Snowy Hydro expansion could cost $1bn more

Snowy Hydro expansion could cost $1bn more than Turnbull said, senators told

Company managers tell Senate estimates the $2bn project announced by the PM has not counted a large cost factor

 Malcolm Turnbull (centre) on a tour of Tumut 3 power station at the Snowy Hydro Scheme in Talbingo.
Malcolm Turnbull (centre) on a tour of Tumut 3 power station at the Snowy Hydro Scheme in Talbingo. Photograph: Lukas Coch/AAP

The expansion of the Snowy Hydro Scheme, touted by the prime minister as costing $2bn, will likely blow out to more than $3bn, Senate estimates was told on Tuesday.

The idea of expanding the Snowy Hydro Scheme, adding 2,000MW of capacity and storage, was announced by Malcolm Turnbull in March.

Under questioning from Greens senator Larissa Waters, the chief operating officer of Snowy Hydro, Roger Whitby, said the $2bn estimate did not include the cost of expanding transmission lines.

“For this to be feasible more broadly, and providing benefits to consumers, it will have to have deeper transmission augmentation – both into New South Wales and Victoria,” Whitby said, noting those connections were not included in the original estimate of $2bn.

Asked by Waters whether it would cost more than $2bn to build those connections, Whitby responded: “I would imagine it’s less than $2bn.” But he said it was “potentially more than $1bn”.

 Under further question from Labor senator Kim Carr, the Snowy Hydro executives revealed a $29m feasibility study funded by the Australian Renewable Energy Agency (Arena), expected to be completed this year, would not examine the cost of those transmission lines.

“It won’t be part of our feasibility [study],” said the chief executive of Snowy Hydro, Paul Broad.

The executives said they were in discussion with TransGrid, which operates the lines about their cost and feasibility.

The hearing also revealed that Turnbull had announced the project less than two weeks after the idea was raised with his office by Snowy Hydro.

Under questioning from Waters, Broad said they had first had discussions with the prime minister’s office on 3 March, just 13 days before he announced the project publicly.

The government’s deadline for all onshore asylum applications is impossible to meet,

To Meet and will result in people being deported to danger.

On Sunday the immigration minister, Peter Dutton, announced an immovable deadline of 1 October for all asylum seekers in the so-called “legacy caseload” to have lodged their formal applications for protection.

The legacy caseload is about 30,500 asylum seekers who arrived in Australia by sea between August 2012 and January 2014. Their claims for protection were frozen under Labor’s “no advantage” rule.

The majority – 23,000 of the 30,500 people – in the legacy caseload have applied for protection. But 7,194 have not yet formally applied, most because they were banned from applying until as late as October last year, or are on a waiting list for legal assistance.

The required protection application – form 866 – has 101 questions and is 41 pages long. Almost all asylum seekers require legal assistance to correctly fill it out; even then it typically takes between 10 and 15 hours.

The government has cut legal funding for asylum applicants by 85%, and most legal centres offering pro bono assistance have waiting lists longer than a year.

Dutton said on Sunday anybody who failed to lodge their application by 1 October would be deemed to have forfeited their claim to protection. “They will be subject to removal from Australia, prohibited from applying for any Australian visa, cut from government income support and banned from re-entering Australia,” Dutton said.

The executive director of Refugee Legal, David Manne, told Guardian Australia the deadline would be an impossibility for thousands of asylum seekers.

“Despite the huge scaling up of free legal assistance, by us and others, it simply can’t be met. And the government well and truly knows that, no one should be surprised. The deadline is arbitrary, unnecessary and unfair.”

Manne said international law obliged Australia to provide people an opportunity to fairly present their case for protection. “Otherwise, if you deprive people of that opportunity, it risks an unfair hearing and serious miscarriage of justice, in these circumstances that could well result in somebody being sent back to torture and death.

“The slip of a pen could be a death sentence.”

Manne said in the wake of the government’s announcement, his organisation had been inundated with offers of volunteer support, including from major law firms offering to send lawyers to assist with protection applications. However their waiting list is more than 2,000 people long

Manne said people in the legacy caseload were “desperate to apply” for protection, but the vast majority had been banned from making an application until as late as October last year.

