Federal budget ‘will not undermine existing contracts on gas exports': Albanese

Further to recent coverage by Accounting Times of a likely rejection of additional taxes on gas exports in the upcoming federal budget, Prime Minister Anthony Albanese addressed the issue more directly yesterday (29 April).

In a speech delivered at The Chamber of Minerals and Energy of Western Australia, Albanese highlighted how the “quality and reliability of Australian agriculture, Australian resources and Australian gas have been critically important to the assurances we have received for future supplies of petrol, diesel and fertiliser”.

“In other words, our gas exports are directly linked to our national fuel security.”

“And the middle of a global fuel crisis is the worst possible time to jeopardise these partnerships, or the investment that underpins them”

The Greens have suggested that Albanese is equivocating on the issue and leaving the door open to tax changes for future supply and new export contracts.

Leader of the Australian Greens, senator Larissa Waters, said: "instead of oblique references to existing gas contracts not being undermined, the Prime Minister should apply a minimum 25 per cent tax to all gas exports, which would raise $17 billion a year to help people through a cost-of-living crisis".

“It’s crystal clear that the Prime Minister is feeling the heat from Australians who are sick of being ripped off by greedy gas corporations,” said Waters.

“Labor cannot let the gas corporations cry poor while they balance the budget with brutal cuts to services like what we’ve seen in the last week with the NDIS.”

While not announcing any other major changes, Albanese cited two existing policies in defence of his decision not to introduce new taxes yet.

These were the intended Domestic Gas Reservation for the east coast - first confirmed last year - which will require gas companies to set aside a specific percentage of produced gas for the domestic market, much like the Western Australian scheme, and 2023 reforms to the petroleum resource rent tax (PRRT), which forced gas companies to pay tax on at least 10 per cent of revenue much sooner.

“The people of Australia have every right to expect Australian gas to be affordable for our economy - for industry and households alike,” Albanese said.

In the same vein, he referenced the capping of gas and coal prices in 2022 “to shield businesses and households from those global energy price spikes”.

Calls for a gas export tax have only ramped up as the release of the budget looms.

On 17 March, the Australian Council of Trade Unions supported a replacement of the PRRT with a 25 per cent levy on the revenue from the sale of gas, and this was recently referenced by Independent David Pocock who, on 24 April, stated that modelling from the Economic Inclusion Advisory Committee “shows that with additional revenue for fairer taxation we could easily lift from people out of poverty”.

In addition, Independent Allegra Spender said that the current six cents “in every dollar of oil and gas revenue” that the Australian government is receiving has fallen from the 1990s rates, and is “not a fair return for a finite natural resource that belongs to the Australian people”.

“I’ve put forward a proposal to the current Senate inquiry: a progressive price-linked royalty on LNG exports, with a volume-based floor.”

“It’s designed to do two things at once - capture a fair share of the current windfall, and establish a durable framework for when prices return to normal.”

Despite eased fuel prices, the Strait of Hormuz remains largely closed, meaning that calls for increased resource taxes will likely only grow louder.

Chair of the select committee on the taxation of gas resources Senator Steph Hodgins-May added: “This fight is far from over. Public pressure for a gas export tax is growing by the hour, and the Prime Minister knows it so he’s keeping the door open ahead of the budget.”

“The May Budget is the test. If the Prime Minister believes in this, now is the time to act.”

The Federal Budget will be released on 12 May.