The eclipse of economic rationalism?

 

(Above - this US cartoon from over a century ago reflects an enduring truth about capitalism)

Written by: (Contributed) on 23 January 2024

A recent report from the OECD has revealed how governments are increasingly using tax-payers money for state-controlled programs, as GDP continues to decline. (1) In fact, the global economy is on present track to record the slowest GDP growth in three decades. (2)

An official IMF projection has already concluded that Australia will face a major downturn to a mere 1.2 per cent economic growth this year. (3)

Economic rationalism became vogue thinking for the business-classes and corporate sector during the 1980s. International financial institutions including the World Bank and International Monetary Fund foisted programs of privatisation, de-regulation and liberalisation through trade bodies in order to keep the US at the centre of the global economy; globalisation became the order of the day. A prominent feature of economic rationalism was 'trickle-up' patterns whereby the rich became even richer at the expense of the mass of the population.

An OXFAM report in 2020, for example, established the richest one per cent of the world's population had grabbed two-thirds of the $42 trillion of 'new wealth', while the remaining 99 per cent acquired the remainder. (4) It also established that the fortunes of billionaires were increasing by US$2.7 billion each day, while 1.7 billion workers lived in countries, such as Australia, where wages were outpaced by inflation and CPI. (5)

An IMF report in late 2023 officially recorded that the global economy was 'limping along … not sprinting … growth remains slow and uneven … with widening divergences'. (6)

It is important to note, therefore, that the latest World Bank report, Global Economic Prospects, noted 'a grim outlook beyond the next two years' … the outlook is dark … what looms … is a wretched global growth performance'. (7) There has been a general decline in economic growth over decades: during the 2010s, the average was 3.1 per cent, it is now barely 2.4 per cent and not expected to rise higher. (8) Global trade figures, likewise, have also declined: it is now expected to be only half this year, of an annual average during the decade before the pandemic. (9)

The recent Global Risks Report released by the World Economic Forum, likewise, forecast 'a doomsday scenario of events which could occur in the future'. (10)

The business-classes and the corporate sector, however, were well aware of the looming problems and have already taken precautionary measures to safeguard their positions and stabilise economic systems. It was done with very little publicity and was often hidden amongst indirect forms of support; in South Australia, for example, many companies use government subsidies for 'training provision', with numerous courses linked to private training agencies.   

A significant increase in the role of state spending in recent years, nevertheless, has included 'an array of new spending needs, from military priorities to industrial policy'. (11) It marks a shift away from previously held economic rationalist models which emphasised a reduction in state support for business.  

The change has been particularly noticeable in the European Union where government spending is now accounting for half of the region’s economic output in 2023. (12) Higher interest rates, globally, have also made their mark; re-payment on existing debt levels has already been recorded rising from 104 per cent of GDP in 2019, to 112 per cent in 2023. (13) They are set to rise even higher.   

What is significant is that the business-classes and corporate sector expect governments to use tax-payers money as subsidies, while continuing to gloat over their own profits. Some of their businesses, furthermore, do not even pay tax. It has led to an official statement from a major European bank that 'this means many rich countries … have no alternative to raising tax revenues’. (14)

In conclusion, the economic rationalist business model foisted on countries by international financial institutions can be seen to not have produced healthy, vibrant economies, but those which require government support to maintain their existence.

Ordinary tax-payers are paying subsidies for the business-classes and corporate sector.  

It is a disgrace!

The old trade-union slogan from a century ago of 'I work, you work, they profit', would appear to still be holding and highly relevant!

1.     Tax take on the rise as borrowing declines, Australian, 20 December 2023.
2.     World Bank's 'hazard' warning, Australian, 10 January 2024.
3.     Global economy still limping along: IMF., Australian, 11 October 2023.
4.     Survival of the richest, OXFAM publication, 2020.
5.     Ibid.
6.     Australian, op.cit., 11 October 2023.
7.     Australian, op.cit., 10 January 2024.
8.     Ibid.
9.     Ibid.
10.   Black swans on horizon, Australian, 11 January 2024.
11.   Australian, op.cit., 20 December 2023.
12.   Ibid.
13.   Ibid.
14.   Ibid.