Manne said the characterisation by the government of asylum seekers who have not yet applied for protection as “fake refugees” was without foundation.

“To cast aspersions over thousands of people that they’re somehow fake refugees when they haven’t been able to present their claims yet, let alone have them heard, it’s not only baseless, but it’s quite improper, highly prejudicial, and tantamount to prejudgment of someone’s case before it’s heard.”

He said that any attempt to deport a person for failing to lodge a protection application would be challenged in court.

The chief executive of Melbourne’s Asylum Seeker Resource Centre, Kon Karapanagiotidis, said asylum seekers were presenting to ASRC offices “terrified and panicked” they faced deportation without having a chance to make a claim.

“Like it wasn’t hard enough for these people,” Karapanagiotidis said. “They wake up on Sunday to be told they are trying to rort the system, when they have been wanting to apply since 2012.”

People in the legacy caseload had been banned from applying for protection for between 961 and 1,600 days, Karapanagiotidis said. The most vulnerable were people who were suffering poor mental health or post-traumatic stress disorder, and who hadn’t engaged with legal services.

He said he was urging all asylum seekers to seek legal assistance, because, under the fast-track system, no new information could be presented beyond the initial application, even new evidence of further persecution.

Before fast-track was introduced, 90% of asylum applicants were found to have valid protection claims. Under the new system, that number has fallen to about 70%.

The government’s new deadline for asylum applications was the subject of sustained questioning before Senate estimates on Tuesday.

The department told estimates there were 7,194 people – out of 30,500 in the legacy caseload – who had not formally lodged applications. Half of that number were in families with children.

Iranian nationals, with 2,583 asylum seekers, were the largest cohort, followed by stateless people, 1,196, a group that includes a significant number of Rohingyas, a persecuted ethnic minority from Myanmar.

Then 991 are Sri Lankans and 403 Afghans, while the remainder are significantly smaller national groups, including Pakistanis, Vietnamese and Bangladeshis.

On average it takes the immigration department 261 days – more than eight months – to process somebody on the fast-track refugee assessment, and that time is trending up, department officials said.

The department secretary, Mike Pezzullo, told estimates his department projected that all the applications could be lodged by 1 October, but he conceded the legal sector had told his department it would not be able to meet the deadline. “I do accept that that’s a contestable view, but that’s the rate at which we’re currently tracking.”

Pezzullo said there was no leniency in the deadline. “Whether we hit zero or 100 or 300 or 400 [applications outstanding] at that point [1 October], the commissioner [of the Australian Border Force] and I have to turn our mind as to how we will operationalise a departure strategy … how we will aggressively pursue a departure policy.”

Senior department sources have previously told Guardian Australia there is recognition within the department it cannot process the volume of applications it has demanded of asylum seekers, but there is political pressure to be seen to be clearing the legacy caseload.

The Horror of Manchester

 

Manchester Arena bombing: Theresa May raises threat level, and troops to be deployed on Britain’s streets – live news
Police say attacker died after detonating ‘improvised explosive device’ in foyer of concert hallManchester Arena attacker named by police as Salman Ramadan Abedi
Manchester police say 22-year-old was responsible for suicide attack that killed 22 and injured 59 at Ariana Grande concertSecond Manchester bomb victim named as eight-year-old Saffie Rose Roussos
‘Beautiful little girl’ was at Ariana Grande concert in Manchester with her mother and sister when the explosion happened

The Guardian view on reacting to terror: be Manchester
Editorial: The city’s solidarity and courage is a model for a national response that rejects fear and division

UK ‘vulnerable to terror attacks by jihadis unable to reach Syria’
Both Islamic State and al-Qaida are calling for ‘frustrated travellers’ to stay at home and attack in the west instead, Whitehall source says

 

Australian news and politics
Indigenous children in foster care: ‘These kids can’t see their families if I don’t help them’
More than 40% of Aboriginal and Torres Strait Islander children in out-of-home care are with non-Indigenous foster carers. It takes effort and imagination to ensure the children retain links to their family and the Aboriginal community‘Go and light a fire in the nation’: Uluru gathering aims to map a path to recognition
More than 200 Aboriginal and Torres Strait Islander delegates hold a meeting that hopes to shape the relationship between Australia and its first peoplesBanking levy could fall half a billion dollars short, analysts say
Labor calls on Coalition to rule out raising levy to make up any shortfall after warning from Deutsche Bank and Morgan Stanley

