- Short answer
- Contested. Evidence to the Senate inquiry, including from Treasury, suggested most of the cost would fall on producers; the government and industry argue it could raise prices for overseas buyers and strain trade relations.
- What the industry says
- Producers and the government argue an export tax would raise costs for overseas buyers, damage Australia's reputation as a reliable supplier and deter the investment needed for future supply.
- What the evidence shows
- Treasury's evidence to the Senate inquiry was that the burden would be more likely to fall on producers. The committee's majority report did not resolve the question.
LNG is mostly sold under long-term contracts, with prices set by formulas often linked to oil. A new Australian tax doesn’t change those prices, so in the short run it comes out of the seller’s margin.
According to the inquiry chair’s account of the evidence, Treasury told the committee “the economic burden of any tax change would be more likely to fall on the producers”. Origin Energy said it would have to absorb the cost, INPEX said its long-term contracts “do not allow us to renegotiate due to a tax or royalty change”, and former Treasury Secretary Ken Henry said the incidence falls “overwhelmingly” on shareholders.
The other side: over the longer term, a lower return can mean fewer new projects and less supply, which could push prices up for buyers, and Japan and other customers are important trading partners.