Make the Rich Pay...and then get rid of them!

 

Written by: Nick G. on 10 November 2022

In 2013, in response to people’s demands to know how much – or how little -tax was being paid by businesses on revenue from sales for products and services in Australia, the Australian Tax Office began publishing an annual spreadsheet of entity (companies) income and taxation.

Such disclosures had been fought for years by the Business Council of Australia, by the huge multinational corporations that were notorious as tax avoiders, and their supporters in the Liberal and National Parties.

The figures really only dealt with the tip of the iceberg: in 2013, only companies with a sales revenue of $100 million or more were subject to scrutiny.

The Liberal argued that for privately-owned companies (those without shareholders), the data was an invasion of privacy and the Turnbull government exempted them in November 2015. The exemption didn’t last long, but when they were put back into the scheme the threshold was raised to $200 million, thus limiting the number of companies involved.

The thresholds currently stand at $100 million or more for Australian public and foreign-owned corporate tax entities, and $200 million or more for Australian-owned resident private companies.

In other words, we still don’t know in general what capitalist entities earning income in Australia are paying, or avoiding, in terms of their taxation requirements.

What we do know is that around one-third of those entities that are the biggest companies in Australia (most of these are foreign-owned) are still not paying tax, and that this figure of one-third has been quite consistent since the ATO began publishing the data in 2013.

As a matter of record, the latest data set, for the 2020-21 financial year, shows that 2521 companies had income above the current thresholds, but 801, or 32%, paid no tax.

US multinational Chevron Australia Holdings Pty Ltd is not included in the 32% because, on Australian earnings of $9,163,203,498 it paid a massive $30! 

Two other Chevron entities, Chevron Australia Downstream Holdings Pty Ltd (income of $ 1,720,618,927) and Chevron Australia Products Pty Limited (income of $ 1,599,962,958) paid no tax. We suggest these latter two chip in $10 each to help out their unfortunate sibling.

Spare a thought too for Nature's Care Holdings Pty Ltd which, on an income of $ 107,981,823 could not see its way clear of having to pay $1 in tax.  Surely their accountants could have avoided that for them. The company has nothing to do with environmentalism but is a manufacturer of vitamins which in 2018 was taken over by a Chinese state-backed consortium China Jianyin Investment Ltd (JIC) and private equity fund Tamar Alliance owned by Chinese firms Citic Pacific Ltd and Dah Chong Hong Holdings 1828.HK.

Years ago, our Party advanced the tactical slogan “Make the Rich Pay”.  It was based on the premise that the rich weren’t paying enough for the social programs of the people.  It now transpires that the rich constantly strive, and often successfully, to pay nothing at all, year after year.

As an immediate demand, “Make the Rich Pay….something, anything” still resonates.

However, the days when we continue to tolerate the rich at all are drawing to a close.

Stop the Minerals Council agenda for attacks on the people and the environment.

Written by: Nick G. on 15 June 2020

The ruling class constantly discusses its tactics and refines its agenda in preparation for fresh attacks on the people.

Social, economic and climate crises are favoured moments for such reassessments. The Covid-19 pandemic has been one such crisis, with Morrison giving the green light to industry to “lead the way” out of the crisis with new policy frameworks designed to promote growth in the profitability of major foreign and local corporations.

Earlier this month we analysed new demands (really, attacks) promoted by the Australian Industry Group. But they are not the only ones lining up to tell the government what must be done in the wake of the pandemic.

According to its website, the Minerals Council of Australia (MCA) offers full membership to “companies directly involved in mining, prospecting or contracting activities relating to the obtaining, concentrating, smelting ore (sic) refining of minerals.”  It also offers associate membership to “companies which carry on as their principal business the supply of equipment, materials, services or capital to a company eligible for Full Membership.”

The MCA began its current campaign on May 15 when it released a paper called “Immediate Reform Priorities to Accelerate Economic Recovery”.