The Guardian Essential Report, 23 May results
A summary of the results of polling on Australian politics and national opinion

Snowy Hydro expansion could cost $1bn more than Turnbull said, senators told
Company managers tell Senate estimates the $2bn project announced by the PM has not counted a large cost factor

Deadline for asylum seekers in Australia impossible to meet, lawyers say
Experts say 1 October deadline for 7,194 asylum seekers to apply for refugee status ‘arbitrary, unnecessary and unfair’ and ‘the slip of a pen could be a death sentence’

Labor targets bank tax and school funding in question time – as it happened

Gonski 2.0 school funding package comes to parliament and dominates question time following party meetings. As it happened

Around the world
Brazil police arrest close aide of president in World Cup scheme
Tadeu Filippelli, a former vice-governor of the capital and cabinet adviser, was among three senior politicians detained in Brazil’s latest corruption scandalFox News retracts story on murder of DNC staffer Seth Rich
Fox says May report that Rich had been in contact with the website WikiLeaks prior to his fatal shooting was not given a ‘high degree of editorial scrutiny’Former South Korean president Park Geun-hye on trial for corruption
Park accused of putting pressure on firms including Samsung into paying millions in bribes in return for business favours

WHO elects first ever African director-general after tense vote
Former Ethiopian health minister Dr Tedros Adhanom Ghebreyesus to lead World Health Organisation after a long and fraught campaign

Donald Trump says ‘evil losers’ were behind Manchester attack
US president says ‘wicked ideology must be obliterated’, as he delivers remarks alongside Palestinian president Mahmoud Abbas in Bethlehem

 

COFFS HARBOUR CITY CENTRE MASTERPLAN

Mr ANDREW FRASER ( Coffs Harbour ) ( 17:47 ): Tonight I wish to raise an issue on behalf of the Coffs Harbour City Centre Masterplan Committee. In doing so, I will read onto the record a couple of letters that were sent to me from this committee. These letters were addressed to the General Manager of Coffs Harbour City Council. The first reads:

Dear Steve,

Early this year I attended a meeting at the C.ex about their community safety corridor project which would see better lighting and CCTV cameras in the entertainment area surround the C.ex. Their application for funding required a cash contribution, and the CBD Masterplan Committee was asked for support. Unfortunately I had to inform the C.ex we couldn’t consider contributing because our true financial position is unknown.

We’ve had a significant cost blow-out on the Harbour Dr shared zone, and the total cost of the Duke St extension remains allocated to the Special Rate Variation (SRV), despite several requests to have it removed. As recently as the last minutes of the CBD Masterplan Committee, a detailed breakdown of the budget was requested, and once again we received a one page sheet with Budget and YTD totals, and no itemised transaction list. Of concern is the vague note regarding Duke St, saying “additional funding to come from other Council Budget areas.” This is not good enough.

John Rafferty, CEO of the C.ex was one of those involved in extending the SRV and has repeatedly sought details of the CBD Masterplan budget, which we’ve been unable to provide. This has obviously prompted the letter (attached) handed to me yesterday, 16 March.

The Committee has been requesting clarification of budget issues for the best part of two years now. The situation remains that we only get totals without itemised expenses which are not recorded in approved minutes. Following conversations with John, I have canvassed several other businesses identified in the letter to the General Manager dated 12 January2012, and like John, they are concerned we’re headed for a similar situation as the first SRV, where unbeknownst to them, they had been charged the full costs of a Project Manager, including a motor vehicle and on-costs, to the value of some $253,000.

Clearly, what’s happening now is not what they agreed to. Central to the negotiation of an extension to the SRV, was that CBD Landowners (the Special-Rate payers) would have a majority of votes on the committee so that no expenditure could be made without their explicit, minuted approval. That was the deal maker. All of the discussion about establishing an extension to the special rate, focused on that critical point. They did not want a situation where Council controlled the decision-making.

