Australia’s Richest Man Fights Tax Man And Overstates Tax Bill
It has taken The Australian newspaper a full week to realise that Kerry Packer made some outrageous claims about his taxpaying feats in their exclusive interview but finally they revealed the porkies that our richest man told.
Firstly, let's get to the crux of the issue: Kerry Packer does avoid tax whenever and wherever he can and he does wax fat off government licences. He's also an obscene gambler but his reputation is overblown. Lloyd Williams reckons the big man would struggle to make it into the list of 50 biggest whales and he would know because for five years he ran the world's biggest high roller casino and he is Kerry's best mate.
Lies, damn lies and Packer's use of statistics
The bullshit detector has been going off regularly of late and Big Kerry was triggering a good deal of it. The first rule of any gambling company is to add up every single dollar you've given to the government for anything, come up with a huge number and then also find some noble charity that you've given lots to. This will stop people talking about the real part of your business which brings a lot of misery down on ordinary people. That's where Kerry's "I've paid the government $2 billion over 10 years" claim fits into the picture. He also very neatly claimed his NET gambling losses for the year are less than the $10 million he has given the Children's hospital in Westmead. And in pushing his good guy status, Kerry also gloated that he employs 15,000 Australians - more than Rupert Murdoch, although this conveniently ignores the 30,000-plus Rupert employs overseas.
Crown purchase allows good guy claims
Now that Packer owns Melbourne's Crown casino, he can really crank up his good guy status. You see Crown employs about 7000 people - more than any other Australian company under the one roof. Shame that a lot of the jobs are shitty service gigs that don't require any great skill or a university education. Crown also pays a truckload of cash to the Victorian government - almost $250 million a year - but this is not the same sort of tax that we're debating about here. You see the government takes out a fixed slice of revenue in return for giving Crown a 12-year exclusive licence. It doesn't matter who owns Crown, the government take would still be the same. Packer is trying on the same argument that Bondy used with beer when he took credit for the excise duties that government collected on grog as if he was somehow making a difference personally. Since Bondy went belly up, the next mob that came along and ran those same breweries also sold beer at inflated prices that included excise duties. So what? By the way, you should remember that Packer's PBL bought Crown partly to utilise its $500 million in tax losses - hardly the action of our biggest taxpayer.
Packer's TV fees should be higher
The same applies with Packer's claim about television licence fees. He has been privileged to own a government-mandated television licence for most of the past few decades. He's made squillions out of this government licence and he absolutely should be paying annual fees to the taxpayer for the privilege. They arguably should be a lot higher. And if One.tel - which is about 20 per cent owned by the Packers - was prepared to pay more than $500 million for mobile spectrum last year, why on earth shouldn't Packer's Nine Network have had to pay for digital spectrum? It is fanciful of him to claim he's been paying for digital for the past 15 years. As he pointed out recently last week, digital hasn't even started yet. The Howard government could have raised up to $1 billion for taxpayers auctioning off digital broadcasting licences to the highest bidder but chose to just hand it out to the incumbents and delay the advent of competition until 2006. This was a disgraceful deal between the government and the two Kerrys and Johnny Howard's snivelling comments in support of Packer last week is enough to make any fairminded taxpayer's blood boil.
The Shanahan interview and comment piece
Dennis Shanahan made some good points in his comment piece in The Australian last week and we particularly like these two paragraphs:
"The other area of Latham's grievance - the allocation of digital TV licences - is on firmer ground for claiming preferential treatment for the Packer organisation from this Government, although it is not the whole explanation. Again, however, those who bear responsibility for this situation are not the media groups of the Packers, the Murdochs and the Fairfaxes, but both sides of politics that have allowed the cringing culture towards media organisations and their related businesses to develop."
Labor and the Coalition have for years been doing grubby deals with Murdoch and Packer in return for editorial support. You can even see how little Johnny Howard still views the whole argument around the issue of whose side you are on. Take this quote from the PM as an example:
"I thought the Latham attack was ludicrous, driven I believe very much by Latham's closeness to (former Prime Minister) Paul Keating."
Can't Howard look at an issue objectively without putting people into camps. We all know that Packer fell out with Keating when he publicly backed Howard and that Packer's media empire have subsequently given the Howard government a relatively easy time. We then have Howard working hard to unwind the cross-media laws to give Packer a clear run at Fairfax and we also have the disgraceful digital handout to the free-to-air networks last year which was brilliantly exposed on Four Corners in late August.
