This is Australia · 1984–2026
Australia’s
Gas Tax Story
From resource rent to royalty-free exports: how a tax created in the Hawke–Keating era became the centre of a forty-year argument over who benefits from Australia’s gas.
Begin the storyThe original bargain
Recover the costs.
Share the exceptional (super) profits.
Australia already has a gas tax. The problem is that it does not fire properly.
In 1984, the Hawke Government proposed a new way to tax Australia’s petroleum resources. Instead of charging companies simply for extracting publicly owned oil and gas, the Commonwealth would tax the exceptional profits—or economic rent—earned by successful projects.
The Petroleum Resource Rent Tax eventually carried a headline rate of 40%. But companies could first deduct project costs, carry unused deductions forward and, in some cases, increase—or uplift—their value each year.
Over the following four decades, Australia transformed from an emerging petroleum producer into one of the world’s largest LNG exporters. The tax system did not transform at the same pace.
The tax exists. The deductions can outrun it. That does not mean every project pays nothing. It means large, compounding deduction pools can delay significant PRRT for years or decades, even while production and export revenue continue.
Portfolio guide: Treasury develops PRRT policy and the ATO administers the tax. Resources ministers oversee petroleum, gas and offshore-resource policy. Trade ministers handle trade agreements, export promotion and market access, while foreign-investment screening sits principally with Treasury and the FIRB. Commercial LNG sale contracts are generally signed by project companies and their customers, not by ministers.
Keating
A new bargain for Australia’s petroleum#
The Hawke Government announces a resource-rent-tax policy for new offshore petroleum projects: investors recover legitimate costs and returns, while Australians share in exceptional profits earned from finite resources.
Historical contextThe PRRT becomes law#
Parliament enacts the Petroleum Resource Rent Tax Assessment Act 1987. From January 1988, new offshore projects face a 40% tax on taxable project profit after eligible deductions—not 40% of sales or exports.
View the legislationAustralia enters the LNG export era#
The North West Shelf begins exporting LNG to Japan. The project is initially outside PRRT and continues under Commonwealth excise and royalty arrangements.
Uplift and transferability reshape the tax#
Exploration deductions become transferable between qualifying projects within company groups. Some exploration spending continues to attract an uplift tied to the long-term bond rate plus 15 percentage points. Bass Strait also moves into PRRT.
Callaghan Review, historical changesWillis
Costello
How do you price gas before it becomes LNG?#
Integrated LNG projects create a problem: no ordinary sale may occur where upstream gas production ends. Government develops a Residual Pricing Method, followed by formal Gas Transfer Pricing regulations in 2005.
A 150% frontier exploration incentive#
Eligible exploration in designated remote offshore areas receives a temporary 150% deduction, using PRRT to encourage risk-taking as well as collect revenue.
Swan
Ferguson
The LNG construction boom#
Australia approves and builds a generation of enormous LNG projects, including three Queensland export terminals. Their costs create equally enormous deduction pools before substantial PRRT becomes payable.
PRRT is extended across Australia#
The Gillard Government extends PRRT to onshore petroleum, coal-seam gas and the North West Shelf from July 2012. Existing projects receive starting-base deductions recognising prior investment and value.
Hockey
Morrison
Exports rise. PRRT revenue falls.#
As new LNG production arrives, concern grows that PRRT receipts are declining rather than rising. Some large LNG projects may not pay significant PRRT for decades because their accumulated deductions continue to grow.
The Callaghan Review#
The Turnbull Government’s review finds PRRT remains the preferred resource-rent model but is better suited to oil than modern LNG. It recommends reducing excessive uplift rates and modernising the system.
Read the reviewFrydenberg
Uplift rates are reduced#
Parliament reduces several uplift rates and removes onshore petroleum projects from PRRT. The changes limit future compounding, but do not simply erase the legacy stock of accumulated deductions.
View the 2019 ActChalmers
King
An energy crisis delivers windfall gains#
Russia’s invasion of Ukraine drives international energy prices higher. Australian LNG exporters benefit from elevated prices, intensifying scrutiny of the public return Australia receives from its gas.
A minimum payment—eventually#
The Albanese Government limits relevant LNG projects to offsetting 90% of assessable PRRT receipts with deductions. The cap applies from July 2023 and brings some tax forward, subject to the rules for when a project becomes covered.
ATO explanationThe push for a flat export tax#
The Australia Institute, ACTU, David Pocock, Steph Hodgins-May, Richard Denniss, Konrad Benjamin and others support a 25% tax on gas-export value. The Australia Institute estimates revenue of up to $17 billion a year.
Read the proposalThe argument remains unresolved#
A Senate inquiry receives more than 230 submissions but cannot agree on common recommendations. The Government does not adopt the 25% export tax and instead pursues domestic gas-reservation measures.
View the Senate inquiryThe choice now
Australia has spent forty years trying to tax exceptional petroleum profits.
Should it continue repairing that system—or replace complexity with a simple charge on what leaves the country?
What the Commonwealth received
PRRT receipts by financial year
The first receipts arrived in 1989–90. The highest cash result in this official series remains $2.379 billion in 2000–01.
The final two bars are Budget estimates, not actual collections: $1.4 billion for 2025–26 and $1.9 billion for 2026–27.
View the complete data table
| Financial year | Cash receipts ($m) | Status |
|---|
Source: Parliamentary Budget Office, Historical Fiscal Data—2026–27 Budget , cash-accounting “resource rent taxes” series. The PBO notes that this head combines PRRT and, during its short life, MRRT receipts. Values are nominal and rounded to the nearest $1 million for display.