He goes on to say in part:

Those paying the SRV are very disappointed that the agreed Terms of Reference can also be rewritten at any time. And I think that that goes to the heart of the issue, in that Council has assumed control of the Masterplan funds. To quote a Council employee of the Masterplan Committee meeting late last year, “It’s our money (Council’s) and we can spend it on whatever we want, and we don’t need your permission”, which is clearly contrary to the conditions agreed to in setting up the extension of the SRV, nor does the statement equate to dealings with IPART where clearly the funds are to be spent on projects identified in the CBD Masterplan.

There is also correspondence here from the Chief Executive Officer of the C.ex Club:

The Special Rate Variation was presented to the owners of properties in the CBD after Coffs Harbour City Council had received an extension of the CBD Special Rate Variation for the 2012-13 rate year …

And now runs to 2017.

On behalf of the Coffs Ex Services Memorial and Sporting Club Ltd and in the view of transparency the Club requests information regarding the use of funds acquired and expended by the CBD Masterplan Committee … commencing 2013-14 until 28 February 2017.

The Coffs Ex Services Memorial and Sporting Club Ltd is concerned with the progress of the CBD Masterplan and believe that the contributions from the ratepayers for the period in question would be approximately $2.9 million.

We have a situation where council is failing to provide the information it promised to provide. In applying to the Independent Pricing and Regulation Tribunal [IPART] for that variation, they have also this week given delegated authority to the general manager to hand out a contract on the swimming pools, which has created hundreds of emails and letters to my office. I am calling on IPART and this Government to have a full investigation into the conditions of the special rate variation. There are huge question marks over it. Either the Minister for Local Government has to do it or IPART has to do it, to ensure that the money is spent where it was promised to be spent in the first place, because we are not getting a fair deal from council.

What would happen if Donald Trump were impeached?

What would happen if Donald Trump were impeached?

The latest whirlwind of news about Trump, Comey and Russia has again stoked the chorus for impeachment. Here’s how it might happen

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How to impeach a president

Around midday on Monday, Congressman Al Green, a Democrat from Texas, held a press conference to call for the impeachment of Donald Trump. The firing of FBI director James Comey, Green said, was an obstruction of justice falling clearly into that basket of “high crimes and misdemeanors” prescribed in the constitution as grounds for impeachment.

Green should have waited a day. Because by the time the sun went down on Tuesday , advocates for Trump’s impeachment had a lot more to work with.

The White House denied the report, which was subsequently confirmed by numerous media outlets.

The Comey news broke before Washington had a chance to catch its breath from Monday’s shocking revelation. Late on Monday afternoon, the Washington Post reported that Trump had divulged highly classified material to Russian diplomats in an Oval Office meeting last week – material so sensitive that homeland security officials scrambled to place calls to US intelligence agencies afterwards to warn them that the information had leaked, via the president’s mouth, to Moscow.

Trump told Russian foreign minister Sergei Lavrov and ambassador Sergey Kislyak about spying by an unnamed US partner that had revealed an alleged Islamic State plot involving laptop computers and airplanes, the Post reported.

The White House trotted out national security adviser HR McMaster on Monday evening to call the Post report “false” – but then the president, on Tuesday morning, as much as confirmed it on Twitter, although he did not specify the information was classified.

“As president I wanted to share with Russia (at an openly scheduled WH meeting) which I have the absolute right to do, facts pertaining … to terrorism and airline flight safety,” Trump wrote. “Humanitarian reasons, plus I want Russia to greatly step up their fight against Isis and terrorism.”

The episodes have once again stoked the chorus calling for the impeachment of Trump, a chorus that has steadily built over the four months of the Trump presidency.

Some Democratic lawmakers immediately questioned the legality of Trump’s alleged statements to Comey, with Senator Dick Durbin saying it “again appears to cross the line into the obstruction of justice”. Elijah Cummings, a top congressional Democrat, said, “clearly we’ve got a smoking gun and a lot of dark smoke.”

As for Monday’s bombshell, legal analysts say that Trump is correct in noting his “absolute right”, as president, to share information as he pleases. The president’s discretion overrides any categorical classification, and there has been no assertion that Trump broke a law by allegedly sharing the information.

