Though It Continues To Triumph, The Power Of Big Business Remains Brittle


Every now and then, politics distills a moment of clarity. Yesterday was one of them. Three separate events showed how powerful big business has become.

There was a government report, a Senate inquiry, and a court ruling. All were massive wins for big business in this country. If you ever needed evidence that Australia under the Abbott government is increasingly run for and by big business, yesterday provided plenty.

First up, the Federal Court handed down its decision in the long-running ANZ bank fees case. A panel of judges struck down the class action against ANZ’s exorbitant late fees on credit cards, thereby handing the big bank a huge win against consumer groups fighting against the practice.

It’s a cruel blow to consumers in this country, effectively green-lighting the big banks to charge whatever they like in fees. While the litigators will appeal, the effect of the decision means that literally billions of dollars in unfair fees have been ruled legitimate.

In his judgment, Federal Court Justice James Allsop effectively blamed the customers, saying they could have closed their accounts at any time. “The customer could terminate the account at will, could (in most cases) avoid the fee by turning off shadow limits, or in all cases, by adhering to contractual arrangements,” he wrote. Naughty customers! You should have read the fine print.   

While the legal arguments will rage on, the judgment shouldn’t be surprising: existing banking and contract law strongly favours financial institutions. But it highlights the vast pricing power that heavyweight banks can exert on millions of ordinary Australians. New consumer protection laws could crimp the fees that banks can charge. But no-one thinks the present government will be introducing any of those.

After ANZ walked away with a blank cheque, we saw another example of corporate power in this country.

Yesterday was the first sitting of a Senate inquiry into multinational tax avoidance. Technology giants Google, Microsoft and Apple openly admitted that much of their Australian earnings were repatriated offshore, away from the reach of the Australian Tax Office.

Google’s Australian boss Maile Carnegie told the Senate committee that none of Google’s Australian earnings were booked in Australia. Instead they are whisked off to low-tax Singapore, where the global multinational presumably pays far less tax than it would here.

We don’t know how much, however, because Ms Carnegie told the Senators that it would be a breach of US tax disclosure laws to reveal how much tax Google paid to Singapore on its Australian revenue.

Apple’s Tony King appeared less concerned about such US tax laws. He told the committee that Apple paid only $80 million in tax to Australia, on revenue of more than $6 billion – an effective Australian tax rate of just 1.3 per cent. Microsoft is slightly more generous: it pays about $100 million on $2 billion in revenue, or a comparatively generous 5 per cent.

To add insult to evasion, the Australian Tax Office’s Chris Jordan told the Senate inquiry that the ATO would not reveal which companies it is currently auditing for multinational tax evasion. In a move signed off on by Treasurer Joe Hockey, the ATO Commissioner said that naming and shaming the companies dodging their tax would be a breach of confidentiality.

With touching faith in the honesty of global multinationals, Jordan explained that “we need to be able to have transparent and open relationships with companies”. Apparently, the ATO needs to stay friends with the companies that are fleecing it of billions of dollars of year. “We cannot have a situation where companies can argue they will not share information with us,” Jordan explained.

So there you have it: companies avoiding tax need to be cosied up to, just in case they get hostile and stop telling the ATO where they’re hiding the dough.

If nothing else, the Senate inquiry is making it clear just how little tax some of these big multinationals pay. While you and I have to pay tax on the money we earn in this country, big companies are routinely sending the loot to tax havens and secrecy jurisdictions in Bermuda, Singapore, the Netherlands and Ireland, where they pay little or no corporate tax. Like so much else in our topsy-turvy society, it’s one rule for the big companies, and another rule for the little guys.

The third win for big business yesterday was the release of the Abbott government’s Energy White Paper. It was a case study in how to reward big fossil fuel companies, at the expense of the environment and the renewables sector.

Why? Because the Energy White Paper says Australia should adopt a “technology neutral” approach to energy generation. It also says that all the remaining state-owned electricity assets should be privatised.

There are no prizes for guessing who would win in such a scenario: big fossil fuel companies like AGL, Origin and Energy Australia. In a policy setting which completely ignores climate change – the 74-page document mentions the word “climate” just twice, and then only to extol the virtues of the government’s laughable Direct Action policy – the winner of “technology neutrality” will be the same old vested interests that currently control electricity markets: coal and gas. “Ongoing access to large volumes of coal and gas will also underpin our energy generation mix for some decades,” the paper confidently states.

The white paper also attacks solar and renewable energy, claiming that the Renewable Energy Target is that dreaded monster, a “market distortion.”

“Interventions, such as the RET and solar feed-in-tariffs, can distort market signals and cause unintended disruptions to competitive energy markets,” the paper claims, despite no evidence that the RET is disrupting anything other than Origin and AGL’s future profits.

While we’re on the RET, the government is yet again proving how determined it is to destroy Australia’s renewable energy sector, staring down a Labor and Clean Energy Council proposal for a reduced renewable energy target of 33,500 gigawatt hours by 2020.

Energy Minister Ian Macfarlane claims 32,000 hours is his take it or leave position, conveniently ignoring the fact that keeping the RET at 41,800 hours was a Coalition election promise. Macfarlane has played a canny game on the RET, holding the entire sector hostage to the Coalition’s ideological hatred for all things green.

The upshot from Energy White Paper and RET negotiations is that renewables will lose (especially solar), while fossil fuels win, yet again. It’s business as usual for the big energy companies that so dominate Australia’s energy and environment policies.

Why does big business always win? As the old joke goes, it’s the “golden rule”: he who has the gold makes the rules.

Big banks and big energy companies have the best lobbyists, lawyers and tax accountants money can buy. They’re not shy to donate big sums to the major political parties. Ordinary citizens don’t have access to these resources, and they don’t have the ear of the politicians who make the rules either.

But big business has an Achilles heel, and it knows it. Big corporations are inherently unpopular.

Ordinary citizens want big companies to pay more tax. They want the power of the big banks curbed. They want more renewable energy, not less. The political power of business is based on money, but that influence could crumble in the face of a determined populist attack. 

This vulnerability showed itself this week, when nine business lobby groups issued an extraordinary open letter on Monday. They are deeply worried that the Coalition has given up on the unpopular task of budget repair (read: cutting government spending).

“The reality of where prosperity comes from,” the letter cautioned, “is much more sobering and if neglected will set us on a path to economic despair.” The letter harked back to the largely mythical golden age of reform during the Hawke-Keating years, and called on politicians “to ensure the insights from the Intergenerational Report underpin successful reforms in public spending, tax, federation and workplace relations”.

What do Australian voters think of such ideas? They hate them. Cutting public spending, lowering tax for corporations and cutting penalty rates are all deeply unpopular policies. Big business knows this. It also knows the Coalition has no intention of genuinely addressing Australia’s budget deficit, and will instead let the debt and deficit blow out.

The real truth of the power of big business is how brittle it is. If voters were presented with alternative policies that punished big business, they would most likely vote for them. No wonder the business lobby is so worried.

Ben Eltham is New Matilda's National Affairs Correspondent.