The government's plan to impose a 40 percent tax on above-normal mining profits got an ally from union members who criticized what they described as "disgraceful scare campaign" that the new levy would translate to job losses in the industry.

Tony Maher, the national president of the CFMEU, said the proposed new tax on above-normal profits in resources industries, is a good thing and would not affect job security in the industry.

"Nobody's job is at risk as a result of this tax. I think the scare campaign the mining companies are running is disgraceful," he said.

He likened the latest scare campaign with the similar criticism raised against the emissions trading scheme. "it was rubbish then and it's rubbish now." Maher added.

Billionaire Clime Palmer, a mining magnate from Queensland and owner of Resourcehouse, joined the growing chorus among mining owners, who criticize the Federal Government for above-normal mining profits. He said tax rates in Russia and China are better.

He warned the new tax measure could mean thousands of job losses in the mining sector.

"There are thousands of workers working in mining towns all around Australia and in all the regional centres that will be affected by this. You never increase jobs by increasing taxes."

Earlier, Rio Tinto's Australian managing director David Peever said changing the tax rules is sending a wrong message to investors.

However, the administration of Prime Minister Kevin Rudd remains unfazed despite drawing flak from miners.

He defended the new tax measure and said the Australian public deserves a bigger share of the booming mining profits and added the money from the tax would be used to fund increase in superannuation and company tax cut.

"Of course there will be threats of project closures and the rest. I also expect that the mining industry council will try and put together a political campaign against the Government," he said.