Dr Ken Henry Australian treasury secretary said that there is reason to be skeptical about some of the doomsday predictions sparked by the proposed resources tax changes.

In his annual post budget address to economists, Dr Henry has argued similar predictions have been made in the past by the mining industry and have not eventuated. He said that some of the commentary around the tax has been confused and incorrect, and he has taken aim at the mining industry's outcry.

Dr Henry said that "In the last four decades numerous predictions have been made of large scale unemployment and the death of manufacturing, decrying deregulation, decrying tariff cuts and decrying mineral booms. The dire predictions of the past have not eventuated, and it's unlikely that similar predictions today will fare any better."

Dr Henry said that, for the most part, the consultations with mining executives about the implementation of the tax have been constructive, but there have been exceptions. He added that "In other cases, the consultations have been somewhat less productive because those who have come to the table have not brought their numbers with them and instead have come along armed with rhetoric. That's regrettable."

Dr Henry argues the strong demand for Australian resources will continue for some time because of China and India's need for the commodities. He said that the tax will not deter miners from investing in Australia and, on the contrary should encourage more investment.

He said that that is because some marginal projects will become profitable, while highly profitable projects will only become slightly less profitable. He added that "Projects which are right at the margin at the moment because of royalties will become profitable projects, obviously, if royalties are removed and instead a resource super profits tax imposed. Projects which are earning super normal profits will continue to earn super normal profits after the tax is imposed and, for that reason, in a long run view the level of mining investment should not be affected by the resource super profits tax but should be encouraged by the other components of the tax package."

(Sourced from www.abc.net.au)