Rio Tinto criticized on Thursday the Australian government for its failure to deliver on carbon tax promises, which the Labour government agreed on with industry leaders.

David Peever, managing director of Rio Tinto Australia, cited the principles of environmental effectiveness, budget neutrality, competitiveness of Australian industries, investment uncertainty and administrative simplicity as areas that the government has yet to address.

He said the planned imposition of the carbon tax came at a wrong time because it would worsen the current low business confidence level prevailing in Australia.

"None of us need to be reminded that the world is still recovering from the global financial crisis, there are U.S. and European debt issues, there is turbulence in global financial markets and soft domestic consumer confidence," Mr Peever told The Australian.

"In this environment, the government's carbon tax scheme is another impost that will undermine business confidence and competitiveness in Australia," he added.

The proposed levy will consist of two rounds of tax cuts and increases in allowances, payments and benefits expected to benefit about eight million Australian households. However the tax would cost the average household an average increase of $9.90 per watt, which the government said would be offset by an average compensation of $10.10 weekly.

The burden will be felt by the top 500 companies in Australia, which are also the biggest polluters, because they will have to pay carbon tax at $23 per tonne. The tax is expected to cover only 60 per cent of carbon pollution because agriculture, petrol or light on-road vehicles are exempt.

The aim of the tax, besides raising more than $9 billion yearly from high polluters, would be to reduce Australia's carbon emissions by 159 tonnes annually or the equivalent of removing 45 million cars off the road.

Mr Peever said that Australia's contribution to international efforts to cut carbon emission must be proportional to actions initiated by its overseas trading competitors.

The government insisted that the carbon packaged was completely consistent with principles it agreed upon in the business roundtable, which included companies such as Qantas, Woolworths and Shell.

Nathan Fabian, chief executive of Investor Group on Climate Change and one of the roundtable participants, came to Labour's defense.

"Every group put in their own version and it would be inaccurate for anyone to comment on whether the priorities were broken from the perspective of other members of the roundtable," Mr Fabian told Australian Mining.