Packer overstates the case
Big Kerry has clearly got a bit of homework to do if he seriously believes the following statement that he made to The Australian:
"Over the last 10 years, in government charges - whether they be licence fees, income tax, payroll tax, levies on spectrum - we have paid as a corporation in excess of $2 billion in tax for the government. Two billion dollars. Find another company in the top 15 in Australia, in the top 20, that has paid at that rate. I can't. I think you'll find the entire News Corporation has paid something like $700 million."
For a start, News Corporation has paid almost double that in "company tax" on its profits over the past decade. And if you added in all the payroll tax, licence fees and other charges it would be well over $2 billion. The only explanation here is that Kerry is talking about the tax News Corp has paid to the Australian government. Given that only 10 per cent of its assets are here it clearly pays a lot more tax to foreign governments.
Lots of companies pay more tax than Kerry
But Kerry has a much bigger problem claiming that he pays more tax than any other Australian company. We've just stumbled across the 1999 Tabcorp annual report and on page three it says in big bold print:
"STATE GAMBLING TAXES CONTRIBUTED BY TABCORP BUSINESSES $499.6 MILLION - UP 14.3 PER CENT."
You see Tabcorp pays gambling and wagering taxes to the Victorian government as part of its exclusive monopoly and duopoly licences. It also pays more than $100 million to the NSW government for Star City Casino in Sydney and on top of that it paid $81 million in company tax to the federal government in 1998-99. So how can Kerry claim his $2 billion over 10 years is bigger than anyone when we've discovered a company that is not even in the top 30 paying about $700 million a year.
But even if we were only assessing company tax, Kerry's claim is still complete bullshit. A quick look at the 1999 National Australia Bank annual report sitting under Crikey's bed spells out the following on page 80: "Income tax expense 1999: $1.32 billion". And if you add up the past five years it comes to $4.91 billion. So much for Kerry's claim that he "can't" find another company in the top 15 that have paid as much as him. NAB have paid more than double his $2 billion in half the time - and that's not including all those banking transaction taxes it collects for the government. In fact I'd go so far as to suggest that the majority of companies in the top 15 have paid more tax to Canberra than Packer's outfit has over the years.
It took a full week before The Australian woke up to the fallacious Packer tax claims and exposed it in last Saturday's paper on page five under the headline. They first carried the quote the previous Saturday and we first exposed its inaccuracy in a piece published on Crikey last Wednesday. We then mentioned it during interviews on 2BL and 2GB in Sydney last Friday.
To his credit, Richard Gluyas from The Australian did some solid research in his page five lead under the headline "Sums out on Packer tax claim".
He mentioned Telstra's $1.88 billion tax bill last year along with the $4.57 billion paid by the Commonwealth Bank over the past decade. And he did the necessary searches of ASIC filings before putting together the following key paragraphs: "Mr Packer's $2 billion claim also does not stack up under the scrutiny of publicly available records."
"His accounts, filed with the ASIC, reveal that Mr Packer paid a total of $714 million in income taxes during the past 10 years."
"The Australian calculates that the media group has paid about $420 million in television spectrum licence fees since it bought back the network from Alan Bond in 1991."
"His private company, Consolidated Press, has paid $112 million since 1990, including a $111 tax credit in 1992."
This is probably why the tax office have been pursuing him for more than five years. If he really was Australia's biggest taxpayer they would leave him alone. But who could forget Kerry's famous line in 1991 to the cross-media inquiry:
"Now of course I am minimising my tax," Kerry told an assortment of frightened politicians including now Treasurer and friend Peter Costello. "And if anybody in this country doesn't minimise their tax, they want their head's read." Ironically, we now have the spectre of Packer taking court action to stop a company using these famous quotes in their advertising. You said it big boy and you should stand by it because it is a lot more accurate than your latest claims.
Our Biggest Whale Uses Tax Havens
As Bryan Frith has pointed out regularly in The Australian, Packer's ultimate holding company Consolidated Press International is registered in some tax haven like The Bahamas. Decent Australian corporates don't do that. They keep everything domiciled in Australia. This is particularly relevant for Big Kerry given that he has made much of his fortune waxing fat off government rents and licences. Let's pass the hat around for the tax office as it tries to get some more money out of one of the world's most conspicuous consumers.
