Australia's giant LNG exporters are poised to receive a $27bn revenue boost due to the Middle East conflict, according to new government estimates that are already fueling demands for higher gas taxes. Despite being among the world's top three LNG exporters, Australia collects relatively little tax compared to other resource-rich nations like Norway and Qatar.
Government Estimates and Market Impact
The Department of Industry, Science and Resources now forecasts Australia's LNG export earnings for 2026-27 at $67.6bn, which is $21bn above the December forecast. The department also upgraded its export earnings estimates for the past financial year by $6bn and warned that extended disruptions could add a further $7bn to LNG exports in 2026-27. The report states: "Price pressures linked to the Middle East conflict are expected to largely ease by 2029, with prices then returning to levels broadly consistent with forecasts made in March 2025."
Political Pressure for Tax Reform
Independent Senator David Pocock used the latest forecasts to intensify his push for higher gas taxes. "Our campaign for a gas tax isn't going away and huge wartime revenue for gas companies again underscores how as Australians we are missing out on a fair return from the sale of our finite resources," Pocock said in a statement. He has booked ads targeting Labor's national conference, scheduled for a few weeks from now, and criticized the Albanese government for "caving to vested interests, from gas to gambling."
Expert Analysis on Tax Failures
Experts have noted that the current petroleum resource rental tax has failed to capture windfall profits from mostly foreign-owned operators of Queensland's LNG export facilities. Independent economist Chris Richardson described the efforts to tax gas firms as a "bipartisan blooper" and an "epic fail." Josh Runciman, an analyst at the Institute for Energy Economics and Financial Analysis, said Australia is experiencing its second global gas supply crunch in five years. Unlike in 2022 following Russia's invasion of Ukraine, domestic prices have not followed overseas prices higher, partly due to government intervention and the looming gas reservation scheme. Runciman noted, "We know that the existing state and federal taxes don't do a good enough job capturing windfall profits that occur when things happen overseas."
Proposed Tax Models
While Runciman supports reforms for a better deal for Australians, he believes the flat 25% export tax pushed by some, including Pocock, is "not the right model." Instead, he favors an expanded version of Queensland's tiered royalty system at the federal level. He said the current higher prices and revised export earnings are likely to continue pressuring the government to act on taxes. Runciman also warned that global fossil fuel supplies remain vulnerable to disruptions, even if the Middle East conflict is resolved. "We'll probably see more periods where Australian LNG exporters earn windfall profits again, and without any reform we may see situations like this, where taxpayers continue to not earn much return on the gas," he said.
