An economist, who along with 19 economic experts signed a letter of support for the now revised resource super profits tax, said Friday that the announced mining tax compromise would send a chilling signal that determined corporate manoeuvrings could actually influence government policy decisions.

Economic professor John Freebairn of University of Melbourne admitted that the adjusted mining tax is better than the existing system but he maintained that the original proposal resulting from the Henry review was far more superior.

He said that the new tax version closely resembled that of the petroleum resource rent tax, which he characterised as a move halfway along since it "will be extended pretty much unchanged to onshore oil and gas, which will include the new coal seam projects in Queensland."

And now that same model would be applied to the mining industry, which Professor Freebairn said forcefully pointed to a more worrying reality of the compromise deal and that is the extent of influence that giant mining companies and their lobby group could exercise on the government and media in order to force a change of policy that benefits them.

According to Professor Freebairn, the deal only proved that mining companies were more than willing to spend hundreds of million dollars just to keep the tax rate down than to use the money to discover better ways to extract their targeted minerals, as he stressed that as far as the mining giants are concerned "it's better spending the money in trying to reduce the tax burden, and low and behold it seems to have worked and this is quite a scary development for democracy."

Professor Freebairn is adamant that the Henry review was the better model since it intended not to distort investment decisions just to favour a commodity or another or to give more weight to another industry such as the resource sector but he conceded that the mining tax's new incarnation could only affect investment decisions in a lesser magnitude as compared to the one it intends to replace.

He said that economists usually gravitate towards "shifting the tax burden away from what we would call internationally mobile factors of production, particularly capital, and shifting the tax burden onto immobile factors which include land and natural resources," adding that the situation could have been a lot better if the Henry proposal had been fully adopted.

Professor Freebairn said that the plan to apply the new mineral resource rent tax exclusively to coal and iron ore could distort the allocation of investment, as other sectors enjoying peak prices were conspicuously excluded from the tax.

In the end, questions would be raised on why the coal and iron ore sectors were enjoying 30 percent rate while the petroleum and gas industries were being punished with a 40 percent rate and not to mention the exemptions to be enjoyed by such minerals such as gold, copper and bauxite.