Australia's Senate votes to repeal mining tax in win for Abbott

By Matt Siegel

SYDNEY, Sept 2 (Reuters) - Australia's upper house Senate voted on Tuesday to scrap a tax on mining industry super profits, a major victory for conservative Prime Minister Tony Abbott that has fuelled accusations that he is in the pocket of global mining giants.

Abbott made abolishing the Mineral Resource Rent Tax (MRRT) one of the centrepieces of his campaign, but it has been stalled in the upper house alongside austere budget measures introduced in May to stave off what he has called a "budget crisis".

Although the repeal of the mining tax follows the successful scrapping of the controversial carbon tax earlier this year, it remains to be seen whether they signal a thaw in the hostile Senate, where his budget remains essentially frozen.

"The government has delivered on our commitment at both the 2010 and 2013 elections to scrap the failed Minerals Resource Rent Tax," Treasurer Joe Hockey and Finance Minister Mathias Cormann said in a joint statement.

"The tax package was so poorly designed, it was in fact costing the government billions of dollars each year."

The government says the repeal will take net savings forecast in the budget to more than A$10 billion (US$9.29 billion) over the forward estimates, and passage in the lower house is seen as a formality when it comes up this week.

But while the repeal should signal a victory for Abbott by delivering some of the budget savings he promised earlier this year, it is unlikely to silence a growing chorus of critics who say he is weakening social and environmental protections.

"Instead of getting a fair share from the big end of town that can afford to pay, coal mining billionaire Clive Palmer has done a tricky deal and put the pressure back on workers and families," opposition Greens Party leader Senator Christine Milne said in a statement.

"Champagne corks will be popping in mining company boardrooms while Australian workers will face less money for their retirement."

Global miners with bases in Australia, such as BHP Billiton (NYSE: BBL - news) and Rio Tinto (Xetra: 855018 - news) have said the tax, and a carbon tax repealed by the government earlier this year, are out of step in the aftermath of a decade-long mining boom.

Under the Labor party, Australia slapped the "super profits" tax on producers of iron ore and coal - Australia's two most lucrative exports - despite fierce opposition from industry-funded lobby groups.

Those groups welcomed the repeal, arguing it was necessary in the light of a global cool-off in metals and coal prices that has removed much of the wind from the sails of the mining industry. (1 US dollar = 1.0767 Australian dollar) (Additional reporting by Jane Wardell in Sydney; Editing by Jeremy Laurence)