Changes to greenfields agreements

Amongst its recommendations were proposed changes to greenfields agreements. The MCA wants greenfields agreements to run for the life of the operation.

Greenfields agreements are those negotiated between an employer and a union before the company has started operations.  At this stage there are no workers on site and the company can strike a deal with a preferred union and exclude unions it dislikes. Greenfields agreements run for four years at which stage the workers are free to negotiate a new agreement, hopefully with improved wages and conditions. By seeking to extend greenfields agreements for the life of the company’s operations, the MCA hopes to lock workers out of any future claims based on increases in their productivity and on the company’s profitability.

The MCA is also seeking a waiver allowing a 12-month greenfield agreement to be made without any union involvement.  A case of the company conveniently agreeing with itself, since no-one else is involved.

On May 29  CEO Tania Constable expanded on these demands in a press release calling for simplifying awards and improving enterprise bargaining.

Only a simpleton would fail to ask of the MCA “simplify awards” for whom? “Improve” enterprise bargaining for whom? Unless we are very mistaken, these “simplifications” and “improvements” would be for the corporations, not the workers.

Changes to company tax rate

 The MCA paper also bleats that “Australia’s company tax rate of 30 per cent is too high and not internationally competitive.” It calls for a reduction of the company tax rate.

Each year for the last five years, the Australian Tax Office, under massive public pressure to tell us what major companies are, or are not, paying in tax, has released an analysis of company tax payments.  The company tax rate is set at 30%. Hardly any companies pay that much. They retain any army of accountants to avoid taxes. For each of the five years for which this data is available, more than 300 of the biggest foreign and local corporations have paid not a single cent in tax on earnings in the hundreds of millions, indeed billions, of dollars.

Those that do pay tax manage to minimise their obligations and pay far below the 30% about which the MCA is complaining.

The ten biggest members of the MCA are listed below, with their Australian earnings, tax paid and the rate

Company	Ownership	Brief description	2017-18 Aust revenue	2017-18 Aust tax paid and rate of tax
Rio Tinto	Anglo-Australian	the world's second largest metals and mining corporation	33,176,084,964	3,170,873,230 (9.5%)
Glencore	British	ranked tenth in the Fortune Global 500 list of the world's largest companies	15,694,206,513	239,872,883 (1.5%)
BHP	Anglo-Australian	the world's largest mining company	36,685,553,130	3,523,250,116 (9.6%)
Anglo-American	South African	the world's largest producer of platinum	4,720,895,769	311,947,890 (6.5%)
Newmont	US	the world’s largest gold mining company	2,399,681,101	266,474,855 (11%)
Peabody	US	largest private-sector coal company in the world	4,323,880,463	0
Yancoal	Chinese	Australia's largest pure-coal producer	4,206,512,986	0
COAL21	Various	includes 26 investors from among black coal                 producers in Australia	n/a	n/a
Newcrest	US	subsidiary of the world's second largest gold producer	428,492,069	39,052,552 (9.1%)
Whitehaven	Australian	Biggest ASX-listed coal miner	2,307,717,714	0

The average tax rate of these leading MCA members is 5.2%.  Three paid no tax at all.  The MCA, which complains that its members are operating under an internationally uncompetitive tax system, are fleecing the Australian people of billions of dollars in unpaid taxes.

Eliminate red, black and green tape

 The MCA wants its members’ projects “fast-tracked” by the elimination of red and green tape. It wants inward and outward investment made easier, it wants the clean energy bodies the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC) to invest in fossil fuels, and it wants the government to support the development of nuclear energy in Australia.

The MCA pays lip service to “forming partnerships with Indigenous Australians” at the same time as its biggest member company, Rio Tinto, shows its callous disregard for Indigenous culture by blasting to smithereens a cave which records 46,000 years of Indigenous activity.

The MCA boasts about high wages in the mining sector as if such wages have been provided out of the goodness of the corporate heart.

