Treasurer Jim Chalmers is pushing ahead with changes to claw more tax revenue from the offshore gas industry, urging the coalition and Greens to accept the middle ground.
Changes to the petroleum resource rent tax will cap tax offsets at 90 per cent of assessable income and raise more revenue sooner.
Treasury released the first tranche of draft legislation on Monday, with the aim of bringing in an extra $2.4 billion over the next four years.
But the federal government may face an uphill battle to pass the bill in the Senate with the Greens and crossbenchers wanting the cap dropped to 80 per cent to secure their votes.
This would mean at least 20 per cent of an offshore gas company's revenue is subject to the tax.
Dr Chalmers said the government's model balanced getting more revenue and providing supply certainty.
"This is a sensible change that has been worked through methodically to ensure that offshore LNG pays more tax, sooner, so we can fund our priorities," he said in Canberra on Monday.
"They are all about getting a better return for Australians."
He said the draft legislation would be an important test for the coalition.
"We will put this out in good faith," he said of the legislation.
Opposition finance spokeswoman Jane Hume said while the coalition leadership would review the draft legislation before deciding how to vote, more supply was needed to bring down electricity prices.
"We need more gas investment, more gas supply in the system. This will only make it harder," she told ABC TV.
Senator Hume said the government was putting pressure on the market through its price caps on top of extra red tape and taxes.
The bill's draft explanatory material says the policy will provide industry and investors certainty "to allow the sufficient supply of domestic gas and will ensure Australia remains a reliable international energy supplier and investment partner".
The industry has backed the change.
The Senate next sits on September 4 for a fortnight.
