Australia not changing gas tax policy: Farrell
- Sydney (24 April)
Australia’s Trade Minister Don Farrell has indicated that the Australian Government will likely not introduce new gas taxes in its upcoming budget, pushing back on calls from multiple politicians, including Labor MP Ed Husic.
“I think the Treasurer and the Prime Minister remain pretty clear. We’re not changing our policies [with] respect to gas,” Farrell told reporters on 24 April. But final tax decisions will be revealed by Treasurer Jim Chalmers in the Government’s upcoming budget on 12 May, Farrell added.
Gas producers operating onshore and in coastal areas pay state-level royalties, which generally range from 10% to 15%, rather than federal taxes.
In theory, Australian producers pay a 40% federal tax on profits generated from offshore gas sales through the Petroleum Resources Rent Tax (PRRT) scheme. But companies can claim development cost deductions on 90% of PRRT obligations, limiting tax collections. Prior to July 2023, gas producers could claim development deductions on all PRRT obligations.
Chevron made its first PRRT payments on sales linked to its Gorgon and Wheatstone natural gas projects in 2025, according to the company. It opened the two projects in 2016 and 2017, respectively.
Australia replaced gas excises and royalties with the PRRT to support investors in 1988, Treasury said in a 2016 review of the scheme.
“While [excises and royalties] are relatively easy to collect and difficult to avoid, they were seen to interfere with investors’ search for the best returns as they are based on volume or value of production, rather than on the profitability of petroleum projects,” Treasury said.
Earlier on 24 April, Resources Minister Madeline King noted that Australia’s gas industry requires hundreds of billions of dollars of capital – including foreign capital – over multiple decades, while explaining the Government’s tax position.
Multiple Australian politicians have supported gas export taxes over recent months. “I do support the idea of a gas tax on uncontracted exports that then gets extended as future contracts are being negotiated,” backbench Labor MP and former Industry Minister Ed Husic told the ABC on 22 April.
Australia’s government should use gas tax revenue to build energy independence and sovereign capability, Husic added.
Independent Senator David Pocock and the Australian Greens similarly backed a 25% gas export tax earlier this year.
The Australia Institute – a left-leaning think tank – has estimated that the proposal would raise A$17 billion per year. It could also drive down Australian gas prices by encouraging producers to redirect supplies to the country’s domestic market, according to the think tank.
The Australian Senate set up a Select Committee on the Taxation of Gas Resources on 13 April to study gas tax proposals and other issues. The committee will report back to the Senate on 7 May, less than a week before budget day.
By Avinash Govind