Despite the headlines, Albo hasn’t killed the gas tax
The Prime Minister ruled out a tax on existing gas contracts. But what about new ones?
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If you trusted the corporate media, you’d have thought Prime Minister Anthony Albanese had ruled out a gas tax when he spoke at a business breakfast in Perth last week.
‘Anthony Albanese rules out new tax on gas’, went the headline in The West Australian.
‘PM kills gas tax, says it will threaten fuel supplies’, said the Financial Review.
But these headlines missed some important nuance to the comments Albanese had made to a crowd of mining execs at the event hosted by WA’s Chamber of Minerals and Energy (CME).
True, he had said that “the budget will not undermine existing contracts on gas exports.”
But when pressed on whether there would be any changes at all to the taxation regime on oil and gas companies, Albo evaded the question, telling the audience to wait until the budget was handed down.
That hadn’t stopped the fossil fuel lobby, eager to quell the growing demands for a fair deal for Australians on our gas exports, from claiming that the gas tax was dead.
“We are confident that the Budget won’t include any significant new taxation measures,” CME boss Aaron Morey told The West Australian, who followed his lead in their reporting.
But what most mainstream reporting failed to mention was that — confusingly — a significant portion of the gas exported from Australia is considered “uncontracted”, meaning it is sold outside of existing long-term contracts.
According to analysis from the Institute for Energy Economics and Financial Analysis (IEEFA), around 24% of the LNG exported from Australia is sold on the global ‘spot market’. The spot market for this ‘uncontracted’ gas allows for the quick sale of LNG at spot prices, which are often more lucrative for producers. According to the Australia Institute, more ‘uncontracted’ gas is exported each year than is sold to Australian households, businesses, and industry combined.
What’s more, many of the existing contracts to export Australian gas are due to expire from 2030 onwards. IEEFA’s Gas Tracker shows that by the middle of the next decade, Australia’s spare capacity to produce LNG will be more than what is committed under existing contracts. To sell this gas, companies could sign new contracts, or sell it on the spot market.
What Albo refused to rule out is a tax on either of these scenarios. While a tax that exempted existing contracts would fail to deliver the $17 billion per year in revenue a flat 25% tax could make, it would still go a long way to funding necessities like cost-of-living relief and the energy transition for Australians.
At the business breakfast, Albo was doing what politicians do when speaking to the resources industry — telling them what they want to hear.
But behind the scenes, he’ll be doing what politicians do behind the scenes — weighing his options, calculating risk and cost, and looking for compromises.
The gas lobby and their cheerleaders were eager to claim last week that the gas tax was dead, but there’s still a week to go until the budget. Albanese will be aware that failing to heed the calls for a gas tax will haunt him come election time.
According to reports, Albanese is now considering some other, well-overdue tax reforms in next week’s budget — winding back negative gearing and the capital gains tax discount to help young Australians who want to own their own home. Maybe he’s decided he’d rather piss off landlords than gas execs.
Albanese is clearly aware the electorate expects more from him, and that he can’t just keep ruling in a way that advances corporate interests. So far, as Prime Minister, he’s squandered the opportunities afforded to him by his huge majority. But if Albo stood up to both property developers and the gas lobby, the tangible benefits for everyday Australians would be huge.
Alternatively, if he continues down the risk-averse path he’s on, come election time, he’ll bleed votes to competitors on both the left and the right, who will tap into growing disenchantment with Labor’s status quo.
About the author
Gerard Mazza
Gerard has worked as a campaigner, writer, school teacher, and radio producer. He grew up in Bunbury, Western Australia, and now lives in Fremantle. You can find more of Gerard’s work on his website gerardmazza.com or on his Substack.
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Mr Mazza's biography omits that he has a conviction for criminal damage and attempted trespass, plus one other offence, in relation to the residence of a private individual. Rather poor form not to disclose this I would say.