The Australian Financial Review attacked Senator Rex Patrick this week after Patrick attacked Energy Australia chief Catherine Tanna, suggesting she step down from the board of the Reserve Bank for running a company whose tax haven structure helped it pay zero tax on $30 billion of income. Michael West corrects the record. Amendments to the AFR’s story, Tanna and Taxation, are in bold.
AFR: For an upper house crossbencher, Centre Alliance senator Rex Patrick sometimes can sound almost credible.
MW: For a big business public relations outfit, the Australian Financial Review sometimes can sound almost credible.
AFR: But not when he uses parliamentary privilege to wildly denounce, with little apparent evidence, a leading Australian corporate head as ‘‘an international corporate tax dodger, a swindler’’ who should be turfed from the Reserve Bank board.
MW: But not when it uses its corporate advertising platform to wildly denounce, with little apparent evidence, a leading Australian politician for doing the right thing by his constituents and all Australians. (Okay, “swindler” is a bit juicy.)
AFR: Senator Patrick says that EnergyAustralia, the power generator and retailer run by Catherine Tanna, paid just $69 million in tax on nearly $8 billion of income in one recent year.
AFR: He denounces the company and its managing director for paying no tax at all on $30 billion of income in the previous four years.
MW: Correct again.
AFR: Wait a minute! What the Tax Office reports as corporate ‘‘income’’ – as in income tax – is not profit.
MW: Wait a minute! Correct again! Patrick is reporting the very same numbers publicly reported by the Australian Tax Office: total income, taxable income and tax payable.
AFR: It’s revenue, a distinction the ABC has badly tripped over previously and which some activists continue to abuse.
MW: Those damned Trotskyites at the ABC must be wrong to think that companies owned in the British Virgin Islands, which snip a cool $8 billion a year from the bank accounts of ordinary Australian taxpayers, ought to contribute to Australia by paying tax.
(By “activists”, we can only surmise the Fin is referring to the journalists, accountants and others whose investigations have led to billions of dollars flowing to the Tax Office over the past five years – taxes which are used to build schools, hospitals, roads and defend the nation – and Energy Australia and the Fin Review – against foreign military threats.)
AFR: Moreover, much of the $7.8 billion of income or revenue EnergyAustralia collected from its customers was passed onto separate power networks as their cut of the bill.
MW: Moreover, much of the $7.8 billion of income or revenue EnergyAustralia collected from its customers was passed onto its parent company in the Caribbean, thence its Hong Kong parent company and the billionaire Michael Kadoorie who controls that.
AFR: And the years in which Senator Patrick complains EnergyAustralia paid no tax reflected the company’s previous losses.
MW: And the years in which Senator Patrick complains EnergyAustralia paid no tax reflected the company’s previous losses and the interest charges on a $1.4 billion loan from its tax haven parent company and other “losses” it siphoned out of the country.
AFR: For good reason, companies do not pay corporate tax on revenue or losses. And they can carry losses forward for equally good reasons.
MW: For some reason, Energy Australia did not even pay tax on the skimpy $52 million in taxable income it did manage to declare over those four years on its $30 billion of total income.
AFR: In the company’s financial year ended December 2018, EnergyAustralia reports its income tax payable as $240 million, an effective tax rate of 34 per cent. Could the story be that Ms Tanna took over a company in 2014 that couldn’t pay any tax, and turned it around to one that does?
MW: In the company’s financial year ended December 2018, EnergyAustralia reports its income tax actually paid as $136.9 million; pocket fluff on its $8 billion in cash from customers. Could the story be that Ms Tanna and her board have been exposed here and elsewhere over the past three years for devious tax practices and have begun to pay a bit of tax to justify their social licence to operate in this country?
Power prices more than doubled over the ten years to 2018. Energy Australia’s revenues rose strongly, as did its executive pay, the large fees taken by its auditors and advisers at PwC and its payments to its foreign shareholders. It is Australia’s second largest carbon emitter.
It should be said that Catherine Tanna has done a good job for those she represents, the shareholders of EnergyAustralia Holdings in the British Virgin Islands and Hong Kong. This is her primary responsibility. She has acted in accordance with her duties as a director.
It is the duty of Rex Patrick however to represent his constituents, taxpayers and the national interest. He has done that. It’s about time politicians held business leaders to account. It is the duty of journalists to represent the public by scrutinising large public institutions. The Fin Review should try it sometime.
Tanna has form. In this story, gas industry whistleblower Simone Marsh, details how Tanna, then chief executive of BG Group promised BG would pay more than a billion dollars in tax after 2014. It does not appear to have paid any.
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.