Max Chandler-Mather (Griffith, Australian Greens) Share this | Link to this | Hansard source

I move:

That this House:

(1) notes the Government's failure to reign in excessive profits from corporations which are hurting everyday people by driving inflation and worsening the cost of living crisis; and

(2) calls on the Government to tax super profits and make the big corporations pay their fair share of tax so that everyone can have a better life.

There are 1.5 million mortgage holders at risk of mortgage stress. There are 62 per cent of renters in rental stress. But, in the same year in which we've been in one of the worst housing crises we have seen in generations, the Commonwealth Bank has recorded a record $10 billion in profit. There are people going to the supermarket right now making tough choices between feeding their kids and paying the rent; they're finding their grocery bills going up every week. But, at the same time that that is happening, Coles and Woolworths have just recorded record profits. In fact, Coles has just recorded a $1.1 billion profit and Woolworths a $1.62 billion profit. Their profits are going up at the same time as people's household costs, financial stress and cost of living are going up.

We have a political and economic system so entirely stacked against ordinary people that we can have Coles and Woolworths come out and talk about how they're going to crack down on more theft occurring at supermarkets while, at the same time, they are robbing millions of Australians blind, abusing their market power and driving up costs, while we have a government—a Labor government—unwilling to hold them to account. I mean, the gall of these massive corporations—making massive profits, then turning it around and saying: 'We don't understand why theft is going up'! Well, what happens when a single mum is at the supermarket and knows that if she can steal a carton of milk then she'll be able to make sure that her kids get a good feed the next day? And all of a sudden, society and the media are focusing on that and not focusing on the fact that these corporations are robbing Australians blind.

Now, there is entirely a solution that the government could pursue. Indeed, we've had it costed by the Parliamentary Budget Office. The government could introduce a super-profits tax on these corporations. They could make clear to the Commonwealth Bank, to Coles, to Woolworths and to the gas corporations, who are robbing us blind: 'Enough is enough. Every time you earn a super profit, every time you price-gouge Australians, then that will be taxed and we will raise tens of billions of dollars that we can put back towards giving relief to renters and giving relief to mortgage holders. We can use that money to incentivise a freeze and cap on rent increases. We can use it to bring dental into Medicare. We can use it to raise the pension and other government payments above the poverty line, to ensure everyone in this country lives a good life.'

Perhaps the cruellest irony is that, every time inflation has gone up over the last 24 months, the Reserve Bank has solemnly said to Australians: 'The way to deal with the inflation crisis is to raise interest rates.' All that has done is to put pain on mortgage holders, on renters and on ordinary people doing it tough, and it has done nothing to address the real cause of the inflation crisis, which is massive corporate super-profits. Does anyone seriously believe that it's workers and wages that are causing the inflation crisis? A lot of economists now have made it very clear that what is causing the inflation crisis, what is causing the cost of living crisis, is companies like Coles and Woolworths abusing their duopoly power and driving up the cost of living, driving up prices and driving up profits. Then the only solution that our government has had, really, has been to rely on the Reserve Bank to jack up interest rates, which has only put people in more financial stress and more pain and punished the people who have nothing to do with this, while allowing banks like the Commonwealth Bank to drive up their profits even more. That's how rigged this system is against ordinary people.

Now, we do have solutions: a freeze and cap on rent increases; taxing super-profits, to make sure those corporations are disincentivised from driving up their prices because they'll know that if they do then we'll just tax that and use that money to do things like bringing dental into Medicare; building public and affordable housing; and fully funding our public education system, so the public schools aren't forced to charge exorbitant student fees—things that have been done before in countries around the world.

Not only that, but also we could, for instance, scrap student debt. That's the other deep irony—the cruel feedback mechanism that is screwing people over: every time Coles, Woolworths and the Commonwealth Bank drive up their prices, thus driving up inflation and the rate of CPI, when student debt is indexed, that debt goes up even further. Indeed, we've got a situation where, while gas corporations are making record profits, the government's so-called gas tax is going to raise only $2.5 billion over the next four years, at the same time as the government is about to make $5 billion from indexing student debt.

We have a political and economic system entirely stacked against ordinary people and a government unwilling to take on Coles, Woolworths, the Commonwealth Bank and the other multinational corporations currently screwing Australians over. And I think a lot of people are fed up with it.

Milton Dick (Speaker) Share this | Link to this | Hansard source

Is the motion seconded?

