At the Ararat servo last Tuesday, a bloke in a Collingwood jumper ahead of me in the queue stares at the bowser as if it had just insulted Jock McHale. Two hundred and fifty-five dollars to fill a diesel HiLux. “Bastards”, he says back in the cab, still staring at the bowser, collecting himself. That is the sight and sound of geopolitics arriving in the Western Districts.
“Lucky Jim” Chalmers flies to Washington for the IMF’s spring gab-fest at exactly the wrong moment, being a moment that clarifies everything. The global economy is being knocked side-ways by an American stunt: a reckless, gratuitously cruel and unwinnable war on Iran, a choked strait, volatile oil markets, and now the Armageddon chorus from the same mongrels that would walk over hot coals to defend the top end of town, but are MIA in the war on ordinary people.
In closely related news of that war, Shell Australia Country Chair Cecile Wake and Asia-Pacific head of tax Coralie Trotter are questioned by independent Senator David Pocock. The star executives are unable to say how much gas the company exports or its total revenue from local operations in the last financial year.
Adam Smith didn’t call self-interest the invisible hand of capitalism for nothing.
Are we up shit creek? Australia is not headed for a carbon copy of the GFC, but it is facing something just as lethal in a different form: a supply shock that tips inflation higher while grinding growth lower, landing hardest on the people with the least capacity to absorb it.
There are three bastards driving this. Three elephants in the room. At least. None of them has been properly named in the respectable commentary. They are connected. They are large. And they are all, in their different ways, picking the pocket of the bloke at the bowser.
The first is the war economy itself
The IMF’s slogan against overspending should be treated with caution, if not derision. The fund’s chief economist tells a flatulence of finance ministers that governments should refrain from wasteful and untargeted fiscal measures and that avoiding fiscal stimulus during rising inflation was essential. The global economic priesthood had spoken.
Australia is one of the few advanced economies to have avoided both a major global recession and a full-blown GFC-style collapse this century, and that was not an accident of fate. It was the result of governments willing to spend when the system was under stress.
The lesson is not that public support is dangerous in a crisis. The lesson is that support delivered quickly, aimed at the people who need it most, can stop a shock becoming a depression. It’s not what the top end of town wants to hear.
On the other hand, The Australia Institute’s analysis of the Middle East war is blunt: domestic petrol, diesel, gas and electricity prices rise, broader prices follow, multinational gas exporters pocket the windfall, and Australian governments capture very little of it. We socialise the pain and privatise the profit. The IMF, on cue, is urging belt-tightening. It always does. The belt it has in mind does not belong to Woodside, Chevron or Shell.
The second force is the Strait of Hormuz, and the fraying of the old monetary order.
The strait, through which roughly one-fifth of the world’s oil and gas normally passes, has become something out of a lurid, techno-thriller. Since mid-March, Iran’s Islamic Revolutionary Guard Corps, depicted in corporate media as the highwaymen of the high seas, have, in fact, been running a sovereign tollbooth at the world’s most critical maritime chokepoint, charging oil tankers up to two million US dollars per transit, payable in Chinese yuan or cryptocurrency. Iran’s parliament formalised the arrangement into law on 30-31 March under the Strait of Hormuz Management Plan.
The toll system could generate twenty million US dollars a day from tanker traffic alone.
This is not a desperate regime improvising under fire. Iran hasmethodically built a sanctions‑resistant financial ecosystem; layering informal networks, state‑linked intermediaries, Russia‑linked rails, crypto flows, and an expanding yuan settlement channel, to monetize its oil and geography outside conventional SWIFT‑dependent, dollar‑clearing arrangements.
The petrodollar system is not yet dead, but its monopoly is visibly fraying; bombing Tehran has not restored the old order, and the effect of sanctions and conflict has instead accelerated the search for alternative circuits of value that can operate beyond U.S. oversight.
For Australia, that matters immediately. Even a brief disruption at Hormuz lifts the CPI significantly, shaves growth and regional ute owners struggle to make rent. And it matters strategically, because we are a commodity exporter in a changing currency system, and that demands resilience rather than obedience to Washington’s economic catechisms.
The third force is the one grazing in our own paddock, and it is the fattest of the lot
Australia is one of the world’s largest exporters of liquefied natural gas. The war has sent global LNG prices surging. Australian east coast domestic spot gas reached $11.05 per gigajoule in March 2026. The Gladstone export price on the same day stood at $31.74 per gigajoule. That gap, 186 per cent, is the difference between what Australian industry pays for Australian gas and what multinationals pocket when they sell it abroad at wartime prices.
