A report in the Australian Financial Review reveals that Chinese-owned ConsMin appears to have joined some of Australia’s most profitable corporates by dipping into JobKeeper payments
5 August 2021 | Marcus Reubenstein (Image APAC Digital)
For the past three years the Australian Attorney General’s Department has kept a register of businesses and individuals conducting activities which could be construed as “foreign influence”. The idea was to limit the ability of “state-based actors” to peddle political influence in Australia.
“State-based actor” is code for China and given an overflowing raft of federal laws and security agency powers which ensure that China has virtually zero influence over Australian public policy, there is a solid argument that the Chinese have been shut-out of most areas of influence.
Corporate Australia, on the other hand, rarely has its ability to peddle influence in the corridors of power questioned.
Chinese-owned Consolidated Minerals Australia (ConsMin), which operates a manganese ore mine in WA, has apparently woken up to this and followed many of its peers, into ‘corporate welfare’.
ConsMin has realised the Australian government is far more forgiving on the big end of town than on our biggest trading partner.
Through the pandemic there has been no better example of taxpayer-funded largesse than the Commonwealth’s $90 billion JobKeeper wage subsidy scheme.
There was zero transparency in this Scheme, the Australian Tax Office and the federal government simply refused to disclose who was getting all this money.
“Colossal” corporate welfare
As it turns out independent analysis from the Parliamentary Budget Office revealed $12.5 billion was paid to entities which did not meet the shortfalls they forecast to qualify for the scheme.
As Federal Labor MP Andrew Leigh, who requested the report, told Parliament, “The Morrison government’s thrown a shroud of secrecy over the JobKeeper program, but a new report finds that half of the public companies that got JobKeeper saw their earnings go up, not down. One-fifth of the JobKeeper dollars went to firms that were more profitable than before the pandemic.”
He called JobKeeper payments to big corporates, “Waste on a colossal scale. The report suggests that $10 billion to $20 billion in JobKeeper payments may have gone to firms with rising profits—firms that never needed it, firms that gave it to billionaire shareholders and millionaire CEOs.”
With so many corporate hands in the commonwealth’s colossal JobKeeper jar, it looks as though Consolidated Minerals Australia (ConsMin) decided to slip another one in.
The Australian Financial Review (AFR) reports that analysis of the majority Chinese-owned ConsMin annual accounts reveal a $1.8 million “government grant”, which the AFR understands to be JobKeeper payments.
As reported by the AFR’s Michael Rodden, “ConsMin, is a wholly owned Jersey-based subsidiary of Consolidated Minerals, the world’s largest producer of manganese, which is in turn owned by the Cayman Islands-domiciled Ningxia Tianyuan Manganese Industry Co (TMI), one of China’s 500 largest firms.”
The company gave no comment to the AFR on the nature of the government grant.
However, the AFR reported ConsMin Australia revenue fell 22 per cent over the period when in order to qualify for JobKeeper it had to show a decline in revenue of 30 per cent.
No tax to boot!
Some years ago, the federal government caved into pressure and mandated the ATO release the details of tax paid by large entities, ConsMin slips into the Top 2,000 Australian companies by revenue.
ATO data on ConsMin showed it paid no tax in the last reported year, a situation very familiar in the resources sector, whereby local arms of overseas controlled companies minimize their taxable income by taking out loans from parent entities.
As the AFR reported, tongue in cheek, “How good is JobKeeper? So good it beats drawing down on the $150 million worth of headroom you have in your $800 million interest-free loan from your parent entity incorporated in the Channel Island tax haven of Jersey.”
It also noted, “Ninety-nine per cent of ConsMin’s revenue comes from sales of its ore to China, and its financial accounts show net operating cash inflows rose 45 per cent to $119 million during the same period.”
In fairness to ConsMin it was far from alone.
In its bracket of companies with less than $1 billion in annual revenue, ConsMin was just one of 364,900 companies to fail the 30% drop in turnover test yet still claimed JobKeeper.
The corporate shame list
Certainly, ConsMin’s claims seemed far less egregious than the 157,650 companies which increased earnings over the JobKeeper period yet still stuck their hands in the taxpayer jar.
Harvey Norman and franchisees received an estimated $22 million in JobKeeper, despite Harvey Norman more than doubling profits during the pandemic to $462 million.
The retail group owned by billionaire Gerry Harvey, is consistently the biggest advertiser in Australia. So, there was little reason to hand back the $22 million as its hand feeding the mainstream media advertising departments was in no danger of being bitten by those who make ‘editorial’ decisions.
Among others, clothes retailer, Best & Less revenue rose $77 million over 2020 financial year but still received $42.6 million in JobKeeper.
Accent Group, increased second half 2020 profits by 60 per cent, increased their dividend by 50 per cent to record levels, and paid their CEO a $1.3 million bonus. Claimed nearly $50 million in JobKeeper.
Car retailer AP Eagers received $130 million in JobKeeper, despite posting a $156 million profit compared to a $140 million loss the year before. It paid $64 million in dividends, including $17 million to its largest shareholder, Nick Politis.
The nice list
Some corporates did the right thing—or were shamed into doing so—and paid back JobKeeper.
As of July it had been declared that $225 million in JobKeeper subsidies were being returned to the government, 90 per cent of those returns came from publicly listed companies.
Following this scrutiny some public companies announced a decision to voluntarily repay a component of the JobKeeper they had received in calendar 2020.
Research from Ownership Matters, reveals, 75 companies received $2.45b in JobKeeper; only 20 of those ASX companies have announced their intention to repay, representing a total of $139.8m of the $292.0m (pre-tax) they received.
All the 20 companies were profitable in the calendar 2020 period and 11 of this group reported that their preferred earnings measures were better at 31 December 2020 than at the same time in December 2019.
Those companies are: Premier Investments, Cochlear, Qube Holdings, CIMIC, Mirvac Group, SEEK, Sims, Healius, Iluka Resources, Ingenia Communities Group, Nick Scali, Collins Food, Santos, Super Retail Group, ALS, Nine Entertainment Co., Domino’s Pizza, Lynas Corporation, Blackmores and ADBRI
