Rex Patrick (SA, Centre Alliance) Share this | Link to this | Hansard source

In the Senate sittings that took place before coronavirus impacted our country, I began a series of speeches that aimed to put the spotlight on a number of Australian businesspeople little known to the broader community. These quiet Australians rarely make the headlines even in the business pages of our newspapers. They often shun the limelight, but they deserve scrutiny and attention because their actions profoundly affect our nation for good or for ill.

Tonight I want to turn the light onto another one of these quiet Australians, Michael Ullmer, chair of the board of Lendlease, that huge construction, property and infrastructure conglomerate headquartered at Barangaroo, near Sydney's Darling Harbour. Mr Ullmer is not a household name. Outside of Australia's business, political and cultural elites, few Australians would know of him. Ullmer is a corporate numbers man. Born in London in 1951 and with a mathematics degree from the University of Sussex, he is a fellow of the Institute of Chartered Accountants, the Financial Services Institute of Australia and the Australian Institute of Company Directors.

Ullmer started out in business in 1982 with the accounting firm KPMG and moved to Coopers & Lybrand a decade later. He joined the Commonwealth Bank in 1997 and the National Australia Bank in 2004, rising to become NAB's deputy chief executive officer from 2007 until August 2011, when he retired from the bank and joined the board of Lendlease, becoming the chair in November 2018. Ullmer is also the chair of the Melbourne Symphony Orchestra, a position he's held for some 14 years, and he's a trustee of the National Gallery of Victoria. In January he was made an Officer of the Order of Australia. The citation for his AO reads:

For distinguished service to the performing and visual arts through a range of roles, and to the finance and banking industry.

An Australian conglomerate active across Australia and in Asia, Europe and North America, Lendlease's activities include construction, infrastructure, residential development, property management and, significantly, retirement villages. With over 70 villages Lend Lease Retirement Living is the largest developer, owner and operator of retirement villages in Australia and New Zealand.

Lendlease has also emerged as a major contractor to the federal government. The AusTender database shows that since 2016 until May this year, Lendlease had won federal government contracts worth more than $661 million. That includes $110 million in a contract for construction here at Parliament House. However, most of the federal government work contracted to Lendlease, some $534 million worth, has been awarded by the Defence department for projects including development of the Osborne shipyard in Adelaide and the $427 million HMAS Watson redevelopment at South Head in Sydney. And that's not all: just last week Lendlease was awarded another $365 million contract for the first tranche of works at HMAS Stirling in the Australia Maritime Complex in Western Australia. This brings the total of Lendlease's federal government contracts since 2016 to over a billion dollars.

Now, against that background, Senators, one might ask what contribution Lendlease makes in terms of corporate income tax. After all, those revenues support many things that all Australians and Australian businesses like Lendlease rely on: defence and national security; law enforcement; the national healthcare system; the social security system; aged care and disability pensions; and education and training. So how much does Lendlease contribute through corporate income tax? I can ask Senator Brockman who's the chair of the economics committee, and we'll find that the answer is zero. They pay absolutely nothing in corporate tax.

According to figures compiled by investigative journalist Michael West and from the Australian tax office's tax transparency reports, over the last five years from 2013-14 to 2018-19 the company generated $43 billion in revenue and in that period they didn't pay a brass razoo in tax. Now, they realised a profit before tax of more than $5 billion, delivered an annual return on equity for security holders of 11.7 per cent and returned to security holders over $2 billion dollars—again, no corporate tax paid. As Michael West points out, that's no mean feat for an Australian based company without the usual multinational means and ends to shift its profits offshore, but Lendlease has managed that and they've done so while repeatedly denying that they've been participating in tax evasion or aggressive tax planning. Yet, one way or another, they've minimised their corporate income tax liabilities on a massive scale. One significant element in Lendlease's retirement village business—which, as of a year ago, generated over a billion dollars in tax deductions while still turning a good profit—is that Lendlease has cunningly developed a tax minimisation strategy in which it swapped the contractual arrangements with its retirement village residents and lease premiums to loans and harvested sufficient tax deductions to cover the whole operation for five or six years.

The tax office has been looking at this dodge for some time. Two years ago, the ATO told a Senate inquiry that there is a suggestion that there is somehow a double dip in having some sort of depreciable cost from the assumption of liabilities and getting a reduced capital gain when things are sold. Last October, the ATO published a draft ruling confirming that no-one, including Lendlease, can double dip in this way, but the consultation process is taking a while and we haven't seen a final ruling. Also, in the midst of a pandemic crisis, Lendlease's retirement villages have continued their operations, yet remarkably the company has been able to put its hand out for more taxpayers' money through the JobKeeper program. Lendlease's lawyers have sussed out a loophole. So, despite basically continuing to thrive, they've managed to pull $15 million from the taxpayer. They haven't paid any tax, but they've managed to pull $15 million from the taxpayer to support their workforce during the COVID crisis. No-one making that sort of money and not paying tax should be taking money from the taxpayer.

Michael Ullmer has, of late, encountered negative publicity relating to his position as the chair of the board of Melbourne Symphony Orchestra. In April, the board stood down all its MSO musicians and put them on the JobKeeper program, despite the fact that they'd been negotiating to take a 50 per cent pay cut. This prompted calls for the Victorian government to step in and dismiss the board, including the chair. With a clear sense of entitlement, Ullmer replied that he wasn't going anywhere and, in a rare interview, likened his tenure on the MSO board to the Eagles song 'Hotel California'. It's a moot point whether a corporate tax dodger such as Michael Ullmer should serve in any public role. There's no good reason why he should use work relating to the arts as a reputational screen for his amoral corporate activities. The ATO may well catch up with Lendlease. The government should take a close look at its procurement practices and especially at the need for greater tax transparency for its large contractors. How can it be acceptable that Lendlease can secure over a billion dollars in government contracts while not paying a cent in corporate tax? Clearly, it shouldn't.

And, on another matter, there really should be a ban on awarding Australian honours to tax parasites such as Michael Ullmer, who was awarded an AO while making a mockery of our taxation system. In Ullmer's case, AO really ought to stand for 'avoidance order' because that's his major contribution as the chair of Lendlease—corporate tax avoidance on a grand scale. The Lendlease chairman hasn't given distinguished service to our nation; he's just an amoral number-cruncher whose career has just involved profit without social conscience. He ought to be stripped of his AO.

In closing, Lendlease's code of conduct, which applies to all directors and employees, has a test: 'Would I be willing to see what I'm doing, or what I'm about to do, described in detail on the front pages of a national newspaper to be read by family and friends?' Perhaps they should add 'or in a Senate speech'. I will have more to say on Lendlease and other corporate tax dodgers over the coming months.