BHP chief Mike Henry’s commitment a boon to PM Scott Morrison

Mike Henry BHP CEO: a great investment. BHP

Scott Morrison’s $1.5bn manufacturing plan met with the expected rounds of applause from the business lobbies, but what may have impressed most was the commitment from BHP. chief executive Mike Henry who has quietly moved to bring more work in house away from contractors, and in the process has uncovered skills short­ages across the board, from diesel fitters to maintenance crews to explosives.

His $800m investment to fill that gap is just the sort of initiative the Prime Minister is looking for and is a million times better than warm words from a business lobby.

Morrison’s a politician so he’ll take praises from wherever he can, but he has an issue with industry lobbies, which he sees as being hostage to the lowest common denominator and having to achieve consensus on issues rather than take actual leadership.

Having almost single-handedly talked the government back into power at the last election, Morrison is well aware of who was backing him and who has jumped to the cause.

If the lobby groups find his ­office hard to penetrate to push a view, that is one reason why, and also why a single commitment from the politically savvy BHP was just what his strategy launch needed.

Some in business will be hoping that, if there is more to come in the budget, it will be for a change to R&D deductions to drop the present plan that gives you credit based on cost intensity.

This is weighted in favour of offshore companies with minimal commitment to Australia that might be spending on research and, because they have a low cost base, would get bigger incentives.

A local plant employing Australians with high local costs gets less under the present system.

The manufacturing strategy outlined on Thursday comes straight from a BCG pitch book with all the right messaging, starting with the need to ensure macro conditions are right for business.

The sector focus ticks all the boxes with the possible exception of space, but in other respects it highlights the right measure of technological innovation and ­national resilience, including the push for recycling and clean energy backed by Anthony Pratt and brother-in-law Ruffy ­Geminder and sectors with natural comparative advantage like ­resources, technology and food.

The government already has programs trying to encourage collaboration between universities and industry start-ups in advanced manufacturing, like David Chuter’s Innovative Manufacturing CRC, and Industry Minister Karen Andrews’ $1.3bn modern manufacturing initiative takes this a step further into established companies trying to increase collaboration and scale.

This is the government waving a flag in the right direction, stopping short of oversubsidising those that can afford to build it themselves.

If 2020 was the year COVID-19 hit, next year will be the long slow recovery when the damage to the economy becomes all too clear, so some rays of sunlight as showcased on Thursday are a welcome initiative.

Tanna for Rio role?

Cath Tanna has served as head of EnergyAustralia for the past six years and, while she has hung around to help navigate the energy politics, she is approaching her use-by date.

Cath Tanna. Picture: John Feder/The Australia.

Non-executive roles would readily be an offer for the highly regarded executive but having done time at BHP Petroleum, Shell, British Gas et al, if Rio is ­really serious about tilting towards Australia what chance Tanna for the vacant chief executive role? Just a thought.

ASIC loses Gregg case

The full bench of the NSW Supreme Court has handed a resounding defeat to ASIC in the regulator’s case against former Leighton and Qantas CFO and Primary Health Care chief Peter Gregg and has again raised the issue of jury trials for complicated white-collar crimes.

Gregg was cleared and the ASIC case against him overthrown, which ends his legal torment, unless in the unlikely event that ASIC seeks leave to appeal the matter to the High Court.

The full bench led by Chief Justice Tom Bathurst made clear the trial judge had erred several times in his directions to the jury, but was also bewildered by just how the jury could have reached the conclusions it did in the case alleging falsified accounts.

The issue was a lack of supporting evidence in a highly circumstantial case.

Some argue complex white-collar cases are too difficult for a jury trial but the onus then is on the judge in his or her directions to the jury and the prosecution to make out the case so people can understand — and on this ­occasion both failed.

Webb Henderson acted for Gregg, who will now consider what action if any to take on the defamation case on hold against the Nine Network.

ASX on notice

The RBA and ASIC on Thursday raised the pressure on monopoly stock exchange operator ASX to get moving on its CHESS replacement project while also ensuring the new system will be able to handle increased capacity.

The regulators actually used the word “monopoly services”, which is an anathema to the folk at the ASX and comes after ASX chair Rick Holliday-Smith wrote to stakeholders telling them everything was under control.

Stakeholder concerns include governance, transparency, fairness and pricing.

The ASX has hit back claiming the big registry services like Computershare are covering up for their lack of systems investment.

ASX boss Dominic Stevens on Thursday underlined the message from his interview last month with this column signalling a delay in the introduction of the new settlement system for as much as six months from the proposed April 2022 start date.

The ASX will make a formal statement later this month when it releases comments on the CHESS replacement ahead of the proposed December trial start.

He noted software operators such as GBST had requested extra time to get their systems ready.

Replacement of the 25-year-old settlement system has been used by some like the Governance Institute to argue for a new governance system that would ­effectively separate clearing and settlement from the trading platform, as in markets like the US.

Later this month the ASX will update its Nasdaq-based trading platform, but the debate has been over the proposed blockchain-based CHESS replacement.

In its statement the RBA underlined the fact it was regulating the ASX’s “monopoly cash equity CS services”, which is a term the exchange tries to hide from.

It added the ASX “will need to place a high priority on addressing recommendations related to margin at ASX Clear (futures) and operational risk at ASX Clear and ASX Settlement, including via the replacement of CHESS.”

System capacity is a big issue with the rapid rise in shareholders over the last financial year with a 6.5 per cent increase overall and in Macquarie’s case a 25 per cent lift in the number of shareholders.