'Conspiracy' over mining tax

THE Coalition has blamed a "sinister conspiracy" for the failure of the mining tax to collect appreciable revenue.

THE Coalition has blamed a "sinister conspiracy" involving Julia Gillard and Wayne Swan for the failure of the mining tax to collect appreciable revenue.

In its majority report, the Coalition-dominated Senate review of the tax concluded that in the lead-up to the 2010 election, the Prime Minister and Treasurer wanted to neutralise mining industry hostility without any costly commissions undermining the promised return to budget surplus.

"The immediate suspicion is that this is another case of mere government incompetence. The truth however is likely to be much more sinister," the report says.

"It is the considered view of this committee that the Gillard government was well aware that it had overestimated MRRT revenue and underestimated the fiscal impact of the concessions it made in its mining tax deal."

It said Mr Swan had "turned a blind eye" to the true cost to the budget of the key design features written into the agreement with the mining industry.

While the Coalition called for the tax to be abolished, dissenting reports by Labor's Doug Cameron and by the Greens called for amendments to strengthen the tax's revenue collection. Senator Cameron said volume-based mining royalties, favoured by the Coalition, were the least-efficient way to tax the resource industry.

He said key features of the mining tax should be reviewed, including whether the long-term bond rate plus 7 per cent was an appropriate threshold for the tax to apply, and whether the 25 per cent "extraction" allowance was appropriate.

However, deputy chairman of the committee Labor senator Mark Bishop said the tax was working as intended and revenue shortfall was the consequence of weak commodity prices and the high value of the Australian dollar.