Nothing could be further from the truth.  Wages are high in this sector because they have been fought for by generations of working class Australians. They are part compensation for the often remote locations of mining operations, for the destabilising fly-in fly-out and long day shift patterns, and dirty and dangerous work. If wishes were fishes, we’d all swim in this sea.

The MCA has a common agenda with the Australia Industry Group and other peak employer bodies such as the Business Council of Australia and the Property Council.

The government has succeeded in seducing the ACTU into sitting at its table.

Workers must ensure that their own unions stay independent of attempts to buy the unions off, to dampen their efforts to protect wages and conditions and shared community concerns.

Workers should be vigilant and ensure that an independent working class agenda confronts the combined agendas of government and peak employer organisations.

 Dare to struggle, dare to win!

……………………………………………………………….

Big multinationals still dodging tax

Written by: Nick G. on 13 December 2019

Latest figures from the Australian Tax Office (ATO) show that big multinational corporations are continuing to evade their obligations to pay tax on their Australian earnings. They have been doing this for many years, but the ATO has only made data available since the 2013-14 financial year.

The figures for the 2017-18 financial year, the fifth in a series of annual reports on the tax status of entities considered to be the biggest 2200 companies in Australia, showed 32% paid no tax on billions of dollars of Australia revenue.

The figures cover public and foreign-owned corporations with a total income of $100 million or more, and Australian-owned resident private companies with a total income of $200 million or more.  These cut-off points actually enable thousands of very profitable large foreign and local companies to avoid public scrutiny.

Australian tax laws require companies to pay a 30% tax rate on their profits.  Unlike individual tax-payers, they are not taxed on their income, but on what they can cleverly claim to be their annual profits.

The following table lists the income, tax payable and tax paid by the first 5 (alphabetically listed) member companies of the Business Council of Australia whose 100 or so members constitute the core of the Australian ruling class.

 

BCA Member Company	Total Income	Tax Payable	Tax Paid
Accenture	2,139,397,646	110,877,856	32,392,961
AGL Energy Ltd	11,937,111,946	9,526,762	2,786,458
Alcoa of Australia Ltd	4,606,084,558	1,474,280,687	438,797,274
Alumina Ltd	392,076,018	497,596,404	Nil
Amcor Ltd	5,081,720,569	Nil	Nil
Total	24,156,390,737	2,092,281,709	473,976,333

The figures show that these five companies alone were able to reduce their tax payable to a mere 8.6% of their income, and paid tax of only 1.9% on that income.

I don’t know many workers who can evade tax to that extent!

The rorts embedded in the company tax system that allow tax refusal on this scale include:

• carrying over losses from previous years,
• inbound supply chain rorts where local subsidiaries of multinational companies are charged over the odds for goods they sell in Australia, locking the profit away offshore,
• related party finance deals under which offshore companies in a multinational loan their Australian associates money at usurious rates, making sure little or no profit is made locally, and
• companies selling intellectual property, such as patents, to an offshore affiliate for less than the IP cost to develop and then lease it back.

Although under significant public pressure to make companies comply with their tax obligations, the Australian Tax Office treads very gently around the issue.

ATO deputy commissioner Rebecca Saint claimed that “voluntary compliance with tax law by big companies” had improved, but was still in need of further improvement.

So, the core of the ruling class, by the ATO’s own admission, is subject only to “voluntary compliance” with Australian tax law.

That means big foreign-owned multinationals like ExxonMobil which savaged its workforce at Longford in Victoria, demanding they accept wage cuts and cuts to annual leave and shift loading, paid no tax on the income their workers had made for them.

For the record, ExxonMobil paid no tax on Australian earnings of $9,617,324,823 in 2013-14; on $8,464,272,972 in 2014-15; on $6,728,562,395 in 2015-16; on $8,360,800,462 in 2016-17; and now, on $9,234,164,781 in 2017-18.  So, over five years, ExxonMobil has had an income of $42.3 billion in Australia, and paid not one single cent to the AT0!

Australia’s richest man, Anthony Pratt, controls Pratt Consolidated Holdings which again paid no tax, despite a turnover of $2.8bn and a taxable income of $59.1m.

