Senate inquiry into taxing gas exports begins as experts call system 'broken'

The Greens-led Senate inquiry into taxing gas exports will begin today with climate groups, economists, and advocacy organisations lining up to give evidence.

Many submissions to the committee argue that Australia is missing out on billions in revenue, despite the country being one of the world’s largest exporters of liquefied natural gas (LNG).

Senator Fatima Payman said the issue had struck a chord with the public, describing the current system as “broken, imbalanced and in need of reform”.

“Australian gas belongs to Australians,” she said.

“When our gas is sold and sent overseas, the Australian people have a right to a portion of that revenue.”

The ACTU’s proposed 25 per cent tax on gas exports has been gaining momentum ahead of the May budget, with the Climate Council among a growing list of supporters.

“It is reasonable that Australians receive a much stronger public return from publicly owned resources—particularly when global crises drive extraordinary profits for exporters while households face rising costs,” it wrote in its submission to the inquiry.

The Australia Institute said failing to tax gas exports fairly means accepting bigger budget deficits, lower quality public services and rising inequality.

It estimates that such a tax could raise up to $17 billion per year — more than enough to cover the cost of placing dental in Medicare, or to provide free tertiary education and TAFE, or free childcare.

“If Australia is to embrace progressive patriotism, as the Prime Minister calls it, or put Australia first, as Pauline Hanson says, then this is a once-in-a-generation opportunity to simultaneously repair the budget, improve the quality of public services and lower the cost of living,” said Dr Richard Denniss, co-CEO of the Australia Institute.

The Institute for Energy Economics and Financial Analysis (IEEFA) said that conditions are “right” for reform, with LNG exporters set to reap windfall profits for the second time in five years.

“The current system does not appear to be working,” the organisation said, adding “there was strong public support for changes to ensure Australians benefit more from their natural resources.”

Greenpeace Australia Pacific said a flat 25 per cent export tax “should be the floor, not the ceiling” and is “the bare minimum required to begin clawing back what the gas industry has extracted from Australian communities”.

Criticism of the existing Petroleum Resource Rent Tax (PRRT) has been widespread, with several submissions arguing it has failed to capture a meaningful share of industry profits.

Advocacy group Parents for Climate said, “The current system isn’t just broken; it is being gamed.”

“The PRRT was designed to ensure Australians benefit from our shared resources, but tenfold growth in gas export revenue has produced no meaningful increase in what the gas industry pays. There are too many loopholes,” it stated.

Others called for a windfall gains tax, with former Treasury secretary Ken Henry arguing the “socially optimal tax rate” was “approximately” 100 per cent.

He also rejected claims by gas giants that a windfall tax would deter investment, writing, “Self-serving claims of elevated ‘sovereign risk’ and a freeze in investment should be ignored”.

“Since the burning of fossil fuels has been a major, and increasing, cause of nature loss, there is a strong case for using some of the proceeds of a windfall gains tax to undertake nature repair,” he suggested.

Bushfire Survivors for Climate Action said the proposed tax would represent fair payment but called for the government to go one step further and establish a Climate Pollution Levy that feeds directly into a Climate Compensation Fund.

Comparisons with other gas-rich nations were also raised in submissions, with Punter’s Politics noting that Australia collects significantly less revenue from the sector than nations such as Norway, despite similar export volumes.

“The international experience, particularly Norway, demonstrates well-designed reforms can strengthen public returns while maintaining a competitive and stable investment environment,” it wrote.

The Senate inquiry will hold three public hearings this week, two in Canberra and another in Perth.

It is yet to be seen if the bosses of Australia’s biggest gas producers will respond to an invitation to attend.