Australia's miners end advertising truce with government

CANBERRA Thu Apr 12, 2012 10:48pm EDT

Heavy equipment operates at Fortescue Metals Cloudbreak iron ore mine, about 250km (155 miles) southeast of Port Hedland in Western Australia state, July 25, 2011. REUTERS/Morag MacKinnon

Heavy equipment operates at Fortescue Metals Cloudbreak iron ore mine, about 250km (155 miles) southeast of Port Hedland in Western Australia state, July 25, 2011.

Credit: Reuters/Morag MacKinnon

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CANBERRA (Reuters) - Australia's powerful mining lobby has launched an advertising campaign warning the Labor-led minority government against imposing more taxes, recalling its 2010 anti-tax crusade that helped bring down the then prime minister.

Miners spent more than $20 million on advertising in 2010 to fight a resources tax by then Labor Party leader Kevin Rudd. Rudd was toppled by his deputy, Julia Gillard, who as prime minister watered down the tax to appease the mining sector.

The mining industry's latest advertising campaign is in response to pressure from Greens legislators on the government to use its May 8 budget to scrap more than $2 billion of diesel fuel tax rebates to miners, to help the government deliver a promised budget surplus by July 2013.

Greens' support gives the minority Labor government a wafer-thin working majority in parliament.

In a series of full-page advertisements in national newspapers on Friday, the industry said it was already highly taxed, and Australia risked losing its ability to attract mining investment if it increased taxes on the industry.

"We are essentially countering a plethora of commentators who are seeking to either demonize the industry or demonize the amount that the industry contributes for the benefit of all Australians," Minerals Council of Australia chief executive Mitch Hooke said.

"They are promoting the politics of envy and redistribution and it's a softening-up exercise for what would appear to be a whole new round of taxes coming in the budget."

Australia, a major exporter of iron ore and coal, is going through a prolonged mining boom from supplying China and India.

Gillard in 2010 negotiated the new mining tax with global miners BHP Billiton, Rio Tinto and Xstrata, ending the public campaign by the industry against the government plans.

The tax, which will start on July 1, will affect about 30 iron ore and coal mining companies and aims to raise about $11 billion in its first three years.

In the past few months, Treasurer Wayne Swan, however, has been engaged in a new public war of words with Australian mining magnates, accusing them of using their wealth to influence public policy.

Swan has committed to deliver a small budget surplus in the year to June 30, 2013, and to trim government spending, despite relatively low government debt which will peak at around nine percent of GDP and well below levels in countries in Europe and the United States.

(Reporting by James Grubel; Editing by Eric Meijer)

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