Milton Dick (Speaker) Share this | Link to this | Hansard source

I have received a letter from the honourable member for Mackellar proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The urgent need for a tax on gas exports to ensure all Australians receive a fair share of the benefits from the sale of our natural resources.

I call upon those honourable members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

Sophie Scamps (Mackellar, Independent) Share this | Link to this | Hansard source

Australians don't like being taken for a ride, and right now they're being taken for a ride by the gas giants operating in this country. These are foreign owned corporations that treat Australia like a doormat, profiting from global conflict and raking in billions from our natural resources, while everyday Australians are left struggling with rising energy bills. That's why so many Australians are calling, right now, for a fair return for the export of our gas.

The Australian Council of Trade Unions and the Australia Institute have put forward a straightforward proposal that would replace the broken petroleum resource rent tax with a 25 per cent flat tax on the value of exported gas. This would ensure that Australia actually receives revenue when our gas is shipped overseas.

Other sensible options have been proposed—including a price based royalty, whereby gas companies would pay royalties based upon the price of gas sales, allowing tax rates to increase as prices go up and to decrease as prices drop. This option would ensure that Australians benefit from windfall profits but would also protect industry when prices drop. The successful Queensland coal and gas royalty scheme is based on such a measure.

We have known for a long time that the current system is failing Australians, allowing multinational gas companies to pay little or no tax despite earning eye-watering profits. The current petroleum resource rent tax is riddled with loopholes that allow profit-shifting, compounding, carry-forwards and accounting tricks, which all equate to minimal tax being paid on company profits. Added to that is the fact that 56 per cent of our exported gas attracts zero royalties. We give away more than half of our gas for free.

The system is broken and Australians know it. That's why support for a gas export tax or a Commonwealth royalty scheme is so strong. Polling from the Australia Institute shows that voters across Australia support a gas export tax, including 75 per cent support in my electorate of Mackellar, and there is broad backing across the political spectrum, with some of the strongest backing coming from One Nation voters.

Right now, the gas industry uses more gas to process into LNG for export than Australian manufacturers use, combined. Meanwhile, some of our biggest trading partners are making tidy profits onselling our gas. Research from the Institute for Energy Economics and Financial Analysis shows Japanese companies onsold 600 to 800 petajoules of Australian LNG in 2024, more than the entire gas demand of eastern Australia. Those resales alone likely generated more than $1 billion in profit for Japan.

A gas export tax would raise significant revenue. Currently, the Commonwealth makes more from beer excise and from HECS than it does from the PRRT. A 25 per cent gas export tax would generate up to $17 billion a year. In fact, figures released this week from the Australia Institute suggest Australia misses out on nearly $350 million in revenue every single week. Other countries are way ahead of us. When gas prices spike, the Saudis, Qataris and Norwegians benefit because they tax their exports properly. Australia is the outlier here. We have massive gas exports but receive minimal public revenue. Norway has a sovereign wealth fund worth $2 trillion. We have billions in debt. Australians want answers and they want action.

Some are talking about a windfall profits tax, and that has its merits, but it's not enough on its own. Windfall taxes only apply during price spikes and are easy to minimise. A flat 25 per cent gas export tax delivers revenue every time gas is exported, not just during boom years. It's stable, it's simple and it's much harder to avoid with accounting tricks. Similarly, a price royalty scheme would be comprehensive, capture windfall profits, be relatively simple to administer and implement, be low risk for taxpayers and, importantly, would not materially discourage investment.

Momentum is building, and it's positive to see new modelling being requested by government on levy options and an inquiry established into windfall profits. So the call for the government is simple today. Please fix the broken system that is ripping off Australians and ensure we start getting a fair return for the sale of our gas. I'd like to now cede the second half of my time to the member for Kooyong.

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

The call will in fact be alternating, as it always does.

Andrew Leigh (Fenner, Australian Labor Party, Assistant Minister for Productivity, Competition, Charities and Treasury) Share this | Link to this | Hansard source

At the outset, I'd like to thank the member for Mackellar for bringing this important debate in the matter of public importance. Gas constitutes about a quarter of Australia's energy needs, according to the Future Gas Strategy, and it has an important role as a bridging fuel in the carbon transition. It's heavily used in manufacturing; cement, bricks, glass products, fertiliser and EV batteries all depend on a reliable and affordable supply of gas.

Australia exports around three quarters of our gas, which plays a role in the energy transition and in countries to our north. As the Future Gas Strategy notes, Australia can't reach our 2050 net zero targets without reducing and decarbonising our consumption of natural gas. The Future Gas Strategy notes that that'll occur through increased electrification of processes that currently use natural gas, replacing natural gas with low-emissions gases and converting remaining emissions from natural gas to be fully offset.

