Govt uses emergency powers to back tax

The Rudd government has taken the extraordinary step of invoking national emergency powers to launch an advertising blitz aimed at countering miners' fierce campaign against the mining super profits tax.

In an unprecedented move, special minister of state and cabinet secretary Joe Ludwig has allowed the government to breach its own advertising guidelines to launch a national campaign promoting the resources tax and attacking the opposing arguments of the mining sector.

Senator Ludwig said such an exemption to the advertising guidelines could be granted "on the basis of a national emergency, extreme urgency or other compelling reason".

The guidelines prohibit government from running campaigns for party political purposes or releasing materials that "directly attack or scorn the views, policies or actions of other such as the policies and opinions of opposition parties or groups".

Senator Ludwig said he accepted treasurer Wayne Swan's advice that there was an "active campaign of misinformation about the proposed changes and that Australians are concerned about how these changes will affect them".

"Given that co-ordinated misinformation about the changes is currently being promulgated in paid advertising, I accept the need for extremely urgent action to ensure the Australian community receive accurate advice about the nature and effect of the changes," Senator Ludwig said.

Mr Hooke said "the Minerals Council of Australia's advertising has been fact-based and accurate throughout the debate over the proposed super mining tax."

"As the changes also affect the value of the capital assets and impact on financial markets, I am satisfied that a compelling reason for an exemption exists, particularly given the nature and extent of misinformation against a backdrop of continuing market volatility."

The treasurer wrote to Senator Ludwig seeking the exemption from the advertising guidelines on May 10.

Since the tax was announced in early May, opinion polls have shown support for the Government has plummetted amid claims that thousands of mining jobs and billions of dollars in planned investment could be put at risk by the tax plan.

The government's flouting of the advertising guidelines was slammed by the Chamber of Minerals and Energy of Western Australia.

"Taxpayers should be outraged they will foot the bill for a politically-motivated campaign, in the context of an election year" said chamber chief executive Reg Howard-Smith.

"The markets have suffered because the supertax threatens our international competitiveness and the government failed to consult the industry on an appropriate model."

Mr Howard-Smith described the government's entire approach on the issue as "extremely regrettable".

The Minerals Council Australia also condemned the government's use of "misleading radio advertisements" as the campaign began today.

"An advertisement, played this afternoon on Sydney radio, focuses on the mining industry's royalty payments, but fails to acknowledge the sector's company tax contribution in the total tax paid," MCA chief Mitch Hooke said.

"The head of the Treasury's Consultation Panel has already described the current company tax regime as a de facto resource rent tax.

"The Government has acknowledged that failing to include the mining industry's company tax contribution is not the full picture of the sector's taxation contribution, but this is what the advertisement aired on Sydney radio (2GB) this afternoon does.

"It is ironic that the Government has resorted to misleading advertising given its stated justification for the new taxpayer funded campaign."

Fortescue Metals Group also questioned the validity of the exemption allowing the campaign to begin.

"Fortescue is disappointed by the Federal Government's decision to grant itself a special Ministerial exemption from the guidelines on information and advertising campaigns by Australian Government Departments and Agencies," it said.

"Fortescue fully supports the mining industry's right to defend itself against the Federal Government's Resource Super Profits Tax, which will have a negative and material impact on the Australian mining sector and therefore the Australian economy.

"The industry's comments do not constitute a national emergency nor an urgent and compelling reason, as required by the exemption provisions.

"If the Federal Government had consulted with industry before imposing this fundamentally flawed tax, the Government would not have needed to spend taxpayer funds on this wasteful advertising campaign. "

Meanwhile, Iluka Resources joined the throng of miners to write to its shareholders criticising the tax.

Iluka chairman John Pizzey told the company's shareholders that the tax would hit the company just as it was finally about to reward shareholders with a return to strong profits after years in the doldrums.

Mr Pizzey said Iluka had not generated adequate profits for several years, but was on the verge of a major transformation as it commissioned rich new mines in Victoria and South Australia, in which it had invested $650 million over the last three years by foregoing dividends for its investors.

"Put simply, the goal posts have been shifted," he wrote.

"Just at the stage where shareholders expect a return to profitability, and a reward for their patience and support, the Federal Government has announced a "super profits" tax on resources - changing the taxation landscape without any recognition of the history of profitability of this company and, I would suggest, others in the resources sector."

Mr Pizzey reiterated the views put by other companies in recent weeks, such as BHP Billiton, Rio Tinto and Fortescue, that the tax would stifle investment, cost jobs, and do major damage to Australia's repuation as a safe investment destination.