The corporate giants that dominate Australia’s gas industry appear to be on the backfoot, as a long overdue Senate inquiry into taxing gas exports kicked off on April 21.
Introduced by the Greens, the Select Committee on the Taxation of Gas Resources will hear submissions from economists and climate action organisations, as well as advocacy groups, which are calling for such a tax. They include the Climate Council of Australia, The Australia Institute and the Australian Council of Trade Unions (ACTU), with the latter proposing a rate of 25% on exported gas, which could yield up to $17 billion a year.
Calls for action on taxation have also been backed by former Treasury Secretary Ken Henry, Commonwealth Bank CEO Matt Comyn, Labor MP Ed Husic and several others from his party. Even Liberal MP Andrew Hastie has said he would consider the option.
The ABC on April 24 reported that, under this pressure, Santos, Origin and Shell have reversed their earlier position of sending the majority of domestically-produced gas offshore and are “suddenly putting Australians first”, even as people in European and Asian countries face exorbitant gas prices, and as the US locks down the Strait of Hormuz.
It said while Western Australia has had a domestic gas reservation policy for than two decades, only after “years of intense pressure” has Labor committed last year to a gas reservation police for the East coast.
During previous wars — such as Russia’s invasion of Ukraine — Australian gas producers yielded massive profits by sending supplies out of the country, leaving the country with less while pushing inflation and interest rates higher.
The ABC reported that numerous industries suffered the knock-on effects from domestic price gouging and lack of supply, including producers of glass, plastics and agricultural additive urea; in the latter case, the Invitec Pivot urea plant on Queensland’s Gibson Island was forced to close in 2021, after the price of liquefied natural gas (LNG) rose to an unsustainable high.
This left farmers — who rely on the nitrogen-rich ingredient — searching for supplies overseas.
While it is nice to see corporate giants put under a little pressure, is a tax rate of 25% really enough given their contribution to economic and social devastation, not to mention the ecological impact of fossil fuel burning?
Sam Wainwright, who will be Socialist Alliance’s lead Senate candidate in the WA election in 2028, said the Anthony Albanese government could, and should, go much further.
“This Senate inquiry has opened up a long overdue discussion about who benefits from Australia’s mineral wealth,” Wainwright told Green Left.
“The proposed 25% on gas exports is really quite mild compared to Norway, which imposes a 78% tax on oil and gas export profits, which includes a 56% special tax and a 22% corporate tax rate.”
He said the speed with which both the federal and WA Labor governments had rejected the proposed tax rate indicated “who their real masters are”, adding, “it’s not the Australian people”.
Alongside Norway, Wainwright said Qatar had taken greater ownership of the gas industry, but said a socialist model of ownership would be even more beneficial.
“In Qatar, the gas industry is 100% owned by the government. Our gas industry needs to be nationalised also. But in contrast to Qatar, it needs to be in the framework of democratic public ownership.
“Not only would this ensure that 100% of the revenues from a publicly-owned resource get returned to people, it is vital if we are to ensure a genuinely just transition away from fossil fuels.”
Taking revenues generated from fossil fuels today would help pay for their replacement in a way that guaranteed jobs and enabled the building of community connection, Wainwright said.
“Democratic public ownership coupled with a serious transition plan makes this possible. There’s no serious path to reducing our greenhouse emissions without it.”
The Senate Inquiry was in Boorloo/Perth on April 24 to hear submissions from fossil fuel giants Woodside, Chevron, Santos and INPEX.
But they are up against a growing list of stakeholders who are adamant that they pay their way, not continue on the path of being, what the Australian Tax Office describes as “systemic non-payers of tax”.
Under the current system, the Australian government receives less than $2 billion a year from the Petroleum Resource Rent Tax (PRRT), compared to a potential $17 billion under a 25% tax rate on exported gas. But many gas companies simply do not pay any PRRT, nor any company tax.
Dr Richard Denniss, director of The Australia Institute, who made a submission to the inquiry, explained the extent to which gas companies are taking people for a ride. He said that “uni students repaying their HECS debts pay more each year for their university degrees than the gas export industry pays in PRRT”.
This means that despite 80% of Australia’s gas production being sent offshore, the government receives almost no return — even when prices spike, as they did after Russia’s invasion of Ukraine. Those using gas are simply left with less for themselves, while producers are laughing all the way to the bank.
Denniss argued that if the Labor government was to take a similar approach to Norway or Qatar, it would reduce gas prices for people in this country by up to 25% and “give the gas industry an incentive to avoid tax by diverting gas away from exports and towards Australians”.
He said that “increased supply to the domestic market will lower prices and end the farcical situation where Australians were told that they had a ‘gas shortage’ while simultaneously being one of the world’s largest gas exporters”.