Pictures that tell 1,000 words

Pictures that tell 1000 words pic.twitter.com/Gy2olRH8Lz

— Laura Tingle (@latingle) April 26, 2017

 Left to right: Ivanka Trump, Managing Director International Monetary Fund Christine Lagarde, German Chancellor Angela Merkel caught by a photographer as Ms. Trump states that her father U.S. President Donald Trump has a long history of advocating on women's issues. 

Problems with tax collection from Australian resource and energy sector due to aggressive avoidance strategies

It would appear that successive federal and state governments have allowed the resource and energy sector to take Australia for everything except the gold fillings in its teeth……..

2 Office of the Chief Economist, Resources and Energy Quarterly, December 2016; Office of the Chief Economist, Resources and Energy Quarterly, December 2015; Office of the Chief Economist, Resources and Energy Quarterly, December 2014.

[Australian Taxation Office (ATO) 30 March 2017 submission to Senate Standing Committees on Economics, Inquiry into Corporate Tax Avoidance]

The Sydney Morning Herald, 29 April 2017:

Multinational gas companies will soon sell an annual $50 billion worth of Australian liquefied natural gas to foreign markets, but the nation will have to wait more than a decade for any revenue boost and some projects will never pay a cent in tax for the resources they extract.

A report prepared for the Turnbull government into the petroleum resource rent tax has confirmed fears, first revealed by Fairfax Media in 2015, that revenue from offshore gas will continue to flatline until at least 2027.

Despite that, Treasurer Scott Morrison insisted on Friday that Australians were not being shortchanged, but said the government would consider some changes to the system.

The review of the PRRT by former treasury official Mike Callaghan has acknowledged there are systemic problems and recommended changes to toughen the system for new LNG projects.

But, in a clear victory for the $200 billion industry, he shied away from urging any major changes for projects already past the investment stage, including Chevron's giant Gorgon and Wheatstone ventures and Shell's Prelude project.

The Callaghan report was released amid the political wrangling over east coast gas supply and on the same day the Senate inquiry into corporate tax avoidance grilled LNG bosses in Perth.

The Sydney Morning Herald, 26 April 2017:

Foreign-owned gas companies have legally avoided paying significant tax on billions in earnings from their Australian operations because of loopholes, according to a study. 

The loopholes have allowed the companies to write off interest payments for the borrowings of offshore subsidiaries, it has been claimed.

The study, by academic accountants at the University of Technology School of Accounting, and left-leaning campaign group GetUp, looked at the available balance sheet data of gas giants ExxonMobil and Chevron. It found the two companies have achieved colossal revenue flows from their Australian operations but paid little if anything in petroleum resource rent tax in recent years.

The practice is known as "debt loading" or "thin capitalisation".

Over the two years 2013-14 and 2014-15, Chevron earned more than $6.12 billion in revenue, but paid nothing in PRRT, according to the assessment.

It found ExxonMobil achieved revenue of almost three times that at $18.08 billion in the same period, but paid only $803.5 million.

The study concluded that between the operation of the company tax rules and the petroleum resource rent tax regime these enormous multinational resources companies can "load up" their balance sheets with excessive debt, thereby reducing taxable income to the point where the tax liability is low or non-existent.

The report, Investigation into the Petroleum Resource Rent Tax and Debt Loading in Australia – 2012 to 2016, found 95 per cent of oil and gas projects in Australia paid nothing in PRRT in 2014-15.

Australian Petroleum Production & Exploration Association (Appea) Ltd, Submission to the Review of Commonwealth Petroleum Resource Taxes, February 2017: 

APPEA does not consider a case exists for any changes to be made to the existing PRRT provisions.

Oil and gas corporation Santos Limited currently seeking to establish coal seam gas fields in NSW stated in a 3 February 2017 written submission to the current Senate inquiry into tax avoidance:

Santos has participated in a number of offshore and onshore oil and gas projects during the period of operation of PRRT, from 1 July 1986 (see attachment). Based on our experience with petroleum projects in which Santos has an interest it is our view that PRRT has operated as intended and that therefore the existing design features are appropriate…..