But the Future Gas Strategy also notes the role that gas plays in supporting our economy through the transition to net zero. Gas operates as a backstop for renewables, it's fast ramping and dispatchable, and it can complement variable renewable sources of power. California and Germany are just two examples of economies which have seen coal exiting, renewables expanding and gas supporting that transition. Gas does emit CO2, but 40 to 60 per cent less per unit of electricity than coal. Gas also supports hard-to-abate industries, like steel, cement, chemicals, and ammonia and hydrogen production. It can help households and firms as we make that clean energy transition. While batteries and pumped hydro, the so-called wet batteries, are increasing, they are still costlier, and gas has a bridging role to play.

We've seen over recent years Australia's LNG production declining. Domestic gas demand is falling as households move off gas production, notwithstanding that we still have five million homes connected to gas for heating, cooking and hot water. Our LNG exports fell to the lowest level in four years, largely as a reduction in LNG demand from Asia.

The member talks about the importance of fair taxation of the oil and gas industry, and it's important to draw the House's attention to the decision that the Treasurer made in 2023. As a result of the Treasury gas transfer pricing review and the Callaghan review, the Treasurer announced that the government would limit to 90 per cent the share of petroleum resource rent tax income which could be offset by deductions to 90 per cent from 1 July 2023. That sounds quite technical, so I'll put it in plain terms. Previously the west coast gas projects had not been on track to pay PRRT until the 2030s—we brought that into the 2020s. We can see that, over the latest budget update forecast, the government will collect $5.4 billion in PRRT over the four years to 2028-29, and that's on top of the corporate tax those companies will pay.

We've seen an increase in the company tax paid by the oil and gas sector from $1.1 billion in the five years to 2021 to $10.4 billion in 2023-24. Our changes have ensured that offshore gas companies are paying more tax sooner. They have increased the number of companies paying PRRT from 11 to 16 in 2023-24, and, collectively, the oil and gas industry paid almost $12 billion in taxes in 2023-24. That's on top of the important reforms that Labor has made to multinational tax. No government in Australian history has done more on multinational tax fairness than the Albanese government. No government around the world is doing more to improve multinational tax integrity than Australia. We put in place legislation to ensure multinationals pay their fair share of tax, setting a 15 per cent global minimum tax. We curtailed excessive debt deductions, increasing the revenue to the budget by hundreds of millions of dollars.

We've increased corporate tax transparency with a world-leading public country-by-country reporting register, ensuring that large multinationals operating in Australia need to disclose the amount of tax paid in countries around the world. If you are tendering for a large government contract, you now have to disclose your country of tax residency. We have boosted funding for the ATO's Tax Avoidance Taskforce by $200 million a year and extended the operation of the taskforce. We've put in place reforms which have curtailed the ability of companies to operate in opaque fashion through a beneficial ownership register, ensuring that firms need to disclose their true owners. This is an important measure when many Australians are looking to the government for comfort and reassurance at a time of fuel pressures. We have set out a collective approach with the states and territories, guided by four levels of action: level 1, plan and prepare; level 2, keeping Australia moving—that's the current level; level 3, taking targeted action; and, level 4, protecting critical services for all Australians.

We are ensuring that fuel supply flows to those who need it. This has been done with a range of measures, such as the appointment of a national Fuel Supply Taskforce Coordinator, Anthea Harris, and counterparts in the states and territories. We increased the penalties for petrol companies that rip off Australians. Those penalties were $10 million when this government came to office. We increased that to a maximum of $50 million or three times the benefit of the breach, or 10 per cent of turnover—and just recently we increased that maximum penalty to $100 million. We have provided additional resources to the ACCC to crack down on anticompetitive and anticonsumer conduct. We've released a fifth of the Australian fuel reserves, and we've targeted that at regional areas. We have announced the halving of the fuel excise for diesel and petrol and a cut to the heavy vehicle road user charge to zero for three months—measures which provide motorists with some relief at the bowser.

I remember the way in which the former prime minister Scott Morrison railed against electric vehicles. Under us, we've seen an increase in the share of EVs on the roads from single digits to double digits, and that means that there are fewer people needing to line up at the bowser and there is less pressure on our fuel supply. We have temporarily changed petrol and diesel standards to get more fuel flowing, and we have tasked the ACCC to issue on-the-spot fines.

The cabinet is engaging with international partners to keep supply flowing. We have a range of international relationships with countries such as Singapore and Korea, through which much of our oil flows. Indeed, in the case of Korea, they are also a significant recipient of Australian gas, so it is in the interests of both countries to ensure that that supply flows. The National Coordination Mechanism is an important way in which the Minister for Climate Change and Energy has engaged with states and territories on supply and distribution.

