Rio Tinto CEO Jean-Sebastien Jacques.

While Malcolm Turnbull was preparing for and undertaking an otherwise pointless trip to the United States to generate some positive publicity for corporate tax cuts, Australian business was demonstrating how his arguments about the need for them simply don’t stack up.

The December 31 corporate reporting season that ends this week will have been one of the best, if not the best, for listed Australian companies since the financial crisis erupted a decade ago — and all under Australia’s supposedly onerous company tax regime. The half-year reports (and full-year for some groups, such as Rio Tinto, Oz Minerals, Coca Cola Amatil and Adelaide Brighton) has been marked by more companies than expected reporting higher profits.

True, there were some embarrassing blobs of red in from QBE (today), Wesfarmers (last Thursday), Prime Media (last week), and Mayne Pharma (Friday). But they were the exception rather than the rule in an otherwise strong reporting season. AMP’s Chief Economist, Dr Shane Oliver did the numbers:

46% of results have exceeded expectations (against a norm of 44%), 73% of companies have seen profits rise from a year ago (compared to a norm of 65%) which is the strongest since the GFC, and 66% have increased dividends from a year ago with 27% keeping them flat which is a sign of ongoing confidence in the outlook.

This week sees the last of the listed companies with December 31 balance dates reporting — BlueScope Steel (a skilled player of the anti-dumping and government aid game, as well as cutting wages and conditions) reports today along with QBE (which will report big losses). Wednesday sees the half year report from Harvey Norman retailing group, chaired by serial moaner, Gerry Harvey. Petrol retailer Caltex Australia reports its full-year result; it is one of the major petrol retailing groups in the country that are making a motza from high margins — so high, the ACCC is actively urging motorists to shop around to avoid being ripped off.

Naturally, with additional after-tax cash to hand, and with the government insisting business needs more after-tax cash in order to invest and pay higher wages, you’d assume these companies to have been busy announcing a welter of new spending plans and breaking the drought for Australia’s private sector wage earners, stuck at zero real wage growth. 

Instead, the money is flowing back to shareholders: BHP, OZ Minerals, Qantas, Rio Tinto, CBA, Woolworths have all handed back more money to shareholders via buybacks or higher dividends (and, of course, higher bonuses and performance share grants to CEO, boards and other senior executives in these companies). 

Consider Rio Tinto. A couple of weeks ago, Rio announced a record dividend totalling $5.2 billion for shareholders and an additional $1 billion share buyback program on top of the share buyback program it has been conducting since September. But strangely, CEO Jean-Sebastien Jacques — who tagged along with Turnbull’s fatuous Washington visit — was complaining overnight that he’ll switch investment to the United States unless Australia gives him a tax windfall to make even more money out of the Pilbara iron ore mines, which are the only world-class asset Rio now owns.

As both Rio’s recent announcement, and the US tax cut experience demonstrates, Jacques and his fellow CEOs will simply hand out even bigger dividends and launch more share buybacks with higher after-tax profits.

This charade by politicians, journalists and CEOs is so ridiculous, Pauline Hanson emerges as one talking good sense. Her column in The Australian, presumably ghost-written by someone in her office, makes the obvious point that there’s no guarantee that the government’s tax handout won’t simply be handed back to investors — and that it’s unfunded, just like Trump’s trillion-dollar deficit inflating cuts.

When Pauline Hanson talks more sense than you, you might want to stop and think how silly you’re looking.

Peter Fray

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