Finance Finance News Turnbull invites boss of zero tax-paying coal giant on gala junket to US

Turnbull invites boss of zero tax-paying coal giant on gala junket to US

Malcolm Turnbull
Prime Minister Malcolm Turnbull with workers during a visit to Glencore Copper Refinery in Townsville last year. Photo: AAP
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Prime Minister Malcolm Turnbull has invited the head of coal at multinational mining giant Glencore, a company which routinely avoids paying a cent of company tax, to join him on a gala diplomatic mission to the United States to visit President Donald Trump next week.

Peter Freyberg, a coal industry veteran who last year urged the Australian government to back out of the Paris climate agreement, will join a retinue of more than 20 business leaders accompanying the PM on the junket to celebrate ‘100 years of mateship’ between Australia and the US.

Mr Freyberg’s company, Anglo-Swiss commodities colossus Glencore, has 17 coal mines across Australia, and takes in billions of dollars in revenue annually through its Australian operations alone.

peter freyberg
Mr Freyberg, 58, heads up Glencore’s Australian coal business and is a non-executive director of the Minerals Council of Australia. Photo: Getty

Nevertheless, last year lower profitability and losses carried forward from previous years meant the firm did not pay a cent of company tax to the federal coffers. On the contrary, it received a $37 million rebate from the government.

This comes at a time when Australia’s company tax rules are under intense scrutiny. The Turnbull government is currently pushing hard to reduce the company tax rate from 30 per cent to 25 per cent, following huge tax cuts introduced by the Trump administration.

This has brought to light the fact that, while Australia’s headline company tax rate may be 30 per cent, the effective tax rate is actually well below 20 per cent – possibly as low as 10.4 per cent.

Glencore’s controversies

Like many multinational corporations operating in Australia, Glencore regularly avoids paying a cent of company tax, despite being the largest mining company in the world by revenue.

In 2016 the company – which is listed on the London Stock Exchange and headquartered in the tax havens of Switzerland and Jersey – paid absolutely no income tax at all in Australia.

That was in part thanks to losses dating back 10 years as a result of the purchase of Xstrata in 2013. Australian tax law is unusually generous when it comes to carrying losses forward into subsequent tax years.

Glencore Australia is comprised of around 10 different tax entities (the number is constantly changing). Over the last four years most of these have paid zero company tax.

Coal giant Glencore paid no company tax last year.
Coal giant Glencore paid no company tax last year. Photo: Getty

The company says this is because low commodity prices since the end of the mining boom (around 2011) have eaten into profitability. It points out that company tax is charged on profit, not revenue, and when there is little or no profit, it naturally pays little or no company tax.

On top of this, it argues mining is an investment-heavy industry, meaning much of its revenue must be reinvested in the company’s operations.

Glencore’s main business in Australia is coal. Of its 24 mines, 17 are coal mines, while the rest are copper, nickel and zinc.

Mr Freyberg has been a vocal critic of renewable energy targets and the government’s carbon emissions reduction efforts. He made headlines last year when he urged the government to consider dropping its commitments in the Paris climate accord.

This controversial position puts him on common ground with Mr Trump, who plans to withdraw the US from the Paris accord entirely, and who made saving the coal industry a key promise in his 2016 election campaign. 

Who else is in Turnbull’s junket?

Mr Freyberg is not the only controversial inclusion. Ian Narev, the chief executive of the Commonwealth Bank of Australia, will also be among the entourage.

CBA boss Ian Narev will step down next year after a string of scandals.
Former CBA boss Ian Narev will join Malcolm Turnbull on his visit to the US.

Mr Narev was forced to resign last year when regulator AUSTRAC announced it was suing the bank for thousands of alleged breaches of anti-money laundering laws. He leaves the bank later this year.

Mr Turnbull’s entourage also includes barely any women. Only 13 of the 20 business leaders have been named, and just one is a woman: Business Council of Australia chief executive Jennifer Westacott.

At a ratio of 12:1, that’s worse than Mr Turnbull’s own cabinet, where men outnumber women 18 to five.

But it’s not far off the industry average. According to a recent survey 94 per cent of the CEOs of ASX 200 companies are men.

A government spokesperson declined to comment on the PM’s choice of delegates, but stressed that all business delegates would pay their own travel expenses. The taxpayer would not foot the bill.

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