We understand that this crisis isn't homegrown. This is a crisis caused by the decision of the United States and Israel to take military action in Iran. At the outset of the conflict, the United States and Israel said that the principal goal was to decrease the chances of Iran being able to build a nuclear weapon. That having been achieved, the government has encouraged the US and Israel to bring the conflict to an early conclusion. It is in those countries interests, as well as in Australia's interests and in the interests of the global economy to bring this conflict to a swift end. Australia is not a significant player in the Middle East, but we have urged on all parties that it is time to reach a ceasefire and that it is time to bring this conflict to an end.

Monique Ryan (Kooyong, Independent) Share this | Link to this | Hansard source

Australians are once again experiencing a global economic shock for which we were unprepared. Four weeks after Donald Trump triggered a regional conflict and a global energy shortage, a war that began in the Middle East is hitting Australians hard. Dr Fatih Birol, the head of the International Energy Agency, has warned that this energy crisis is worse than the combined consequences of the two oil shocks of the 1970s and the gas crisis following Russia's invasion of Ukraine in 2022—the three biggest energy shocks in modern history.

The alarm bell has also been sounded by economists, industry and Treasury. Rapid price rises will reignite inflation; will drive up construction costs, freight costs and food prices; and will place further pressure on mortgage holders and renters. The ripple effects from the Iran war are everywhere. Consumer confidence is the lowest ever recorded. Australians are already feeling price pressures at the bowser and will soon feel them in power bills and at the supermarket.

Yet we continue to export enormous volumes of gas without receiving a fair return for the Australians who own them. The Australia Institute has found that every week the Albanese government delays implementing a stronger tax on gas exports costs us hundreds of millions of dollars. This is revenue which belongs to all Australians. It could and it should be captured from multinational gas companies for the public good. Australia's broken resource tax system is not a market failure. It's a policy choice. We are one of the world's largest gas exporters, but we collect far less revenue from our gas than other exporting nations do—less, in fact, than we collect from the beer excise or from students' HECS payments. It shouldn't be this way, and it doesn't have to be this way.

There are several rational and fair ways by which we could legislate for better returns on our oil and gas. The Institute for Energy Economics and Financial Analysis has raised the possibility of expanding Queensland's gas royalty scheme, which in recent years has raised more revenue for the state than the federal PRRT has. We could expand it so that it applies nationally. In doing so, gas producers would be required to pay royalties based on the price of the gas sales, allowing rates to increase as prices go up.

Alternatively, two permanent and responsible reforms proposed by the Superpower Institute could also improve our energy security and economic resilience. The first is a fair share levy on gas exports to ensure that, when gas prices surge, Australia receives a guaranteed return. This is not just a short-term solution. A fair share levy would be a permanent mechanism offering market certainty and stability alongside higher tax revenue. The second is a 'polluter pays' levy, which would recognise that industrial emissions impose real costs on our economy in the form of health costs, disaster recovery costs and infrastructure damage. A simple 'polluter pays' mechanism would charge large polluters—there are fewer than 60 of them at this point—for the carbon pollution that they generate through fossil fuel extraction or importation. Over 80 per cent of our national emissions would be covered. We could achieve 100 million tonnes of additional annual abatement after the first 10 years alone, which is more than twice that forecast under our current policies.

Taken together, the two reforms proposed by the Superpower Institute would raise an average of $35 billion a year of additional tax revenue through to 2050. That revenue could be used to ease cost-of-living pain, to resolve funding shortfalls in our schools and in our hospitals and to increase our energy and our manufacturing sovereignty. These measures would help us prepare for and protect ourselves against the next inevitable global energy crisis.

At a time of profound global geopolitical instability, demanding a fair share for Australians from our gas exports is sensible. Pricing pollution is necessary. Ensuring Australians benefit from the sale of resources that we own is acting in the national interest. Securing a fair return from our gas exports should be an immediate priority for the government.

Zaneta Mascarenhas (Swan, Australian Labor Party) Share this | Link to this | Hansard source

I'll start by doing a little bit of a throwback and recognising that WA kept Australia strong during the pandemic, and when the resource sector is strong, Australia is strong. What we saw during the pandemic was WA's iron ore and LNG exports keeping the nation afloat.

What I also recognise is that the resources that we have below the ground are not owned by companies. They are owned by all Australians, and a part of this means that there is a social contract. This social contract includes things like making sure we pay workers fair wages. My dad's a metal worker. He worked at Mt Charlotte out at Kalgoorlie and then out at Kambalda at the nickel mines, and he was a proud member of the AMWU. Another part of the social contract is around keeping workers safe. My dad is from a generation of workers where he has 9½ fingers.

There's also an importance for making sure we maintain strong environmental standards. When I was a little girl growing up out at the mines, we actually learnt how to rehabilitate mine sites. Again, a part of that social contract is action on climate change, and one of the things that I think is particularly interesting is that in Western Australia what we've seen over the last 10 years is a continual decarbonisation of our grid. What we've seen is more households integrate more solar onto their rooftops. What we've also seen is that coal-fired power stations are ill-equipped to deal with the modern grid. We've seen an introduction of gas into our system, and we've seen our emissions drop which has been fantastic. Gas has been a good dance partner for solar power.

