Social + community licence to operate is a real issue for the mining industry in Australia – BHP opposes changes to DGR regulations

“We do not support changes that limit public advocacy to 10 percent of funds, or requirements to spend 25 percent of funds on environmental remediation.”

Having already rocked the mining industry’s peak lobby, BHP’s determined pursuit of an independent public affairs course in the name of renewing and enhancing corporate social licence has now triggered angry resentment within some powerful pockets of the federal government.


The fulcrum of this latest bout of BHP-fuelled anxiety is a letter from the company to a small community of charity organisations in the middle of October and that followed a meeting between management and the lobbies in late September.

In its letter, dated October 16 and written by sustainability and public affairs officer, Tony Cudmore, BHP reiterates that it is actively reviewing membership of the Minerals Council of Australia and other industry lobby memberships and then goes on to announce management’s opposition to flagged government reforms to the tax status of charitable organisations in Australia.

Cudmore opened the October communiqué by restating the breadth and intent of the already-flagged internal review of its associations and its determination to advertise points of policy difference between the company and its lobbies.

“In relation to the MCA, as you are aware we have committed to complete our review of industry association memberships by December 31 this year, including the MCA, and we will make outcomes of that review public,” he said. “This will include a list of any material differences on climate and energy policy.”

The letter was sent following a September meeting with the leadership of four community organisations, two of them leading environmental protection lobbies (the World Wildlife Fund and the Australian Conservation Foundation) and two peak councils (the Australian Council for International Development and the Community Council for Australia).

The meeting was held three days after the abrupt resignation of MCA chief executive Brendan Pearson. It is widely appreciated that Pearson took his leave under pressure from BHP and Rio Tinto, who account for an estimated 60 per cent of the mining lobby’s budget.

BHP’s October correspondence with the Gang of Four then went on to document BHP’s support for some of the reforms proposed by a July Treasury discussion paper that represented another milestone in a continuing review of the mechanics of the scheme that allows tax deductibility for donations to a vast family of Australian community organisations.

At the same time though, BHP announced its rejections of a key reform proposal that would contain how much charitable organisations could spend on public advocacy and would require environmental groups to spend a specific portion of their funding directly on remediation programs.

“We believe that many of the proposals put by Treasury that relate to enhancing governance and transparency in the charitable sector are appropriate to the extent that they may serve to further enhance community confidence in the vital work of our nation’s charitable sector,” BHP said in its letter. “These include the suggested requirement for all entities with deductible gift recipient status to operate as registered charities.

“We note submissions to the Treasury paper proposing specific restrictions in relation to spending by charities on advocacy. Consistent with our view outlined above, we do not support changes that limit public advocacy to 10 per cent of funds, or requirements to spend 25 per cent of funds on environmental remediation.

“We have made our views known to government.”

Once again then, BHP has taken a wildly different public policy tack to that taken by the MCA.

Of those who met with BHP, David Crosbie has probably been most vocal in expressing concern over the mining industry’s capacity to shape this policy debate to its perceived benefit.

Crosbie runs the peak body for community organisations and his background is in drug and alcohol recovery. And back in June he assessed that “the mining industry and others would like to divide and conquer” the charity industry to set the community mainstream against the direct actioners in the environmental lobby.

“They are hoping the broader charities sector will distance itself from environmental charities and be content with these changing, knowing most charities are not yet directly in the firing line,” he suggested.

Crosbie’s call for cross-sector solidarity cited efforts by the MCA to motivate submissions to the government’s review by its members as evidence of the mining industry’s approach to charity funding reform. The MCA’s clarion noted that Greenpeace, Lock the Gate and other activist groups presently benefit from being able to receive tax deductible donations.

“This assists them to raise funds for illegal protests,” the MCA said before offering a suite of proposals that its members might include in their submissions. The MCA recommended a policy that enforced regular reviews of charities to ensure they were law abiding, that those found to be law breakers should lose their tax protection and that the primary purpose of environmental groups who were given deductible status should be ‘on ground’ works that physically improve the environment.”

BHP’s problems with Pearson (and it did not work alone here) and his approach were myriad, but the conclusive issues were MCA’s approach to energy policy generally and the Finkel review specifically. The MCA’s aggressive defence of the coal sector was forgivable, given that it had absorbed the NSW and Australian coal councils through the long market bust. This was a strategy that sat firmly aligned with some high-profile supporters of the coal sector in the government but that challenged a whole lot of other folks, most notably some of Pearson’s non-coal producing membership.

he MCA’s promotion of specific domestic power generation solutions already had tensions running unsustainably high, even before the MCA took its polarising approach to the Finkel review, both through its preparation and then in the pointedly negative welcome of key recommendations.

BHP particularly had urged a very different approach to Finkel.

The house view at Australia’s biggest resources company was that Alan Finkel’s review would and did offer the nation a way forward from the chaos of last summer and that the industry and its lobby should be working to formulate a political and community consensus around the first, and only, best-policy option.

BHP’s part in the putsch against Pearson has earned it no political credits within a government that has increasingly identified coal and the power-generating capacity its supports as being a key plank in its response to our simmering energy crisis.

The view from the right was BHP had done a good man out of a job and that Australia’s second biggest coal miner appeared to be marching increasingly to a green drumbeat. News of an alignment of views on proposed reforms to the way environmental groups raise and allocate funding is said to have transformed irritation to something a wee bit more ominous.

But BHP seems unlikely to let short-term political upsets stand between it and a shift to direct and differentiated communications with all of its local and global stakeholders.

Just two weeks before Pearson took his leave from the MCA, BHP’s chief external affairs officer and chief legal counsel, Geoff Healy, went to the MCA’s annual pow-wow with federal politicians to explain what BHP was doing and why.

Healy said the collapse of community trust in business had reached a “tipping point” and that industry generally, and the resources sector particularly, needed to recover its standing as a matter of urgency. He made it plain that the need to recover trust would shape the way BHP worked with its communities and their governments.

This is a serious problem because trust in our sector is not a ‘nice to have’. It is a pre-requisite for everything we do and aspire to” he said.

“We need to make the case – more confidently and more effectively than ever before – for the positive contribution that well-run and responsible resource companies make to society. And we need to make that case far more widely than ever before.

“In reality the debates are now being had, and the headlines written, on social media – where everyone’s an editor. But this is not just about communication. We need to eliminate the gap between what we say and what we do. We need to deliver better and fairer outcomes.”

“We have to close the gap between rhetoric and action. And we have to be more transparent about the things that matter the most.”

“On any view, the path to trust is not optional – we must listen and we must respond. And we must do so quickly.”

But now it seems Healy is moving just a wee bit too quickly for some in Canberra.

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