Australia’s failure to properly tax gas exports is costing billions in public revenue, even as other countries capture windfall profits for national benefit.

In March 2026, Australian unions called for Australians to get a more equitable share of the massive windfall profits that are now flowing to multinational oil and gas corporations profiting from the Trump Administration’s renewal of resource imperialism. The ACTU has urged the Federal Government and Treasurer Jim Chalmers to replace the flawed petroleum resource rent tax (PRRT) with a 25 per cent revenue-based export levy on the sale of liquefied natural gas (LNG) from Australia.

This is hardly a radical proposition. The call has been supported by shadow minister for industry Andrew Hastie. Last week saw Matt Comyn, the CEO of Commonwealth Bank – Australia’s largest bank – throw his support behind a new exported gas levy gas or PRRT reform, highlighting that the time has now come for the nation to profit from its vast gas reserves, and urging the Albanese Government to ‘push the boat out’ and publicly back reform.

In a positive sign, it was reported last month that the Department of Prime Minister and Cabinet (PM&C) had requested Treasury modelling on new levy options to tax windfall gas and thermal coal profits, and to further improve the PRRT ahead of the May budget.

The international experience of nations introducing windfall profit taxes in the context of global energy crises supports the case for reform. In May 2022, just months after Russia launched its invasion of Ukraine, the United Kingdom introduced the Energy Profits Levy, a windfall profits tax on the extraction of UK oil and gas, initially set at 25 per cent, rising to 38 per cent in November 2024. The Levy has generated a total of £8.9 billion (A$17 billion) in additional tax revenues for the people of the UK in its first three years.

But Australia does not have to search halfway across the world to see how effective resource taxation can be implemented.

Queensland’s progressive coal royalty scheme showcases for the Federal Government an equitable and effective taxation structure that ensures benefits to the Australian people are realised during periods of hyperinflation in energy markets.

In 2022, then Labor government Treasurer Cameron Dick introduced three new royalty tiers to return an equitable distribution of windfall coal profits: 15 per cent on prices of $150-175/tonne, 20 per cent on $175-225/t, 30 per cent on $225-300t, and 40 per cent when prices exceed $300/t. In practice, effective royalty rates for Queensland coal trend towards the top rate of 40 per cent during periods of windfall war profits, well above the 15 per cent top rate prior to the 2022 reforms – see Figure 1.

On Queensland’s ~135-140 megatonnes (Mt) of coking coal production, the reformed royalty scheme generates a further $3.2 billion in public revenues that fund critical social services, cost-of-living relief, and state infrastructure on current coking coal prices, in addition to revenues from thermal coal.

This mechanism generated an all-time record high $18.2 billion in FY22-23 returns to the people of Queensland during Russia’s invasion of Ukraine.

Figure 1: Queensland’s progressive coal royalty structure

Source: CEF Calculations & Estimates

Queensland coal royalties are expected to generate $5.4 billion over 2025-26. If prices maintain current levels, more than $1 billion in additional windfalls over FY2025-26 could be generated. Depending on how long coal export prices remain elevated, this could be repeated over 2026-27.

Queensland has essentially modelled for the Federal Government the immense value of progressive resource taxation as it approaches the critical May 2026 Budget.

Australia’s current gas royalty and rent taxes – the Federal PRRT, Queensland’s petroleum royalty, and WA’s North West Shelf Grants – have generated $19 billion over the five years 2020-25, with a further $12.7 billion through 2028-29 – see Figure 2. Cumulatively, Australia’s current gas taxation regime is expected to generate $24.6 billion over the seven years 2020-27.

Figure 2: Current federal and state gas royalties and rent taxes

Source: Budget Papers, CEF calculations

If Australia replaced its existing taxation mechanisms with a 25 per cent revenue-based export gas levy, it could have generated $106.6 billion – a more than 330 per cent uplift in public return from the use of public resources. Even a 25 per cent gas levy implemented for the next financial year would generate $8.9 billion more than all state and federal royalty and rent taxes combined in 2026-27.

Following the commencement of the US war on Iran in February 2026, benchmark prices have surged over 100 per cent to more than US$20/MMBtu (A$30/GJ). CEF estimates that a 25 per cent gas export levy could have generated an additional $12 billion in revenues above current royalties, and a $17 billion uplift in public revenues 2026-27 if prices are sustained with ongoing conflict in the Middle East - see Figure 3.

Figure 3: Tax revenues from existing royalty and rent taxes against proposed 25 per cent gas export levy

Source: Budget Papers, Office of the Chief Economist, CEF Calculations & Estimates

The opportunity cost of continued inaction grows every single day Australia does not act. In our counterpart nations across the Middle East, the Americas, Norway and in the UK, governments typically take well over half of fossil fuel profits. Across the PRRT, royalties and corporate taxes, the Australian public receives only 30 per cent of notional or onshore declared fossil fuel profits, well below our counterparts.

Failure to equitably tax commonwealth resources has a material impact on the public good, as billions in privatised windfall profits flow offshore to multinational shareholders, depriving Australian schools, hospitals, infrastructure and household budgets.

The latest Federal Budget MYEFO forecasts a $36.8 billion deficit in the underlying cash balance for 2025-26, with $34-36 billion deficits expected over the forward estimates. Australia’s budget and government are under acute pressure to fund cost-of-living relief whilst maintaining a degree of fiscal sustainability and austerity. The case for a 25 per cent gas levy, as supported by Australian unions, members of parliament, industry and the financial sector, is economically and politically sound and fiscally necessary.

The Federal Government has Treasury modelling in hand, a mandate from unions and business leaders, and a live budget crisis demanding lasting solutions. The architecture of reform is there. What remains is the political will to build it.