Temporary Gas, Coal Tax ‘Short-Term Fix’ to Energy Price Spike: Mining Council CEO

A general view of Coal Seam Gas wells and a waste water treatment plant in Narrabri, Australia, on Feb. 6, 2021. (Brook Mitchell/Getty Images)

The CEO of the Mining Council of Australia has described a proposed tax on coal miners and gas producers as “perverse.”

“It’s a very short-term fix, not sensible to put at risk our investment in Australia, our jobs in Australia and what industries are doing with communities,” Tania Constable told Sky News on Friday.

“It’s not sensible for the government to put another big tax on an industry that’s been holding up the economy for quite some time.”

Australia’s gas and coal industry saw a record surge in export earnings amid global energy shortages and elevated energy prices due to the drop in exports of gas, coal and oil from Russia.

The nation’s earnings from LNG are expected to reach $90 billion in 2022-23, while earnings from thermal and metallurgical coal are forecasted to reach $120 billion, according to the Australian government’s department of Industry, Science and Resources on Oct. 4.

Gas Price Cap On The Table

The comment comes as the Labor government looks for solutions to alleviate the soaring energy prices, with Prime Minister Anthony Albanese saying a price cap on gas and a temporary gas and thermal coal tax were “one of the options that is under consideration.”

“All sensible measures remain on the table. We’re working these things through, including talking with the industry themselves,” he told Sydney radio 2GB on Friday.

“But we need to provide relief … you have extraordinary profits being made [by coal and gas companies] at the same time as households and businesses, particularly manufacturing, are under pressure.”

Albanese, however, has ruled out the prospect of a mining tax and said his government didn’t intend to interfere with the energy supply.

The federal budget in October revealed Treasury predicted that electricity prices will go up by an average of 20 percent in late 2022 and jump by a further 30 percent in 2023-24.

The estimation comes despite Labor’s election promise to cut power bills through its Powering Australia policy, which focuses on implementing 43 percent emissions reduction target and investing in the renewable sector.

Economic Concerns

As the U.S and UK introduced coal tax in a bid to drive down electricity costs, Jeffrey Tucker, president of America’s Brownstone Institute, warned that “it’s by no means certain that the price of gas would fall at all, simply because inflationary pressures are still there.”

“Prices are always forward-looking while taking into account producer costs tracing back deep into the production structure,” he argued in an op-ed on The Epoch Times on June 23.

“The formation of prices is never mechanical; it’s always both retrospective and speculative, ultimately depending on complex relationships rooted in competitive structures, supply constraints, expectations, and demand elasticities.”

“That would set up a real regulatory basis for hounding every retail seller in the country for alleged ‘price gouging,’ and a further unjust attack on this most essential industry, thereby only intensifying the assaults on the energy sector.”

Previously, Japanese ambassador Yamagami Shingo said the Queensland government’s massive coal royal tax could be the deal breaker for major Japanese mining firms.

“Some Japanese companies are already questioning whether Queensland will continue to be the safe and predictable place to invest that they had known for decades,” he said on July 6.