BHP boss bullish on medium-term commodity demand

IN AN interview on the ABC’s 7.30 program last week, BHP Billiton chief executive Andrew Mackenzie said Australia still had some of the best days ahead of it in terms of mining development.
BHP boss bullish on medium-term commodity demand BHP boss bullish on medium-term commodity demand BHP boss bullish on medium-term commodity demand BHP boss bullish on medium-term commodity demand BHP boss bullish on medium-term commodity demand

Andrew Mackenzie

Michael Cairnduff

“I believe that the resources industry has been pivotal to Australia but as we go forward demand continues to increase and everything is there for Australia to play for,” Mackenzie said.

In regards to the relative slowdown in Chinese demand, the BHP boss said it was clear that the country was also going through a transition period, where it was moving from being entirely investment driven to being more consumption driven – rebalancing its economy to be more sustainable in the long term.

“I would also say that for many of the commodities Australia’s resources industry produces, we are looking at the possibility of an increase in demand of about 75% in the next 15 years.”

According to Mackenzie, conditions for the country’s resources industry to prosper rely on it offering more than an inherited endowment of good geology – it must provide conditions that promote competitiveness.

“They are simple regulation one-stop shops but ones that continue to protect the health and safety of our workforce, the environment and so on and so forth – and a range of polices, which you might label as fiscal, trade or foreign policy,” he said.

Mackenzie said he would also argue for an industrial relations framework that more firmly drew everybody concerned in the same direction to drive more productivity.

He was asked whether, if the Coalition was elected, the Coalition-proposed 1.5% cut to the company tax rate would be cancelled out by BHP being required – as a large Australian employer – to pay the 1.5% levy to fund the paid parental leave scheme. However, Mackenzie dodged the question, claiming a lack of detail to date on these Coalition policies.

He instead shifted the focus to a discussion of Australia’s broader tax picture and took the opportunity to point out that BHP was the country’s single largest taxpayer, paying a tax rate of 45% or $9 billion in fiscal year 2012.

“That is a fair rate of tax, so as we continue to look at reforms that are out there to hopefully enhance the competitiveness of the country, then we will have to see fiscal policy alongside industrial relations policy, alongside foreign policy,” he said.

Responding to a question on whether he thought BHP paid too much tax, Mackenzie said the company understood governments needed to raise revenue.

“We are also able to talk to governments about how the competitiveness of Australia stands up in terms of other parts of the world that either we are investing in – in competition, if you like, to investments that could happen here – or even other countries where we are not present but we know they are likely to compete against our investments here in Australia,” he said.

“So we can inform that and obviously get the right balance between what governments need to raise and what we need to do to promote the competiveness of the country.”

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