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Economy

Dec 8, 2017

Company profits rocket skyward

Yet, despite profits at all-time highs, corporate taxes collected by the Turnbull government are at historic lows.

Alan Austin — Freelance journalist

Alan Austin

Freelance journalist

Australia’s big corporations are enjoying the strongest boom in revenue and profits in history. Monday’s figures from the Australian Bureau of Statistics show gross operating profits for the September quarter were a thumping $79.2 billion. That’s the highest for any September quarter ever. It is third-highest result for any quarter, beaten only by the previous two quarters this calendar year. But only by a smidgeon.

10 comments

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10 thoughts on “Company profits rocket skyward

  1. Itsarort

    That’s a serious disparity which I don’t expect to see in the mainstream media anytime soon.

  2. [email protected]

    How many staff were removed from the ATO by Abbott and Turnbull?

  3. DavidH

    GST Ramblings
    We should look closely at the real contribution of mining to Australia – billions of dollars GST are refunded to the mining industry each year. The extractive industries contribution to the economy is a lot less than most realise.

    This refund is treated as a balance sheet item and does not impact on the profit or loss – or directly affect any other tax the industry pays.
    • For most exporters, the current GST policy seems rational – those industries with substantial local “value add” such as agriculture or manufacturing.
    • Extractive industries, on the other hand, could be viewed differently. These exports have a minimal Australian “value added” component and appear to make a lower contribution to the economy. In fact, to the extent that they reduce competitiveness, they have a negative impact on the other sectors of the economy.
    • The mining and gas industry is the largest beneficiary of the current GST policy.

    Applying GST to the extractive industries (without allowing for any volume/pricing adjustment) would yield in the order of $20-30b pa.

  4. editorbruce

    I distinctly remember hearing Treasurer Morrison telling us that company taxes have to be cut so profits can go up so wages can rise. Now it’s clear that profits have been going gangbusters but wages not to speak of. Treasurer Morrison?

    1. graybul

      Would like to think you would get an acknowledgment EditorB but Treasurer M’s track record . . . well, not so good eh? The trickle down principle is only meant to trickle very slowly, and mostly not down; but out . . . . .

      1. klewso

        As for “trickle down” : don’t eat the yellow snow.

    2. klewso

      How true. How many times have we heard it, according to Scrotonomic Theory – “Higher profits go to higher wages”?

  5. AR

    In the last 50 years, the contributions to Treasury in tax from individuals and corporations has virtually reversed, 60%+ from individuals – excluding GST – and 10%+ from corporations.
    Bring back the 60s, full employment, one income more than sufficient to buy or build a house and have a family.

  6. Robert Garnett

    The Labour Party (Hawke & Keating) followed up by the Tory Party and the Agrarian Socialists have pursued the agenda of neo-liberal bastardry (it’s not “reform”) since the end of the seventies. This reform is characterized by:

    – Privatisation of virtually all government services including critical infrastucture the worst example of which is the electricity system

    – The implementation of user pays for everything with only lip service paid to “community obligations.

    – The imposition of a flat tax, the GST which impacts far more on the middle class and poor than the owners of the country.

    – The failure to pursue rampant tax avoidance by Australian and Foreign corporations

    – The Implementation of draconian Labour Laws that take way the right of working people to strike, but also to pursue social agendas critical to there well-being.

    – Persue Investor Rights agreements with foreign countries and then claim that they are trying to foster “free trade” which instead take away Australia’s right to make economic policies that serve tordinatry people and instead of US or European multinationals.

    All of these policies aimed to do two things:
    – Reduce the power participation of ordinary Australians in economic decisions
    – Increase the power and influence of capital especially foreign capital.
    In other words to make our democracy democratic in the technical sense, but to ensure that democracy in the practical sense was reduced to virtually nothing.

    These two aims have been met spectacularly.

    The best example if the electricity system.

    Kennet and His Federal counterpart Ralph Willis promised that our electrical supply would be cheaper, more reliable and higher quality. I will leave the readers to judge the results for themselves.

    The foreign participants have gamed the Government in a whole host of ways. International Power conned the Australian Competition and Consumer Commission into letting them buy Loy Yang B. This resulted in the successors Engie being able to pull Hazelwood from the market to put a premium on Loy Yang B when they sold it.

    We now have a panicky state government installing 100 Diesel Generators at taxpayer expense to get us out of the poo this summer. No one knows how much it will cost as no doubt it is “commercial in confidence” , but my bet is they won’t get much change out of $6 million and that’s only if they don’t have to run them. Add another $5 to $10 million for for fuel costs if they have to run them for only a couple of days.

    If the ACCC had had enough nouse to see through the snake oil peddled by Mssrs Concanon and Orr of International Power when the ACCC were evaluating the effects on competition we would be in a much better position now.

    The Chief Tory, Malcom Turnbull has said we must be more competitive with out corporate tax rates. Cutting coporate taxes he says will increase jobs. Why?

    The coporations are making high profits in the face of stagnant demand. This is as a consequence of competitive failure, government subsidy and a phenomenon I shall call the Greenspan Factor.

    Alan Greenspan said that

    “if the workers are more insecure, that’s very healthy for the society” because “they’ll serve the masters gladly and passively.”

    In other words people are frightened to ask for or fight for pay rises. Thus corporate wage costs are lower.
    If we let the corporations have even more money through tax cuts WHY will they employ more people? If the demand for goods and services was increasing and the demand was outstripping supply, surely they would be already, putting on more people to make up the supply shortfall. If they were not then they are either confident that barriers to entry in their market are too high for new entrants and are simply doing a bit of gouging or they are asleep at the wheel.

    Of course the tax cuts are not about JOBS they are about PROFITS. To understand what is going on, whenever a politician of ANY persuasion mentions JOBS simply substitute the word JOBS with the word PROFITS and you will understand what is really going on.

    Of course one might argue that these extra profits will get spent on Australian goods and services by the lucky investors who reap the tax reduction rewards, except that this just never happens. Look at the US if you don’t believe me.

    Inequality and job security in Australia are closely following those the the UK and US and its for one reason the neo liberal philosophy, of Hayek and Friedman and their political fellow travelers, Reagon, Thatcher, Hawke, Keating, Kennet, Costello Abbot et al.

    What to do about it. Don’t vote for the bastards. Vote independent.

    Write to you local member and keep writing.

    Get your friends to write.

    Get out on the streets.

    Lets get some real democracy.

    Ask for a public survey like the mariage rights survey for all major policy decisions.

    Ask for some actual practical democracy that serves ordinary people not just the rich elites.

  7. Marjorie Carless

    All the clever words and numbers just don’t say it. These results are absolutely disgusting for the working people of this country. It appears to me that the strategies of the past 30/40 years by our governments are bringing home the bacon at last and in a big way. Up to 128% profit is obscene to me.