Contributed by Joe Montero
“People know something’s wrong. They know something’s wrong in their society when we have Commonwealth Bank recording over $10bn in profit while ordinary Australians are struggling to put a roof over their head.” These words were said by Zach Smith, construction division national secretary of the CFMMEU.
This was in the context of the union’s bid to push for a super profit tax in the coming national conference of the Labor party in Brisbane. It comes at a time when the cost of putting a roof over one’s head is the biggest financial burden by far the biggest financial stress faced by most Australians.
Photo by Mick Tsikas/AAP: Zack Smith
The broad community wants the government to act decisively and on a big enough scale to make a real difference, and the current of the Albanese government doesn’t meet this standard. The promise of up to $500 million a year for social housing is far too little to make an impact.
The CFMMEU proposal for a super profits tax has been modelled by Oxford Economics Australia, and the findings are that a 40 percent tax will raise more than $500 to build 750,000 new homes over the next two decades. This will not solve the whole problem. But it is far more than has been offered so far.
Reports of massive increase in super profits at the top end of the corporate world are drawing a backlash, and this is bound to make the idea of a super profits tax an increasingly popular option.
The latest has been the huge jump on recorded bank profits, coming at a time of successive interest rate hikes, declining quality of service, and other pressures on the cost of living. When the Commonwealth Bank posted a record $10 billion for the year, it drew a flood of complaints. This came on top of the criticism of a similar jump in the profits made by supermarket giants Coles and Woolworths. They have been accused of large scale price gauging. Before that it was the oil and gas companies doing the same thig.
While much of the business world is under stress, those corporations that enjoy monopoly power can use this power to gain what the market would otherwise not allow. Profit gained in this way is the definition of super profit.
This sort of profit comes at the expense of other businesses and out of the pockets of consumers forced to pay higher prices. Australia has little restriction on monopoly power.
In this light, the idea of a tax on super profits comes across as quite reasonable and explains why the proposal is gaining support within the Labor Party and it political working class base. For example, Labor for Housing convener Julijana Todorovic said that the federal is “acknowledging that this is the number one issue for many people across the country.”
The Greens and at least some of the independents are warming to the idea. But it is the growing criticism of the actions of monopoly corporations that is turning the tide of public opinion and feeding the calls for government action.