Andrew Forrest of Fortescue Metals has found an ally in its High Court battle against the mining tax in the Australian state of Queensland. Despite a meeting on Monday between Prime Minister Julia Gillard and Queensland Premier Campbell Newman, the state will go ahead and join Fortescue in the High Court challenge.

Queensland Attorney-General Jarrod Bleijie said on Sunday that the state decided to join Fortescue because of a crown law advice that it could intervene in the debate over state-commonwealth rights. Queensland is wary that the tax, at 30 per cent on profits from iron ore and coal, could apply to state-owned electricity generators that mine coal supplies and are affected by the carbon tax.

While both the carbon and mining taxes took effect July 1, Queensland did not pursue a legal challenge against the carbon tax because of a legal advice that the law which created the measure was bullet-proof. However, in the case of the mining tax, Mr Bleijie said it would argue that the levy is constitutionally invalid, which is the same argument raised by Fortescue.

"Intervening in the challenge allows the Queensland government to put forward its own arguments against the MRRT. Taxes must be imposed equally and it can be argued the MRRT is calculated in such a way that it discriminates between states. This is a battle that has to happen because there is the potential the MRRT is constitutionally invalid," The Australian quoted the attorney-general.

Mr Bleijie said the mining tax is being used by the federal government to raise revenue, similar to the carbon tax. "Queensland should not have to pay the price of Labor's financial mismanagement," he insisted.

The MRRT is estimated to raise for the federal government $13.4 billion over the next four years.

The government justified the tax on the ground that the resources belong to the entire nations and the mining companies which benefit from it should give the rest of Australia their share in the boom through the mining tax. Treasurer Wayne Swan said the legal challenge should be funded by the Liberal Party which would benefit from the repeal of the mining tax, not Queensland taxpayers who stand to lose from its abolition.

He said that the repeal of the MRRT would prevent 560,000 small businesses in Queensland to receive a tax break, 1.4 million workers to enjoy a boost in their retirement savings, another 800,000 low-income workers from receiving a tax concession on their superannuation and to fund vital infrastructure projects in Queensland.

Another major mining state, Western Australia, said it would not join the legal challenge of Fortescue and Queensland. Fortescue, which filed the legal challenge in June, said the MRRT discriminated between the states, curtailed the states' sovereignty and its ability to encourage mining.

Constitutional law experts, however, doubt the arguments raised by Fortescue and described it as incredibly complicated and difficult to convince the High Court.

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