6. Implementation of a Targeted 12,5 Percent Windfall Tax on LNG Exports

A 12.5 percent ad valorem royalty shall apply to LNG export revenues. This shall consist of:

• A 7.5 percent ad valorem royalty component levied by the Commonwealth on the realised royalty value (the export sales value on an arm’s-length, FOB-equivalent basis, less allowable deductions for reasonable transport and packaging costs incurred up to the point of first sale);
  
  
• An additional 5 percent ad valorem component levied by the relevant state government(s) on the same royalty value base.
  
  

The royalty shall be levied on the full royalty value in each quarter, replicating the structure and valuation methodology used for iron ore exports under Western Australia’s royalty regime.

Key design features include ring-fenced allocation of all proceeds (both Commonwealth and state shares) to an Australian Energy Relief Fund dedicated exclusively to household electricity rebates, funding the elevated tax-free threshold, SME protection measures, and domestic energy infrastructure projects; non-retrospective application, exclusion from domestic gas sales, and a built-in review mechanism; mandatory quarterly public reporting on collections and fund disbursements to ensure full transparency; immediate inclusion that domestic supply be guaranteed on a most favoured nation basis prior to export; and a full review of all gas export licences to ensure contracts are in the interests of Australia.

This mechanism, replicating the proven ad valorem royalty system successfully applied to iron ore in Western Australia (where the state royalty rate is typically 7.5% with additional federal overlays or adjustments in practice), ensures a fair and consistent share of Australia’s finite natural resources returns to Australian taxpayers and households. Historical data on LNG export values demonstrate that export revenues have disproportionately benefited exporters while domestic energy costs have risen sharply.

The proposed royalty corrects this imbalance without deterring long-term investment in the sector, as evidenced by the iron ore sector’s continued strong investment and production under its royalty regime.

Forecast real-world outcomes include generation of substantial additional revenue over time depending on global price and volume cycles, full funding of the $50,000 tax-free threshold and SME protections without increasing public debt, direct rebates that cut average household energy bills by $400 to $600 per year, and accelerated domestic refinery and coal-to-liquids projects that further lower fuel prices.

All LNG export licences shall be reviewed to include a ‘most-favoured-nation’ clause that ensures Australia has access to its entire domestic demand before export commitments are met.

LNG is an exhaustible national resource. A standard 12.5 percent ad valorem royalty on export revenues, modelled after iron ore, recycles resource rents into domestic relief and infrastructure, improves the terms of trade for Australian households, maintains investment incentives, and ensures that resource rents accrue first to citizens rather than foreign shareholders.

These proposals rest on established principles of sound public finance: protecting productive enterprise, enhancing labour supply incentives, eliminating inefficient subsidies, and securing sovereign control over strategic resources. Implementation will strengthen fiscal sustainability, support employment, and improve energy affordability for all Australians.

7. Declaring Agriculture as an Essential Service – Granting Fuel & Fertilizer Security Critical National Security Status

Agriculture forms the foundation of Australia’s food security, export earnings, and rural prosperity. The Australian Lobby Group calls for the immediate formal declaration of agriculture as an essential service under national emergency and critical infrastructure frameworks. Fuel supply (including diesel for on-farm machinery, transport, and processing) and fertiliser supply chains must be designated as matters of critical national security.

Specific measures include:

• Guaranteed priority access to fuel during any national or regional emergency, supply disruption, or crisis, with explicit protections for agricultural operations.
  
  
• Development of strategic national stockpiles and diversified international supply agreements for fertiliser to guard against geopolitical risks, trade blockades, global shortages, or price shocks.
  
  
• Immediate feasibility study into restarting Urea production at Gibson Island (QLD) and fast tracking Perdaman completion (WA).
  
  
• Integration of agriculture into national critical infrastructure planning, ensuring priority in energy allocation, port access, transport corridors, and emergency response protocols.
  
  
• Cross-portfolio coordination between Defence, Agriculture, Energy, and Trade departments to treat disruptions to agricultural inputs as direct threats to national resilience and sovereignty.
  
  

Outcomes include enhanced resilience against global supply shocks (as seen in recent fertiliser price spikes and shipping disruptions), protection of Australia’s $80+ billion agricultural export sector, prevention of food price volatility and potential shortages, safeguarding of hundreds of thousands of jobs in farming, processing, and regional communities, and strengthened sovereign food production capacity that reduces reliance on imported inputs.

Australia’s vast arable land and productive farming sector are strategic national assets.

Treating agriculture as essential and securing its critical inputs (fuel and fertiliser) prevents cascading failures in the food supply chain, insulates rural economies from external shocks, maintains Australia’s reputation as a reliable global food supplier, and ensures that national security policy properly recognises the foundational role of domestic food production in times of crisis or isolation.

Closing

As long as Net Zero legislation and emissions regulations remain in place, Australia cannot achieve genuine energy security. Nor can we sustain or rebuild critical industries like domestic fertiliser production.

The Safeguard Mechanism, the carbon trading framework, and all associated emissions obligations act as structural barriers to sovereign production. They must be repealed.

We acknowledge that some existing contracts and international obligations may need to be honoured in the short term. That is a reasonable good faith concession. But the underlying legislative architecture itself, the entire Net Zero policy framework, must be systematically wound back and removed.

The energy and cost of living crisis Australia is living through right now is not an accident. It is the direct and predictable consequence of policy choices that prioritised emissions optics and global virtue signalling over operational reality, industrial strength, and the national interest.

Energy security, affordable power, and sovereign capability cannot coexist with the current emissions straitjacket. The architecture must go.

The Australian Lobby Group urges immediate parliamentary consideration and passage of these measures.