Orica chief executive Alberto Calderon says Australia must change its tax laws if it wants to continue strong economic growth but does not have to "blindly" follow the aggressive tax cuts introduced in the United States.
Mr Calderon says the two main drivers of Australia's growth over the past 20 years - mining and housing - will not contribute at the same level in future and urgent tax policy changes are needed to encourage new areas of investment
"Doing nothing will in time, maybe not next year but certainly in the near future, without a doubt, lead to very low levels of growth," Mr Calderon said in a speech to the Melbourne Mining Club on Thursday.
However Mr Calderon cautioned against simply following the tax cuts championed by US President Donald Trump and recently passed in the United States congress, which take the US company tax rate down to 21 per cent from 35 per cent.
"I am not necessarily suggesting we blindly follow the United States in its tax strategy," he said
While some believed a corporate tax cut would boost investment, jobs and wages, Mr Calderon said, Australia's situation was more complicated due to its use of franking credits on company shareholder earnings.
"If we simply pass on any tax cut to shareholders through increased dividends instead of financing new investment, the benefit to the investor is offset by reduced franking credits," the explosive maker's boss said.
Instead, Mr Calderon said local and offshore companies could be encouraged to invest in Australia through measures such as targeted incentives in areas that can directly increase activity, improving the Australian research and development incentive, introducing better capital allowances, or targeted reductions in tax rates for capital intensive or high technology manufacturing.
He also said changes to the tax regime alone will not induce sustainable economic growth.
"If we are to support private investment, our regulatory regimes for energy, transport, water, land access, telecommunications and other infrastructure services need to support, not add to the cost and timeliness of projects and the cost of operations," he said.
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