THE showdown between the federal government and the iron ore and coal industry on the new mining super tax enters a new phase with the release of the Argus committee report on the transitional aspects of the tax.

The Treasurer, Wayne Swan said that he would immediately release a report from the policy transition group, led by the former BHP Billiton chairman Don Argus.

He said that ''I will be publicly releasing the final report immediately, and flagging an ongoing process of consultation and discussion with industry, state governments and my cabinet colleagues before we provide draft legislation next year. We're determined to implement the MRRT [mineral resource rent tax] and expanded PRRT [petroleum resource rent tax] in the national interest and we're consulting tirelessly on the best way to do it, consistent with our agreement with the mining companies.

Mr Swan said that ''Reforming our mining tax arrangements is absolutely critical to building a stronger, broader economy that best leverages the opportunities that will flow from mining boom Mark II.''

Debate on the tax is bogged on several fronts. The big coal and iron producers BHP, Rio Tinto and Xstrata signed a secret deal on a watered-down version in July.

That deal has drawn criticism from the industry for being a self-interested attempt by the big three miners to preserve the status quo in the production stakes. Suggested concessions for smaller producers are expected in the Argus report.

Under the deal the government's first two years of take from the industry decreased from an expected USD 12 billion to USD 7.4 billion from just the iron ore and coal industry alone. The deal infuriated those not party to the negotiations.

But more damaging for the Gillard government is the potential for the big three to again largely fund a campaign against the government's fragile hold on power should the July deal not be delivered as they expect.

The mining industry's USD 18 million advertising campaign against the original more severe mining tax has been cited as a factor in the loss of Labor Party leadership by the former prime minister Kevin Rudd and Labor's losses in the federal election.

All the bosses of the big three mining companies that signed the July agreement have said they expect a follow through of their understanding that state royalties on mineral production will be credited against the tax.

The Argus committee is expected to have suggested as much, leaving it to the federal government to come to an arrangement, with the states increasingly hostile to Canberra on the closure of the open-ended loop.

(Sourced from www.watoday.com.au)