Australia Eyes New Gas Tax Ahead of Budget

Australia’s federal government is assessing whether to introduce a new tax targeting the gas sector, with a decision potentially tied to the May budget. The policy debate has intensified as support grows among parts of parliament and the public for measures aimed at capturing what are described as windfall gains linked to high energy prices.

The proposal under discussion includes a possible flat 25% charge on gas exports. The Australia Institute has estimated such a measure could raise about $17 billion per year, though that figure is an external estimate rather than an official government forecast.

What is being considered

The government’s Treasury is modeling multiple approaches rather than committing to a single design. Options being examined include adjustments to the Petroleum Resources Rent Tax (PRRT) and potential changes to corporate tax settings that would affect gas and thermal coal producers benefiting from elevated energy prices.

The central policy aim, as described in the debate, is to increase the public share of profits during periods of unusually strong pricing. The focus is on export-oriented producers that may see higher earnings when global energy markets tighten.

Industry and diplomatic response

Australian Energy Producers (AEP), an industry group representing major companies including Woodside, Santos, and Chevron, has opposed the idea. AEP argues that a new tax would damage Australia’s commercial ties with key Asian customers, naming Japan and South Korea.

Japan’s ambassador to Australia, Kazuhiro Suzuki, warned that an additional tax could discourage investment and redirect business activity to other jurisdictions. Those comments come as Prime Minister Anthony Albanese is seeking to reinforce energy-supply relationships with regional partners.

Political momentum and public backdrop

Despite resistance from producers, support for a tougher fiscal approach has been building among Labor members of parliament, trade unions, and cross-bench lawmakers. Public opinion has also been shaped by campaigns comparing the gas industry’s tax payments with contributions from other parts of the economy, contributing to calls for higher resource-sector taxation.

What remains unclear is which mechanism—an export levy, PRRT changes, corporate tax adjustments, or a combination—would be selected, and how quickly it could be implemented. The Treasury’s modeling indicates the government is still weighing trade-offs, including revenue potential, investment incentives, and the impact on relationships with major buyers.