What I'd also say is that with all dance partners, sometimes you might look around for alternatives. One of the meetings I had today was with Graham Arvidson from Australian Vanadium. Australian Vanadium isn't just a mining company. They're an integrated supply chain that's looking at making vanadium flow batteries. These are large batteries that can be scaled up significantly, and it'll be interesting to see its role in the grid in the future.

Going back to the social contract, a part of that is also about making sure that taxes are paid. I will point out that the Albanese Labor government's tax policy has not changed, but we are the party where households are getting tax cuts, which we're delivering for every taxpayer this year and next year. And one of the things we did during our first term was to have a look at the petroleum resource rent tax. Basically, we want to make sure that offshore gas companies pay more tax and they pay more tax sooner. This was a change we made, and it was absolutely the right call.

An additional change we also looked at was in relation to big multinational companies. We want to make sure they pay their fair share, and that's something we have worked on. We now have a 15 per cent minimum tax for these companies. We are also making these companies publicly report how much tax they pay. One of the things we saw under the coalition government was basically tax avoidance, where PwC effectively sold tax advice to help companies basically pay less tax. So dodgy! We have looked at boosting the tax office and making sure that the tax avoidance team has the resources to make sure we don't see this happening again.

I continue to see the role that oil and gas play in our society. The thing we're seeing across our communities at the moment is what comes out of our ground, but also what comes out of our bowsers. And do you know what? Households have been doing it tough. This is the reason why we introduced the fuel tax offset, which is basically 26c off fuel from April to June. And while we have been doing that, we have also been looking at supply.

One of the things we did is change the fuel standard. Rather than it being 10 parts per million of sulphur, we have changed it to 50 parts per million of sulphur. We basically want to ensure that fuel made in Australia can be sold to local places, but we cast the net wider and we can import more oil from other places.

Nicolette Boele (Bradfield, Independent) Share this | Link to this | Hansard source

I thank the member for Mackellar for raising the topic of taxing our gas exports. It is a matter of public importance and worthy of time in this place. I'm going to approach the topic from a slightly different angle to colleagues. I want to talk about it in the context of Australia's place in the geopolitical landscape that has ruptured; in the context of the new world order in which we find ourselves and how Australia should see itself, position itself in that new paradigm. In short, I want to talk about how it's time for Australia to embrace a level of sovereign bravery in relation to taxing exports but also in a much broader sense.

Australia has a lot more agency and influence in the world than what many of our leaders would have us believe and what many of our leaders have convinced the populace that we have. Our leaders should rethink the rhetoric. They should start to grasp that we are a middle power with influence; that we are the 15th-largest economy in the world by GDP, just below South Korea and above Indonesia; and that we have proven ourselves, generation after generation, to be a trusted, reliable actor on the international stage. And maybe then, when it comes to taxing our resources, we might properly understand that we have commodities that the rest of the world wants and needs, and that gives us a competitive strategic advantage.

Let's just break it down in the context of our ongoing failure to properly tax companies who profit from our natural resources. Two reasons are often written for why we don't and can't better tax the resources that we virtually give away. The first is that the mining companies will be less likely to invest here. The Australian Energy Producers, the peak body of energy producers, said just last week:

Imposing higher taxes on Australian gas producers would stop investment in new gas supply, leading to gas shortfalls, higher energy prices, and the closure of Australian industries that rely on reliable and affordable gas.

I'm going to call BS on the last part of that. One clue is in the definitive and hyperbolic rhetoric that they are prepared to use, without knowing any detail at all about the design of a new tax. Look, it's true that applying more tax to gas exports may reduce the profits of gas companies, but Australian gas producers pay some of the lowest taxes on gas in the world. Other major fossil-fuel-exporting countries typically share between 75 per cent and 90 per cent of fossil fuel profits. Australia shares only 27 per cent. With profit defined in cashflow terms as in Norway, Australia shares even less—just 18 per cent.

The second argument that comes up to counter the suggestion that gas exporters should pay more tax is the impact it will have on our relationships with our key trading partners, the countries who buy our gas, because it might increase the prices that they are required to pay. This kind of objection you're less likely to hear the government say out loud, but it is most definitely an argument they heed. Let's have a look at what actually happens with the gas that we export, for example, to Japan. It might surprise many people here that Japan onsells vast quantities of gas that it purchases from Australia at a considerable profit. Research from the Institute for Energy Economics and Financial Analysis has shown that Japanese companies are onselling about half as much Australian gas as they import from Australia. They are onselling it to markets we operate in. They have become our competitor with our gas. This is a lucrative side hustle for Japan, and it's a ludicrous embarrassment to Australia. The government's allowing the Australian taxpayer, the owners of the gas, to be played as absolute mugs.

