TORONTO (Dow Jones)--Australia's proposed new tax on its resources industry could be a huge competitive advantage for Canada, Canadian Finance Minister Jim Flaherty said Tuesday.

Speaking to the media ahead of a speech to a public-policy forum on pension reform, Flaherty said the continued decline in corporate taxes in Canada are a " great attraction for investment."

Flaherty said he still needed to closely review the tax proposed by Australia's government over the weekend to fully understand how it worked. Like Australia, Canada has a very large and active resource industry.

Australia's government announced plans to make mining giants liable for a tax on profits made from the exploitation of nonrenewable resources. The extra revenue will be used to lower other corporate taxes.

Flaherty noted that Canada has been reducing its corporate taxes, so that corporations in most of Canada will face a combined 25% tax rate by 2012.

He said the "easiest thing" for a politician to do is raise taxes, which immediately increases revenues, but limits growth.

-By Monica Gutschi, Dow Jones Newswires; 416-306-2017; monica.gutschi@ dowjones.com