BHP Billiton CFO Peter Beaven is pushing for a cut in company tax, which he said will lead to an increase in investment, employment and tax revenue. Beaven’s comments came during the Australian Financial Review’s Business Summit, held in Sydney on Thursday.
The mining giant’s CFO said the resources sector had made $600 billion worth of investment over the last 10 years and offered employment to as many as 235,000 workers who are working at an average income of $140,000. However, he said there is a growing concern about a drought in business investment.
“The reason why we are losing the race for investment dollars is simple – the costs of doing business in Australia are too high," he said. "That means Australia is less likely to attract its fair share of global capital. And without those investment dollars, it is difficult to create nation-building jobs."
The corporate tax rate in Australia is "significantly" higher in comparison to some of the other countries that form the Organisation for Economic Cooperation and Development. Commenting that the decline in investment goes beyond the resources sector, Beaven said the difficulty could escalate into a national crisis.
Some local growth projects worth $25 billion — including building an iron ore mine in the Pilbara, enhancing production at South Australia’s Olympic Dam and increasing operations of coking coal in Queensland — are being administered by BHP Billiton. The investment of $25 billion would result in $45 billion in royalties and taxes for 20 years. Moreover, it will also provide employment in regional areas.
“These are options that we can touch and feel, but no investment will be made unless there is a return on a risk-adjusted basis which is better than just giving it back to shareholders,” he said. “The national dividend from modest tax reform would be felt almost immediately across the economy, and for decades to come.”
People will be able to use the advantages brought by the tax reform to their benefit, Beaven said. He said while Australia is a “fantastic” place to do business, “it is going to get harder.” Shares of BHP Billiton sustained a fall of 4 percent on Thursday, brought down largely by oil prices.
“That next set of investment options has not been brought to execution for a reason — they are not as good as the ones that we had prior. To win that capital you have to have a bunch of savings,” he said.