Boat surge leads to huge profits
May 6, 2012,
Michael West, SMH.
A surge in asylum seeker boats has delivered an explosion in profits for the private company operating Australia's detention centres.
Serco Australia, a division of a British multinational, enjoyed a 45 per cent rise in net profits to $59 million last year.
The revenue of the company, which has the mandate to run the immigration detention services on behalf of the federal government, almost doubled from $369 million to $693 million.
And the disclosure in its accounts, according to a leading academic in the field of accounting and regulation, failed to comply with Australian accounting standards.
''Rules are rules,'' said Jeffrey Knapp, a senior lecturer at the University of NSW. ''Serco has broken them. Serco Australia Pty Ltd is a reporting entity and should do a general purpose financial report like BHP or Telstra, including full disclosures of related-party transactions and balances.''
Serco's high cash flow, low debt levels and 35 per cent profit margins would make it the envy of the corporate elite. Few of Australia's top 100 companies matched the profit rises or margins of Serco when they last reported. Serco's profits had also doubled the year before.
The rise in the number of asylum seekers since the breakdown of the government's Malaysia plan has led to an increase in detention centres from 12 to 20 across the mainland, Tasmania and Christmas Island. In the 2010-11 financial year, a total of 8874 people were taken into detention. It has also meant a lucrative new $1 billion contract for Serco, in a deal renegotiated with the government last December. A contract to manage the immigration residential housing program had blown out from $44.5 million to $85.6 million.
It is difficult to tell from Serco Australia's financial statements how profitable is the outsourcing of immigration detention.
A spokesman for Serco, Paul Shaw, declined to respond to questions in detail but said the company worked hard to ensure that its reporting was thorough and compliant. ''Our report was due on 30 April and was submitted on 4 May. We will honour a late fee if ASIC deems it appropriate.''
A spokesman for the Minister for Immigration, Chris Bowen, blamed the opposition for the increasing numbers in detention because it did not accept offshore processing.
The opposition's immigration spokesman, Scott Morrison, said that, after Labor blew out the borders, the blowout in the budget was inevitable.'' .
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