Australian Bureau of Statistics figures released today showed that capex in the mining sector fell by 16% in the June quarter on a seasonally adjusted basis to $A10.7 billion, the lowest since the December 2010 quarter.

MCA CEO Brendan Pearson said the proposed new $7.2 billioniron ore tax on BHP Billiton and Rio Tinto would make WA the highest taxing iron ore province in the world and would only worsen future investment.

"Massive new taxes on Western Australia's most important industry will reduce jobs, not create them," he said.
 
"A huge new tax burden will deter investment, not encourage it."
 
Pearson noted that in the 2015 financial year, BHP and Rio contributed $3.2billion in royalties to the government and a further $259 in other state government taxes. 

"In the five years to 2015-16, BHP and Rio Tinto purchased around $80 billion worth of goods and services from local WA businesses and invested approximately $2.7 billion in infrastructure and services for local towns and communities," he said.

Yesterday, WA Liberal Senator Linda Reynolds labelled the plan as "utter madness" in her maiden speech yesterday.

"There are few ideas that are more anti-West Australian, anti-Australian and anticompetitive," she said.

"Not only are billions of dollars in taxation revenue at risk but thousands of Australian jobs. The kicker of it all for me as a Western Australian senator is that, even if this were implemented and the tax were raised from both of these companies, over 70% of that money would go to the Commonwealth coffers—it would not be staying in the Western Australian coffers. It is outrageously ridiculous."

Chamber of Minerals and Energy of Western Australia CEO Reg Howard-Smith praised Reynolds for her understanding of the issue.

"Sadly, Nationals WA leader Brendon Grylls has chosen to ignore the strong economic and social contribution being made to the regions, state and country by BHP Billiton and Rio Tinto by proposing this tax," he said.

"As Ms Reynolds says, we need to stop demonising the very industry that is a major employer and contributor to our economy."

While the plan is unlikely to get up, it's still given the majors a scare.

Last week new Rio CEO Jean-Sebastien Jacques described the plan as a major risk for the company, while BHP CEO Andrew Mackenzie last month said he was perplexed by the plan.

"It strikes me as somewhat unfair and anti-job creating,"Mackenzie said.

"I'm trying to understand why something so unfair and anti-jobs has been given so much currency."