Collectively, these parasites siphon off and keep for themselves so much of the immense wealth created by Australia’s working people.  This is wealth that could more than pay for the improvements in education, health, community and social services, for reparations and compensation to First Peoples, and for action on climate change and the environment (see our recently released Draft Fighting Program). 

We must force the rich to pay!

We must have the multinationals in our key industries nationalised!

We must aim for an independent and socialist Australian Commonwealth where wreath is indeed held in common, by the people, for the people!

Corporate tax avoidance alive and well

Nick G.

The Australian Tax Office has just released the 2015-16 report on taxes paid by Australia’s largest companies – and it shows no real improvement on the scandalous non-payment of taxes by some of these big corporations.

In the 2013-14 financial year, nearly 38 per cent of big corporates paid zero tax.

In 2014-15 36 per cent of large firms had zero tax payable.

For the most recent financial year, 2015-16, 730 out of 2044 of the biggest corporations, or 30.6%, paid no tax.  It’s a decrease, but not worth the hype by the government and the ATO about their “successful” cracking down on corporate tax avoidance.

Exxon-Mobil, currently embroiled in the long-running Longford dispute in which it is trying to force maintenance workers onto new contracts with pay cuts of between 15 per cent and 30 per cent, has paid no tax on its Australian earnings for three years in a row.

In 2013-14 it earned $9.617 billion; in 2014-15, it earned $8.464 billion; and in 2015-16 it earned $6.78 billion, for a total over three years of nearly $25 billion. No wonder Julie Bishop crowed when its global CEO Rex Tillerson became Trump’s Secretary of State, that he was well-known in Australia and had many friends here. He does in the traitor class that works for imperialism, but not amongst the working people who his company is trying to cheat out of their wages.

The ATO report lists public and foreign owned entities (including foreign owned private companies) with total income of $100 million or more, as well as Australian-owned resident private entities with total income of $200 million or more, in tax returns for the 2015-16 income year.

Total corporate tax avoidance is therefore much bigger than the two thousand biggest companies.

In a comment on last year’s report (for the 2014-15 financial year), we said:

The ATO, which comes down hard on any wage-earner who tries to avoid paying tax, warned that “not paying tax does not equate to tax avoidance” and that “wealthy Australians made a substantial contribution to the nation’s economy”.

We say that big corporations avoiding their responsibility to pay tax epitomise the selfishness and greed of the capitalist system.

We say that big corporations avoiding their responsibility to pay tax are thieves stealing from social funds for education, health and social welfare services.

We say that big corporations avoiding their responsibility to pay tax will lead more and more Australians to struggle for anti-imperialist independence and socialism.

Years ago our party advanced the tactical slogan “Make the Rich Pay”.  It was based on the premise that the rich weren’t paying enough for the social programs of the people.  It now transpires that the rich constantly strive, and often successfully, to pay nothing at all.

As an immediate demand, “Make the Rich Pay….something, anything” still resonates.

However, the days when we continue to tolerate the rich at all are drawing to a close.

Not a word of that comment needs changing.

No 'Paradise Lost' for multinationals' tax evasions

Max O.

At the same time that the released "Paradise Papers" exposed the nefarious corporate tax havens and their tax scam evasions, the Turnball Coalition government was once again promoting the case for lowering the company tax rate. Capitalist roaders have plenty of gall when it comes to tax and profits. It demonstrates the ruthless madness of this economic system and how its proponents never cease to continually devise more of their twisted, miserly schemes.

As a result of the International Consortium of Investigative Journalists (ICIJ) and a number of newspapers, particularly the German newspaper Süddetsche Zeitung, releasing confidential documents from a law firm and a couple of tax minimization companies (Appleby,  Estera and Asiaciti Trust), the world's public once again have become aware of how the mighty multinationals and the filthy rich evade paying tax.