A tax on gas exports would be a win for the Australian people. Either we raise significantly more revenue from the sale of our own resources or more gas stays onshore for sale to Australian consumers here at home, where we need it most. The world is changing significantly and quickly. Australia is in an incredible position to stand up and be counted. It will require us to reorient our sense of place in the world and to exercise our sovereign bravery. We need to decouple from our colonial past and from our sense of being the underdog and realise and behave as though we have influence as a middle power. Taxing gas exports, which is nothing more than demanding what we are entitled to, should be a really easy place to start.

Lisa Chesters (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

I want to acknowledge the mover of this motion and this MPI and the spirit in which it's been brought into this place. I have long advocated for making sure Australians get their fair share of our gas for domestic customers and making sure they get their fair share of our sovereign wealth. I was one of the first people in this place to sign on to the AWU campaign at the time to say, 'Reserve our gas.' That's why I'm proud to stand here today and be part of an Albanese Labor government that has done that. It took us getting elected into government to methodically draft that, but we now have a gas reservation policy in place on the east coast. What we will see over time is that start to grow and really benefit gas customers on the east coast.

I say 'gas customers' because we cannot ignore the simple fact in Australia that there are still over five million homes connected to gas that can't electrify any time soon. It is in the walls. It is in the floors. It is how people heat their homes. It is how they cook their food. The cost to electrify is just out of reach for many households. Some households also can't sustain or support, because of the age of their roofs, solar panels. Whilst it is working for some being able to put solar on their roofs and connect to batteries, it's not a solution for everybody at this time.

So that is why our government is approaching the energy transition that's going on in our country in a methodical and considered way. We are looking at the fact that we need to have a level of gas in this country to help service existing customers. We simply can't just cut them off. I say this worried about what's going to happen to three communities in my electorate. Because of jumping-around policy by the former Liberal-National government in the state of Victoria that promised something they could not deliver, we have now got homes in Victoria that are literally being cut off gas. Those who are from Victoria might remember the Baillieu-Napthine government promised to connect towns like Marong, Maldon and Heathcote to gas, and they outsourced to Solstice Energy the ability to connect to gas. But they didn't build gas lines. What they did was install infrastructure. It was like having a portable gas station built just outside the town. They encouraged people in these towns to spend the money to connect to gas. Some of those residents invested a lot. At the time, gas prices were a lot cheaper. We saw households installing gas equipment and gas burners because they thought they would be, in the long term, better off.

Fast forward over a decade, and we've seen that government lose. We've now got a Labor government in place, trying to deal with the mess that was left. Because of the spike in gas prices, the energy provider that was delivering gas—literally on trucks—to mini gas stations in these communities has announced that it is going to stop supplying gas to these 10 regional Victorian towns. This is a disaster, a demonstration of what happens when you don't have long-term thinking around energy and gas policy. These communities are devastated, and I really feel for them. They are now trying to electrify. They are now trying to do what they can. I do acknowledge the work the Allan government have done to try and help these communities, including through the subsidies they're offering. These communities have really been led up the garden path by bad policy from a previous government and are now living with the consequences because of a change in the market. I say this to demonstrate why we can't just have these blunt instruments, these ideas that may be good today but could, in the long term, deliver damage.

I've had a lot of people reach out to me about the proposal, the simple idea of a 25 per cent tax on companies that take Australian gas overseas. I have to be really honest with people that it's a blunt instrument, and we don't know the impact this idea of taxing companies 25 per cent could have on our own gas market. We don't know if increasing taxes on gas that we export will lift the price of gas in our country. Will it destabilise the gas markets globally in a time when we already have these challenges?

Elizabeth Watson-Brown (Ryan, Australian Greens) Share this | Link to this | Hansard source

I thank the member for Mackellar for raising this very important matter of public importance. An overwhelming number of Australians support a gas export tax to fund essential services in Australia. In a national poll conducted by YouGov, 61 per cent of voters agreed that gas export companies should pay a 25 per cent gas export tax. Only five per cent disagreed. It's not a secret anymore; Australians have cottoned on to the fact that we're being taken for a ride by massive gas corporations, and they're demanding that the government do something about it. They're demanding a 25 per cent tax on gas exports. Not only would this raise much-needed revenue for essential services; it would also incentivise gas companies to divert gas to Australians. One of the easiest ways to avoid an export tax would be to sell it domestically, increasing supply and lowering the price for everyday Australians.

