Key Takeaways
- Australian Senators, led by independent David Pocock, are pressing for a windfall tax on gas exports, citing the industry’s low effective tax payments relative to workers and other sectors.
- Shell reported paying only $109 million in petroleum resource rent tax (PRRT) last year and none in the prior decade, despite $6.2 billion of after‑tax profit and $2.9 billion in total taxes paid in 2024.
- The Queensland Resources Council argues that new levies would constitute double taxation, jeopardising investment, jobs, and energy security amid global oil shocks.
- Pocock proposes a 25 % export windfall tax, estimating it could raise around $17 billion annually and lower domestic gas prices, while insisting the move is not anti‑industry but a matter of fairness.
- Industry representatives warn that such a tax would deter capital, make projects uninvestable, and harm Australia’s competitiveness and international partnerships.
Background of the Inquiry
The snap federal inquiry into taxes on the gas industry was convened to examine whether existing fiscal arrangements adequately capture the value of Australia’s natural gas resources. Central to the discussion is the petroleum resource rent tax (PRRT), a profit‑based levy applied to offshore projects that critics claim generates less revenue than the federal excise on beer. Senators from both the crossbench and the Greens are scrutinising whether the PRRT, as currently structured, fulfills its intended purpose of delivering a fair return to the Australian public from a finite resource that belongs to all citizens.
Shell’s Tax Disclosure and Investment Claims
During the hearing, Shell’s Australian head Cecile Wake and tax boss Coralie Trotter revealed that the multinational paid only $109 million in PRRT for the most recent fiscal year, with no PRRT liability in the preceding ten years. Trotter noted that Shell contributed $2.9 billion in taxes on $6.2 billion of after‑tax profit in 2024 and had paid roughly $12 billion in taxes over the past decade. Wake emphasized that the corporation had invested US$60 billion in developing Australian gas projects during that period, arguing that recouping such capital outlays before profit‑based taxation is a reasonable expectation.
Pocock’s Challenge on Transparency
Senator David Pocock pressed Wake on the apparent disconnect between the company’s willingness to disclose investment figures and its reluctance to reveal export volumes or domestic revenue. He questioned how Shell could detail billions in capital expenditure while being unable to specify how much gas it sold or the revenue derived from local operations. Wake responded that she would gladly provide the requested data on notice, underscoring the committee’s demand for greater transparency regarding the scale of Australia’s gas exports and the financial benefits accruing to foreign operators.
Industry Argument Against New Levies
Janette Hewson, chief executive of the Queensland Resources Council, warned that imposing additional taxes would undermine supply resilience and investment certainty at a time when global oil shocks are heightening the need for secure energy supplies. She highlighted that the oil and gas sector contributed $21.7 billion to the Australian economy in 2024/25, including $960 million in wages for 94,000 Queensland workers. Hewson contended that the existing Queensland royalty regime functions adequately and that a federal windfall levy would amount to punitive double taxation, potentially leading to cancelled projects, reduced investment, job losses, and a shrinking revenue base.
Pocock’s Reference to Santos and Public Sentiment
Pocock pointed to Santos as an illustrative case, noting that the company had sold $47 billion worth of liquefied natural gas (LNG) overseas while paying no corporate tax for the past decade. He asked Hewson what the industry would say to essential workers—such as teachers and nurses—who personally pay more in tax than Santos does. Hewson responded that a holistic view must consider ancillary costs like payroll tax, but Pocock maintained that the core issue remains the exploitation of a nationally owned finite resource without adequate compensation to the Australian populace.
Proposal for a 25 % Windfall Tax
On ABC’s 7.30 program, Pocock framed a 25 % export windfall tax as a measured, not radical, policy reform. Citing analysis from the Australia Institute, he projected that such a levy could generate roughly $17 billion per year in typical conditions, with substantially higher receipts during periods of windfall profits. Pocock argued that the revenue could be redirected to alleviate cost‑of‑living pressures, lower domestic gas prices for manufacturers and households, and fund a sovereign wealth fund akin to Norway’s, thereby ensuring that Australians benefit directly from their natural resources.
Industry Rebuttal: Competitiveness and Security Concerns
Wake countered that a 25 % windfall tax would be “spectacularly ill‑advised,” asserting that it would diminish Australia’s appeal to global investors, render many new developments financially unviable, and erode energy security. She warned that the measure could strain relationships with key regional trade and defence partners at a moment when economic reliance and reliability are crucial. Wake further argued that the fiscal models of Qatar and Norway—often cited as successful examples—are not directly comparable, because those governments assume substantial equity risk by directly investing in projects, whereas Australian policy largely leaves risk to private operators.
Balancing National Interests and Industry Viability
The dialogue encapsulates a broader tension between capturing a fair share of resource wealth for the public and preserving an investment climate that encourages continued development of Australia’s gas sector. While Pocock and supporting senators contend that current arrangements undervalue a national asset and exacerbate inequities, industry leaders caution that aggressive taxation could jeopardise projects that provide employment, regional development, and strategic energy supplies. The inquiry’s outcome will likely shape future tax policy, influencing how Australia navigates the transition to renewable energy while managing its lucrative fossil‑fuel exports.