And if you want to be reminded about this conspicuous consumption, check out Crikey's coverage of the Packer wedding last year. Given that the entire PBL board was there and Jodie Meares only knew 20 of the 750 guests, we wouldn't be surprised if it gave big Kerry a $10 million tax deduction.
The wedding of the decade
First published October 24, 1999
By Hugo Kelly and Stephen Mayne
With the strains of 'Crocodile Rock" humming in the damp Sydney air above the Packer Compound, 750 of Australia's glitterati gathered for the 1999 Packer Corp EGM (Extraordinary General Marriage) on Saturday.
Sin City's biggest corporate merger since Crown & PBL jumped into bed two years ago attracted a curious mix of rich and powerful Packer friends, business partners and unlikely bedfellows. In fact it was the most powerful gathering of people in the same place since the Packers and Lloyd Williams launched the Crown Casino, oops sorry The Crown Entertainment Complex, in May 1997.
At the forefront at the Bellvue Hill event was the Boy Billionaire's Club, MoJs (the Gen X Mates of Jamie group), people with power, people with influence and the odd colorful Sydney Racing Identity (SRI's).
Make more money: invite your competitors
The guest list included some interesting people commonly regarded as business competitors of the Packer clan. What were Optus chief executive Chris Anderson and wife Gaie doing there? Afterall, the Packer's have about 25 per cent of One.Tel and Foxtel which are both vigorous competitors of Optus. Channel Seven executive chairman Kerry Stokes also reportedly got a mention. And what was Aussie Home Loans spruiker John Symonds doing there when the Packers have just bought half of his bitter competitor Wizard from that well known Sydney MoJ and party boy Mark Bouris. Hang out for $200 million before selling to the Packers John. When A Current Affair really starts cranking up those bank bashing stories your business will be worth even more than you think.
Hard as Flint shows up
And what was the fearless broadcasting umpire, David Flint, chatting with the Nine Network heavies about? As Australian Broadcasting Authority chairman, the cringeing monarchist and eminent head of the world-class law faculty at Sydney's UTS, Flint clearly didn't feel compromised celebrating the nuptuals of Australia's dominant TV owner. And the Packers had no qualms about inviting seriously damaged goods to their wedding. Yes, soon to be former shock jock John Laws was there, no doubt having a friendly chat over Canapes with Sharp as Flint. Fred Hilmer, the CEO of Australia's most powerful newspapers group John Fairfax, and wife Claire were there, too. Naturally, Fairfax is a fierce media competitor to Nine - the appearance of longtime Nine servant Brian Powers as Fairfax chairman last year was pure coincidence. Remember the furore when former Sydney Morning Herald boss John Alexander accepted a cruise on the Packer boat almost three years back. Naturally JA was at the wedding as he now runs the Packer magazine empire which apparently has somehow secured the exclusive wedding pictures.
Fairfax boys party with the Packers
It was Brian Powers who signed up Fred Hilmer on his five year contract at Fairfax last year and at the time Fred claimed to hardly know the Packers. Obviously Brian has built a few bridges there. Presumably Powers was at the wedding, probably toasting having almost doubled his money buying shares in the Fairfax-related and Packer controlled FXF Trust courtesy of a loan from his old billionaire boss.
And who was that with the buoffant haircut and wife Felicity by his side...? Why, it's none other than ex-Premier, Jeff Canute, in his first interstate appearance as Parliamentary middle bencher and mere member for Burwood. As he sipped his champagne and mingled with all the current heavy-hitters, he will have reflected keenly that there is nothing - nothing - as Ex as an Ex-Emperor. For those who thanked Jeff for his contribution, he smiled and said it was great fun. The Packers have certainly enjoyed making about $400 million out of Crown so far.
New Victorian Premier Steve Bracks was not in attendance, invitations having gone out before King Canute was kaputed by Victoria's three democracy-conscious independent MPs. Apparently James has been watching his own network and hasn't yet heard of the Bracks Ascension; if you'd been relying on the Nine Network's current affairs stable for news on Victoria you'd have sworn blind it was business as usual. The only piece A Current Affair did on Kennett for the length of the campaign for Frankston East was a weird little profile on election eve.
Which is one interesting story more than you saw on Channel Seven's soft stroking Today Tonight, an allegedly state-based current affairs show. On the same evening, that fearless defender of Kennett-style democracy, Neil Mitchell, rambled his way through a few Vox Pops on the election. Which brings us to James Packer's great television rival, Kerry Stokes. And there he was, little Kerry, reportedly tucking into the wedding cake - nothing like fierce rivaly between TV moguls to set the stage for a broad democratic media dialogue.