The president may, however, have broken his oath of office, according to analysis at Lawfareblog, whose top six analysts joined in a byline to write: “It’s very hard to argue that carelessly giving away highly sensitive material to an adversary foreign power constitutes a faithful execution of the office of president.”

The blog notes that allegations of oath violations have been central to every previous case of impeachment or near impeachment.

“Let’s not minimize it,” legal scholar Alan Dershowitz said on CNN late Monday. “Comey is in the wastebasket of history. Everything else is off the table. This is the most serious charge ever made against a sitting president of the United States. Let’s not underestimate it.”

The case against Trump was, to some minds, already strong. A campaign is under way to impeach Trump for allegedly violating constitutional bans on receiving certain gifts. Others have argued for an arcane application of constitutional law under which the vice-president and cabinet together might declare the president unfit to serve.

Green was not alone in seeing the firing of Comey as the last straw. As FBI director, Comey was leading an investigation into alleged ties between the Trump presidential campaign and Russian operatives. Trump told interviewer Lester Holt last week that the Russian investigation was on his mind when he fired Comey.

“And in fact when I decided to just do it, I said to myself, I said ‘you know, this Russia thing with Trump and Russia is a made-up story, it’s an excuse by the Democrats for having lost an election that they should have won’,” Trump said.

To many ears, the lines were a blank admission of obstruction of justice à la Nixon. In a Saturday Night Live parody of the scene, Holt, played by Michael Che, stops the interview to ask his production team: “So … did I get him? Is this all over?” Holt listens to his earpiece. “No, I didn’t? Nothing matters? Absolutely nothing matters any more?”

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Who has been impeached before?

Two presidents, Bill Clinton (1998) and Andrew Johnson (1868). (Congress may also impeach judges.) Articles of impeachment were passed against Richard Nixon by a congressional committee, but Nixon resigned before the House of Representatives could vote on the matter, meaning that technically he was not impeached.

Impeachment does not mean expulsion from office. Under the constitution, impeachment happens in the House of Representatives if a majority approves articles of impeachment previously approved in committee. Then impeachment goes to the Senate, where a two-thirds majority vote is required to convict the president, upon which he would be removed from office.

Both Johnson and Clinton were impeached in the House but then acquitted in the Senate and remained in office.

What can a president be impeached for?

“Treason, bribery, or other high crimes and misdemeanors”, the constitution says. Needless to say, there’s debate over what all those terms mean.

Johnson was charged with breaking the law by removing the US secretary of war, which, in the aftermath of the civil war, was not his decision as president to make. Clinton was charged with obstruction of justice and with perjury, for allegedly lying under oath to a federal grand jury about his affair with Monica Lewinsky.

Had Nixon not resigned, he might have been convicted in the Senate on one of three charges: obstruction of justice, abuse of power or defiance of subpoenas. In any case, Gerald Ford, who was Nixon’s vice-president and who succeeded him, pardoned Nixon of any crimes a month after Nixon resigned.

Can a a president t resignfrom through impeachment?

Theoretically, yes, under the aforementioned 25th amendment, which was ratified relatively recently, in 1967, to clear up succession issues made painfully urgent by the assassination of John F Kennedy.

The 25th amendment describes a process by which a president may give away power owing to his or her own disability, and a separate process by which power may be taken from a president owing to disability or inability.

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The key players in the second case are the vice-president and the top 15 members of the cabinet. If the former and a majority of the latter decide the president is “unable to discharge the powers and duties of his office”, they submit that information in writing to the House speaker (currently Paul Ryan) and Senate president pro tempore (currently the Utah Republican senator Orrin Hatch) and just like that, the vice-president would be acting president.

The president may challenge such a decision, at which point a two-thirds majority in both chambers of Congress would be required to stop the president from regaining power.

It’s conceivable that Trump would not go quietly if his cabinet and vice-president Mike Pence were to gang up on him.

How long do impeachment proceedings take?

There isn’t much precedent to say, but the Clinton case proceeded through Congress relatively quickly, in about three months. That example may be misleading, however, owing to the years-long investigation of Bill and Hillary Clinton, including the Lewinsky affair, by the special prosecutor Kenneth Starr, which preceded it. Starr handed his report and research to the House judiciary committee, which therefore had no need to conduct a time-consuming investigation of its own.

