Corporate profits: Why do Australians hate companies making money?

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Recently, leaders from major Australian corporations including Coles, Wesfarmers and Commonwealth Bank have highlighted how “profit” has become a dirty word.

Take Coles as an example: despite making less than 3¢ profit on every dollar spent by shoppers and maintaining stable profit margins for five years while employing over 120,000 Australians, the company faced intense criticism for reporting “billion-dollar profits”.

This narrative ignores the fundamental role of growing profits in sustaining businesses and driving economic growth – lost in the discourse due to unfortunate, but rare, scandals.

“The perception that profits are inherently negative often stems from historical and cultural contexts where profit-seeking was associated with exploitative practices, unsafe conditions, or environmental harm,” says Waterhouse.

Notes economist Saul Eslake: “Corporate profits have done much better in the US than Australia, up 11 per cent over the past two years, while in Australia they are down 22 per cent. Over the same period, productivity in the US private sector has risen by 2.1 per cent, but fallen by 0.4 per cent in Australia.”

Labour productivity is generally higher in the private sector, making the sector’s growth key to pulling us out of our economic malaise.

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Private sector employment has stalled since 2022, with the public sector accounting for 87 per cent of all new jobs in the past two years as Australia experiences one of its longest per capita recessions.

It pains me to point out that profitable companies contribute significantly to government revenue through taxes, which fund essential public services like healthcare, education and infrastructure. For instance, the tax revenue collected from the mining sector is offsetting the cost of one NDIS (for now).

Australians love an underdog story, and right now, there is no greater underdog than the Australian private sector economy. To pull ourselves out of this malaise, as even Treasurer Jim Chalmers has admitted, we need to reframe and celebrate profit growth.

You can expect to see lots of negative media headlines over the next few weeks lamenting “billion-dollar profits”, but we can’t create jobs, pay higher wages, secure our retirements, and pay for our soaring public spending without a strong private sector in which businesses are profitable.

Tall profits syndrome is lethal to entrepreneurship, toxic to innovation, stifles productivity, and is anti-growth. I don’t say this often, but let’s try to be more like the Americans, and celebrate business success.

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