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Money, money, money: Murdoch's media tax

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Rupert Murdoch (Image courtesy Keogh Cartoons)

Rupert Murdoch complains about unfair competition from the ABC, yet imposes his own consumption tax whilst paying next to none. Rodney Lever questions Murdoch's motives in ousting Tony Abbott in favour of Australia's wealthiest prime minister, Malcolm Turnbull.

JOHN MENADUE, a former head of Rupert Murdoch’s Australian publishing empire, has written on his website an extraordinary explanation of how Murdoch manages his Australian taxes while most of his Australian holdings are operating at a considerable loss. 

Menadue points out that Rupert Murdoch complains about unfair competition from a taxpayer-funded public broadcaster, the government-owned ABC. Yet, Murdoch, in effect, imposes his own consumption taxes on Australian consumers at a time when Australia has the wealthiest prime minister in the nation’s history. It seems more than coincidence.

Even more coincidental may be the arrival into the leadership of Malcolm Turnbull in Australia when he became the wealthiest prime minister the nation has ever had. The Murdoch media led the way in abruptly ending Tony Abbott’s short reign and shoving Malcolm Turnbull into the top job.

Menadue points out that Australian consumers, whether they know it or not, make a financial contribution to Rupert Murdoch’s empire when we buy our goods and services. This is because the producers of those goods or services include the cost of advertising that businesses spend to help sell their products. The advertising that Rupert Murdoch’s companies receive is loaded into the cost of the goods and services we buy.

Last year more than $13 billion was spent on advertising in Australia, of which about $5 billion was spent on commercial TV and radio and more than $2.5 billion went to the Murdoch newspapers in five states. 

That is an important part of Rupert Murdoch’s media income, Menadue writes. In broad terms we pay about $1,500 per year per household for the advertising in his newspapers. Murdoch’s share of that revenue goes to media companies like Murdoch’s. Of the $1,500 per year per household, about $500 is for commercial TV and radio and $300 for newspapers. This excludes the cover price.

We pay about $300 per year per household for all the advertising that appears in newspapers. That amount is loaded into the price we pay for goods and services that we buy as a result of reading the media. With Murdoch owning about two thirds of metropolitan newspapers, this means that he gets about $200 per year advertising revenue from every household — yours and mine. This $200 is loaded into the price we pay for all goods and services. It is in effect a consumption tax which is a regressive form of tax.

So in effect, Menadue notes that his own household pays about $200 per year to Rupert Murdoch for newspapers that he produces that most people rarely read.

By contrast, we pay about $120 a year per household through progressive tax that keeps the ABC alive.

In short, Australian households are getting a cheaper and better service from the ABC, without advertising, compared to what Rupert Murdoch offers with most of his Australian investments. My local newsagent is, in fact, contributing to Murdoch’s better income results from his British and U.S. operations when the newsagent sends hundreds of copies of the Weekend Australian to the local dump every week.

Let’s face it: anyone who buys a Murdoch newspaper is being suckered while Murdoch increases his “losses."

Malcolm Bligh Turnbull (the family had a link to Bligh of the Bounty) was born in 1954 and became prime minister just this year. His family wealth saw him begin his career at Sydney Grammar School, followed by Sydney University and Brasenose College Oxford as a Rhodes Scholar.

As a Bachelor of Arts and a Bachelor of Laws, he worked for a short time as a journalist and then joined the Australian Republican Movement and the Liberal Party when John Howard was leader. After Howard retired, Turnbull lost by one mysterious vote for Tony Abbott in a party leadership poll.

In 2005, the combined net worth of Malcolm and Lucy Turnbull was estimated at A$133 million, making him Australia's richest parliamentarian until the election of Clive Palmer in the 2013 election. Palmer’s last published estimated wealth was about $120 billion. 

Turnbull made the BRW Rich 200 list for the second year running in 2010, and although he slipped from 182 to 197, his estimated net worth increased to $186 million in the following years and he continued to be the only sitting politician to make the list. Turnbull was not listed in the 2014 list of the BRW Rich 200. As of 2015, his estimated net worth is in excess of A$200 million.

In the list, of all 29 prime ministers since Federation, not one has come anywhere near to Malcolm Turnbull’s wealth.

Turnbull requested his company be removed from the list only after it was published!

Making money is not a sin. Nearly every U.S. president has made a fortune that far exceeds his annual salary.

Rupert Murdoch is well placed in the rich lists in the U.S., with an estimated $13 billion stash. In Australia, James Packer is number 4 in our rich list, with about half of Murdoch’s wealth. But Packer wisely got out of the four family generations who controlled a big slice of our commercial media and went into building a lucrative gambling business, where the casino management always has the opportunity to shuffle the cards.

Surely, life in Australia is becoming more complicated than it ever was in our entire history.

You can follow Rodney Lever on Twitter @rodneyelever.

Cartoon courtesy Bruce Keogh at Keogh Cartoons.

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