THE AUSTRALIAN government could call a snap election this weekend after securing a deal with the mining industry over a new resources tax.
Prime minister Julia Gillard reached agreement with the resources sector yesterday, just a week after she was sworn in. Her predecessor, Kevin Rudd, was deposed by his own Labor Party, partly because his refusal to compromise on the tax had contributed to the government’s popularity plummeting.
What was originally called a “super profits” tax will instead become a resources rent tax which will take Aus$1.5 billion (€1.01billion) from previously expected revenues.
“There will be a negotiated profit-based tax regime but there will be no resources super profits tax,” Ms Gillard said after days of talks with the three biggest miners operating in Australia.
“It will maintain Australia’s standing as a competitive and attractive destination for investment.”
The new tax will be at a rate of 30 per cent, down from the planned “super profits” rate of 40 per cent. The tax will also not apply until a higher profit point is reached. It was originally going to include all mines (2,500 companies), but will now only include iron ore and coal mines (320 companies), and will exclude companies with profits below $50 million per annum.
Mining share prices soared after the announcement.
Mitch Hooke of the Minerals Council of Australia welcomed the deal as “a positive outcome for Australia and the minerals industry”, but Greens leader Bob Brown was not impressed.
“In the future, this is going to strip billions out of budgets, which would be going to the welfare of all Australians,” he said.
Tony Abbott, leader of the opposition Liberal Party, said: “I think it’s clear from the prime minister’s comments this morning that battle lines are drawn for the coming election.
“The next election will be a referendum on tax. The government wants a new tax, the [Liberal-National] coalition doesn’t. It’s as simple as that.”
Australia’s three-year federal electoral cycle meant an election was likely to be held by November this year, though it could be as late as March 2011. However, the mining tax deal and a spike in the government’s popularity under the leadership of Ms Gillard have led to intense speculation that the election will be called this weekend. The convention is that elections are announced on a Sunday, but there is no law stating this must be the case.
The law does require a minimum 33-day campaign though, allowing for an election to be held on the first or second Saturday in August.
Two opinion polls taken since the elevation of Ms Gillard to prime minister give Labor a commanding lead which would see the government returned with an increased majority. The poll boost was particularly strong in the mining-rich states of Western Australia and Queensland.