Revolving Door
From politician to the gas industry payroll
Several federal ministers responsible for resources, energy, trade or closely related policy later accepted employment, lobbying, advisory or board roles in the resources sector.
These career moves do not, by themselves, prove that any minister acted improperly in office. They do raise legitimate questions about access, influence, institutional knowledge and the strength of Australia’s post-ministerial employment rules.
| Former minister | Relevant public position | Subsequent resources-industry role | Commenced | Evidence |
|---|---|---|---|---|
| Martin Ferguson | Minister for Resources and Energy, 2007–2013 | Chair of the advisory board of APPEA, now Australian Energy Producers | 2013 | Australia Institute record |
| Ian Macfarlane | Minister responsible for industry and resources, 2001–2007 and 2013–2015 | Chief Executive, Queensland Resources Council; subsequently a Woodside director | 2016 | Queensland Resources Council |
| Gary Gray | Minister for Resources and Energy, 2013 | General Manager, External Affairs, Mineral Resources | 2016 | Australian Government biography |
| Mark Vaile | Minister for Trade, 1999–2006; Deputy Prime Minister, 2005–2007 | Chairman and non-executive director, Whitehaven Coal | 2012 | Whitehaven corporate record |
Scope: this is a selected, evidence-linked list rather than a claim of improper conduct or a complete register of every post-political appointment. “Resources industry” includes oil, gas, coal and mining companies and their peak lobbying bodies.
Language of the system
Terms and acronyms
PRRT debates mix tax law, petroleum engineering and LNG-market language. These are the terms used on this page and in its principal sources.
- ACCC
- Australian Competition and Consumer Commission
- AEMO
- Australian Energy Market Operator
- ANAO
- Australian National Audit Office
- ATO
- Australian Taxation Office
- AUD / A$
- Australian dollar
- bcm
- Billion cubic metres of gas
- BTU / MMBtu
- British Thermal Unit / one million BTU, a gas-energy measure
- Capex
- Capital expenditure: spending to develop or expand a project
- CCS
- Carbon capture and storage
- CPI
- Consumer Price Index, a measure of consumer-price inflation
- CSG
- Coal seam gas
- EM
- Explanatory Memorandum accompanying legislation
- ETS
- Emissions Trading Scheme
- FID
- Final Investment Decision: formal approval to proceed with a project
- FLNG
- Floating liquefied natural gas facility
- FOB
- Free On Board: price at the export point before freight and insurance
- GDP
- Gross Domestic Product
- GLNG
- Gladstone LNG project
- GTP
- Gas Transfer Pricing: rules for valuing gas before liquefaction
- GST
- Goods and Services Tax
- Ichthys
- Ichthys LNG project, often abbreviated ICH
- JCC
- Japanese Crude Cocktail, an oil-price benchmark used in LNG contracts
- JKM
- Japan–Korea Marker, a benchmark for spot LNG prices in Asia
- LNG
- Liquefied natural gas
- LRET
- Large-scale Renewable Energy Target
- LTBR
- Long-Term Bond Rate, based on Australian Government bond yields
- MoU
- Memorandum of Understanding
- mtpa
- Million tonnes per annum
- NOPSEMA
- National Offshore Petroleum Safety and Environmental Management Authority
- NOPTA
- National Offshore Petroleum Titles Administrator
- NPV
- Net Present Value: today’s value of future cash flows
- NWS
- North West Shelf project
- Opex
- Operating expenditure: the ongoing cost of running a project
- PBO
- Parliamentary Budget Office
- PRRT
- Petroleum Resource Rent Tax
- ROC
- Rate of Return on Capital
- RPM
- Residual Pricing Method used within gas-transfer-pricing rules
- Tcf
- Trillion cubic feet of gas
- ToP
- Take-or-Pay: a contract requiring payment for an agreed volume whether taken or not
- UDE
- Undeducted Expenditure: deductible PRRT expenditure carried forward unused
- Uplift
- Annual compounding applied to specified unused PRRT deductions
- USD / US$
- United States dollar
- WA
- Western Australia
Evidence
Principal sources
- Parliamentary Budget Office—Historical Fiscal Data, 2026–27 Budget
- The Australia Institute—Removing the fossil fuel industry’s influence on politics, 2024
- Queensland Resources Council—Ian Macfarlane tenure record, 2023
- Australian Government—Gary Gray biographical record, 2020
- Australian Treasury—Petroleum Resource Rent Tax Review, Final Report, 2017
- Australian National Audit Office—Administration of the PRRT, 2009
- Treasury Laws Amendment (2019 Petroleum Resource Rent Tax Reforms No. 1) Act 2019
- Treasury—Review of Gas Transfer Pricing Arrangements, 2023
- Australian Government—Changes to the PRRT, 7 May 2023
- Australian Taxation Office—PRRT deductions cap
- Australian Taxation Office—PRRT data in the 2023–24 Corporate Tax Transparency Report
- Australian Treasury—current and previous Treasury ministers
- Parliamentary Handbook—Commonwealth ministries and portfolio appointments
- Department of the Prime Minister and Cabinet—current and recent ministry lists
- Senate Select Committee on the Taxation of Gas Resources, 2026
- The Australia Institute—Submission on taxing Australia’s gas, 2026
This page distinguishes enacted law and official findings from proposals, estimates and advocacy claims. Advocacy figures are attributed to their originating organisation. Ministerial markers identify portfolio responsibility; they do not imply that an individual minister negotiated a private LNG contract or personally administered a company’s PRRT assessment. Last factual review: 20 September 2026.