Libs put BHP projects at risk: SA govt

08/02/2010 | 07:17 PM

The Liberals risk losing face with mining giant BHP Billiton over expansion of its Olympic Dam project, the South Australian government says.

Treasurer Kevin Foley says Opposition Leader Isobel Redmond is trying to win voter support in promising to cut some projects while snubbing the mining giant's senior executives.

On Sunday, Premier Mike Rann said Ms Redmond had promised to stop BHP Billiton building a landing facility near holiday shacks at Port Augusta, and also wanted a desalination plant relocated at a cost of $500 million.

The opposition denies it's made any promises to stall projects and says the government is using this as a diversionary tactic.

"Our position is no different to the government," an opposition spokesman told AAP.

The real issue is a possible tax hike that could be slapped onto the mining industry in the future following the Henry tax review, he said.

According to reports, the Henry review, which was handed to the federal government in December, recommended scrapping state-based royalties on mining projects and replacing them with a resource rent tax (RRT), set at 40 per cent.

The tax change would raise billions more in revenue than the current system and could reportedly cost mining giants BHP Billiton Ltd and Rio Tinto Ltd a combined $US5 billion ($A5.59 billion) in earnings a year.

BHP Billiton is refusing to comment on the treasurer's assertions about Ms Redmond.

"This is a person who will not even meet the most senior people in BHP to discuss what is the most important major project in the state's entire history," Mr Foley told reporters.

When it comes to trust he did admit the government has some ground to make up after polls last week revealed voters found Ms Redmond more trustworthy than the premier.

"In our view, the trust that we have, and we hope to earn with the community is that we can be trusted to do our best in negotiating major projects, jobs and continuing to secure billions of dollars in investments," Mr Foley said.

"Our government is not perfect, we've made mistakes, I understand that, and that's what happens in government."