Sunday, January 29, 2023

Address the mess Albo – fossil super profits and soaring energy bills – now may be your only time

Compare Denmark in the 1980’s

Denmark’s State revenue

State revenue from the North Sea activities derives from three elements.

State revenue from the North Sea activities derives from hydrocarbon tax (a rate of 52 per cent) and corporate income tax (a rate of 25 per cent).

In addition to taxes and fees, the Danish state receives revenue from the North Sea through Nordsøfonden, which has managed the state’s 20 per cent share of all new licences since 2005. Since 9 July 2012, Nordsøfonden has also managed the state’s 20 per cent share of Dansk Undergrunds Consortium (DUC), whose other partners are A.P. Møller – Mærsk, Shell and Chevron.

State revenue from hydrocarbon production in the North Sea aggregated about DKK 404 billion in 2014 prices in the period 1973-2014. Total state revenue for 2014 has been calculated at DKK 18.8 billion.

Multinational tax avoidance cost Australia $6bn in 2014

As Australia pays through the nose for fuel

Exporters reap windfall profits and

Pay No Tax

ExxonMobil told a Senate inquiry on Wednesday 14th Mardch 2018 that it did not expect to pay any Australian corporate tax

until 2021, meaning it would not have paid the tax for eight years, and was again accused of misleading the inquiry over its links to tax havens.

Address the mess Albo – fossil super profits and soaring energy bills – now may be your only time

The new Labor government of Anthony Albanese has a unique political opportunity, a one-off perhaps, to reform.

Michael West reports:

The new Labor government of Anthony Albanese has a unique political opportunity, a one-off perhaps, to reform. The Tory government has slapped a super profits tax on multinational gas giants in the UK. Can Labor go in to bat for the people of Australia over its fossil fuel donors? Michael West reports.

So shonky, so deceitful is the Coalition that they even went so far as to change the law heading into the election last weekend, just to cover up the explosion in energy prices.

This sneaky amendment to the Electricity Retail code at the 11th hour allowed Angus Taylor and Josh Frydenberg to delay the shocking news and campaign on lower energy prices, even when they knew that energy bills were spiralling 30%.

Energy poverty is now upon us. Yet the gas companies are reaping astronomical profits. Is the answer not abundantly clear?

In the UK overnight they just slapped a super profits tax on the oil and gas giants – detail below – yet here Down Under we are still showering these tax cheats with $12bn a year in subsidies, even for technology which doesn’t work, such as subsidies for Carbon Capture and Storage (CCS), which will only prolong the life of coal and gas projects.

There is a unique, historic opportunity to reform, right now, to address the mess. Dither, and the opportunity is lost.

Payback time

To paraphrase, Albanese can say to the Minerals Council of Australia and the Business Council of Australia: “We helped you through the pandemic. Your members don’t pay much tax, if any, on their gigantic profits. The public, ordinary Australians helped you, now it’s time for you to help them. Pay your fair share”.

Thanks to the reckless JobKeeper waste from Frydenberg, which sent $40bn in public money straight to the bottom line of companies who didn’t need it, even companies enjoying rising revenues, the government has a unique mandate for meaningful reform.

There is no sign from the new government as yet, ALP coffers fuelled by fossil fuel donations, just like the Liberals and Nationals, that it has the stomach to tackle the big issues.

But they do have a licence, indeed a moral obligation, and the appetite for reform will inexorably diminish over time. They can point to the rise of the Third Force in Australian politics, the Greens and the independents with almost a third of the vote. They can say Australians have spoken. They can say the Coalition has failed miserably to represent people over corporations. All of this is true, surely truer than honouring lame, small-target election promises.

Do they really have to stay true to $200bn in tax cuts for the wealthy? Or childcare for people with millions in assets, or third-rate action on climate, or $12bn in subsidies for fossil fuels?

Circumstances have changed, they are changing dramatically before our eyes. And with that, comes a duty to change policy.

The Boris ballgame

Leadership has come from unusual quarters, the besieged regime of Boris Johnson’s Tory party in the UK. Under pressure from its “Partygate” imbroglio, Boris and his chaps moved overnight to pump up Great Britain’s Exchequer, indeed the Tories’ waning popularity too, by moving big time on tax reform.

Following Italy’s lead, the Conservatives have put a 25% windfall profits tax on the oil and gas sector. Producers – the BPs and Shells of the world – had long been charging international market prices in their domestic market, reaping super profits.

The UK levy is designed to fund £650 to 8 million low income households struggling with their energy bills  – and cancel £400 in loans.

The 25% levy is on top of the 40% rate the companies already pay (which is higher than the 19% general corporate rate). So they are no doubt screaming blue murder; but the fact is, as here, the rate is meaningless. The reality is their amortisation and depreciation breaks mean they pay almost nothing. And now, the oil and gas majors will not be allowed to offset prior year’s losses to eliminate their tax.

Australia did have a 22.5% mining tax from 2012-14, but unlike the UK levy, it was flawed, allowing mining companies to revalue their mines using commodities boom prices, then set off this new higher “starting base allowance” against any tax.

Ergo, no material tax was ever paid. They gamed the government, forced a prime minister out of office in Kevin Rudd, with the connivance of Rupert Murdoch’s News Corp, and there has been nothing much done since to tackle the erosion of Australia’s tax base, or in layman’s terms, the robbery of this country by foreign corporations.

Now, the profits being made by these same corporations, at the expenseof energy customers, is so immense, surely the new government has a licence to move on behalf of its people rather than kowtow to its donors.

Michael West established to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences.

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