Dick Alston can see no conflict: here, have the spectrum for free Kezza
Little Kerry privately complains that Federal Communications Minister Richard Alston is the Minister for Big Kerry. And naturally Dickie was at the Packer compound on Saturday, as was the Prime Minister John Howard, whose illogical arguments in favour of Kerry being able to bid for Fairfax two years ago were embarrassingly similar to the those put forward by Big Kerry and his mogul-in-training son James.
Given that Fred Hilmer hardly knows the Packers, maybe he is one of the meagre 20 guests who pin-up bride Jodie reportedly knew at the wedding. Imagine knowing only five per cent of the guests at your own wedding - and not even inviting your own father who spent the weekend in northern Queensland. Still, Jodie seems very happy with the terms of the prenuptial agreement which the Packer friendly Federal Parliament kindly made legal in Australia just in time for the self-proclaimed ''Wedding of the Decade'', as patient Ros Packer, wife of the father of the bride, penned in a letter to neighbors warning of the noise and dislocation.
The official newspaper of the Packer wedding - Rupert's Sydney Sunday Telegraph - treated the wedding as the biggest news event since Diana & Dodi's crash. Editor-in-chief Col Allan signed a pretty interesting contract for the "right" to publish pictures of the happy event. On pains of a $50,000 penalty for breach, it prevented the paper running so much as pix taken from the street of family members arriving at the Packer compound. Rival editor of Fairfax's Sunday Sun Herald Alan Revell described the document unkindly as "heavy-handed media management". Nevertheless, if that was the wedding photographer's contract, you can only imagine how the pre-nup reads. Presumably the Packer's will recover some of the $10 million wedding costs with zooming sales of Women's Weekly when they get to run 18 pages of wedding pictures, including some of James with Jodie in her skimpiest of skimpy dresses.
Lachlan Murdoch and his super model wife Sarah O'Hare were seen chatting with the man who wants to be Australia's first President and run the ABC, the lawyer turned comedian turned entrepreneur Steve Vizard. The gossip amongst News Ltd drivers is that Rupert is also in town but declined to turn up, a contrast to his attendance at Gretel Packer's wedding to Nick Barham in England a few years back.
Despite signing the onerous picture contract, Col Allan, Lachlan and News Ltd are still apparently at war with the Packers and Channel Nine over something. The Telegraph is still refusing to mention Channel Nine in the paper, which makes Nine's intended broadcast of Rupert's Fox Studio opening an interesting one to watch. It was Lachlan who apparently gave Herald Sun editor Peter Blunden the order to go big on anti-Crown casino stories during the recent Victorian election.
Lachlan Murdoch gets married far more tastefully
Lachlan and Sarah had a far more tasteful and discreet wedding at Cavan, the Murdoch family retreat near Canberra, earlier this year. No $10 million investment showing off your political, entertainment and business pulling power for the classy Murdochs.
It would appear Kerry decided he wanted to pull an even more powerful crowd than his colorful racing mate Lloyd Williams assembled on May 8, 1997, for the $60 million opening of the Crown casino. The similarities were amazing as Lloyd strove to win the support of opinion leaders and the rich and powerful. Yes, Elton John also performed at the Crown opening and sure enough, Lloyd's favourite MC, Eddie McGuire, was MC for the wedding of the decade.
McGuire is a struggling Broadmeadows boy turned millionaire living in Toorak who in now President of Australia's most famous sporting club Collingwood. He has a remarkable network and influence in Melbourne and the Packers quickly snuggled up to him for that. If James and Kerry are to ever realise their goal of securing the AFL TV rights off Seven, McGuire will be an important player. Afterall it was Packer mate Rodney Adler (Yes, he was at the wedding) and Rodney's even more colorful mate Brad Cooper who backed McGuire for the top job at Collingwood.
People who made it to both the wedding and the Crown opening include Simone Warne, Nine boss David Leckie, Lloyd, Eddie, Richard Alston, Peter Costello, Jeff Kennett and about 50 others. The Packers and Lloyd both know that the way into people's hearts and pockets is through sport. Both are mates with many sportsmen, as is Eddie McGuire. Hence the presence of people like Pat Rafter and Mark Taylor at the big wedding on Saturday. It seems that whenever the Packers meet cricket mad John Howard, they bring along Mark Taylor to keep him happy. Playing politics is so easy these days.
