BHP chief Andrew Mackenzie: US tax cuts could create jobs

BHP chief Andrew Mackenzie says Western antipathy to free trade is blocking economic progress.

BHP chief executive Andrew Mackenzie. Picture: Stuart McEvoy.

BHP Billiton chief Andrew Mackenzie says Western antipathy to free trade is blocking economic progress and providing China and other emerging nations with more opportunities.

But the head of the world’s biggest miner says company tax cuts proposed by the Trump administration could spur spending and more jobs in the US, and if the move was followed by Australia it could mean more BHP investment here.

Speaking at the Melbourne Mining Club yesterday, Mr Mackenzie called for more transparency from the business world, which he said needed to regain the trust of the broader population.

“Right now there is a perception in the West that too few have benefited from globalisation and too many have been left behind,” he said.

“This has clearly distracted the West and created opportunities for China and the East, which they are seizing.

“The ambition of China’s Belt and Road initiative is astounding,” he said.

But he told the audience of more than 600 at the Melbourne Town Hall that Donald Trump’s plans to cut US corporate tax, if passed, could start to redress the balance.

“Incentives are necessary to get our arms around and get into action the long-term investment that will ultimately create jobs and the growth of the future,” Mr Mackenzie said.

“I don’t know if this is happening, particularly in the Western world, where we have to do something about the incentives to invest in capital.”

He said the US tax cuts were a bold move that he hoped would spur action in other nations, including Australia.

“If it does (pass), it will make me a lot more optimistic about ... jobs and the demand in the future, so I hope Australia takes notice,” Mr Mackenzie said.

He said recent Australian tax concessions to companies with annual turnover of less than $50 million should be extended to all companies.

“Most small companies will do a lot better if big companies are investing,” he said.

“If we do that, we will find more investment happening and we (BHP) will make investments at the margins ... the board would favour more investment in ­Australia as a result of that.”

When asked about Tax Commissioner Chris Jordan’s comments in The Australian yesterday that the tax office was prepared to take BHP and Rio Tinto to court over their Singapore trading hubs, the he gave a strident defence of the big miner’s contribution, drawing applause from the industry-friendly audience.

“We paid $66 billion in tax in the last 10 years in Australia,” he said.

“That’s an effective tax rate of 34 per cent; if you include royalties, it’s 44 per cent. We pay our fair share.”

He said BHP’s debate with the tax office over the treatment of the company’s Singapore trading hub was over just 1 or 2 per cent of the group’s total Australian tax bill.

“We make a phenomenal contribution to the Australian economy,” Mr Mackenzie said.

“Of all the companies that are represented, in my view, we do a wonderful job of distributing a lot of the wealth we create to all sectors of society.”

BHP and rival Rio Tinto have been under pressure from the ATO over their use of the Singapore hubs as part of their iron ore sales process. Both companies are still in dispute over huge tax bills from the ATO over their use of Singapore marketing hubs: BHP for about $1 billion including tax, interest and penalties, and Rio for about $450 million in tax.

Mr Jordan this week told The Australian he was increasingly seeing no choice but to test the issue through legal avenues.

On top of tax cuts, Mr Mackenzie said that for the West to compete with China, business needed to regain trust.

“Business must not just wishfully count on the universal values of democracy, human rights and open trade,” Mr Mackenzie said.

“We have to champion them and live them, along with beliefs in fairness, inclusion and cultural diversity.”

He said BHP would meet a target, revealed last year, of gender balance by 2025.

“Women now make up more than 20 per cent of our workforce,” he said.

“We’ve made more progress towards gender balance in the last financial year than in the past decade.”

The reporter travelled to Melbourne as a guest of BHP.