Federal Politics

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High Court gives Fortescue nod to challenge mining tax

THE federal government faces a fresh threat to its plan to return the budget to surplus after the High Court agreed on Monday to hear a challenge to the mining tax by the minerals boss Andrew Forrest.

Following a directions hearing, the Chief Justice, Robert French, ruled there be a hearing before the full bench of the High Court for three days in March.

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Surplus promises looking shaky

A High Court challenge to the mining tax adds doubt to budget forecasts. So can either major party keep their promises of a budget surplus?

Mr Forrest's company, Fortescue Metals Group, argues the tax is unconstitutional. If Fortescue is successful, the government faces having a $9 billion hole blown in its budget over four years and $2 billion this financial year. These were the revenue forecasts for the minerals resources rent tax contained in the recent midyear budget update. Despite the mining tax, which began on July 1, making next to no revenue in its first three months of operation, the government is adhering to those revenue forecasts.

The development came as the shadow treasurer, Joe Hockey, launched a swingeing attack on the Treasury Secretary, Martin Parkinson, effectively accusing him of political bias. Coalition sources said Mr Parkinson would likely be removed if the opposition won government.

Mr Hockey wrote him a letter on Monday after Fairfax Media published Treasury analysis which showed three key Coalition policies would cost Australian businesses $4.6 billion in their first full year of operation.

''I am concerned that if Treasury undertook to conduct these unsolicited costings, or subsequently released these costings to the media, then the apolitical and non-partisan nature of Treasury has been severely compromised,'' Mr Hockey wrote. ''I believe this matter raises serious questions about the impartiality of your department.''


Mr Hockey said Treasury would be better occupied focusing on the nation's budget, given the ''significant variations'' between the budget in May and the midyear update.

The update forecast a slender surplus for this financial year of $1.1 billion.

The Treasurer, Wayne Swan, dismissed a report released on Monday by Deloitte Access Economics that this surplus would instead be a $4.2 billion deficit, primarily because of dwindling revenues related to low commodity prices. Mr Swan sad the government was ''on track'' to deliver a surplus.

But since the midyear review, the government has walked away from its promise to return to surplus this year. While yet to raise the white flag, it is aware that should the economy turn downwards again, there is little scope for further harsh cuts and a deficit may have to be accommodated. Despite this, the Opposition Leader, Tony Abbott, recommitted a Coalition government to achieving a budget surplus in each of its first three years, starting next financial year.

''Yes, we will do better, significantly better than the government,'' Mr Abbott said.

He gave no firm indication how this would be achieved, and the Coalition is yet to back any of the key savings announced in the midyear budget update, such as paring back the baby bonus from $5000 to $3000 for the second child and subsequent children.

At a Group of 20 finance ministers meeting in Mexico on Monday, Mr Swan added Australia's voice to concerns that whoever won the US presidential election must not proceed with spending cuts of $1.2 trillion, mutually agreed to by Congress, because of the risk of driving the US into recession.