Abbott having it both ways on BHP

It was eminently predictable the opposition was going to blame the decision to shelve the Olympic Dam expansion on the mining tax and the carbon price.

Certainly, in recent months, BHP Billiton bosses Jac Nasser and Marius Kloppers had been complaining in general terms about the taxes contributing to the high costs of doing business in Australia, all while commodity prices were starting to fall.

Those other high costs, such as inputs, labour and the exchange rate, were driven principally by the mining boom itself. The industry was becoming a victim of its own success.

When BHP announced the Olympic Dam decision yesterday, Kloppers’ statement cited ‘‘current market conditions, including subdued commodity prices and higher capital costs’’.

Minutes later, Tony Abbott, flanked by 10 South Australian Liberal MPs and senators, declared it was a catastrophic day for South Australia and blamed the mining tax and carbon taxes.

He kept at it on the 7.30 Report last night during an interview in which he said he had not read BHP’s statement issued hours earlier. Today he said he had misanswered the question and had read the statement.

He insisted BHP did not have to cite the mining and carbon taxes yesterday because it had complained about them for months.

The Coalition is trying to have it both ways on the mining tax. It has been saying for months that the big miners, BHP included, have told it privately that they swindled the government during negotiations and will pay little or no tax for many years.

At the same time, the Coalition says the tax is killing such projects as Olympic Dam.

The mining tax did not apply to Olympic Dam because it only applies to iron ore and coal. There is a strong but unsubstantiated rumour in the industry that when the minerals giants renegotiated the mining tax with the government after Kevin Rudd was dumped, exempting uranium, gold and copper was a condition of Olympic Dam going ahead.

Either way, BHP cited neither the mining tax nor the carbon tax in its statement, and afterwards Kloppers told journalists the mining tax - which BHP will supposedly pay on its iron ore and coal projects - was not a factor.

‘‘As you know the tax environment for this particular project has not changed at all since we started working on it six or seven years ago,’’ he said.

‘‘The MRRT only covers coal and iron ore – not copper, not gold and not uranium - so the tax situation for this project has not changed. What has changed is the capital cost of construction. What has changed also is that post-Fukushima there is a different and still developing outlook on uranium.

‘‘Gold prices have changed, so there has been a number of variables here, but the most important one is that capital costs have gone up, which is an industry-wide phenomenon across the globe in most large producing nations.’’

Regardless of what BHP says, the opposition will continue to blame the carbon and mining taxes.

Receiving less attention yesterday was industrial relations. BHP has been complaining about the Fair Work Act as well as the carbon and mining taxes in recent months, saying the act is too restrictive and favours unions, thus further contributing to the cost of doing business in Australia.

Julia Gillard reiterated as recently as Monday night she believed cutting wages and conditions or introducing individual contracts would not boost productivity.

Abbott, who is reluctant to make any substantial changes to the Fair Work Act, was also far less vocal about BHP’s gripes regarding industrial relations.

Phillip Coorey is The Sydney Morning Herald's chief political correspondent

Smartphone
Tablet - Narrow
Tablet - Wide
Desktop