The federal government needs to define its exact policy on carbon pricing, skilled immigration concerns and the controversial mining tax in order to lend some level of certainty in the Australian economy.

Rio Tinto Ltd iron ore division chief executive Sam Walsh said on Thursday that it is crucial for the government of Prime Minister Julia Gillard to pinpoint its policies on issues that directly impact the local economy.

The most important thing, according to Walsh, is the federal government must ensure that the Australian economy would be able to maintain its competitiveness while at the same time protect its present stature as a place for opportunities, not only for the resources industry but also for the other business sectors.

Speaking before the Melbourne Mining Club, the Rio Tinto executive said that Australia's further economic growth would be duly supported by its labour skills and the mining industry itself must work hard to convince Australia that skilled immigration is required to meet the labour demands of the expanding mining sector.

At present, mining experts are predicting that labour demand for skilled worker would surge by more than 30 percent over the next five years but that numbers would double within the next 20 years as Rio Tinto estimates that commodities demands would continue to rise as countries like China, Brazil, India and Indonesia head towards expansions.

On Wednesday, Rio Tinto announced an additional $1.25 billion new investment to ramp up its iron ore productions in the Pilbara region of Western Australia, where the mining firm plans iron ore production to reach 333 million tonnes by 2015, with up to $7.2 billion more fund infusions.

Yet all these projections could prove futile until Ms Gillard's government has determined its actual stand on climate change as Walsh stressed that the carbon pricing debate must carefully engage, study and manage the impact of the adjusting climate to Australia's globally competitive mining industry.

On questions about the provisions of the minerals resource rent tax, the Rio Tinto executive maintained that the government would only need to honour its earlier deal with the country's biggest mining firm and strictly follow its essence, in which it is stated that "all state and territory royalties will be creditable against the resources tax liability."

By doing so, according to Walsh, the MRRT should prove to be a more manageable federal measure that would benefit not only the government and mining companies but also the whole of Australia.