BHP's Jac Nasser gives government productivity warning

• Sarah-Jane Tasker and Scott Murdoch
• From: The Australian
• August 11, 2011 12:00AM

BHP chairman Jac Nasser.  Picture: Alan Pryke Source: The Australian

BHP Billiton chairman Jac Nasser has strongly criticised two of the government's key policy platforms, with the head of the nation's biggest company warning against spending $36 billion on the National Broadband Network and the aggressive timetable for a carbon tax.

Mr Nasser, an internationally experienced businessman who once led Ford in the US, questioned the government's handling of the economy through the introduction of the unpopular policies, and argued that the nation should instead be looking to increase productivity.

Speaking in Sydney yesterday, he said this could be done through the development of centres of excellence in high-growth areas, such as the Pilbara mining region in Western Australia.

Mr Nasser said although he was not completely familiar with the details of the NBN, the $36bn to be spent on the project was not an appropriate allocation of that level of capital in Australia.

"When you try and marry large capital expenditures with a fast-moving pace of technology change, I think that is fraught with risk," he told an American Chamber of Commerce in Australia event.

"I am always concerned when a project such as this is driven by government rather than private enterprise. I worry about that. Little warning signs come up in my head."

 

Ralph Norris, the outgoing chief executive of the Commonwealth Bank, joined the criticism of the NBN, saying governments did not have a strong track record of operating commercial ventures. "I've never been a great fan of government's running commercial or business entities," he told The Australian. "What ends up happening is that they end up getting run on a non-commercial basis."

Mr Norris said the cost of the NBN was a major investment that needed to be supported by a business case: "As for the NBN, there is a lot of infrastructure being made redundant and you have to ask yourself if that is cost-effective."

Mr Nasser also warned against the government's rush to introduce the carbon tax by July next year, arguing that it was a difficult time to push ahead with that type of reform. In May, before the government had finalised its plans to place a $23-a-tonne price on carbon before shifting to an emissions trading scheme, Mr Nasser urged Australia to adopt a "go-slow" approach to tackling climate change.

His comments differ from the original position taken on the government's plans by his chief executive, Marius Kloppers, who last year called on Australia to take a global lead on pricing carbon.

BHP, as the world's largest miner and Australia's largest company with a stockmarket value of almost $190bn, has the ear of the government and its comments are widely influential. The miner's influence was seen during the mining tax debate when the global giant was instrumental in forcing the government to water down the original resource super-profits tax to the less-onerous mineral resources rent tax.

Mr Kloppers's original comments on carbon pricing were highlighted at the time by the Gillard government, but he had also called for trade-exposed industries to receive rebates until a global scheme was put in place.

Last month, Mr Kloppers added to industry opposition to the tax by warning that the government's plans could damage the nation's export competitiveness.

Rio Tinto chairman Jan du Plessis has also previously urged the Gillard government to rethink its carbon tax policy and timing.

Mr Norris, who will leave the Commonwealth Bank in December, weighed into the carbon tax issue yesterday, saying it was still scaring the business community despite the government outlining the details of the policy.

Mr Nasser added further weight to the industry concerns, saying that while he agreed with the direction and the science of climate change it was a difficult time to be introducing the reform when other countries were not. "If I were doing the fine tuning I would slow it down," he said.

Mr Nasser's comments on the NBN and carbon tax followed a wide-ranging speech on Australia's productivity and competitiveness, which he said were in danger if measures were not put in place to address negative trends. He noted that productivity growth had declined this decade, after peaking n 1998.

"In the 1980s and 1990s, there was a meaningful dialogue about the major issues facing Australia, leading to some of the most important economic and social reforms in Australia's history. We don't see that dialogue today."

While there were calls to increase productivity, there was less detail on how that could be achieved. Mr Nasser said development of centres of excellence - based around the booming resources sector in locations such as Darwin, Perth, Townsville, Brisbane and Adelaide - would drive productivity. He explained that centres of excellence were not formal institutions, such as think tanks or industry parks funded by government or industry.

He saw them as the coming together of "like-minded" individuals, businesses and, possibly, public institutions to serve a growth industry.

A centre of excellence could be established around the Pilbara iron ore region, where $78bn was committed to projects that would see the need for more than 60,000 workers by 2020. "To deliver on these projects, the workforce will need specific skills that can't be taught quickly," he said.

 "This is a perfect example of where industry can work strategically with our state and local governments and universities to help create a centre of excellence."
He said such centres "may give us a vision and plan for the future that helps address the economic uncertainty that people and markets are feeling today".