WAYNE Swan claims US investors are not discouraged by the...

WAYNE Swan claims US investors are not discouraged by the Gillard government's pledge to introduce a tax on mining super-profits.

The Treasurer said yesterday that investment in Australia's resources sector had grown all year during the height of debate over the mining tax, and he expected no let-up.

In an interview with The Australian in Washington, Mr Swan highlighted forecast investment growth of 50 per cent over this financial year, based on intended capital expenditure by mining companies.

"These figures were collected during the debate on the mining tax," he said.

He told the ABC yesterday he had called on business leaders to nominate where the government should cut spending to fund future corporate tax cuts.

He said the business sector had to accept what a cut to the rate would mean for government revenue. "My message to them is we have to be realistic about what can be achieved," Mr Swan said.
"I do believe it is desirable over time we bring down corporate taxes but, if we're going to do that, that has a cost to revenue.

"Those that are arguing for a very big corporate tax cut and may also, say, be arguing for a substantial increase in education spending; the onus will also be on them to say where they think we could actually make the saving to fund those sorts of initiatives."

Mr Swan has been attending meetings of the International Monetary Fund in Washington with fellow finance ministers. He arrives today in New York for talks with US banks, in an attempt to woo new investment.

The Treasurer's chief message will be to stress the strength of the Australian economy, arguing that the country is well-placed for further growth after avoiding recession. He denied the minerals boom had proved the economy's saviour, saying stronger demand for minerals "only kicked in" during the second half of last year.

"What we did with our stimulus was far more important in terms of Australia avoiding a recession," he told The Australian.

"Strong commodity prices are certainly an important part of our prosperity, and an important part of growth, but they are not the only part of it. It's a much more balanced outlook than that."

According to the Treasurer, Australia's services sector and several areas of manufacturing were competitive and attractive to international investors.

He refused to comment on the high Australian dollar apart from the "swings and roundabouts" it gave consumers and exporters.

"The high Australian dollar is a reflection, basically, of the underlying strength of our economy."

The Australian dollar slipped slightly on the weekend after hitting US99.17c last week, the highest point since the currency was floated in 1983. The dollar traded at US98.44c after Wall Street rallied on the expectation that US authorities would order a fresh round of stimulus next month to revive the economy.

Mr Swan said that, economically, Australia had the advantage of being in the right place at the right time in what would be an "Asian century", with enormous growth in the Asia-Pacific region.

He refused to comment on China's exchange rate, but said a focus on exchange rates was "not the be-all and end-all" on the question of economic prosperity.

He urged developing countries to lift their domestic demand by addressing issues such as social security and health, "rather than simply export their way to growth".