Greens call for LNG export tax to combat projected domestic shortfalls

On Monday (1 December), the Greens announced they would advocate for a 25 per cent tax on liquefied natural gas (LNG) exports to address east coast gas supply shortfalls projected from 2028.

The minor party argued that a tax on exports would ensure that domestic gas supply was prioritised without incentivising new fossil fuel projects. It added that it would not support any government measures to support new gas fields.

“We don’t have a gas shortage, we have a gas export problem,” Greens spokesperson for resources, Senator Steph Hodgins-May, said.

“We don’t need new gas fields to meet demand. We need to stop our own gas being shipped overseas while Australian families struggle to heat their homes.”

The Australian Energy Market Operator (AEMO)’s most recent gas market outlook predicted that Australia’s southern east coast would face a gas supply gap from 2028 as production from Bass Strait gas declined faster than demand.

It found that new investment was “urgently needed” if gas supply was to keep up with demand from homes and businesses. In response to this challenge, the government is preparing to release its strategy to address this projected supply shortage following its Gas Market Review.

The Greens argued that the volume of uncontracted gas currently being exported was “more than enough” to offset domestic shortfalls, and said that more should be done to divert gas supplies to the domestic market.

Calls for a 25 per cent export tax on gas came from the Australian Council of Trade Unions (ACTU) in August, following the government’s economic reform roundtable. The ACTU argued that the tax could replace the “broken” petroleum resource rent tax (PRRT), which had yet to raise any revenue from LNG.

“To date, not a single LNG project has paid any PRRT and many are not expected to pay significant amounts of PRRT until the 2030s,” Treasury budget papers noted in 2023–24.

The heavy up-front costs associated with LNG projects enabled companies to carry forward tax deductions for years, the budget paper said.

To address this, the government amended the PRRT in 2024 to impose a 90 per cent annual deduction cap for offshore LNG projects, to ensure that at least 10 per cent of their PRRT-assessable income could be subject to the tax each year.

The Greens said the PRRT could be replaced by the 25 per cent LNG export levy.

“A tax on exports is the best way to redirect existing supply to Australians, raise the revenue needed to compensate households, and help us get off gas quickly and fairly — without opening new climate-wrecking gas projects,” Hodgins-May said.