Australia's debate over whether to impose a 25 per cent tax on gas exports has intensified after a snap Senate inquiry heard the measure could raise tens of billions of dollars a year and ease pressure on domestic energy prices. Economists, former senior public servants and climate change officials told the committee on Tuesday that Australia was failing to capture a fair return on its natural resources, while industry groups and the federal opposition warned the proposal would threaten future investment.
The Australia Institute told the inquiry a flat 25 per cent levy on LNG exports would raise $17 billion annually . "An export tax solves all those problems," the institute's executive director Richard Denniss said.
In a statement released before the hearings, the institute argued Japan, a major importer of Australian gas, had collected almost $40 billion in taxes on gas and coal imports over the past five years, compared with the $7 billion Australia received from its petroleum resource rent tax (PRRT).
"Not only has Australia been literally giving more than half of the gas we export away for free, we now learn that the same Japanese government that is opposed to us putting a tax on our gas and coal exports has been raking in billions of dollars per year via their own tax," Denniss said.
The push for reform has been welcomed by Professor Tina Soliman‑Hunter, an energy and resources law specialist at Macquarie University and Transforming Energy Markets Research Centre co-director, who argues Australia is effectively giving away a public asset. "The resource that's in the ground belongs to all of us," she tells Lighthouse. "When gas companies dig it up and sell it without taxation, they are essentially getting that resource for free."
Australia already applies the PRRT to offshore oil projects, but gas has long been exempt. Soliman‑Hunter says the arrangement dates back to the 1980s, when the government offered generous incentives to encourage development of the then‑nascent LNG export industry on the remote North‑West Shelf.
The region required costly new infrastructure and long‑term contracts to secure financing, and Canberra allowed gas producers to avoid the PRRT entirely to attract investment. "We were trying to establish ourselves in the market," she said. "But the industry is now mature and extremely lucrative."
Over the last decade, Australia has become one of the world's largest exporters of liquified natural gas. Photo: Getty.
"Imagine Coca Cola building its first Australian factory," she explains, "and like an oil or gas company, they build all the infrastructure to make the Coca-Cola. But instead of having to buy the sugar, caffeine, and other ingredients, they're just given all of that.
"Sure, they're paying for the infrastructure, but we're arguing they shouldn't be just given the ingredients."
Several witnesses told the inquiry that Australia lags far behind other major exporters such as Norway and Qatar, which collect vastly more revenue from their gas industries.
Soliman‑Hunter pointed to Norway's petroleum tax regime, created in 1975 after the '73 global oil shock, as evidence that high resource taxes can coexist with a thriving export sector. "At the time, Norway had two gas fields," she says. The Norwegian government applies two taxes to petroleum profits – a 22% company tax and a 56% special petroleum tax – which mean companies are taxed on 78% of their profits. "Norway said 'we've got all this potential and we're stable like nobody else is, but these are the conditions. If you don't like it, don't come'," she says. "And they built one of the most successful resource industries in the world."
The first gas shipment of LNG from Australia to Europe in more than half a decade arrived to storage units on the Isle of Grain in Rochester, England in 2022. Photo: Getty.
Professor Soliman-Hunter argues history is rhyming amidst the US-Iran global energy crisis, and Australia is uniquely positioned to follow Norway's roadmap.
"Establishing a sovereign wealth fund is an exceptionally good idea and the reason is this," she explains: "Extracting petroleum is like selling a house. Once it's sold, the asset is gone. Currently, Australia's revenue from PRRT goes into the government slush fund."
"It is spent, rather than re-invested."
Norway's sovereign wealth fund, established in 1990, is built almost entirely on profits from its oil and gas sector. As of early 2026, its total assets exceed $3 trillion. Over half the fund's current value is derived from returns on its global investments rather than direct oil/gas income.
"The trade-off we're talking about is interfering with the profits of private companies, who are selling our resource wealth, versus providing for every Australian with the resources that we own."
Former Treasury secretary Ken Henry, whose submission advocated for a 100 per cent windfall profits tax, issued a blunt message to the committee. "Just do it. In the national interest, just do it," he said. "And stop the crap that the Australian public have put up with for decades now in respect of the taxation of Australia's finite natural resources."
Industry groups have pushed back strongly, arguing the sector paid $21.9 billion in tax last year and warned that new levies would deter investment. Representatives from Australia's resources industry have fiercely argued against the tax, with Shell Australia chair Cecile Wake calling it "spectacularly ill advised."
There was a heated exchange between Wake and the committee's chair, Greens senator Steph Hodgins-May, who asked how much Shell had paid in PRRT. Wake said Shell paid $109m in PRRT last year and another representative from Shell, Coralie Trotter, said the company's profit that year was $2.5 billion before tax. Trotter confirmed the company had paid zero dollars in PRRT in the previous decade.
Professor Soliman‑Hunter rejects their claims the tax would threaten jobs or undermine our mature industry. Over the last decade, Australia has become one of the world's largest exporters of liquified natural gas, she says, with research suggesting gas companies have made roughly $149 billion from exports in the last four years. Only a small percentage of this profit has been taxed.
She also suggests that a tiered tax structure (25 per cent on exports and 10 per cent on gas sold domestically) could help redirect supply back into the local market. "Domestic buyers don't pay as much as LNG export markets, so companies prefer to send it overseas," she said. "A differential tax could guarantee domestic supply and stop energy prices rising."
The researcher is hopeful about the public mood finally shifting. "I've spent 25 years of my life trying to make people aware that this is our gas and our wealth," she says. "Now is the time."
With the federal budget approaching on May 12, the government faces mounting pressure to ensure Australians receive what advocates call a "fair share" of the country's natural resources. Whether it adopts the 25 per cent export tax, or opts for a more modest change, may determine how much of Australia's remaining gas wealth is captured for future generations.
