BHP’s mining operations chief executive Mike Henry says the miner will continue to push for reforms to the GST system, saying the current mechanism is not equitable, and favours states who limit resource developments.
Henry spoke to a Minerals Australia lunch in Perth on Monday, and appealed to the West Australian audience, which has felt hard done by over the GST regime for some time.
“I don’t need to tell anyone in this room, how tough it’s felt to be in WA and watch WA’s share of the national funding pool fall by two thirds in the past decade, to the point that WA now only receives less in absolute terms than it is at the time the GST was conceived, in spite of national GST receipts more than doubling over that period.”
Henry criticised Canberra’s inaction on GST.
“Unlike something like say pokies revenue,” he said, “state resource royalties get captured in the pooling mechanism in a way that sees increased royalties translate into less GST.”
The result of this, which Henry described as “perverse” is to dull the incentive for states to stimulate resource developments, “for what they receive in the one hand they lose from the other”.
“I think it can be argued that that isn’t in the interests of the states nor the nation,” he said.
“A distribution that saw states retain a portion of resource royalties outside of the funding pool, would increase the incentive towards resource developments. All other things being equal, this would mean more investment, more jobs and more opportunities for local business. That would mean a stronger economy, which would be good for not only the states but the nation. And it would be more equitable.
“A fairer distribution, where communities could more clearly see the benefit from resources accruing to their state, would also strengthen community trust in the system.”
He said BHP would continue to campaign for reform.
“Key players in the industry and the state, like ourselves, have a role to play in advocating for an approach that stimulates investment in the industry,” he concluded.