Diversified miner BHP has urged the Australian government to adopt tax and regulatory reforms that would make the country more competitive for global investment, warning that current policy settings risk deterring capital at a time when productivity growth is lagging.

In its submission to the Productivity Commission’s interim report on Monday, BHP highlighted its role as one of the nation’s largest taxpayers. In the 2025 financial year, the company paid A$10.5-billion in Australian taxes, royalties and other payments, A$6.2-billion in wages and benefits to 46 000 employees and contractors, A$20.3-billion to suppliers, and A$102-million in community contributions. Over the past decade, BHP has contributed more than A$103-billion to Australian governments, with an average effective tax and royalty rate of 45.3%.

Despite this contribution, BHP said Australia was “being outcompeted for global capital” with private investment as a share of GDP now lower than two decades ago and business investment about 30% weaker than expected given current economic conditions. Citing analysis by the Organisation for Economic Cooperation and Development (OECD), BHP noted that Australia’s “investment gap” was the third worst among developed economies.

At the same time, the miner believed that Australia relied too heavily on corporate and personal income taxes and that, over time, the country must shift towards a more balanced tax mix that shifted towards consumption taxes. A corporate tax of 25% and value-added tax of between 15% and 20% was more typical among peer nations, the firm noted.

BHP cautioned against the Productivity Commission’s proposed 5% net cash flow tax on companies, arguing that it would raise the effective burden on large businesses without attracting new investment. The miner acknowledged that the proposal would see small and medium-sized businesses receive a reduction in their corporate tax rate to 20%, but the improvement would not be extended to Australia’s biggest companies.

“This proposal presents only disincentive for why BHP would choose to invest additional capital in Australia relative to other jurisdictions.

“There is nothing in this proposal that could cause a dollar to be invested in Australia by a major business with a turnover above A$1-billion – it only puts up the tax burden that we face investing our capital in Australia,” the company said.

“We are a proud Australian business and we want to be able to invest more here, but the reality is that capital flows globally and our Australian pipeline of growth projects would be less competitive for capital. Inevitably,  this will mean more of our available capital will flow overseas rather than into projects in Australia.”

While BHP believes Australia has to address corporate tax rates, it also acknowledges that targeted supply-side reforms that unlock productivity may be more appropriate given the current structural budget deficit. Thus, the group has recommended introducing a permanent investment allowance, similar to temporary schemes used in the past, which would provide an additional tax deduction on capital expenditure.

“The allowance would be in the form of an additional tax deduction equal to a percentage of  the expenditure on depreciating assets after the relevant start date. The rate set in 2008 was 10% and we continue to view that as appropriate.

BHP also called for regular global benchmarking of corporate tax settings, maintaining fiscal policy certainty, and spending restraint to preserve buffers for future shocks.

The miner further welcomed government commitments not to impose new or higher taxes on the mining industry, as well as ongoing efforts to modernise the Environmental Protection and Biodiversity Conservation Act, which the company described as fragmented and duplicative.

Answering shareholder questions earlier in the day, BHP CEO Mike Henry stressed that cost competitiveness, particularly electricity prices, remained a concern. “Australia has electricity costs that are two to three times higher than the countries that we are competing with and 50% to 100% higher than the US,” he said.

“It is critically important for the nation that we lift productivity. The US is very focused on drawing in investment including in mining. We see the same thing happening in Canada and other jurisdictions. Australia at the end of the day needs to be able to compete for global capital,” Henry added.