The federal government is not headed on a collision course with Australia's mining giants as Federal Treasurer Wayne Swan insists that the current debate on royalty taxes amount to nothing but minor dispute, which should see a quick resolution.

Swan issued his comments amidst another brewing row with BHP Billiton, Rio Tinto and lately Xstrata over claims that the government is backing down on earlier commitment that guarantees federal refunds on all state royalties accounted under the proposed minerals resource rent tax.

Xstrata echoed this week earlier accusations aired by both BHP and Rio Tinto that the tax deal forged by Prime Minister Julia Gillard with the country's biggest resources companies would not be honoured.

The three miners specifically complained that Ms Gillard seems to backtrack on the pre-election agreement when she declared her reservations of channelling federal funds for the royalty refunds stipulated in the tax deal, which she argued was not definite on its royalty provisions.

Xstrata chief executive Peter Freyberg testified before the Senate on Monday that his company would have not been party to the tax deal if royalty refunds looked ambiguous during the July negotiations for the compromise agreement.

Freyberg said that it was their understanding that current and future royalties would be credited back by federal authorities under the proposed MRRT and if such is not the case "then Xstrata would have to review $20 billion worth of planned investment in Australia."

He added that the tax deal then dangled by Ms Gillard appeared to be deliberate and aimed at rehabilitating Australia's bungled image as one of the world's best business investment option.

That sentiment was largely shared by BHP Billiton and Rio Tinto, which both declared that the deal would amount to nothing if the government would remain adamant of excluding future royalties for the promised tax credits.

However, Swan said that the decision to revert back the royalty issues to state governments empower them to independently legislate their own respective tax policies and more so, allow them to significantly move up royalty taxes.

He gave assurance though that whatever glitches created by the dispute could be resolved shortly as he expressed his belief that no disagreement exists between the federal government and the three giant firms who took part in the tax deal.