The new Labor government of Anthony Albanese has a unique political opportunity, a one-off perhaps, to reform. The Tory government has slapped a super profits tax on multinational gas giants in the UK. Can Labor go in to bat for the people of Australia over its fossil fuel donors? Michael West reports.
So shonky, so deceitful is the Coalition that they even went so far as to change the law heading into the election last weekend, just to cover up the explosion in energy prices.
This sneaky amendment to the Electricity Retail code at the 11th hour allowed Angus Taylor and Josh Frydenberg to delay the shocking news and campaign on lower energy prices, even when they knew that energy bills were spiralling 30%.
Energy poverty is now upon us. Yet the gas companies are reaping astronomical profits. Is the answer not abundantly clear?
In the UK overnight they just slapped a super profits tax on the oil and gas giants – detail below – yet here Down Under we are still showering these tax cheats with $12bn a year in subsidies, even for technology which doesn’t work, such as subsidies for Carbon Capture and Storage (CCS), which will only prolong the life of coal and gas projects.
There is a unique, historic opportunity to reform, right now, to address the mess. Dither, and the opportunity is lost.
Payback time
To paraphrase, Albanese can say to the Minerals Council of Australia and the Business Council of Australia: “We helped you through the pandemic. Your members don’t pay much tax, if any, on their gigantic profits. The public, ordinary Australians helped you, now it’s time for you to help them. Pay your fair share”.
Thanks to the reckless JobKeeper waste from Frydenberg, which sent $40bn in public money straight to the bottom line of companies who didn’t need it, even companies enjoying rising revenues, the government has a unique mandate for meaningful reform.
There is no sign from the new government as yet, ALP coffers fuelled by fossil fuel donations, just like the Liberals and Nationals, that it has the stomach to tackle the big issues.
But they do have a licence, indeed a moral obligation, and the appetite for reform will inexorably diminish over time. They can point to the rise of the Third Force in Australian politics, the Greens and the independents with almost a third of the vote. They can say Australians have spoken. They can say the Coalition has failed miserably to represent people over corporations. All of this is true, surely truer than honouring lame, small-target election promises.
Do they really have to stay true to $200bn in tax cuts for the wealthy? Or childcare for people with millions in assets, or third-rate action on climate, or $12bn in subsidies for fossil fuels?
Circumstances have changed, they are changing dramatically before our eyes. And with that, comes a duty to change policy.
The Boris ballgame
Leadership has come from unusual quarters, the besieged regime of Boris Johnson’s Tory party in the UK. Under pressure from its “Partygate” imbroglio, Boris and his chaps moved overnight to pump up Great Britain’s Exchequer, indeed the Tories’ waning popularity too, by moving big time on tax reform.
1/3 🇬🇧 Overnight – UK follows Italy w 25% windfall profits tax on oil + gas sector
Producers have been charging international market prices in the domestic market, earning super profits
The levy funds £650 to 8m low income households struggling w energy bills + cancel £400 loans https://t.co/BqAAVEfyvU— 13foot7 (@13foot7) May 26, 2022
Following Italy’s lead, the Conservatives have put a 25% windfall profits tax on the oil and gas sector. Producers – the BPs and Shells of the world – had long been charging international market prices in their domestic market, reaping super profits.
The UK levy is designed to fund £650 to 8 million low income households struggling with their energy bills – and cancel £400 in loans.
The 25% levy is on top of the 40% rate the companies already pay (which is higher than the 19% general corporate rate). So they are no doubt screaming blue murder; but the fact is, as here, the rate is meaningless. The reality is their amortisation and depreciation breaks mean they pay almost nothing. And now, the oil and gas majors will not be allowed to offset prior year’s losses to eliminate their tax.
Australia did have a 22.5% mining tax from 2012-14, but unlike the UK levy, it was flawed, allowing mining companies to revalue their mines using commodities boom prices, then set off this new higher “starting base allowance” against any tax.
Ergo, no material tax was ever paid. They gamed the government, forced a prime minister out of office in Kevin Rudd, with the connivance of Rupert Murdoch’s News Corp, and there has been nothing much done since to tackle the erosion of Australia’s tax base, or in layman’s terms, the robbery of this country by foreign corporations.
Now, the profits being made by these same corporations, at the expense of energy customers, is so immense, surely the new government has a licence to move on behalf of its people rather than kowtow to its donors.
Cocktail talk: Labor struts both sides of street on energy as Madeleine King mooted for gas ministry
Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.