Australia’s 500 biggest companies made $98bn in “crisis profits” off the back of the Covid-19 pandemic and Russia’s war on Ukraine, new analysis has found.
In 2022 and 2023, companies including Woolworths, Hancock Prospecting, National Australia Bank, AGL Energy and Harvey Norman reaped billions of dollars in profits, more than 20% above their 2018 to 2021 average, according to a new report by Oxfam Australia.
Oxfam calculated these extra profits, known as crisis profits, using methodology employed by the European Union in determining corporations’ “windfall profits” under an emergency taxation measure during the 2022 energy crisis.
Under that measure, the solidarity contribution, the EU asked fossil fuel companies to return at least 33% of taxable surplus profits for the 2022 and 2023 financial years to governments to help fund energy affordability and address supply shortages.
In Australia during that period, iron ore mining companies accounted for the vast majority of crisis profits, raking in $34bn in 2022 and $5.7bn in 2023.
Supermarkets and grocery stores made $5.7bn in crisis profits in 2022, with the vast majority of that – $5.64bn – made by Woolworths alone, Oxfam found.
Coles was excluded from the analysis because it split off from its previous parent company, Wesfarmers, in 2018, but Oxfam found the company had, on other measures, “clearly profited off the back of the crisis conditions”. Coles posted a 4.8% rise in full-year annual profit to $1.1bn in 2023.
The banking and financial services sector had also profited hugely off the back of crisis-driven inflation, with NAB alone making $1.1bn in crisis profits in 2022 and $1.6bn in 2023.
AGL Energy, meanwhile, made $429.2m in crisis profits in 2022, and retailer Harvey Norman made $181.6m.
Oxfam are calling on the Australian government to investigate establishing a crisis profits tax, to be implemented in times of extreme instability.
They calculated that Australia could have raised between $49.1bn and $88.4bn if a crisis profits tax of between 50% and 90% had been implemented over those two years.
A tax on the iron ore mining sector alone would have yielded between $17bn and $31bn for the public purse.
Lyn Morgain, the chief executive of Oxfam, said Australia had missed an opportunity to set up such a system during the pandemic.
“They’re called crisis profits because they arise out of these exceptional crisis circumstances. And they are likely to be an ongoing feature of our economy as global conditions continue to be very volatile,” Morgain said.
“We’re seeking to set the system up for the next likely and probable crisis, and also to capture the profits that are clearly going to the mining industry that are likely to be ongoing.”
A crisis profits tax would not be an ongoing tax but rather would kick in when “unearned” windfalls – profits that were not a direct result of innovation but instead of capitalising on instability – met a certain threshold under particular circumstances.
While making profit off crisis was not illegal, Morgain said, it was out of step with the Australian community’s expectations. Polling from the Australia Institute and Oxfam’s own polling suggest that more than two-thirds of Australians support windfall taxes on oil and gas companies.
“The community’s very clear about this. They are clear about what they consider to be ethical, and what they consider to be necessary,” Morgain said. “So we would think that governments have ample support to try and implement those kinds of measures.”
Oxfam wants to see revenue raised from any crisis or windfall tax used directly on “managing the impacts of such crises on people living in poverty and on low incomes, as well as responding to the increased demand on essential services, such as healthcare”.
In 2023, Oxfam’s inequality report found that Australia’s wealthiest 1% were 61% richer than they were before the pandemic, pocketing $150,000 a minute over the previous decade.
