Independent senator David Pocock has slammed the petroleum resource rent tax as government figures show a $4 billion revenue downgrade over the four years from 2023–24.

Last year, the government made adjustments to the petroleum resource rent tax (PRRT) which Treasurer Jim Chalmers claimed would raise an additional $2.4 billion over the four years from the 2023 financial year.

However, a report by ABC News found that the 2025–26 budget forecast for that period had downgraded PRRT revenue estimates by $4 billion in comparison to the 2023–24 forecasts, raising questions about the effectiveness of the adjustments.

Chalmers defended the revenue estimate gap when interviewed by ABC’s Radio National Breakfast last Thursday, saying that the changes largely stemmed from oil price volatility.

“When it comes to the forecasts of how much these reforms will raise and how much the PRRT will raise, it’s not unusual for there to be revision and that’s because it is based on expectations of production, but also on the oil price, which is especially volatile,” Chalmers said.

“We will collect more tax sooner than if the old arrangements were left in place.”

The PRRT imposes a 40 per cent tax on profits derived from the extraction of resources, such as gas. It was established to ensure that Australians got a fair return from the extraction of the country’s unrenewable resources.

However, policy think tank the Australia Institute pointed out that the current system has enabled liquefied natural gas (LNG) producers to significantly minimise their PRRT tax bills by deducting capital expenses, carrying forward losses and undervaluing extracted gas before it is processed.

These tax loopholes have effectively given offshore LNG companies free reign to profit from Australia’s natural resources without offering any public benefit in return.

“To date, not a single LNG project has paid any PRRT and many are not expected to pay significant amounts of PRRT until the 2030s,” Treasury budget papers confirmed in 2023–24.

The heavy upfront costs associated with LNG projects had enabled companies to carry forward tax deductions for years, the budget paper explained.

To address this, in 2024, the government amended the PRRT to impose a 90 per cent annual deduction cap for offshore LNG projects to ensure that at least 10 per cent of their PRRT-assessable income could be subject to the tax each year.

Independent senator David Pocock accused the Labor government of passing through the weakest amendment possible, calling the current system a “rort”.

“In the last Parliament, Labor looked at PRRT. They had a range of options, and they went with the very weakest one and got that through with the Greens,” he said.

“We are now getting less for our gas and still not a single cent of PRRT from offshore LNG. We are the second-biggest exporter in the world, it is a total scam on Australians.

“We’re paying international prices for our own gas, and I think one of the shifts in this last election was finally the Coalition came out and said, ‘Well actually we don’t have a gas shortage, we have a gas export problem.’ These companies have been taking the piss.”