BHP renews attack on Nationals

BHP Billiton’s top Australian executive has stepped up the company’s criticism of the WA Nationals' planned iron ore tax hike, two days after an opinion poll found high support for the proposal.

The ReachTEL poll of 1,700 voters in Western Australia found 45.4 per cent supported the plan, 31.5 per cent were opposed, and 23.1 per cent were undecided.

BHP’s president of Australian minerals operations, Mike Henry, told Business News he was not really surprised by the poll result, saying it highlighted the need to communicate the facts.

“If people are being told all we pay is 25 cents in tax for every tonne of iron ore we produce, and then get asked if we should pay more tax, even I would say we should, but that’s not the reality,” he said.

Nationals leader Brendon Grylls has proposed that a 25 cents per tonne production rental charge, which is paid by BHP and Rio Tinto under long-standing state agreements, should be lifted to $5 per tonne.

Mr Grylls has argued the new tax was needed to repair the state budget, in light of WA’s low share of GST grants.

Mr Henry said the full picture was that BHP’s WA iron ore business paid $17.50 per tonne in taxes and royalties to the state and federal governments.

This included $5 per tonne in royalties to the state government.

Mr Henry would not be drawn on Rio Tinto’s recent statement the new tax was its number one global risk, but emphasised the impost would have an adverse impact.

“If it were brought forward, it would be very damaging to our business and the state of WA,” he said.

Mr Henry said the proposed tax would lift costs by 20 per cent and put at risk its proposed South Flank project, which involves the development of new mines to replace about one third of its current Pilbara production.

“It’s not just that investment at risk,’’ he said.

“We currently reinvest in the business about $1 billion per year, just to keep current production up.

“And I’ve already mentioned we have invested $1.5 billion in the communities of Newman and Port Hedland over the past four years.”

Mr Henry said the tax hike would make all of these investment harder, and threaten jobs and dividends.

He said current arrangements governing state grants meant most of the money paid under the proposed tax would flow to other states.

He added it would be inappropriate for BHP to try and influence federal-state financial relations.

Mr Grylls defended his plan today.

"It is fair that the Nationals got down into the detail of the old state agreements, found an arcane 25 cent production rental and suggested that maybe there was a possibility of that being increased," he told 6PR radio.

"I don't say that they're too profitable. I'm saying the 25 cent fee set in the 1960s ... that's never been adjusted and I think that's unfair.

"I accept that not everyone is going to agree."

Mr Grylls said it was wrong BHP Billiton was telling staff the policy put their jobs at risk at a time of record iron ore production in the Pilbara.

"The state of Western Australia facilitated a massive expansion of their industry," he said.

"I am asking them to pay a little more to help bring the budget back to surplus.

"I expect and respect their right to go hard on me as a member of parliament - I don't expect them to send untoward emails to their staff threatening their staff's job security."