Coming almost two years after "Panama Papers" uncovered a mountain of files from the law firm Mossack Fonseca which concealed the super-rich's wealth, the "Paradise Papers" likewise reveal  that celebrities such as the Queen of England and Australia's former INXS superstar Michael Hutchence, stashed away their fortunes in tax haven islands around the Atlantic.

The leaked “Paradise Papers" also incriminate major corporations across the globe such as Allianz, Allergan, Apple, Facebook, McDonald's, Nike, Siemens, Wallmart, Uber and Yahoo! who use off-shore accounts to profit shift and so avoid taxation.

Tax evaders in Australia: Loy Yang Generator story

The "Paradise Papers" disclosed that Loy Yang B coal-fired plant, owned by the British-listed company International Power, which in turn was owned by the French multinational GDF Suez, recently rebadged as Engie, moved $1bn offshore while pilfering $117m from Australian taxpayers.
The $117m rip-off occurred when the Gillard Labor government's carbon tax scheme also incorporated a $5.5bn compensation package to multinational energy polluters. Loy Yang B was also presented with 4.87m free carbon units which would allow it to emit pollution free for 4 years.

Bruce Mountain from CME, an Australian market analysis firm, showed that generators were passing on carbon tax cost to consumers and keeping the compensation as profit. The Paradise documents disclosed that soon after receiving the $177m compensation, Loy Yang B income shifted $1bn in dividends out of its Australian operation to its owner Engie, through the fittingly named "Project Salmon".

The Cayman Island offices of the offshore law firm Appleby were approached to implement "Project Salmon" as revealed by the "Paradise Papers". According to the tax office's corporate transparency report Loy Yang Holdings did not pay any tax in 2014-15, even though records show an income of $452m. In 2013-14 with an income of $760m, it paid $26.4m in tax.

Tax evaders in Australia: Glencore's Bermuda triangle story

Global mining giant Glencore, the world’s largest mining company, has used cross-currency swaps of up to $25bn, to evade tax in Australia. Since its entry into the Australian market in the mid-1990s, Glencore has attracted considerable controversy over its black lung and lead blood poisoning among its workforce, degradation of sacred Indigenous lands and tax evasion strategies.

The "Paradise Papers" disclosed that one of Appleby’s largest clients, Glencore was using huge cross-currency interest rate swaps between arms of multinational companies to enter into deals at unrealistic, non-commercial rates, then using the swaps as a way to shift profits from high-tax to low-tax jurisdictions.

It showed that on 12 April 2013 two Bermuda-based arms of Glencore – Glencore Capital and Glencore Finance (Bermuda) – changed $25bn in Australian dollars to US dollars through Glencore Australia Investment Holdings. Glencore Australia Finance, engaged in currency swaps with Bermuda-based Glencore Capital: for A$25m on 15 April 2013; and A$10m on 24 June.

Glencore, who took over XStrata in 2013, has operated in Australia for nearly two decades, with 24 mines in three mainland states and the Northern Territory. The company has attracted fierce criticism from Indigenous activists for its contamination of McArthur River where it has mined. The McArthur River mine in the Northern Territory, is one of the world’s largest zinc and lead mines and has been besieged by community opposition.

Glencore paid nothing in royalties to the Northern Territory government in 2015 and 2016 for McArthur River mining, by offsetting its capital investments to reduce its royalties bill to nothing.

Tax system is rigged for the giant multinationals

Whilst the taxation system is rigged for the super-rich individuals, whose net worth rises well beyond the millions of dollars, it is primarily there to enable the giant corporations to evade paying any tax. Despite the fact that trillions of dollars are hidden beyond the reach of taxation jurisdiction, Australia's ruling class in the form of the Business Council has the audacity to campaign for further reduction of company tax.

These trillions are kept out of sight, locked away by the capitalist rulers, and workers are told that cut backs to health care, education and pensions are needed to balance the government budget. The "Paradise Papers" confirm that the capitalist economic system we live under is bankrupt as far as the working class is concerned. It is the workers who create value - surplus value - and the capitalist class skims it off, demonstrating the fact that capitalists are parasites, who are not necessary for human development and production.