In a video address posted Thursday on the Sydney Mining Club Web site, Rinehart -- who inherited and runs Hancock Prospecting -- said Australia is "becoming a high-cost and high-risk nation" for global investors.
"The evidence is indeed inarguable that Australia is indeed becoming too expensive and too uncompetitive to do export orientated business -- businesses that must sell their products at world market, not Australian, prices," she said.
Rinehart -- who is said to be the richest woman in the world and the richest person in Australia with a fortune estimated at $18 billion -- said Australia needs to compete with nations offering lower labor costs.
"Africans want to work and its workers are willing to work for less than $2 per day," she said.
Australian Prime Minister Julia Gillard said it wasn't "the Australian way to toss people $2, to toss them a gold coin, and then ask them to work for a day."
Australian Council of Trade Unions Secretary Dave Oliver told the Australian Broadcasting Corp. Rinehart's suggestion was "an insult to all the workers who work for her company."
"It just beggars belief that she is trying to advocate a position where for us to be competitive we have to look at the conditions that we see in Third World countries," Oliver said.
Responding to Rinehart's suggestion of a so-called economic trade zone across northern Australia with lower taxes and fewer regulations, Professor John Buchanan of the University of Sydney business school's Workplace Research Center told ABC he preferred to compare Australia's experience with that of countries he said are more like Australia, including Norway, which has an average rate of 78 percent tax on profits in its oil sector.
"Oil companies are queuing up to deal with the Norwegian oil sector because that tax rate is used very creatively by the Norwegian government to encourage employment and further resource development," Buchanan said.
Rinehart recently made headlines for comments she made in a magazine article critical of poor people.
"There is no monopoly on becoming a millionaire," she wrote. "If you're jealous of those with more money don't just sit there and complain, do something to make more money yourself. Spend less time drinking, smoking and socializing and more time working."