Yesterday, the Financial Review platformed former Business Council CEO Jennifer Westacott (confusingly described as “BCA chief executive”) and her “Tony Shepherd Oration”, delivered last night. Westacott used the oration to lament that there was insufficient commitment to economic reform, that “we are sleepwalking into lower living standards”, and that Australia’s middle class — Menzies’ “forgotten Australians” — “feel very angry”.
“They are starting to build tremendous resentment about the way they feel estranged from so many conversations.”
If only both sides of politics would embrace the recent Seize the Moment report from the BCA, she said. That report was “a centrist manifesto. It’s common sense. It should be grabbed by the centre. It should be promoted by the centre.”
Let’s not waste time itemising what Westacott gets wrong, or how often she’s guilty of the most extraordinary hypocrisy given the BCA’s role, on her watch, of thwarting climate action, or pushing back against efforts to increase living standards, or advocating measures that alienate the middle class she professes to worry about.
It’s fair enough for her to try to flog her report one more time, given the fate of these things is to completely vanish from public debate within weeks of being issued, until two years pass and they’re reheated under a different title and re-released for journalists at the Financial Review and The Age to pretend they’re new. But the Seize the Moment report is anything but a centrist agenda, given it’s the same “cut company taxes, dump industrial relations protections” nonsense that the BCA has been spruiking for an eternity. You’d have to be ideologically located between Milton Friedman and Attila the Hun to think that’s in any way “centrist”.
The sordid truth about the BCA’s constant calls for cuts to company taxes is that many of its members already pay a far lower level of tax than the 30% rate that the BCA says is too high.
In fact, according to the corporate tax transparency data released by the Australian Taxation Office recently, a large proportion of the BCA’s members paid no tax at all in 2021-22, and the average tax rate paid by BCA members actually fell, despite a large increase in revenue and profits.
The 12 months covered in the latest tax report include substantial economic disruption from the latter stages of the pandemic, so it’s understandable that companies such as Qantas, Sydney Airport, Stockland and Wilson Parking reported no profits and paid no tax for the year. But overall, the BCA membership reported a total income of $927 billion, up $200 billion from pandemic-dominated 2020-21, and $200 billion in taxable income, compared to $164.4 billion the previous year. But taxes paid only increased from $38.6 billion to $44.4 billion. That means the average tax paid across the 100 or so BCA members fell from 23.5% to just over 22%.
That’s not to say many BCA members didn’t pay full freight, at least on their taxable income — bearing in mind the extraordinary lengths to which large corporations minimise their taxable income. Major banks and investment funds, Telstra, Fortescue Metals, health funds, Coles and Woolworths are among the 50 BCA members that paid 28-30%. Separately, some large oil and gas companies also pay the petroleum resource rent tax separate from company tax.
But a fifth of BCA members paid no company tax in 2021-22. Some, including Energy Australia, IBM and Transurban, reported no taxable income, while companies such as Amcor and Downer all reported substantial profits but paid no tax. Companies such as Woodside, Shell, Atlassian, Bluescope, Endeavour Group and Mitsui reported multi-hundred-million or billion-dollar profits and paid less than 20% tax.
Demands from the BCA to cut company tax would deliver a colossal windfall for its members. A reduction from 30% to 25% in the company tax rate would in 2021-22 have handed $10 billion worth of free money to some of Australia’s biggest companies and multinational firms.
Clearly, that’s $10 billion less in government services, or $10 billion in increased tax revenue from other areas of the economy. The BCA would like that to be ordinary households, via an increase in GST.
Anyone for a $10 billion direct transfer from ordinary Australians to huge companies, many of which are already paying much less than the 30% tax rate they’re supposed to be paying? That’s the conversation Westacott and her successors at the BCA want to have. No wonder ordinary people feel “estranged”.
Correction: This piece initially stated that Shell paid no tax in 2021-22. In fact it paid $117,507,887 in tax. The error appeared in the original Australian Tax Office data and has since been corrected in that source. Endeavour Group states that it pays 30% tax, but it and its subsidiaries have “not elected to form an income tax consolidated group as at the reporting date, which means that they are each separate income taxpayers.”
