Anthony Albanese just drew a line in the sand that’s going to get washed away by the next high tide. In a move that's left both the Greens and cost-of-living-weary voters fuming, the Prime Minister explicitly ruled out a gas export tax in the upcoming May 2026 budget. He’s betting that protecting "sovereign risk" and existing contracts will keep our trading partners happy. It's a massive gamble. While he might think he’s dodging a bullet next week, he’s actually just loading the chamber for a much bigger political fight later this year.
The logic from the top is simple. Albanese argues that hitting gas giants with a new levy right now would jeopardize our reputation as a reliable energy partner, especially with Japan and South Korea watching closely. But here’s the reality: those same "reliable partners" are currently watching Australian gas companies pull in windfall profits that could hit $107 billion this year. Meanwhile, you’re likely staring at a gas bill that feels like a mortgage payment.
The $107 billion elephant in the room
Let's look at the numbers because they’re staggering. Thanks to ongoing global instability—specifically the fallout from conflicts in the Middle East—global LNG prices have gone through the roof. The Green Institute recently pointed out that export revenue could more than double from its original $50 billion forecast. We’re talking about a windfall profit for gas corporations somewhere between $28 billion and $57 billion.
If Labor had the stomach for a 25% export tax, the budget would be looking at an extra $17 billion a year. That’s not just "extra money." That’s enough to fund massive cost-of-living relief, wipe out student debts, or fix the crumbling healthcare system. Instead, Albanese chose a room full of mining executives at the Chamber of Minerals and Energy of Western Australia to announce that their contracts are safe. It’s a bad look when seven in ten voters—including 80% of Labor’s own base—want this tax.
Why the sovereign risk argument is mostly hot air
The industry’s favorite shield is "investment certainty." They claim that any new tax makes Australia "un-investable." They’ll point to places like Qatar or the US and say capital will just flow there instead. Don’t buy it.
Australia isn't just another gas play; we're a massive, established hub with infrastructure that cost billions to build. These companies aren't going to pack up their rigs and leave because they have to pay a fair price for the resources they’re extracting from our soil. Look at Norway. They tax their oil and gas profits at a marginal rate of 78%. Their sovereign wealth fund is the envy of the world, and guess what? The companies are still there. They’re still drilling. They’re still making money.
In Australia, the effective tax rate for these giants often sits much lower once you factor in all the deductions and "legacy" credits they use to offset the Petroleum Resource Rent Tax (PRRT). By ruling out an export tax, Albanese isn't just protecting contracts; he's protecting a system that is fundamentally broken.
The east coast squeeze is coming for your kitchen
While the PM talks about national security and fuel reliability, the ACCC is sounding the alarm. The latest projections for the third quarter of 2026 show a potential supply shortfall of 12 petajoules on the east coast. We’re literally exporting gas that we need to keep our own heaters running in winter.
Why we’re still short on gas
- Declining legacy fields: Production in southern states is falling fast—down 46% over the next five years.
- Storage reliance: We're relying on the Iona storage facility to be at 100% capacity just to scrape through July.
- The Price Gap: In March 2026, the export price for gas was nearly 190% higher than the domestic spot price.
When international prices are that high, producers have every incentive to ship our gas overseas rather than selling it to a factory in Sydney or a home in Melbourne. An export tax would level that playing field. Without it, the government is essentially asking the Australian public to subsidize the energy security of other nations while we pay a "scarcity premium" at home.
The political "can" can only be kicked so far
Albanese is trying to bridge a gap that’s widening by the day. On one side, he has the "Resources States" like Western Australia and Queensland where gas is a jobs engine. On the other, he has a growing "Teal" and Green threat in the inner cities where voters are tired of seeing multinational profits soar while their own standards of living slide.
The Senate inquiry into gas taxation, led by Greens Senator Steph Hodgins-May, isn't going away. They’ve seen the Treasury modelling. They know the options are on the table. By saying "not next week," the PM hasn't killed the idea—he’s just made the May budget a massive target for every crossbencher with a microphone.
Honestly, it’s a weird hill to die on. Even if the government doesn't want a flat export tax, there are hybrid models—like a temporary windfall levy—that could capture some of that $57 billion in "war profits" without tearing up 20-year contracts. By ruling out everything, Labor is leaving itself no room to move when the winter energy crunch hits and the public demands to know why the gas giants are getting a free pass.
If you’re waiting for your gas bill to drop, don't hold your breath. The government is betting on a "Gas Market Review" and a potential reservation scheme that won't even start until 2027. That’s a long time to wait when the budget is being finalized right now.
What you should do now
- Check your energy contract: With supply getting tight for Q3 2026, retailers will likely hike rates soon. Lock in a fixed rate if you still can.
- Watch the May 12 Budget: Look for any "stealth" changes to PRRT deductions. Even if there’s no export tax, the government might try to squeeze more out of the gas companies through the back door to quiet the Greens.
- Pressure your local member: Public sentiment is the only thing that moves the needle on "sovereign risk" arguments. If the polling stays at 70% in favor of a tax, Labor's "never" will quickly turn into a "maybe."
Albanese rules out gas tax hike
This video provides the direct context of the Prime Minister's recent statements regarding gas contracts and why the government is currently resisting calls for a new tax.
http://googleusercontent.com/youtube_content/1