Your cheeky Friday beer generates more tax than Australia's gas industry, and that's a credit to how good we are at enjoying a few cold ones! Despite Australia being one of the largest exporters of gas in the world, we make more from taxing beer than taxing gas. Why? Because the government represents the interests of massive gas companies over those of everyday Australians. Did you know that, despite producing absolutely zero gas themselves, Japan has become one of the largest traders in the global gas industry, entirely off the back of Australian gas exports? When overseas buyers can onsell Australian gas for a massive profit—and they're paying almost no tax—something is fundamentally and seriously wrong. We extract the gas and we export the vast majority of it overseas without any guarantee of domestic supply, and gas companies make record profits while paying almost nothing in tax. Since gas exports began in 2015, they've led to the tripling of wholesale gas prices on the east coast and a doubling of electricity prices. We are paying to ship our gas overseas. Who benefits from Australian gas? Certainly not everyday Australians. It's the massive gas companies who pay no tax, the politicians who receive huge donations from the gas industry and the ultra-wealthy shareholders.

Did you pay more tax last year than a massive gas corporation? Let's find out. Are you a nurse or a teacher? If yes, then you paid more in income tax than Santos, Chevron, Australia Pacific LNG, PETRONAS, TotalEnergies and Shell combined. Are you an electrician or a plumber? Then you paid more in tax. Are you a barista, grad student, hospitality worker, doctor, chippie, public servant or small-business owner? Then you paid more in tax than gas corporations in Australia. Beer drinkers pay more in beer excise than gas exporters pay in Petroleum Resource Rent Tax. Students pay more in HECS repayments than gas exporters pay in tax. We are being ripped off.

In just four years, multinational corporations have made $149 billion exporting gas from Australia totally royalty free. Labor and the LNP often tell the public that we can't afford to do this or that in the budget. A 25 per cent tax on gas exports would raise $17 billion every year, and it would raise it from the companies making billions in profit. So why don't they tax them? Because Labor and the LNP are on the take. They accept millions of dollars in corporate donations from these same gas companies, and they don't want to stop the gravy train.

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

I'm taking a point of order. You have the call, leader of the Nationals in the House.

Darren Chester (Gippsland, National Party, Shadow Minister for Veterans’ Affairs) Share this | Link to this | Hansard source

I'd ask the member to withdraw any imputations. They are disorderly.

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

It is in offence of the standing orders. I ask the member to withdraw that particular comment.

Elizabeth Watson-Brown (Ryan, Australian Greens) Share this | Link to this | Hansard source

I withdraw.

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

Thank you. I give the call to the member for Braddon.

Anne Urquhart (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Deputy Speaker. Since coming to government, we have done more than any other to protect our tax base. We have reformed our tax system and secured the tax revenue arrangements needed to fund government services and stimulate investment. Within this system, we're delivering tax cuts for every single Australian worker this year and next year and a fairer, more sustainable superannuation system.

We believe that Australians are entitled to receive a fair return on our resources. In our first term, the Albanese Labor government reformed the Petroleum Resource Rent Tax, the PRRT, to deliver a fairer return to the Australian community from our natural resources. Our changes to the PRRT ensure that offshore gas companies pay more tax sooner. Our changes increased the number of companies paying PRRT from 11 to 16 in 2023-24. The oil and gas industry contributed almost $12 billion in taxes in 2023-24. This is on top of billions of dollars in royalties to states and territories. The latest budget update forecasts that we will collect $5.4 billion in PRRT over the four years to 2028-29. This is on top of the corporate tax that these companies will have to pay. The company tax paid by the oil and gas sector increased from $1.1 billion on average annually in the years to 2021-22 to $10.4 billion in 2023-24.

Importantly, our changes also provide industry and investors with policy certainty—certainty that is needed for a reliable supply of domestic gas and to ensure that Australia remains a reliable international energy supplier and investment partner. We are working to ensure multinationals, including gas companies, pay their fair share of tax in Australia. Imposing new costs on the oil and gas industry could undermine that investment in gas production, causing shortfalls here in Australia. Five million homes are still connected to gas in Australia for heating, for cooking and for hot water. Without investment from our international trading partners, we wouldn't be able to provide for domestic and regional energy security. The government is focused on delivering policies that ensure there is enough gas for domestic users while also meeting our international commitments.

We also rely on the gas industry to get us off coal and act as a bridge to more renewables in the energy grid. The government is committed to net zero emissions, just like many of our trading partners as well as our Pacific partners. There would be no batteries, solar panels or wind turbines without the gas industry, because green hydrogen simply isn't commercially viable yet. We know that, as we transition to that net zero economy, reliable and affordable energy is a must. It is a must for our community and consumers. We also know that we are a trusted and reliable trading partner—a partner that is working to bring down its emissions.

In our current global situation, we're acting to ensure that our fuel is getting out the door to those who need it while also securing more to come into our country as well. We're acting to shield Australia against any future disruptions to the fuel supply chain by establishing new fuel security powers and enabling government to work with fuel suppliers to keep fuel flowing to Australia.

We need stability in the market while we transition to net zero, and without gas we simply can't have that. We need to build our net zero emissions to a point where they can stabilise, but without gas we simply can't do that, and without the investment that we receive that simply wouldn't happen. We need to ensure that that investment is reliable and is strong and that we have that trading with our partners to ensure that we have a reliable energy system here in the country while we are transitioning to a net zero system.

