BHP Billiton boss warns against shift to protectionism

BHP chief Andrew Mackenzie has urged the Turnbull government not to back away from a free-trade agenda.

BHP Billiton CEO Andrew Mackenzie says the reality for Australia was that it had a relatively small economy critically dependent on trade. Picture: Aaron Francis

BHP Billiton chief executive Andrew Mackenzie has urged the Turnbull government not to back away from a free-trade agenda, even as steelmaker Arrium reels from a flood of cheap imports.

The warning came as it emerged that former Labor prime minister Paul Keating, who played a key role in dismantling protectionism, was negotiating behind the scenes for Arrium as administrators work to secure a plan to keep its Whyalla steelworks open.

Mr Mackenzie said the reality for Australia was that it had a relatively small economy critically dependent on trade and critically dependent on resources. Speaking to The Weekend Australian, Mr Mackenzie said he was continually nervous about movements against free trade.

His comments come as Arrium’s collapse, and doubts over the longer term future of the Whyalla steelworks and its 1600 jobs, have rekindled protectionist rumblings.

Embracing free trade would ultimately support longer term growth at a higher rate than is currently the case. However, a protectionist backlash would be a dampener on growth as Australia negotiates its way through the “quite volatile and unpredictable phase in China as it moves, I think ultimately successfully, through the middle income gap’’.

“We just have to do everything and anything in our power to get the political will within the country, and then across the rest of the world, to actually speak up for free trade and lead by example where it’s possible to do so, whether with the support of the electorate or get the electorate around that, with the sort of ­reforms that really will help global growth,’’ Mr Mackenzie said.

Arrium’s administrators yesterday met unions, South Australian Treasurer Tom Koutsantonis and federal Industry Minister Christopher Pyne.

Mr Mackenzie said Australia could not afford to relax on the free-trade issue as it was not as big an issue for some countries, such as the US with its more self-­reliant economy. “The world is evolving and we have to stick up for an open, connected, highly tradeable world and the underpinning of strong growth in north Asia,’’ he said. “And that would be my kind of message to any politician in power in this country.

“You have a rising population in this world that wants the goods that can only come from providing the resources that we provide and that Australia provides. And I think that’s a huge encouragement to hang on in there for the medium to long term and to gear up the competitiveness of our company and, to some extent therefore, of Australia and Australian ore bodies.”

China, Korea, Malaysia and Taiwan have all been cited in Australia’s recent crackdown on steel dumping, with the crackdown a response to the pressures faced by the local steelmakers from imports looking to find a home in a massively oversupplied global market.

Mr Mackenzie also called for legislative improvement to workforce flexibility: “If we’re going to have a high-wage economy, people need to be very attuned to working as one team, with management, to lift their productivity and changing the way they work more quickly and more efficiently than some of those laws permit.’’

He called for an agenda of reform to increase competitiveness of Australian industry and ensure it grabs a larger market share of the trade in basic commodities that Australia produces.