Gillard warns of reliance on China

Prime Minister Julia Gillard has spoken out of the potential dangers of Australia’s mining industry over relying on Chinese demand.

Prime Minister Julia Gillard has spoken out of the potential dangers of Australia’s mining industry over relying on Chinese demand.

She instead outlined a series of measures to grow the base of the resource exports.

Gillard explained that if the industry became too dependent on a single sector, in this instance China, it “takes too big a risk.

“Even while the demand for commodities remains strong, it risks a patch works economy,” she said.

In particular, Gillard singled out Queensland for potentially creating “an economy where some of the country booms while other parts go backwards.”

She called for a broadening of Australia’s capabilities into more secondary industries, saying “if the demand for raw materials fell away, Australia would only remain strong if economic growth was broad based — encompassing services, manufacturing and agriculture.”

These statements to the Queensland Media Club come on the back of ongoing open discussions with the mining industry, which began earlier this month, as the Government works towards a more encompassing Mineral Resources Rent Tax (MRRT).

This week has also seen Federal Treasurer Wayne Swan having to defend the mining tax at the New York Stock Exchange.

Swan outlined the tax as aiding in “picking up the pace of reform — to make Australia an even more attractive investment destination."

However, the mining industry has viewed the 30% tax on profits from coal and iron ore as less of an investment incentive, believing that is will drive investment away from Australia.

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