Stephen Bates (Brisbane, Australian Greens) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

Andrew Charlton (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

What a pleasure to get an economics lesson from the Greens! We had an explanation that apparently the superprofits of Australian corporations are 'robbing Australians, causing inflation and preventing us from investing in pensions, dental and many other virtues'. And off he goes because he does not want to hear the error of all of his statistics. He referred to the superprofits tax that he would put onto Coles. This is going to fund the pensions and this is going to fund dental in Australia. When you have a superprofits tax, that superprofits tax sits above profits made at five per cent plus the long-term bond rates. The long-term bond rate is around four per cent, so that would be a nine per cent profit margin. What right now in the latest accounts is Coles profit margin? How far above nine per cent is it? What would be the enormous amount of revenue that the genius member from the Greens would reap through his superprofits tax on Coles? Well, Coles EBIT margins are 5.3 per cent, so less than the threshold—in fact, nearly half the threshold that would qualify for a superprofits tax. The tax that he proposes to put on Coles would not raise a cent, although Coles is apparently robbing Australians through a 5.3 per cent margin.

What about Woolworths, the second company that he identified in his speech about superprofits? Again, he has absolutely no idea what the level of profits are in either of these companies. Woolworths most recent profit margin was six per cent, also below any rate that would qualify for any superprofits tax at any level that has ever been contemplated. Coles and Woolworths are the two companies he identified in his speech, both apparently robbing Australians, one receiving a 5.3 per cent profit margin and the other achieving a six per cent margin, but neither would raise a cent under the superprofits tax that he is proposing. And to suggest that these companies are causing inflation, that an increase in Coles and Woolworths profit margins of less than 100 basis points is causing Australian inflation, is absolutely ridiculous. The maths do not add up.

What we are seeing here is the rollout of the Greens agenda, and this is an agenda to reposition the Greens party as a party that is focused on economics as well as environmentalism. Unfortunately, they are bringing their brand of grandstanding on environmentalism—a brand of policy without real solutions and policies that don't add up—into the economic sphere. I had the misfortune to watch the Greens in action on the most important set of environmental policies that this nation has put forward over the last two decades. In 2009 the Greens opposed the Carbon Pollution Reduction Scheme. They caused that scheme to go down and began the climate wars that we have lived with ever since. That was an example of the Greens modus operandi, and that modus operandi is not to solve problems because solving problems does not help their political interests. Their modus operandi is to exacerbate those problems in order to fuel the politics of grievance. That is why they opposed the CPRS and that's why they made the perfect the enemy of the good. Unfortunately, now in economics we are seeing a facsimile of that policy approach. We are seeing the Greens take that same politics of grievance and apply it to economics.

We are seeing that right now with the Housing Australia Future Fund, where the Greens are opposing a good policy that will make a real difference on the ground because they don't want to solve the problem; they want to fuel the politics of grievance. We are seeing that right throughout their policy suite in this area. They are proposing policies that they know will never be implemented. They are opposing policies that are ready to be implemented because they have no interest in actually solving the economic challenges of our nation. They only want to stir grievance and seek to promote their political interests. We have seen this in every single one of the policy areas that they have rolled out in economics, whether it be housing, inflation, budget or fiscal policy. Each time they propose a policy, it becomes more and more ridiculous so that they can create more and more distance between themselves and the government, suggesting policies that they know will never be implemented. The most recent one, their plan for a freeze on rents, was rejected by the Governor of the RBA but is still Greens policy because they're not trying to propose real solutions; they're just trying to promote grievance.

Stephen Bates (Brisbane, Australian Greens) Share this | Link to this | Hansard source

Inflation and the cost of living are hitting hard. Rents are up, mortgage payments are up and the cost of food seems to be spiralling out of control. Every day we are greeted with a new statistic that tells us what we already know; this economy is not working for people but instead for giant corporations. You do not have to look much further than the superprofits that companies in Australia are making: Coles, $1.1 billion; Woolies, $1.6 billion; Qantas, 1.7 billion; BHP, $13.4 billion; and Woodside, $1.7 billion so far in this year alone. At the same time, real wages are stagnant and have even been going backwards. Inflation is still sky high. Our wages are buying less today than they did before 2020, and mortgage repayments and rents are spiralling out of control, impacting everyone and having an acute effect on young people.

We talk to our friends, our families and our co-workers, and almost everyone shares the same story. It's getting harder and harder to get by. The cost of living, which in itself is just a dystopian phrase, is increasing faster than our wages can keep up with. This story is now backed up by the statistic that Australia has slipped into a per capita recession. It is hard to deny the simple truth about our economic system. Something is very wrong. So, if wages are not the primary driver of inflation, then what is?

The Australia Institute, the OECD and the IMF have all come to the same conclusion in the last few months. Corporate profits and price gouging are the primary causes of inflation. The analysis from the OECD covered eight countries, including Australia, and the eurozone. It showed that the contribution of unit labour costs, or wages, to overall inflation was much smaller than in the 1970s and that higher unit profits have been the leading component of recent inflation in several of those countries, including our own. The IMF report also found that rising corporate profit margins accounted for 45 per cent of inflation in Europe since the start of 2022.

So, if corporate profiteering is driving inflation and causing this cost-of-living crisis, then what is the solution? Increasing interest rates, the Reserve Bank's answer, simply punishes households for a problem that they did not cause. A superprofits tax is the answer. It addresses the primary driver of inflation while providing the government with tax revenue to fund essential public services, easing the cost of living and giving people room to breathe.

