Reporting on the release of the mid-year budget update in the Canberra Times on October 22, Peter Martin wrote that “Tax collections from both wages and the GST are running ahead of projections. Dramatically lower company tax collections account for most of the $21 billion write-down.”
Included in that $21 billion is a revenue downgrade of $4.3 billion dollars over four years in resource rent tax from petroleum and mineral extraction from a projected $13.4 billion.
The Federal government's rationale for the expected losses is weaker corporate profits, but the full year results for the so-called “big four” banks (CBA, Westpac, ANZ and NAB) tell a different story. The Sydney Morning Herald said the combined full year cash profits of these banks has increased by 4% to $25.2 billion.
In August this year, the Commonwealth Bank reported a full-year profit of $7.09 billion. This was the largest result by a non-mining company in Australia.
Westpac held its annual general meeting on November 13. The bank's full year cash result reported a full-year profit of $5.66 billion, up 6% on last year.
The only bank out of the “big four” to fair worse than the last financial year is NAB, which still made a full year cash profit of $4.1 billion. Two weeks after its AGM, reported the Australian Financial Review, NAB CEO Cameron Clyne used a speech to Sydney's Lowy Institute to call on the Gillard government to make available the $1.3 trillion of Australian workers' savings and earnings in superannuation as a source of lending funds for the banks, or else risk sending the economy into recession.
The last thing Australian workers need is more corporate fat cats and “banksters” gambling on bad debts and other derivatives with their future retirement income.
That is why Socialist Alliance is calling for the banking sector to be radically transformed and brought under the democratic control of the community.
The budget shortfall also revealed the utter failure of the resources rent tax, which has netted the Australian government a pittance. In its latest report on the Australian economy, the IMF is proposing that the mining tax be broadened beyond iron ore and coal to other mineral resources — just to spread the opportunity for tax avoidance even wider in the resources sector. In addition the International Monetary Fund is proposing an increase in the Goods and Services Tax (GST).
While Gillard and Abbott refuse to countenance raising the GST (at least before the next election), former NSW Liberal Premier, Nick Greiner is pushing for the GST to be broadened to cover fresh food, health and education, and for consideration to be given to increasing the rate.
If readers want a glimpse of a GST post the next election, they need look no further than New Zealand. The GST was introduced there in 1986 by the NZ Labor government under then Finance Minister Roger Douglas. It was raised to 12.5% three years later, and increased to 15% in October 2010 by the National Party government.
GST in NZ is applied to most consumer goods and services, including fresh food. In return, cuts to personal income tax were introduced, to the benefit of high income earners, while those on low wages, the unemployed and welfare recipients have had to bear higher prices for food, transport, housing, education and healthcare.
Back in Australia, workers, the poor and those on welfare are being forced to make up the shortfall in the budget forecasts with attacks on living standards, cuts to health, education and welfare, and the continuation of near or below poverty line incomes for unemployed workers and pensioners.
Together we must resist these attacks and demand that the big banks and the mining companies be forced to return their huge profits back to society for the good of the community. That is why Socialist Alliance calls for these sectors to be brought under worker and community control to make sure the wealth they capture is put back into communities, and to close down all polluting and dangerous operations without workers paying the price. In this way we can protect our planet, our health and our future.