Richard Nixon waves goodbye from the steps of his helicopter as he leaves the White House following a farewell address to his staff on 9 August 1974.
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Richard Nixon waves goodbye from the steps of his helicopter as he leaves the White House following a farewell address to his staff on 9 August 1974. Photograph: Chick Harrity/AP

Who’s saying Trump should be impeached?

About 46% of Americans who responded to a Public Policy Polling survey in February, for starters. Public opinion matters because for impeachment to happen, Congress must act, and elected officials sometimes hang their principles on opinion polls.

It’s notable that Nixon, a Republican, faced impeachment in a Congress controlled by Democrats, and Clinton was impeached by a Republican-controlled Congress. For Trump to be impeached, members of his own party would have to turn on him.

That’s why Republican base approval of Trump is so important. If Republican voters do not abandon the president, Republican members of Congress are not likely to.

On the other hand, the Republican Congress might conceivably be enticed into action by the prospect of dumping Trump in exchange for someone they are far more comfortable with: Pence, himself a former congressman and a much more predictable traditional conservative.

Several congressional Democrats have called for impeachment proceedings of some kind. Representative Mark Pocan of Wisconsin said on the House floor in February that if Trump did not divest business holdings and take other actions, then “we’ll have to take other actions, including legislative directives, resolutions of disapproval and even explore the power of impeachment”.

What might Trump be charged with?

Bonifaz, of the Impeach Trump Now group, argues that Trump’s failure to divest from his businesses has already produced frequent violations of constitutional rules for emoluments, or gifts. Investigations into associations with Russia by Trump or his proxies could conceivably produce some kind of disloyalty charge. If Trump has to testify at some point about any of this, he could face a Clinton-style perjury charge. Abuse of power? Obstruction of justice? It seems as if, should Congress get to the point of charging Trump, they may have a buffet of potential charges to choose from.

What would it take in practice to trigger enough Republicans into action?

Republicans had promised to impeach Hillary Clinton as soon as she took office. But what they might not have remembered is that two-thirds of the Senate is required to convict a president of impeachable offenses. The Democrats are in the minority, but they do have 48 Senate seats out of 100.

The most important factor for Republicans in deciding whether to go after Trump would seem to be the disposition of Republican voters. If the people turn on the president, Congress may follow.

Might Trump resign before he’s impeached if there’s a smoking gun, as Nixon did?

What kind of mood does Pence seem to be in? Is he implicated? In the scenario of a Pence succession, it would be up to the current vice-president to pardon Trump or not. Maybe Trump would be more likely to get out of the way and avoid all or some impeachment proceedings – in this truly hypothetical scenario – if Trump felt reassured that Pence, upon acceding to power, would pardon him.

Could he refuse to comply with proceedings?

Only two months into the Trump presidency, we’ve already heard warnings, issued by members of Congress, about this or that constitutional crisis being afoot: Trump impugns judges; Trump overrides legislated regulations; courts block executive actions. There are many opportunities for further constitutional crises during the Trump years, and a Trump refusal to go along with prospective impeachment proceedings is certainly easy to imagine. In which case: who controls the military?

Could he refuse to step down if he’s found guilty?

See above.

Would Pence go down with him?

Not likely. There’s a school of thought that says a key reason the Republican congressional majority would assent to a Trump impeachment is because then they would get the president they really want, Pence. The closest historical precedent to a double whammy of this kind is the resignation in a bribery scandal of Nixon’s vice-president, Spiro Agnew, in 1973, a year before Nixon went down. But the alleged crimes were unrelated.

Elections have consequences. Is this all actually just a fantasy for liberals and conservative purists who cannot accept that Trump won?

Reasons this might not be true include the fact of Trump’s historically low popularity rating at the two-month mark. Trump sits at 38% approval, according to Gallup, 20-some points behind the historical average for first-term presidents. Additionally, Trump seems to be flying unusually close to the sun, in terms of his conduct as an elected official. During his campaign he refused to release his tax returns on the grounds that the usual rules did not apply to him. His refusal to divest from his businesses as president, on similar grounds, could lead him into legal hazards that other presidents have avoided. And the investigations into his campaign’s ties to Russia continue. Finally, Trump is truly a Washington outsider, which could increase his vulnerability to acts of bureaucratic infighting or hidden treachery, as evidenced by the incredible number of leaks from the intelligence community so far.