The declining revenues are a function of changes to the industry and currant commodity prices rather than changes or faults in the original design of PRRT.

Santos Limited with a total income of $3.38 billion in 2014-15 declared it had no taxable income in that financial year. The previous financial year its tax liability was $3.14 million on a declared taxable income of $27.34 million out of a total income before tax of $4.35 billion.

“The Adelaide-based Santos has long been accused of being a major contributor to the tight gas supply situation in eastern Australia due to the reliance of its Gladstone LNG project on third-party suppliers.”

BACKGROUND

The Australian, 25 August 2012:

SOME of Australia's biggest oil and gas players expect to pay little or no additional tax on their multi-billion-dollar onshore energy projects, putting federal government hopes of billions of dollars of additional revenue in doubt.

The admissions by Woodside Petroleum, Santos and Origin Energy indicate the government is unlikely to receive any significant additional funds in the foreseeable future from the expanded petroleum resources rent tax.

Parliament of Australia, Corporate Tax Avoidance:

On 2 October 2014 the Senate referred an inquiry into corporate tax avoidance to the Senate Economics References Committee for inquiry and report by the first sitting day in June 2015.

On 15 June 2015, the Senate granted an extension to the committee to report by 13 August 2015. On 12 August 2015, the Senate granted an extension to the committee to report by 30 November 2015. On 23 November 2015, the Committee was granted an extension to report by 26 February 2016. On 22 February 2016, the committee was granted an extension to report on 22 April 2016.

On 2 May 2016, the Senate granted the committee a further extension to report by 30 September 2016.  

The inquiry lapsed at the end of the 44th Parliament.

On 11 October 2016, the Senate agreed to the committee's recommendation that this inquiry be re-adopted in the 45th Parliament. The committee is to report by 30 September 2017……

On 1 December 2016, the committee resolved to broaden the scope of the inquiry to include Australia's offshore oil and gas industry.

The committee has asked to receive submissions on the treatment and/or payment of:

i. royalties;

ii. the Petroleum Resource Rent Tax (PRRT);

iii. deductions; and

iv. other taxes

by corporations involved in Australia's offshore oil and gas industry, including matters relating to the collection of these moneys by government.

University Of Technology Sydney, Ross McClure et al, Analysis of Tax Avoidance Strategies of Top Foreign Multinationals Operating in Australia: An Expose, 19 April 2016:

Multinational corporations are in a unique position to engage in tax aggressive strategies, as they are generally large in size and highly profitable, they exhibit low levels of debt in their capital structure, and have operations across national borders that generate foreign income streams. The overall group is made up of multiple entities across a number of tax jurisdictions and most multinational corporations have at least one subsidiary in a tax haven.

These characteristics have been associated with tax shelter activity in the U.S. (Wilson 2009) and with aggressive tax planning strategies such as abusive transfer pricing in Australia (Richardson et al. 2012). The information technology, pharmaceutical and energy sectors are both dominated by large multinational corporations and provide strong mechanisms that allow these corporations to divert profits away from where value and profits are created in order to reduce their tax liabilities.

News.com.au, 17 March 2017:

Gas on the east coast of Australia is controlled by a handful of companies and the lack of competition means they can charge higher prices locally.

At the moment, supply is controlled by six companies: Santos, Exxon, BHP, Origin, Arrow Energy and Shell. Some of these companies also control pipelines used to transport gas around the country, also adding to inflated prices……

He [energy analyst Bruce Robertson] said the global glut of gas, which is predicted to continue until 2030, has also put more pressure on companies to make money domestically.

The more they restrict supply locally, the more money they make.

It’s created the bizarre situation that sees Australian gas being sold in Japan for a wholesale price that is cheaper than the price it’s available for in Australia.

