Australia’s controversial mining tax, which helped topple Kevin Rudd, former prime minister, generated just A$126m ($129m) of revenues in its first six months of existence and is unlikely to make the A$2bn it was forecast to raise this year.

Wayne Swan, Australian treasurer, said revenues from the minerals resource rent tax (MRRT) had taken a “massive hit” from continued global instability, volatile commodity prices and the strong Australian dollar.

“The huge drop in commodity prices in the second half of last year had a dramatic impact on MRRT revenues,” he said.

Iron ore prices fell from $170 a tonne at the end of 2011 to just $80 per tonne in September last year. So a very dramatic drop in commodity prices reflected in a drop in revenue.”

The release of figures is another blow to the ruling Labor government ahead of this year’s federal elections.

It comes just six weeks after Mr Swan revealed a promised budget surplus would not be delivered this year. Labor already lags behind the opposition Liberal Coalition party in the polls and is on course for an election defeat.

“It’s a small number,” said Paul Bloxham, Australian and New Zealand economist at HSBC.” And that’s not good for the revenue side of the budget because the last set of government projections assumed a lot more than that.”

In the May budget, the Treasury forecast the 22.5 per cent tax on certain iron ore and coal profits would raise A$3bn in the year to June 2013 and A$10.4bn over the following three years. Those estimates were subsequently downgraded in October to A$2bn and A$7.1bn respectively.

The government has earmarked MRRT revenues to pay for cost-of-living bonuses, pension contributions for low-income earners as well as infrastructure projects. If revenues do not recover the money will have to be found from elsewhere in the budget, economists said.

However, Mr Swan said it was too early to tell how much the tax would raise, although he noted there had been a partial recovery in iron ore prices, which currently trade at US$155 a tonne.

“We will have to see how prices go over the next six months,” he said.

He also refused to say whether there would be any changes to the tax, which was renegotiated after the Labor party dumped both Mr Rudd and his plan for a 40 per cent resource tax on all commodities in the face of fierce opposition from the mining industry.

“It is too early to be drawing the sort of conclusions that some may want to make about saying this exact percentage is price and this percentage is these other factors. It is clear that price is a very significant factor. It may not be the only factor,” he said.

The level of concessions extracted during negotiations with Julia Gillard, prime minister, and Mr Rudd by mining companies BHP Billiton, Rio Tinto and Xstrata has been criticised by the Australian Greens and others.

Not only can the miners deduct the market value of their operations against MRRT liabilities they can also use present and future royalty payments as an offset.

Friday’s announcement on the MRRT followed pressure from the Liberal Coalition, which has made the economy a key part of its election campaign, and the Greens. They joined forces in the upper house of the Australian parliament this week to demand the Australian Tax Commission reveal how much the tax had raised since it was introduced at the start of July.

“This is the Government that said it was prepared to take on the mining industry but now what we’ve seen is that the miners once again have had a big win over Julia Gillard and Wayne Swan over the negotiation of this tax, said Christine Milne, Greens leader. “It’s shockingly low.”

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