Tensions emerge between new Australian government, independent lawmaker over mining tax

By Rod Mcguirk, AP
Wednesday, September 8, 2010

Tensions emerge in new Australian minority govt

CANBERRA, Australia — Tensions emerged Wednesday between Australia’s deputy prime minister and a kingmaker independent lawmaker over plans to make mining companies pay more taxes, underscoring the fragility of the country’s new minority government.

The center-left Labor Party was returned to power for a second three-year term Tuesday after two final independent lawmakers agreed to back it. That ended 17 days of intense negotiations following Aug. 21 elections in which no party won a clear majority, but created a government that can be brought down by the defection of a single legislator.

Prime Minister Julia Gillard is expected to name a Cabinet this week that includes Kevin Rudd, the prime minister she ousted in an internal party mutiny in June, and might also include Rob Oakeshott, one of the independent kingmakers. Oakeshott has yet to accept the Cabinet job offer.

As part of the deal Tuesday to get Oakeshott and another rural independent, Tony Windsor, to throw their support behind a Labor government, party leaders promised to hold a public summit of tax experts by June 30 to discuss options for tax reforms recommended last year in a Treasury department report.

But Deputy Prime Minister Wayne Swan surprised Windsor on Wednesday by saying that a contentious Labor plan to impose a new 30 percent tax on iron ore and coal miners’ profits, which are swelling because of voracious Chinese and Indian demand for raw materials, would not be submitted for review at the summit.

Swan said some of the 10.5 billion Australian dollars ($9.6 billion) expected to be raised from the tax over two years is needed to pay for other sweeteners offered to Windsor and Oakeshott, including AU$10 billion for upgrading rural schools, hospitals and other infrastructure.

Swan said he hoped to introduce the mining tax legislation in Parliament as soon as possible.

Windsor said he had understood the mining tax plan would be scrutinized at the tax summit and would talk to Swan about having it included.

Windsor and Oakeshott could not immediately be contacted by The Associated Press for comment. But Windsor told Ten Network television that both independents believed that mining tax reform should be discussed at the summit.

Opposition leader Tony Abbott, whose conservative coalition could have formed a minority government with Windsor and Oakeshott’s support, opposes the mining tax, arguing that it would reduce investment in the mining industry and cost jobs.

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