THE Federal Government rejects suggestions its planned super profits tax on miners is responsible for a sharp drop in the value of the Australian dollar.
The Aussie traded at below 82 US cents on Friday morning, down more than 10 per cent on its May high of 92.35 US cents.
"We are seeing a flight to the US currency,'' Deputy Prime Minister Julia Gillard told the Nine Network when asked whether the proposed 40 per cent tax was responsible for the slump.
"The euro is falling dramatically, we are seeing instability in Greece and what we know from the global financial crisis is when you get instability somewhere it feeds around the world.''
The negative effect of the European debt crisis also saw the Australian share market slump to a nine-month low yesterday, with the benchmark S&P/ASX200 index ending trade at 4316.5 points, its lowest since August 21. It is set for another sharp decline today after falls on world markets.
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The Government is under pressure from miners and some state governments to give ground on the tax which it plans to impose from 2012.
Ms Gillard said the government was "absolutely committed'' to the tax and consulting with miners about the implementation arrangements.
When quizzed by Opposition Leader Tony Abbott about significant changes to the tax, Ms Gillard said: "Well Tony, we said we would consult on the implementation arrangements and that is happening.''
Tax experts from mining giant BHP Billiton will meet Treasury officials in Canberra later today, the day after Rio Tinto's Australian boss met the Government's resources tax panel.
Managing director David Peever came away from the talks unimpressed, saying the consultation was not broad enough and the parameters too tight.
Queensland Premier Anna Bligh will meet with federal Treasurer Wayne Swan this morning seeking changes to the new mining tax regime.
She wants the Government to double the threshold that defines a "super profit''.
Ms Bligh is expected to argue for a profit threshold of 11 per cent, not the six per cent proposed.
That would match the existing petroleum resource rent tax, which has applied to new offshore oil and gas projects since 1987.
Independent senator Nick Xenophon believes the Government and the mining industry are working frantically to thrash out a compromise.
"I don't think the Federal Government relishes the thought of the mining industry providing a multi-million dollar war chest against them,'' he told ABC Television.
The South Australian Government says the Commonwealth must ensure the tax won't deter new investment in its state, which is on the "potential cusp'' of mining growth.
"I would like to think that certainly in some of these key design features that they (the Federal Government) will compromise,'' Mineral Resources Development Minister Paul Holloway told ABC Radio.
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