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Govt’s scrapping of iron ore inquiry blamed on lobbying -

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KIM LANDERS: The mining magnate Andrew Forrest has blamed lobbying by his company's bigger rivals for the Federal Government's decision to back away from an inquiry into iron ore pricing.

A week ago the Prime Minister Tony Abbott said he was open to an inquiry into whether BHP Billiton and Rio Tinto are manipulating prices by flooding the market.

But Federal Cabinet was split and last night the Government ruled out an inquiry.

However, for the Fortescue Metals Group chairman, Andrew Forrest, the fight isn't over.

Business reporter Pat McGrath has more.

PAT MCGRATH: This time last week a parliamentary inquiry into the role of Australia's two big miners in the collapse of the global iron ore price appeared to be almost a certainty.

Last Friday, Tony Abbott told the Sydney broadcaster Alan Jones that he was open to the idea.

What a difference a week makes.

TONY ABBOTT: We made a decision that there was no need for it at this time.

PAT MCGRATH: This morning in Tasmania, Tony Abbott was asked whether the Government had caved into lobbying by the big miners.

TONY ABBOTT: Obviously there was some very public calls for an inquiry about a week ago. We carefully thought it through. We talked to all the various players in the sector and in the end came to the conclusion that a parliamentary inquiry would do more harm than good.

PAT MCGRATH: Two main voices have been leading the call for an inquiry into the conduct of BHP and Rio Tinto: Fortescue Metals chairman Andrew Forrest and independent Senator Nick Xenophon.

They say the miners are ramping up supply at the same time as demand from China is falling. The aim, they say, is to squeeze out smaller, higher-cost miners who can't turn a profit with iron ore prices where they are.

Tony Abbott says the last thing he wants he wants to see in the sector is predatory behaviour.

TONY ABBOTT: But we talked to the various people in the sector and came to the conclusion after the sort of consultation which sensible governments do that a parliamentary inquiry was going to generate more heat than light.

PAT MCGRATH: The Opposition Leader Bill Shorten says the matter has been a distraction.

BILL SHORTEN: You know, we've seen the Government carry on for a week about a phantom iron ore inquiry, jeopardising the position and reputation of Australian iron ore companies. But nowhere in this last week have I seen Tony Abbott or Joe Hockey talk about the jobs of the actual miners who've lost their jobs.

But Andrew Forrest thinks there's still hope for more scrutiny of his company's competitors.

He's taking comfort in a line from a statement by the Treasurer, Joe Hockey, last night: that there would be no inquiry "at this time".

He spoke to business editor Peter Ryan this morning.

ANDREW FORREST: Well, I think that was an interesting choice of words which he didn't have to say. People cannot say that he's in the pockets of the multinationals. He obviously found the pressure intense from within his own Cabinet, and I think those members of Cabinet who resisted the opportunity for transparency into this opaque industry just simply got it wrong.

And you know, I felt for the Treasurer. I can imagine the immense pressure that he and the Prime Minister were under. But I've seen it happen before.

And Australia's got to ask, Peter. Australia's got to ask: do we want an environment where multinationals can change government policy at will to minimise tax, to change policy for their own ends?

PAT MCGRATH: But the head of the group representing the big miners rejects the suggestion that industry lobbying has driven the Government's change of heart.

The Minerals Council's CEO, Brendan Pearson, says the inquiry was never a certainty.

BRENDAN PEARSON: An investigation that was based around the proposition that there might need to be policy intervention - which I don't think anyone's in favour of - was always going to struggle.

PAT MCGRATH: But give us an insight into what happens here. One you and BHP and Rio found out that the Government was considering this, what did you do? What was your response? What kind of contact did you make with the Government and how did that process play out?

BRENDAN PEARSON: Look, I think the important thing to remember here is that there was a proposal from one senator for an inquiry.

PAT MCGRATH: Sure.

BRENDAN PEARSON: If every inquiry in the Senate that was proposed was actually to go forward, then we'd need a lot more senators.

PAT MCGRATH: Sure. Sure, we know the background but, I mean, what did the industry do to stop this inquiry from going ahead?

BRENDAN PEARSON: Well, I mean, I don't think there's any secret ingredients here. I mean, we talked to Government. We talked to the media and made our case publicly, just as all players have done. And you know, I think we've probably done less of that than other protagonists in this debate.

KIM LANDERS: Minerals Council chief executive Brendan Pearson ending Pat McGrath's report.