The Greens have proposed a 40 per cent tax on the superprofits of companies with over $100 million in turnover, including multinationals. The tax would apply to net revenue after deducting income tax and making an allowance for a fair return to shareholders. This would raise $53 billion over three years that could be invested into improving quality of life for all Australians. This tax alone would pay for universal child care and bring dental and mental health completely into Medicare, with change left over. That is how you address a cost-of-living crisis driven by corporate greed. And superprofits taxes already exist. Australia would not even be walking an untrodden path. Norway's superprofits tax on oil and gas corporations generated $139 billion for them last financial year. The UK, Spain, France, Germany, Finland and many other countries have all either implemented or proposed superprofits and windfall taxes in recent times. But what do we get in Australia? Nothing.

We are told by this government that the superprofits of fossil fuel companies are untouchable, that the superprofits of banks—made off the backs of people struggling to pay for shelter—are the banks' birthright. We are told that when giant corporations are doing well we must leave them alone. Their profit margins are never to be questioned. But when giant corporations fall on hard times we must bail them out.

Our current economic system has proven itself to be stagnating and structurally incapable of living up to the expectations of neoliberal capitalism. Soaring corporate profits have not translated into a better quality of life for everyone else. This rising tide has not lifted all boats, and many have just sunk. People are calling out for an overhaul. A superprofits tax to pay for universal public services that are free at the point of use is the first step in that overhaul.

Daniel Mulino (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

On the weekend I watched The Wizard of Oz with my daughter. It's an absolutely classic film. I must say I feel as though I've returned to the Land of Oz during this motion, with the Greens' approach to economics. We need to impose an ill-thought-out thought-bubble $50-billion-plus tax so that everyone can lead a better life—free beer, free marshmallows for all, unlimited pensions, based on this thought bubble, with some footnote with a 'return to capital' in it that is completely unjustified!

Let's look at the Parliamentary Budget Office costing of the Greens policy. One of the first things noted in the costing is that the proposal put forward by the Greens has a very high degree of uncertainty. I think that's their euphemism for saying it's ill thought through. Specifically, they say the Greens proposal would be highly sensitive to both international and domestic conditions, that the revenue and costs associated with this massive new tax they're proposing would be highly volatile over time, and that the value of shareholder equity would also be highly volatile over time, which would affect the amount payable under this proposal. The Greens are saying: let's shift to a new massive tax—which is based, as I said, on a pamphlet they put out last year—with almost no justification for the key parameters and without justifying the fact that our pensions, our health system and our NDIS would now be based on a highly volatile new source of taxation, without thinking through the behavioural responses and all of the uncertainty. What are the super profits that they speak of, which we could tap into so easily? This, again, is where the Parliamentary Budget Office refers to the fact that there are inherent uncertainties in their methodology. Again, I think that's a polite way of saying they haven't thought through how this would apply.

Let's go to the footnote in their pamphlet which relates to how this would actually apply in practice. It talks about the fact that their super profits are going to kick in at the risk-free rate plus five per cent. As the previous speaker on this side talked about, what implications would that have in a raft of major sectors in our economy, such as retail? This tax would raise almost nothing. But where does the five per cent come from? It's not clear at all. If one goes to the literature, one finds the long-term equity premium in major economies is between five and eight per cent. It's not an easy number to pin down. What's the current equity premium in Australia? It's around six per cent. What's the equity premium that was identified over recent decades by the RBA? It's six per cent. The core parameter is just asserted in footnote 2 of some pamphlet, with zero justification or analysis.

Secondly, the equity premium changes over time. This five per cent equity premium is not a static figure. It's not at all clear how that would affect the revenue coming into some of our fundamental services.

Finally, it's absolutely unclear how this would apply across sectors. It is true that, with some resource sectors, there have been attempts, in Australia and in other countries, to tax revenue above a certain normal amount of profit to try to pin down revenue coming from the rents associated with those resources, which is particularly appropriate given that those resources are owned by the community. When one looks at the equity premium across the economy as a whole, however, it's far from clear that a standard figure across the economy is at all appropriate. The risk associated with investments and the risk associated with the returns to equity aren't the same across the economy as a whole. Are the Greens literally saying that they're going to apply the same super profits tax to retail, to financials and to high-risk, cutting-edge advanced manufacturing? This tax would have all sorts of unintended consequences—capital flight, behavioural responses—and, as I just mentioned, it would apply unevenly across sectors in ways that would potentially damage the investment that we need in new sectors. This is a thought bubble, and it won't provide the massive promises that the Greens are claiming.

Mike Freelander (Macarthur, Australian Labor Party) Share this | Link to this | Hansard source

The time allotted for this debate has expired. The debate is therefore adjourned, and the resumption of the debate will be made an order of the day for the next sitting.