Speaking of former FAI boss Rodney Adler, on Friday he was re-elected to the One.Tel board by shareholders at the AGM. It would appear there were more One.Tel directors at the Packer wedding than the AGM as neither Lachlan or James bothered to front shareholders on Friday, even though they have committed to plough about $740 million into the company.
Republican Mal gets the call-up
Some old feuds appear to have calmed down as former Packer attorney Malcolm Turnbull made the 750 wedding shortlist despite a spectacular falling out with the Big Billionaire in 1991 over the Fairfax takeover battle. Mal could have had a good chat with new Packer mate and ardent monarchist David Flint, who presumably was deeper in conversation with John Howard about such constitutional matters than he was with John Laws.
Other ex Premiers to get a gig included Nifty Neville Wran who was spotted giving Jeff Kennett a few tips on how to make a buck after leaving office. Nifty has long been a Packer mate after taxpayers paid for the light towers to go up at the SCG so World Series Cricket succeeded. Nifty also gave Packer, Murdoch and Robert Sangster the exclusive Lotto contract in NSW, which was regarded by many as one of the grubbier acts of media snuggling by an Australian politician.
Surprisingly ex-Federal Minister turned Packer lobbyist Graham Richardson was a no show. Maybe he and Olympics Minister Michael Knight, another no show, were too busy working out what the hell to say to the public today about the great Olympic tickets for the rich scandal. Most of the guests present will have no trouble securing tickets from those working class heroes such as Knight, a former BLF organiser, and Richardson. Bob Carr was obviously tipped off about the ticketing disaster by the Packers at the wedding on Saturday night and came out on Sunday calling for more tickets to be allocated to the punters. What sort of a Labor Premier is this bloke? He cuts the purse strings to SOCOG and then bags them for doing one of the few things open to them to raise extra revenue. King Kerry's company Ticketek has a large slice of the Olympic ticketing spoils as doesn't want to be associated with such a PR disaster.
Security bill alone was $37,000
The security firm which heavied journalists and ordinary onlookers outside the compound were apparently paid $37,500 for their services and numbered about 300 on the night. But even they could not stop the rain. They were also in charge of making sure the ostentatious ounce of gold given to all the guests were not nicked. Let's hope all the politicians declare this on their register of interests.
And heaven forbid anyone who accepted a slice of this $10 million largesse from wronging the Packers in the future. If people like caviar king Richard Carleton or fellow Nine comrades Hugh Riminton, Helen Dalley, Ellen Fanning, Ken Sutcliffe, Brian Henderson and the ubiquitous Eddie McGuire ever suggest leaving Nine, can you imagine the reaction from the Packers.
''You tratorious fool. I own you. You even came to the wedding of the decade and now you want to leave.''
The same applies for all the politicians being lobbied by the Packers over things such as digital TV, development rights at the Packer's Perisher resorts, gambling licences, protection for the cosy cinema duopoly they enjoy with Village Roadshow and tariffs to protect their huge chemical investments.
When Peter Costello raises the long running tax office fight with the Packers, his attendance at the wedding could well be in the back of his mind. And when future Prime Minister Kim Beazley decides to tax the wealthy, he'll remember the great time and the ounce of gold offered at the wedding of the decade. As will serial journalist dater and future democrat leader Natasha Spot Destroyer, who was canoodling Nine's Hugh Riminton most of the night.
Shame on those non-friends who showed up
Just maybe a few of the invitees should have taken a slightly more cynical perspective on the whole affair. They weren't all invited because they are nice, kind people who are longstanding friends of the bride and groom. Many were there because of the powerful positions they have held. Maybe a few more of then should have adopted the strategy that John Howard took when bombarded with invitations from Lloyd Williams to attend the Crown opening. Honest John decided to give it a wide berth because he didn't want his name and his office so readily associated with the world's biggest casino and all that political controversy in Melbourne.
It was a shame that more of Australia's movers and shakers did not see the wedding for what it was: a brazen display of power and corporate marketing.
That said, good luck to the happy bride and groom. It will be interesting to see if the lad who has dated hundreds of girls over the past 15 years can settle down to a life of fidelity to Australia's most famous bikini model. Let's hope so as imagine having to watch another performance like we saw in the Packer compound on Saturday night.