Australia exported $65 billion worth of LNG last year. The companies doing the exporting, Woodside, Chevron, Shell, Inpex, Santos, paid tax on almost none of the windfall.
Nothing. Nada. Zip. The Petroleum Resources Rent Tax, is a framework so riddled with deductions and cost-recovery provisions that the industry’s own lawyers helped design it, raised less than $1.5 billion in 2023-24 against revenues that a 25 per cent export levy would have taxed at $17.1 billion. Less than nine cents in the dollar.
For the second time in five years, as global energy prices spike and working Australians feel it at the bowser, the multinational gas industry is harvesting a war dividend that belongs, by any reasonable moral accounting, to the Australian people.
When challenged on this, Chevron calls reform a knee-jerk sugar hit. Santos points out that each LNG tanker leaving Gladstone generates about $4.5 million in royalties to the state.
That is one way of describing it. Another way is that the tanker carries gas extracted from Australian seabed, refined with Australian infrastructure, under a tax framework that ensures the company can defer almost all obligations until it has fully recovered its construction costs, and for some projects that means never.
Never? Po-faced, Shell’s Australian chair warns against short-term fixes. The gas industry has a talent for describing the taxation of its own windfalls as reckless while describing its own profit-extraction as nation-building.
Small-target PM Albanese has boldly asked the Treasury to model a windfall tax. The ACTU, IEEFA and the Australia Institute have all said, in their different keys, that taxing this bonanza is not just necessary and defensible but bleeding obvious.
The industry says it will deter future investment. It always says that. It said it was about the mining tax. It said it after the Ukraine war. It kept investing, because the gas is here and the prices are good and there is no other paddock.
We own the gas. They take it. They sell it back to us and to Asia at prices we cannot afford. They pay almost no tax. And when we suggest they should, they call it ideology.
Chalmers still has options. He can replace the broken PRRT with a serious levy on LNG windfall profits and use the proceeds to shield households from the energy price shock. He can resist the reflex to call every crisis a reason to cut public spending. He can recognise that the proper response to a volatile, multipolar world, (one where Iran is running a tollbooth on the global oil supply and Woodside is counting its war dividend), is not to cling harder to neoliberal dogma, but to use the state intelligently to protect living standards, sovereignty, and the people who make the country work.
The IMF told him to tighten his belt. The global economic priesthood has a talent for seeing the sins of the poor with microscopic precision while remaining strategically blind to the sins of capital.
Out at the servo in the western districts, a bloke is sitting in his diesel HiLux, staring at a receipt for two hundred and fifty-five dollars. He is paying for all of it. In Part Two of The Receipt, we look at who else is picking up the tab, and why the teachers of Victoria walked off the job to tell us about it.
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The US is fighting wars all over the place to defend the global financial system.
They shaped the system to suit their priorities, but the planning was flawed.
They are in deep trouble.
Prof. Michael Hudson: The No.1 US export for 5 months straight is gold. Not AI, not aircraft. Gold to Switzerland, Hong Kong, China. In 1971 Nixon shut the gold window to stop it. Now America can’t — IT is the one selling. The empire is liquidating itself. America’s broke.
Normally, for an economy the size of the US, the problem would not be fatal, they could work their way through it without too much trouble.
But the US does not think that way.
The US is set on global domination and might sink through not adjusting to economic realities.
The sooner that Australia joins the BRICS financial system the better it will be for Australian voters.
The discredited by time ”be thankful that the Yanks saved Australia from the Japanese” propaganda is 19th century thinking in a 21st century world, similar to still waiting for the HMS Repulse & HMS Prince of Wales to arrive after being sunk by the Japanese Air Force in 1942, after the English Commander Percival surrendered Singapore to the Japanese without firing a shot in anger.
Perhaps Australia’s optimum future lies as a non-aligned middle political power, like new Zealand, without any nuclear encumbrances, and demanding that foreign multinational corporations pay their fair share of profits from extracting Australian natural resources of all types.
Steve: You’re circling something real here, but a few of the moving parts need calibrating if we’re to avoid turning a sharp diagnosis into a blunt instrument.
First, the claim about gold. It’s true that the US has recently been exporting significant volumes of gold, with flows to hubs like Switzerland and Hong Kong reflecting refinery demand, arbitrage, and repositioning within global markets. But that’s not quite the same thing as saying gold is now America’s “No.1 export” in any structural sense. Over any meaningful timeframe, US exports are still dominated by energy, services, advanced manufacturing and, yes, the intellectual property stack that sits behind AI. Gold flows spike. They don’t define the system.