Kate Chaney (Curtin, Independent) Share this | Link to this | Hansard source

I thank the member for Mackellar for raising this matter of public importance. Australia is the second-largest exporter of liquefied natural gas in the world. When international gas prices go up, you'd expect a country like Australia to benefit. But, when prices spike, Australians are not receiving their fair share of the upside.

There are two fundamental problems with the tax system applying to our gas exports. Firstly, gas exporters largely do not pay Australians for the gas they extract and sell. This gas belongs to the Australian people. For most resources—coal, iron ore or onshore gas—companies pay royalties for the rights to use it, but most gas exports are subject to no royalties. That means vast quantities of Australian gas are sold overseas without Australians receiving a direct return for the resource itself. Secondly, Australians do not capture our fair share of upside when prices surge. Economists across the political spectrum agree that it's sound policy to tax economic rents—the superprofits that arise from unexpected price spikes. Taxing economic rents does not discourage investment or production because companies still earn an acceptable return.

These two problems mean that the only way Australians get a benefit from gas exports is through the company tax system. When gas companies make more profit, they pay more company tax. This is important but not enough. The gas companies do not pay for their use of our resources, and they do not share in the unexpected windfall of international price spikes. Two facts make this point. First, other major fossil-fuel-exporting countries typically capture between 75 and 90 per cent of profits from fossil fuel companies for the public. Australia captures less than 30 per cent. Second, since the price of gas surged from the war in Ukraine, the gas exporters have made windfall profits approaching $100 billion. Much of that profit was earned on royalty-free gas, and little PRRT was paid. At best, around $20 billion was collected in company tax. In proportional terms, nurses, teachers, tradies and truck drivers pay a higher effective tax rate than these companies.

In Australia, the petroleum resource rent tax was meant to address both the problem of not paying for our gas and the superprofits problem, but it has failed comprehensively. The PRRT scheme was designed for oil projects, not gas projects. Because deductions are so generous and uplift indefinitely, many gas projects have never paid PRRT and likely never will. The Commonwealth collects more revenue from beer excise than it does from the PRRT. So what do we do about it? Well, we can agree that Australians must get their fair share for their resources, but we must be careful that changes don't cripple an industry currently vital for WA and Australia.

There are a range of reform options available. Gas companies need to either pay for all the gas they extract and sell overseas, because it's our gas, or share the upside from external shocks, like war, more fairly with Australians, or a bit of both. Sharing the upside could be done in a few different ways: by fixing the PRRT; by introducing a targeted windfall-profits tax; or through a two-way cash-flow tax, with the government sharing both upside and downside.

Now, the hardest thing about changing the tax treatment of these big gas projects is the purported sovereign risk. Investment decisions were made based on an expectation, at the time, that the tax treatment wouldn't change. We need investors for big projects in Australia if we're going to make the most of the new energy opportunities ahead of us, and we don't want investors to back off because we change our tax position all the time. Certainty is needed. But the sovereign-risk argument is often overstated by gas companies. We are a stable, rule-of-law democracy, with world-class resources. Plus, these gas companies should know that the deal they're getting is too good to be true.

This is a solvable problem. There are options that could ensure Aussies get their fair share, without crushing an industry that will remain important for WA and Australia for some decades whether we like it or not. The best option will be simple, with limited loopholes, and will ensure Australians capture a fair proportion of the value of our gas during both crisis and normal periods. The solutions exist. What is needed is the political will to ensure that our resources truly work in the public interest—not just for a fortunate few, but for every Australian.

Trish Cook (Bullwinkel, Australian Labor Party) Share this | Link to this | Hansard source

Thank you for the opportunity to speak to this matter of public importance today. When we talk about the sale of our natural resources, we're talking about the birthright of every Australian to profit from our resources. Our government understands this, of course, but we need to get the balance right. We need to ensure that Australians receive a fair share of our nation's wealth while simultaneously shielding household budgets from global instability and keeping prices affordable, and also providing investment stability and certainty in the industry.

Before I entered this place, I spent many decades working as an occupational health and safety nurse and consultant, and my career took me to the front lines of this industry, working in the oil and gas rigs in the Burrup, off Karratha, and offshore in Western Australia. I've seen firsthand the massive scale of investment that's required in these operations, and the lead-time to these operations is extraordinary.

The product, of course, has to have a buyer, long before the product is removed from the ground, and, in this respect, prices are set, to some degree, between the buyer and the seller. These are not government projects that we're investing in; they are external investments. And they bring great value to our communities and to our economy.

The dedication of the oil and gas workers is second to none. And this industry does provide huge employment to the workers.

So I know these projects are vital. They provide vital resources to the communities and they provide a vital injection into our economy. And these companies do pay a variety of taxes: they pay company tax and also the PRRT.

