Federal Labor MP Andrew Leigh says the government won't be supporting a race to the bottom on wages after a new report said the mining industry faces some of the highest labour costs in the world.
The Minerals Council of Australia (MCA) commissioned a report by Port Jackson Partners, which discusses the nation's vulnerability to competition from resource-rich emerging economies.
It found that Australia's cost position was declining, with labour costs growing more quickly than the national average and now ranking among the highest in the world.
Rising capital costs, along with increased energy and transport costs, were also a factor and the report called for more skilled migrants and changes to the Fair Work Act to boost productivity.
"I understand there's elements of the Minerals Council of Australia that would like $2-a-day wages but Labor is not going to be supporting this kind of race to the bottom in the minerals industry," Dr Leigh, a former economics professor, told reporters in Canberra.
"We're supporting investment in infrastructure, that's where the revenue from the mining boom is going and we're supporting a minerals resources rent tax (MRRT)."
Billionaire Gina Rinehart this month suggested that Australian wages were too high.
In a video posted online, the West Australian mining magnate said many of her peers believed that Africa, where workers could be hired for less than $2 a day, offered better prospects for investment.
MCA chief executive Mitch Hooke said the report was a wake-up call for anyone who thinks the mining and minerals sector was so resilient it would thrive regardless of the economic and policy climate.
"The report demonstrates that Australia is losing global market share to rapidly emerging resource-rich economies," Mr Hooke said in a statement.
"Added to that, a policy focus on the redistributive rather than the productive side of the economy has been pivotal to undermining our competitiveness and attractiveness to investment."
Modelling in the report found the majority of thermal coal projects in the pipeline were at risk and there were few prospects for growth in the aluminium industry.
It also said Australian iron-ore projects were 30 per cent more expensive than the global average.
The paper found that real gross domestic product would be 5.3 per cent lower in 2040 if Australia did not boost its competitiveness.