Second, 1971. When Richard Nixon closed the gold window, it wasn’t an act of desperation alone, it was a pivot. The US moved from a constrained system to one it could largely write the rules for. That matters because the present system still runs, to a remarkable extent, on US dollar liquidity, Treasury markets, and the institutional architecture Washington built after 1945. It’s creaky, contested, and increasingly resented, but it hasn’t been replaced.
Where your point does bite is in the contradiction. The US wants to remain the system’s guarantor while simultaneously weaponising it, through sanctions, asset freezes, and financial coercion. That creates incentives for others to hedge, diversify, and quietly build alternatives. Not because the system has collapsed, but because trust in its neutrality has.
Is that “the empire liquidating itself”? Not quite. It’s more subtle, and more dangerous than that. It’s an erosion, not a fire sale. The dollar system weakens at the margins, trade begins to fragment, parallel rails emerge. None of it is decisive on its own. All of it accumulates.
And this is where your final point lands. The real risk isn’t that the US is “broke”. It isn’t. The real risk is strategic rigidity, the inability, or refusal, to adjust to a world where power is more distributed and less obedient.
Empires don’t usually fall because they run out of money. They fall because they misread the moment, and insist on yesterday’s dominance in a world that has already moved on.
That’s the danger worth watching.
Thanks David, yes, I didn’t mean for the gold matter to be the full story — that’s the danger of oversimplification!
The problem the US has is that it has not only politicised its structure utterly for global ambitions, it has politicised its sub-structure as well.
As we see with their economy being weaponised.
They see economic threats as national security threats and so economic policy reflects that.
It’s a walking away from reality, and it’s not sustainable long-term.
The quote from Hudson was from an interview, and interviews themselves should be treated with caution.
New England Cocky: There’s an understandable appetite in what you’re saying, a desire to step out from under the old arrangements and reclaim a bit of agency. But we need to be careful not to swap one set of myths for another.
“Joining BRICS” isn’t a plug-and-play alternative to the system we’re in, as fas I can tell. BRICS is not a cohesive financial architecture in the way the US-led system is. It’s a loose alignment of states with competing interests, uneven institutions, and no unified currency, legal framework, or deep capital markets capable, yet, of absorbing a country like Australia at scale. It’s a direction of travel, not a finished bridge you can simply cross.
On the history, there’s a pernicious myth or two at work in the lazy invocation of “the Yanks saved us”. It troubles me, too. The fall of Singapore under Arthur Percival and the sinking of HMS Prince of Wales and HMS Repulse exposed just how brittle imperial assurances were. But that doesn’t mean history is irrelevant, only that it’s often misused. Alliances are neither eternal nor worthless. They are instruments, and they need constant recalibration.
Where your argument has real force is in the question of sovereignty. Australia has allowed too much value to leak offshore, too much policy to be shaped by external pressure, too much deference to become habit. On that, there’s broad agreement building, quietly, across the spectrum.
But non-alignment isn’t a posture you simply proclaim, it’s a capability you build. New Zealand can sustain a lighter strategic footprint because of geography, scale, and a different set of trade-offs. Australia sits in a harsher neighbourhood, with deeper entanglements and higher exposure. Simply declaring ourselves “non-aligned” without the economic and military capacity to underpin it risks turning independence into vulnerability.
The better question is not whether we jump from one camp to another, but whether we can think and act in our own interest inside a more fractured world. That includes taxing our resources properly, setting terms for multinationals, and diversifying our economic relationships, without pretending there’s a clean exit from the system that currently underwrites much of our prosperity.
If there is a future where Australia is more independent, more self-directed, and less reflexively deferential, it won’t come from a rose-tinted re-imagining of BRICS or nostalgia about empire. It will come from doing the hard, unglamorous work of building economic muscle and strategic clarity. And standing up to Woodside, Chevron and Shell.
Otherwise we’re not choosing a new path. We’re just changing the flag we salute.
Australia could break the ties simply by declaring that we are non-aligned. What would follow would be a more co-operative and sympathetic attitude from our non-aligned northern neighbours. As BRICS solidifies it may provide Australia with a harmonious future than the Euro-American alignment that which we are tied to.
These are all very thoughtful contributions to the debate but the question must be: does Australia currently have the leadership necessary to take the steps which are increasingly being forced on us. The budget response to the suggested gas tax increase will give us the answer I think.