Santos, Shell and Origin Energy have to stick to long-term contracts they signed with Japan amid a global glut, but the lack of competition in Australia means they can restrict supply locally and drive up prices.

Australians are now paying a price higher than the international price for gas.

There’s even talk about Australia importing its own gas back because this would be cheaper.

Australia is also not profiting as much as we could from selling our gas overseas.

Japan reportedly puts a tax on the gas it imports from Australia, which will deliver it $2.9 billion over the next four years.

In comparison, Australia will not receive any money from its petroleum resource rent tax from gas projects over the same period. We get $0 in tax from selling our gas overseas.

Most of the $800 million we do get from the tax every year comes from established oil operations in the Bass Strait, rather than from LNG producers.

National Rural Health Alliance welcomes Labor commitment to National Rural Health Strategy and implementation

Medianet Release
26 Apr 2017 7:24 PM AEST - Welcome commitment to National Rural Health Strategy and implementation The National Rural Health Alliance today welcomed the commitment of the Federal Opposition to the development of a dedicated National Rural Heath Strategy and Implementation Plan. The commitment was made by Shadow Minister for Health Catherine King in the opening session of the 14th National Rural Health Conference, which started in Cairns today. Alliance Chair, Geri Malone, said today that the commitment by Ms King represented an important breakthrough for the seven million people who live in rural and remote Australia. "The Alliance has been encouraging broad, non-partisan support for a national strategy for rural and remote health and wellbeing," Ms Malone said. "For too long, Australia has been without an overarching strategy and implementation plan which is dedicated to bridging the health divide between the city and the bush. "There is overwhelming evidence which shows that where you live impacts on your health and wellbeing – that the further you are away from a capital city, the worse your health, and your access to services, tends to become. "But we are now in a rare period in decades of rural health planning and reform where we do not have a current National Rural Health Strategy, and that needs to change." Ms Malone said the first National Rural Health Strategy was released in 1994.   "There were various updates and revisions of the strategy over the ensuing years, with the last being the National Strategic Framework for Rural and Remote Health, endorsed by Health Ministers in November 2011.    "At the time, the Alliance called for a National Rural and Remote Health Plan to be developed to operationalise the goals set out in the Framework, but it never eventuated. "So the Framework has not been actioned in a consistent, comprehensive way, there are no national reports on progress against the Framework, and no action has been taken to update it." Ms Malone said the Alliance recognised the effort being put into health workforce programs, including for rural and remote Australia. "We also know workforce is only one part of a more complex equation about what's different and what needs to be done to fix the divide in health outcomes for rural Australia," she said. "We constantly seem to have to remind the non-believers in our cause, be that politicians and funders, metro centric decision makers and influencers, that firstly as 30 percent of the Australian population, we are entitled to equity in health service provision.  "This does not mean doing the same. One size does not fit all. We know there are many ways of achieving the same end result, but that requires adaptation and contextualization to make it work – contextualized to place, place-based and individualised care. "It is not an easy task and it can become somewhat disheartening to have to plead our case repeatedly.  "We therefore see a national rural health strategy and plan not as ends in themselves but rather they provide the framework within which policies should be developed, planned, implemented and measured. Distributed by AAP Medianet JN#:877826
	© Australian Associated Press, 2017

Is Pauline Hanson failing to fully comply with state and federal electoral laws - again?

It almost beggars belief. Is Pauline Hanson failing to fully comply with state and federal electoral laws – again?

ABC News PHOTO: Pauline Hanson stands in front of the plane that former One Nation members say Bill McNee funded. (Supplied: One Nation)

The Saturday Paper, 29 April-5 May 2017:

One Nation risks deregistration in Queensland following the failure of Pauline Hanson to advise the Electoral Commission of Queensland about a botched incorporation that has left it with a noncompliant constitution. The party secretly switched legal structures last November without telling members, using a draconian clause in its superseded governance rules that allowed One Nation state executive members to do whatever they chose without question. Former insiders have said a principal purpose for the incorporation was to put in place a corporate veil so the entity rather than members of the executive would be the subject of legal action.

