A new Oxfam report has alleged that the top 500 Australian corporations made $98 billion in “crisis profits” since the start of the decade, with the organisation now calling for a “crisis profits tax” to be implemented to discourage price gouging.
Comparing the net profits of the 500 companies between 2021–22 and 2022–23, to their average profits between 2017–18 and 2020–21, Oxfam said corporations amassed “staggering profits” by cashing in on volatile global conditions.
“We find they raked in $98 billion in additional windfall profits, or ‘crisis profits’, that they wouldn’t have made under normal circumstances. Oxfam believes making billions during and off the back of overlapping crises is corporate profiteering,” it said.
“These profits are part of a wider crisis-fuelled inequality story, where billionaires were able to increase their wealth and boost their bank balances while the rest of us endured rising costs of living.”
It identified the banking sector, alongside mining and supermarkets, as recording some of the biggest gains, with NAB said to have pocketed $1.1 billion in “crisis profits” in 2022, and $1.6 billion in 2023.
“Australia’s second largest lender, National Australia Bank, has been able to ride the wave of the Reserve Bank’s 13 interest rate rises since May 2022, to enlarge its profit margins alongside its big four peers, while many people struggled with their increasing mortgage repayments,” the report said.
It also highlighted a recent price gouging inquiry, chaired by former Australian Competition and Consumer Commission chair Allan Fels, that cited the Australian banking system as one of the most concentrated among advanced economies, enabling the big four banks to increase their profit margins for the duration of the rate hike cycle.
“The increase in profit margins has enabled their profits to be higher through the entire period of the pandemic than they experienced on average in the 15 years before the pandemic,” the report said.
Other firms singled out in the report include BHP, accused of making $37.6 billion as mineral prices surged after the invasion of Ukraine; Woolworths, accused of making $5.6 billion by lifting prices in the face of growing inflation; and Hancock Prospecting, accused of “riding the wave of high mineral prices” to make $1.6 billion in crisis profits.
In the face of these findings, Oxfam Australia CEO Lyn Morgain said surging economic inequality has been exacerbated by the intersection of poor government policy, corporate crisis profiteering, and global crises.
“Between the COVID-19 pandemic and high inflation caused by war and corporate profiteering, it was a tough start to the decade for most. Even in relatively wealthy countries like Australia, millions of people have been pushed to the brink by rising prices of food, energy and unaffordable rent. In stark contrast, this has been a profits bonanza for some of Australia’s biggest corporations,” she said.
Oxfam is now calling on the Australian government to implement a “crisis profits tax” on excessive corporate profits, as part of a package of tax reforms that would tackle inequality and Australia’s low taxes.
According to its analysis, a 90 per cent tax on these crisis profits could have generated a considerable $88 billion in revenue, which could have been deployed across critical areas like energy bill relief, increased pandemic-related healthcare costs, and even social housing.
“A tax on the crisis profits of corporations would not only discourage price gouging, but also boost the budget when crisis hits and generate more funds for addressing inequality and cost-of-living pressures,” Morgain said.
“A crisis profits tax is a crucial step towards reining in corporate profiteering, tackling the root causes of economic inequality, and ensuring we have the funds to properly manage the impacts of crises, without sending the budget into deficit.”
A recent YouGov poll, commissioned by Oxfam, found 80 per cent of Australian voters believe it is unfair to allow tax loopholes for big corporations. Moreover, the majority (68 per cent) of respondents support a crisis profits tax, it said.
