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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.

Total operating profits for the full 12 months to the end of September reached all-time records in several industry sectors.

Winners and losers

The big winners are companies in:

  • finance and insurance;
  • mining;
  • manufacturing;
  • electricity, gas, water and waste;
  • professional, scientific and technical services; and
  • rental hiring and real estate.

Not all companies are surging, however. Lagging sectors include:

  • accommodation and food;
  • retail;
  • wholesale;
  • construction; and
  • arts and recreation.

Finance and insurance

Profits for the 12 months to September were $7.6 billion, more than double the $3.6 billion for the equivalent period a year ago. This is the third year profits have strengthened. Compared with three years ago, gross profits are up 128%.

The big miners

Mining profits for the last 12 months were up an extraordinary 66.4% over last year to $108.8 billion. That sets a new all-time record, beating the previous best, back in 2011, by $14.5 billion.

The three big foreign miners Rio Tinto, BHP and Fortescue have recently announced payouts of more than $9.5 billion in dividends to their foreign and local shareholders.

Professional, scientific and technical services

Profits in this sector have surged 64.3% over the preceding 12 months, to the highest level on record.

Manufacturing

This sector continues its recent recovery with profits up an impressive 12.0% to $30.5 billion in the 12 months to September. This is the fourth consecutive annual rise, and by far the strongest.

Sectors still subdued

As is inevitable when jobs, wages, salaries and pensions are depressed, food and accommodation companies are struggling, with profits down an alarming 19.2% to just $5.4 billion.

Retail and wholesale both experienced small profit rises, but assessed over the last three years, returns have been below the rate of inflation and population rises. Construction profits increased over the disastrous level a year earlier, but remain well below levels of the preceding four years.

Company profits overall

The crucial indicator, of course, is gross profits for all sectors combined. This reached a new record: $318.7 billion — up an astonishing  27.1% on the same period a year ago. That’s the highest annual percentage increase since 2001, when the economy was recovering from the early 2000s global recession.

Company taxes collected

Despite profits at all-time highs, corporate taxes collected by the Turnbull government are at historic lows. So far this financial year, from July to October, just $23.6 billion has been collected. That is well below the $25.7 billion collected over the same period in 2011, and the $27.0 billion in 2012 and the $26.4 billion in 2013. Those years were towards the end of the global financial crisis when corporate profits were well down on current levels.

Two economies

Clearly, Australia’s national wealth and income are increasing rapidly, as is happening across the developed world. This is evident in the record streak of trade balances, the value of the sharemarket, the surge in the wealth of the top 10% of Australians, the inexorable growth in gross domestic product – a world-beating 26 years – and, now, booming corporate profits.

The tragedy for Australia is that, simultaneously, other indicators show that most citizens are missing out badly on their fair share of the economic pie.

Wage rises have been at record lows, more than 700,000 people have been unemployed for 49 months straight and the share of the nation’s wealth owned by the bottom half of Australians has declined over the last four years.

The way forward

The critical area the government must now examine, in light of Monday’s profits data, is company tax paid by the roaring corporations.

If collections were anywhere near the nominal rate payable under Australian law, or the rates historically collected, there would be funds aplenty for all current fiscal and social challenges.

Peter Fray

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