The method of incorporation and the failure to consult is consistent with a trend of centralising all of One Nation’s power in Queensland, which has in the past been illustrated by attempts to close branches across the country through the use of proxies to forcibly remove “troublesome” state leaders, attempts to close bank accounts over which the One Nation national committee had no authority, and the initiation of complaints to police to intimidate a sub-branch in the Northern Territory.

At the same time, the party neglected to observe mandatory rules contained in Commonwealth and Queensland electoral laws, which must be included in its constitution for One Nation to be a political party with legal standing. Breaches of provisions that specify which clauses must appear for a constitution to be compliant under law are grounds for the cancellation of a party’s registration under Section 78 of Queensland’s Electoral Act.

Neither Senator Hanson nor the deputy registered officer – party treasurer and Hanson’s brother-in-law Greg Smith – informed the electoral commission of the changes in legal structure of the entity. There were two reporting deadlines missed by One Nation – notification of the changes should have been delivered seven days after December 31 and March 31. 

News of One Nation’s constitutional high jinks follows revelations over the past six months related to the party’s preselection and disendorsement processes during the West Australian election, questions about its compliance with goods and services tax legislation, and doubts about the donation and declaration of an aeroplane to Pauline Hanson for campaigning purposes.

It also follows a network-wide ban of the ABC, announced in a Facebook video posted by Hanson after the April 3 airing of a Four Corners report that highlighted a range of issues faced by One Nation. The program, criticised by Hanson and her colleagues as a media “stitch-up”, has resulted in a formal investigation by the Australian Electoral Commission, related to the donation of the two-seater plane.

Pauline Hanson’s One Nation is the business name of One Nation Queensland Division Incorporated, which was an unincorporated association since it registered on January 23, 2001. That changed last year when the entity was incorporated with the same ABN. 

The entity is regarded as the same for tax purposes and the name of the unincorporated body has transitioned into the incorporated form……

Crikey.com.au, 5 April 2017:

And that’s where the law comes in. The facts as we know them are that Ashby has a plane, in which he flies Hanson around the country on what is clearly One Nation business. Hanson herself has made numerous public statements, including on the party website, asserting that the plane belongs to One Nation. It is literally plastered with her name and face.

One Nation is a registered political party. The Commonwealth Electoral Act requires each party, and each of its state branches, to lodge an annual return with the Australian Electoral Commission, within 16 weeks after the end of each financial year. The annual return must include disclosure of all amounts received by, or on behalf of, the party from any single source totalling more than $13,000 (for the 2015-2016 year).

Donations are expressly defined as including the value of a gift. There is no room for doubt that, if a generous supporter gave an aeroplane to an official of the party, so that that official could fly the leader of the party around the countryside on party business, then the gift of the plane (or the cash to buy the plane, if that’s what happened) would be required to be disclosed in the party’s next annual return to the AEC.

Queensland has its own political donation disclosure laws, which are tougher than the federal regime. Returns are required to be lodged six-monthly, all gifts over $1000 must be disclosed, and any gift worth more than $100,000 has to be reported within seven business days.

One Nation’s Queensland Electoral Commission return for the relevant period in 2016 discloses nothing about the aircraft purchase or gift, but it does include an expenditure item of $1187.09 paid by the party to “Jabiru Aircraft Service”. There are numerous payments to Ashby’s companies for printing services, totalling some $17,000 in the same period. Who was paying for the running costs of the aircraft is a mystery.

But it’s pretty simple, really. Whoever paid for Hanson’s plane — however they paid for it and who legally or beneficially owns it — it was, in form and substance, a gift to the direct benefit of her eponymous political party, and she has treated it and talked about it as exactly that for the past two years…..

