Taxpayers stump up for “man shot in buttocks” journalism as Google Australia pays a pittance in tax again thanks to “world first media reforms”. Michael West reports on a joke.
As predicted here last year, Google Australia has gone back to paying belly-button lint in income tax. This shabby performance despite payments from Australian customers surging to a record $8.4bn last year.
Not that you would see this “above ground” in their latest financial report. They guilefully headline their accounts with a “net revenues” number of $1.9b in the P&L burying the real figure deep in the catacombs of the notes to the accounts – in fact, in a note to a note, in the small print to the small print.
The gargantuan global monopoly stripped its Antipodean outpost of $6.4b in “service fees” last year, presumably syphoned out to the tax haven of Singapore. Big 4 auditors EY ticked the boxes; there is more money in Defence consulting this days. And incidentally, Google – along with Apple and Microsoft – was one of the many multinationals which were sold inside government information by PwC.
Lest we digress, the reason we predicted this Google backsliding on tax was because the Morrison government (backed by Labor) had sallied forth with its ridiculous Digital Media Bargaining Code “world-first media reform” three years ago.
Enter Rupert, Peter and Kerry
The “Bargaining Code” entails a series of secret arrangements between Google, Facebook and the fossil media whereby the platforms sling the government’s media mates such as News Corp, Nine Entertainment and Kerry Stokes an undisclosed sum to stop them whinging about the platforms “stealing our content”.
There is no arbitration mechanism, no real “law”, just a reluctant acquiescence by the digital giants that unless they pay hundreds of millions in secret to the media barons there might be a law.
So it is that we get this fresh off the press today in Google News Showcase which publishes links to the corporate media stories under the pretence of “public interest journalism”.
“I made 4 dishes from MasterChef this week. Here’s exactly how they turned out”. That advert for MasterChef from Mama Mia, subsidised by the “world class reform”.
“Man, 38, found unconscious with gunshot wound to his buttocks”, was another earth-shattering piece today from Rupert Murdoch’s Townsville Bulletin (The Bully).
Now fair’s fair, we accept that “man shot in buttocks in serious condition” is a bona fide news story, although a tad local.
Google Giggle: Josh Frydenberg’s “world-first” media reform a hand-out to billionaire mates
Moreover, there was a follow up in Yahoo, and frankly we were surprised to see that Daily Mail Australia did not go big on the story given its penchant for strong coverage of the buttock sector.
But “Deniliquin Rovers Junior Football Results”? Or some bloke called “‘Mouse’ takes first place” in the Stableford at the Gilgandra Golf Club on the weekend, is hardly public interest journalism.
Under the Code though there is no obligation that the money has to be spent on journalism anyway; it’s just a protection racket.
Bugger it then, we won’t pay tax
Therefore, as predicted, Google and no doubt Facebook too, have probably classed the mainstream media pay-offs as a cost of doing business, as deductibles, and reverted to paying bugger-all income tax versus almost bugger-all previously.
While the Google Australia P&L shows tax expense on profit of $366m for 2022, the cash-flow statement shows actual tax paid almost halving from $86m to $45m. And bear in mind that profit – not even taxed at 30% corporate rate – is calculated on a dodgy revenue number of $1.95b.
The notes to the accounts show actual revenue rose from from $7.2bn to $8.4bn, of which $7.1bn was ad revenue (Google is paid by advertisers for every click).
There is no other place to go if you are in business as this is a replete monopoly. Who clicks on Bing or You Beaut Search? Google even persists in claiming R&D tax breaks, and its executives are geared into Alphabet stock so have no interest in performing for the Australian entity in the least.
The actuals buried in the notes
Related party loans rose from $260m to $527m even when they don’t need finance because 1. They are rolling in cash, and 2. They have no debt otherwise. Service fees to related parties – presumably Google Asia Pacific in Singapore – were the big giveaway, up from $5.4 to $6.4b. These were not counted as revenue, just went straight offshore even though this is a business which sells Australian ads on Australian computers to Australian businesses.
As we have been diverted by the Budget this is belatedly the first in our perambulations around the annual accounts of foreign multinationals operating in Australia (they report at the end of April – unless their name is Brookfield). Stay tuned for coverage of the other big names. In light of the cost of living crisis, tax fairness is even more paramount now than ever.
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.