On the other hand, the election of Trump has been a particularly painful blow to the progressive psyche, more so even perhaps than the re-election of Bush as the atrocities of the Iraq war mounted in 2004. Republicans suffered for eight years from what some of their critics called Obama derangement syndrome, becoming so wrapped up in their opposition to the president that any sense of greater purpose seemed sometimes to be lost. Are progressives and conservative purists suffering from Trump derangement syndrome? It’s possible. We’ll find out.

Julia Carrie Wong contributed reporting to this story

Hello again …

… today we have a small favour to ask. More people than ever are regularly reading the Guardian, but far fewer are paying for it. Advertising revenues across the media are falling fast. And unlike many news organisations, we haven’t put up a paywall – we want to keep our journalism as open as we can. So we think it’s fair to ask people who visit us often for their help. The Guardian’s independent, investigative journalism takes a lot of time, money and hard work to produce. But we do it because we believe our perspective matters – because it might well be your perspective, too.

If everyone who reads our reporting, who likes it, helps to support it, our future would be much more secure.

Global gas giants use loophole to avoid tax on billions from Australian operations

Mark Kenny

Foreign-owned gas companies have legally avoided paying significant tax on billions in earnings from their Australian operations because of loopholes, according to a study.

The loopholes have allowed the companies to write off interest payments for the borrowings of offshore subsidiaries, it has been claimed.

The study, by academic accountants at the University of Technology School of Accounting, and left-leaning campaign group GetUp, looked at the available balance sheet data of gas giants ExxonMobil and Chevron. It found the two companies have achieved colossal revenue flows from their Australian operations but paid little if anything in petroleum resource rent tax in recent years.

The practice is known as “debt loading” or “thin capitalisation”.

Over the two years 2013-14 and 2014-15, Chevron earned more than $6.12 billion in revenue, but paid nothing in PRRT, according to the assessment.

It found ExxonMobil achieved revenue of almost three times that at $18.08 billion in the same period, but paid only $803.5 million.

The study concluded that between the operation of the company tax rules and the petroleum resource rent tax regime these enormous multinational resources companies can “load up” their balance sheets with excessive debt, thereby reducing taxable income to the point where the tax liability is low or non-existent.

The report, Investigation into the Petroleum Resource Rent Tax and Debt Loading in Australia – 2012 to 2016, found 95 per cent of oil and gas projects in Australia paid nothing in PRRT in 2014-15.

The case for reform has been boosted by a recent Federal Court ruling that went against Chevron Australia in a $340 million dispute with the Australian Tax Office for financial arrangements between 2004 and 2008. The full bench concluded the Australian arm had paid more in interest payments to its US parent company than would otherwise be necessary, thus reducing its taxable profits.

However, the company noted it had paid close to $4 billion in taxes and royalties since that period.

GetUp’s Natalie O’Brien said the interest payments on borrowings were designed to minimise or eliminate tax liabilities, that could otherwise fund schools and hospitals.

“Between 2013-2015, Chevron made over $6 billion in revenue in Australia. It paid zero dollars in PRRT, and they paid zero dollars in income tax,” she said. “That’s a rort.

“In the same period, ExxonMobil made $18 billion in revenue and paid no income tax.

“Australians are sick and tired of big corporations using their influence to increase their own power and profits, at the expense of the community and our environment.

“Every day people are being forced to deal with cuts to essential services – all because our politicians won’t stand up to these greedy gas giants.”

The government has commissioned independent expert Michael Callaghan, AM, to review the operation of the petroleum resource rent tax to assess its effectiveness at securing a suitable return for Australians from the development and sale of their mineral resources.

The PRRT was introduced in 1988 under the then Hawke Labor government, and was designed to tax profits at 40 per cent.

It differs in this crucial respect from state royalties, which tax according to volume and thus do not differentiate between highly profitable ventures and those that might be marginal or even loss-making.