The Australian, 2 May 2017:

One Nation’s Senator Hanson shifted her story again on Monday night and said a $106,000 plane “came from” party donor Vicland’s Bill McNee to be used by her chief of staff James Ashby, but it was not a donation.

“So the plane came from Bill McNee, but it was not for the party it was to James for his business?” Sky News’ Andrew Bolt asked.

“Correct,” she answered……

Last night Senator Hanson said the Victorian businessman had allowed Mr Ashby to use the plane.

“He didn’t donate the plane to James Ashby. Having met James, they became friends,” Senator Hanson told Sky News.

“Bill’s a developer and he actually has a lot of business that he does in Queensland, and Bill was continually looking around for a plane.

“He found out James was a pilot (and) he thought: “Here’s a great opportunity to actually have a plane and to actually ¬use it as well.’ ”

The Australian, 3 May 2017:

Pauline Hanson’s controversial chief of staff says he has a “crossover” business relationship with the Melbourne property developer and political donor at the centre of a disclosure row over the purchase of the light plane used by the One Nation leader for election campaigning.

But James Ashby, whose iron-fisted control of Senator Hanson’s office has created ructions inside the party, insisted yesterday that he bought the $106,000 Jabiru 23-D aircraft in 2015 for recreational use and for his printing business in Queensland.

Senator Hanson raised further questions about the status of the plane on Monday when she confirmed on Sky News it had “come from” Bill McNee, but was for Mr Ashby’s firm, not her travel for One Nation.

This conflicts with the media-shy businessman’s assertion that he had no knowledge of the aircraft or how Mr Ashby acquired it. Mr McNee’s company, Vicland, is the Hanson party’s biggest donor, though in a rare interview last November he told The Australian he was stopping all political donations because “it’s something I don’t believe in any longer”.

Pressed on whether he had provided funds to Mr Ashby to buy the plane two years ago, Mr McNee said: “My God, if I am going to buy a plane, I would buy one for myself.” He hung up when contacted yesterday.

The Australian Electoral Commission is investigating whether the acquisition of the plane by Mr Ashby and its use to fly Senator Hanson to campaign events in Queensland before her re-election to federal parliament last July subverted financial disclosure laws.

BACKGROUND

The Guardian, 20 August 2003:

The fiery redhead, renowned for her garish wardrobe, had pleaded not guilty to fraudulently registering One Nation in the state of Queensland. She also denied dishonestly obtaining A$500,000 (£206,000) in electoral funds used for the campaigns of 11 politicians elected to the Queensland state parliament….

Prosecutors had accused Hanson and Ettridge of passing off a list of 500 supporters as genuine, paid-up members of One Nation in order to register the party and apply for electoral funding.

The Sydney Morning Herald, 20 August 2003:

Former One Nation leader Pauline Hanson and party co-founder David Ettridge have been jailed for three years each after being found guilty of fraud charges by a Brisbane District Court jury.

Judge Patsy Wolfe made no recommendation for parole.

           

Hanson, 49, and Ettridge, 58, had pleaded not guilty to fraudulently registering One Nation in Queensland on December 4, 1997.

Hanson had also pleaded not guilty to dishonestly obtaining almost $500,000 in electoral reimbursements after the 1998 state election.

But a Brisbane District Court jury found the pair guilty on all counts after more than nine hours of deliberations.

ABC Radio, PM, 6 November 2003:

MARK COLVIN: But first, the freeing of Pauline Hanson and David Ettridge. The One Nation co-founders have won their bid to get out of jail, after successfully overturning their convictions and their three-year sentences for electoral fraud.

Eleven weeks ago, Hanson and Ettridge were both sentenced to three years jail, after a jury found that they'd fraudulently registered the One Nation Party which they'd founded. Hanson was also found guilty of fraudulently obtaining nearly half a million dollars in electoral funding.

But they'll soon be released from jail, and family and friends were elated by the decision when it came down at Queensland's Court of Appeal this evening.