The schism between the lifters and leaners in corporate Australia has deepened. BHP, Rio and the banks are tipping in massive tax while tax paid by fossil fuel giants remains paltry, abjectly failing to merit a social licence to operate in Australia. Callum Foote peruses the latest tax data.
It’s the usual mob, the leaners that is, again. Foreign gas giants and petrol corporations, Rupert Murdoch’s News Australia Holdings, LendLease, Qantas, the financial engineers from Brookfield, real estate stapled trusts and infrastructure securities such as Sydney Airport, Transurban and Mirvac (their members are supposed to pay the tax). Zip.
By the looks of their tax payments, mostly zero, the energy companies would appear to been doing it tough in 2020-21, but scroll across to the total income and they are raking in the cash, up to their usual tricks of debt loading. Analysis of their accounts over the years by MWM has established how aggressively the energy giants siphon their taxable income offshore to their other entities so they don’t have to pay 30% tax in Australia, which is the corporate rate.
Rupert Murdoch’s News Australia Holdings paid nothing in tax for the eighth year on the trot, despite $1.6bn in income, down $100 million from last year. But broadly in trends, the oil and gas companies are once again the worst, the biggest and greediest leaners.
Property groups such as Brookfield’s BPIH and Toga paid not a cent in tax. Lendlease virtually nothing again; it’s been a decade now. They pay more to foreign governments and the Tax Office is still dragging its feet over the group’s $1b retirement village tax scam – too much pressure from the Big End of Town, mostly from their tax avoidance advisors PwW and KPMG. The good news is Harry Triguboff’s Meriton beginning to pay some reasonable amounts, showing $66 million in tax payable (good thing, it was the peak of the biggest property boom in history).
The major miners again stumped up the super big numbers with BHP recording a staggering $7.3 billion tax bill, Rio Tinto coming in just behind at $6.2 billion and Andrew Forrest and Gina Rinehart’s Fortescue and Hancock Prospecting paying up big time too.
Fossil fuels don’t pay their dues
Some of the largest fossil fuel-related companies made zero taxable income in 2020-21. Topping the list of companies that have made stunning revenues and zero taxable income is Australian petrol station manager Ampol, with $20 billion in revenue and zero taxable income.
BP Regional Australia comes in at number two, with over $17 billion in revenue and zero taxable income.
Insurance Australia, the nation’s largest general insurer, is only one of three non-mining or energy companies to make the top 10 in terms of huge revenue and zero tax. The insurance group earned $16.2 billion in revenue in 2020 while making not a cent of profit.
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The other non-mining or fossil fuel related company is Downer EDI, a building and manufacturing company, and Singapore Telecom Australia which came in at numbers nine and 10. The remainder, all earning $10 billion and up, made no profit for the year. and therefore paid no tax. Notable names include AGL Energy, ExxonMobil and Glencore. The former can be excused for tax dodging as incompetent management is the key for AGL. Around a third of Australia’s biggest companies paid no tax. That’s around the usual number, reflecting in some cases market cycles and losses rather than profits; in other cases, many cases mentioned here, unadulterated tax dodging.
Global culprit and coal major Glencore has just pleaded guilty to bribery in Africa in a UK court, setting aside $1.5 billion to cover the cost of fines, having agreed in May to pay $1.1bn to US authorities for violations of bribery laws and commodity price manipulation.
Miners and frackers
Outside the top 10, there is a veritable who’s who of fossil fuel miners and frackers. Woodside Petroleum made $6.7 billion in revenue without turning a profit. Ichthys LNG, a company formed for the Ichthys LNG project headed by INPEX, made just over $6 billion in revenue without earning a profit. Woodside, Shell, Santos, Yancoal, INPEX and others all also made zero profit.
Credit goes to Chevron Australia for paying some tax. Thirty dollars in total was recorded in tax payable for the fossil fuel giant, from $113 million profit after earning $9.1 billion in revenue. Various other Santos subsidiaries, primarily vehicles to run offshore oil and gas platforms, also paid negligible tax on a total of $728 million in revenue in 2020-21.
According to Bruce Robertson, LNG analyst and former stockbroker: “While some the tax avoidance is legal, some isn’t. For example, Chevron settled with the ATO a few years ago for over $800 million. This is industrial-scale tax evasion. The Tax Office figures are lagging, so the enormous spurt in cashflow from rising prices this year are not captured by the ATO disclosures.
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“These companies use structures that are either very close to the edge of the law or against the law and it’s a problem that has to be fixed. There’s a revenue problem in the budget, and if we still want to fund programs like the NDIS the money has to come from somewhere.”
While the global coal and LNG market had not yet been boosted by the Russian war on Ukraine in 2020-21, it was still strong. “We will see more tax in the coming year than we did this year,” said Robertson. “But the question is ‘is it enough? Is it a reasonable amount of tax?’ The answer is: no.”
As for the Petroleum Resources Rent Tax (PRRT), introduced to specifically tax offshore oil and gas production, it continues its record of bringing in a minimal amount of revenue from Australia’s abundant hydrocarbon resources.
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Royalties remain a joke, the PRRT tax that is, which is supposed to target offshore oil and gas. Bear in mind, royalties are not taxes, they are the payments made to the states for the actual minerals extracted and mostly exported. The payment for our raw materials owned by Australians.
In 2020, PRRT brought in $925 million in revenue for the federal government. Compare this to 1999, where LNG revenue was $5.5 billion, and PRRT was $1.3 billion. By 2018-19, however, annual petroleum export revenues had grown by almost $50 billion, yet the royalty payments to the federal government had dropped by $300 million to $1 billion.
Comparing Australia’s petroleum royalty schemes with the world’s next biggest LNG exporter, Qatar, demonstrates just how much money Australia is losing on one of its biggest exports.
In 2020, Australia overtook Qatar to become the world’s largest exporter of LNG. Yet, according to Tax Justice Network Australia, Qatar collects $26.6 billion in annual royalties from LNG alone. Australia, by comparison, manages a measly $1 billion annually.
No tax was paid by the big trusts such as Mirvac, Transurban and Sydney Airport, although they are trusts so don’t have to. That’s up to their members who pay at their marginal rates, so probably averaging 10% and a bit.
It is past time to have the debate on reforming how much and how long tax losses can be claimed for, as well as reforming stapled security trust structures in property and infrastructure where billions of dollars “leak” in tax every year.
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Callum Foote was a reporter for Michael West Media for four years.