In WA, in particular, in the energy sector, we have been very sensible by making sure that we dedicate 15 per cent of our supply—that must go to domestic supply in WA. Of course, we want to keep those prices at a reasonable, affordable level. But we have become a reliable international energy supplier, and we need to continue this to promote further investment. So our government's approach is balanced: we want to maintain industry certainty, but also to get a fair price on what are, essentially, Australia's resources.

In the Albanese Labor government's first term, there were changes made to the petroleum resource rent tax, and what this did is ensure that we could get the balance right. Prior to these changes in 2023, companies could reduce their taxable income to zero and essentially not pay anything, but the changes we made now see the deduction cap set at 90 per cent. This ensures that we will get income from the PRRT, but it also doesn't provide industry a shock to the system and it allows for continuing investment and stability.

We're also concerned about fuel security, and obviously this crisis has brought that to the fore. I'd just like to mention a few things that we're doing in regard to fuel security and the crisis in the Middle East that has caused this global shock. Security includes a balance and fairness. National Cabinet has agreed to a national fuel security plan, which is a live, coordinated response across the Commonwealth, states and territories. Our approach is guided by the four-point strategy: (1) plan and prepare; (2) keep Australia moving, which is what we're currently focused on; (3) take targeted action; and (4) protect critical services. We will continue on that plan to keep Australia moving.

Zali Steggall (Warringah, Independent) Share this | Link to this | Hansard source

I will start off by giving you a very clear figure. The Australian people lose $2 million per hour in revenue because we are failing to tax the gas export industry appropriately—or some $50 million per day. I ask all government members and backbenchers: how much budget repair and good could we be doing to help Australian households deal with the cost of living and the cost of transport, fuel and so many other things—and offer small-business support—if we just got something fair for Australians' very own resource? Gas is Australians' own resource, and Australians should get the dividend, especially when export prices surge.

We are a gas-exporting powerhouse. Around three-quarters of our gas production is shipped overseas. In 2022-23 alone, LNG exports were worth about $92.2 billion. This represents a potentially transformative opportunity for the federal budget, yet, throughout the discussion on this matter of public importance, what we've heard is platitudes and government talking points but nothing really genuine when it comes to tackling why we are not getting fair revenue for an Australian resource.

The PRRT is a failed government policy. The returns have been patchy and delayed because deductions and project features can push cash payment out for years, and successive budgets have downgraded revenue expectations for the PRRT. I don't have my hopes up that in the upcoming budget, in May, those predictions will be any different. In fact, a couple of weeks ago I asked the Treasurer, in here, if the government would acknowledge that it actually got the PRRT settings wrong and that the Treasury had recommended it be tighter—an 80 per cent deduction, not the 90 per cent deduction. But, no, the government doesn't want to acknowledge it got those settings wrong. It's digging its heels in despite all that revenue lost for Australians. The Australia Institute estimates that we've forgone so far about $63.8 billion since July 2022—and the government made that policy choice—by not taxing gas export windfalls. It's around $2 million per hour, as I said, which is just mind boggling.

Australians are entitled to ask a pretty basic question: how is it that one of the world's biggest gas exporters can raise less from taxing offshore gas profits than the Commonwealth raises from beer excise? Treasury evidence cited publicly this year put beer excise at about $2.7 billion, compared to the PRRT revenue of about $1.5 billion. It is absurd, and Australians know it's absurd; they all know. There is so much support and consensus for us to be properly taxing our gas exporters. To put it plainly—in Australia a night at the pub is being taxed more effectively than the export of a public natural resource. That's not a tax system designed in the national interest.

We know that the government collects more from students through HECS and HELP repayments than it does through the PRRT. What do I say to the young people who are here? These are students who are hoping to go to university and will have to pay HECS debts. They will be contributing more to Australia's future than the gas export industry. A fair share is not anti industry; it's pro Australia. We need a rules based charge on extraordinary export rents. The proceeds of a 25 per cent tax on natural gas exports should be used for responsible cost-of-living relief and to fund a clean industry transition.

We know that every time there are international shocks they have an impact. When Russia invaded Ukraine, global fossil prices spiked and gas exporters made record profits. The price went up and the profits rose about 45 per cent above the pre-2022 average. Yet Australians did not see any of that benefit. At the heart of the problem is this: global shocks send prices sky high and gas companies enjoy the upside, but the Australian public does not capture a fair share of that windfall. The government just has to get on board with doing something to properly bring back some revenue for the Australian people.

What can we do here? We're here discussing it. We've got young students here watching this debate with the hope that they're not going to inherit intergenerational inequity and that they're going to have some revenue in the bank from this government to ensure the right things can be paid for. First, we need to legislate a meaningful tax on gas exports so that the Australian public receives a fair return when global prices surge. Second— (Time expired)

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

The time for this discussion has concluded.