The Business Council of Australia has rejected proposals to increase the tax burden on the gas sector, warning the move would reduce investment and supply, and push up energy costs for Australian households and businesses while directly undermining energy security.
An additional tax would also run against the objectives of the Australian Government’s Future Gas Strategy, the Gas Market Review and the Australian Energy Market Operator, all of which identify new gas supply as essential to affordability, reliability and the energy transition.
Business Council Chief Executive Bran Black said an additional gas tax would be inconsistent with Australia’s efforts to secure reliable energy supply arrangements with trading partners – as it would increase the tax burden on the energy exported to them and therefore the cost they pay – and affordable long-term domestic supply.
“At a time of global uncertainty and heightened energy security concerns, it’s important that Australia maintains policy settings that encourage, rather than discourage, long-term investment in the timely development of new gas supply,” Mr Black said.
“Australia’s reputation as a reliable trading partner has been built over decades, and maintaining this reputation will be critical as regional partners continue to rely on Australian energy to support their own security and transition goals.”
“With projected domestic shortfalls just a few years away, Australia needs more gas to support our energy transition, not less.”
“Australia’s existing tax system already captures higher returns when prices rise. At a time when we are competing globally for capital, increasing the burden on business risks undermining investment, reducing supply and making Australia less competitive.”
“The reality is that Australia is already a high-tax jurisdiction, with the BCA’s Global Investment Competitiveness Index showing we rank just 38th on business taxation out of 42 economies.”
“Proposals to increase taxes on resources companies are led by people focused on shutting down gas investment in Australia.”
Australia’s gas sector also already operates under a substantial tax burden, with recent analysis by Wood Mackenzie estimating effective tax rates of around 53 to 58 per cent across corporate income tax and the Petroleum Resource Rent Tax for Offshore projects. In 2024-25, the oil and gas sector contributed $21.9 billion in taxes and royalties to the Australian and state governments.
The BCA’s position is set out in its submission to the Select Committee on the Taxation of Gas Resources, which highlights the critical role Australia’s gas sector plays in supporting the economy, strengthening energy security and maintaining relationships with key trading partners across the region.