Opposition claims budget too reliant on China

The federal shadow resource spokesman has slammed the mining tax proposed by the Gillard government, saying it underpins the budget and is causing other policies to fall apart.

Ian McFarlane said the government is basing its return to surplus on a revenue base that is unpredictable and unstable and puts energy security and future investment in mining at risk.

The tax is due to be introduced in June next year and will fund a cut in the corporate tax rate, increased superannuation for low-paid workers and make up part of the cost of infrastructure projects in the mining sector.

"The budget is looking like a farce, we are not sure what MRRT figure, if any, they are going to plug into the forward estimates," he said.
"And there is no guarantee, whatever numbers are put in there, that commodity prices are going to hold."

The Herald Sun reports that independent forecaster Chris Richardson agrees with the concerns of the federal opposition that the budget intentions are too reliant on growth in China and India.

The federal government is sticking by it mining tax to be brought in next year and says it is not relying on China’s growth to return the budget to surplus.

Federal Treasurer Wayne Swan said the mining tax was necessary and the government is continuing plans to implement it next year.

He said the comments from Richardson prove the policy is necessary.

"That’s why we moved to have in place the mining resources rent tax to make sure we had a stream of revenue from the boom," he said.

Swan maintains the budget’s return to surplus will be the result of strict fiscal discipline and denied it was “made in China.”

Image: News Ltd

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