However, profitable income under the PRRT is calculated after the deduction of eligible expenses and where these expenses exceed revenue in a given year, such losses can be carried forward to the next year for deduction. This means high capital start-up costs, can be amortised over years, rendering apparently lucrative projects free of PRRT liabilities.

“The good news is that we can fix this,” Ms O’Brien said. “We can close the loopholes, and recover enough to restore every last cent of Coalition cuts to local hospitals and fully fund Gonski needs-based school funding reform – twice over.”

“Debt loading refers to a tax avoidance strategy where business operations and investments are funded with excessive debt rather than equity,” the UTS report authors note.

“Excessive use of debt compared to equity creates ‘debt loaded’ or ‘thinly capitalised’ structures. Debt loading is often used by subsidiaries of multinational entities to shift profits from high to low tax jurisdictions.”

Rental affordability at crisis point for low-income families

 

The eighth annual rental affordability snapshot released by Anglicare on Wednesday reveals that, for those on welfare payments and the minimum wage, rental affordability remains at crisis point. While much of the talk in the run-up to the budget has been about the affordability of buying a house, the snapshot is a strong reminder of the inadequacy of welfare payments such as Newstart and the desperation many low-income families face just trying to find a roof to live under.

On Tuesday the latest consumer price figures showed that while inflation growth jumped a little bit to 2.1%, rental price growth at 0.6% remains the lowest it has been for more than 20 years.

This slowing of rental price growth is the main driver behind the findings of the latest Anglicare rental affordability snapshot, which show that rental affordability for couples on the minimum wage has improved ever so slightly over the past year.

Since the middle of 2014 rental prices across Australia have on average been rising slower than the minimum wage and, since the end of 2015, they have been rising slower than overall inflation:

But while this does help low-income families, it has done little to undo the massive rent price increases of 2007 to 2012.

Over the past decade, while the minimum wage has risen 31%, and inflation has gone up 27%, rents have soared 48%. It is much less affordable to rent now than it was a decade ago:

But one problem with looking at rental prices across the nation is that rents – perhaps even more so than house prices – are greatly affected by local conditions.

The best example is the difference between Sydney and Perth over the past 15 years. During the boom periods, Perth and Sydney both saw rents zoom upwards but the prices in Perth were much greater.

But the end of the mining boom has seen rent prices in Perth collapse over the past two years. In the past 12 months, while the price of rents in Sydney rose by a still historically low rate of just 2.5%, in Perth rents on average have fallen 7.3%. So drastically have rents fallen in Perth that they are back at the level paid in December 2011, whereas in Sydney they are now 17% higher than then:

The other issue for rental affordability is availability.

The snapshot assumes that a family with two children would require a three-bedroom property and that “share accommodation” is also not suitable for couples or families except for couples on an aged pension.

The report also assumes that, for a property to be affordable, the rent should be less than 30% of household income.

Across the nation, Anglicare found that of the 67,651 dwellings that were available for rent on the weekend of 1-2 April, only 6% were are suitable for households on government benefits. This was slightly down on the 7% in 2016. The story is better for households on the minimum wage (either singles or couples), with 30% suitable for any of those four types of households – but again slightly down from 31% in 2016. But these figures – as bad as they are – hide the crisis for many types of households.

For example, across Australia, there were just 21 dwellings that were affordable for a single person on Newstart and just 1.5% of dwellings were suitable and affordable for a single parent subsisting on the parenting payment. Even for a single person on minimum wage, just 1.6% of dwellings were affordable:

Across the capital cites, the picture of affordability improved most for couples on the minimum wage but has actually slightly worsened for single people on minimum wage.

The deteriorating situation for single people on minimum wage is driven mostly by the big fall in affordability in Melbourne, where there the snapshot notes there is a “dearth of appropriate and affordable rentals for most categories of low-income earners”:

But changes can also disguise the picture.

One reason for small changes in affordability for households dependent upon welfare is because no dwellings are available at all. The situation has not become worse only because it was already at rock bottom.

For example, out of 13,447 properties in the greater Sydney and Illawarra areas, not one was affordable for a person on Newstart, the parenting payment, youth allowance or disability support pension, and just 23 were affordable for a single person on the minimum wage: