CANBERRA Australia appointed its first woman prime minister, Julia Gillard, who vowed on Thursday to end division over a controversial mining tax, resurrect a carbon trade scheme and call elections within months.
Former prime minister Kevin Rudd made an emotional and ignominious exit, quitting just before the center-left Labor Party was to dump him in an internal ballot and less than three years after a stunning election victory in 2007.
The Rudd government's dramatic slide in support this year sparked fears within the ruling party of an electoral defeat at a poll expected around October.
"I asked my colleagues to make a leadership change because I believed that a good government was losing its way," Gillard told a news conference.
Bookmaker Centrebet made a Gillard Labor government outright favorite to win the next election over conservative opponents.
Gillard has long been one of the government's best performers in parliament with her ability to sell policies and deflect political attacks.
Gillard, 48, immediately offered to end a bitter dispute over a controversial "super profits" mining tax, which is threatening $20 billion worth of investment and has unnerved voters, saying she would throw open the door to fresh negotiations.
"It's a genuine offer - the door of this government is open ... I'm asking the mining industry to open it's mind," she said.
But Gillard stood firm on the introduction of a resource tax, stressing that miners should pay more tax. She said later in parliament miners had conceded they could pay more.
Miners responded to the leadership change by suspending a multi-million dollar anti-tax advertising campaign and welcoming Gillard's conciliatory tone.
"We look forward to working with the government in this new way to find a solution that is in the national interest," said a spokesperson for BHP Billiton, the worlds biggest miner.
But miners also stood firm on their position of reducing the 40 percent headline tax rate and doubling the threshold of when miners start paying the tax to 12 percent from 6 percent.
The Australian dollar briefly jumped after the leadership change, while shares in BHP and Rio Tinto rose around 2 percent, outperforming a flat broader market.
CARBON TRADE SCHEME
Gillard's takeover will see the government resurrect its failed climate change policy, a carbon trade emissions scheme, with the new prime minister saying she was disappointed in the government's failure to pass laws to set a price on carbon.
"I will re-prosecute the case for a carbon price at home and abroad. I will do that as global economic conditions improve and our economy continues to strengthen," she said.
Greens party leader Senator Bob Brown and institutional investors said they were looking forward to early action on climate change. Rudd postponed his carbon scheme until 2011.
Australia is the world's top coal exporter and among the highest pre-capita emitters of planet-warming carbon dioxide, with coal used to generate about 80 percent of electricity.
Rudd became the shortest-serving Australian prime minister since 1972, with his leadership falling apart after a string of poor opinion polls.
"I have given my absolute all. I was elected by the Australian people as the prime minister ... to bring back a fair go for all Australians," said Rudd, choking back tears.
Government lawmakers believe Gillard has a better chance of winning back voters because she is a warmer personality who can sell policies more effectively.
Gillard will automatically attract a large female vote, especially when compared with conservative opposition leader Tony Abbott, who is anti-abortion and opposes sex before marriage.
"I was so disappointed when Hillary Clinton didn't become president of the U.S., so I'm very happy that a woman is in power in Australia," said a pensioner named Anne in Sydney.
SOFTER TAX, TOUGHER SECURITY
Global miners such as Rio Tinto, BHP and Xstrata are expected to resume their public campaign against the tax at the next election if it is not changed, helping a resurgent conservative opposition's bid to oust Labor.
"If she is going back to a clean slate that's good news. But we still do not know if she will be negotiable on the 40 percent and other details," said Simon Bennison, chief executive of Australia's Association of Mining and Exploration Companies.
Economic analysts believe Gillard will either water down the tax or offer major concessions to miners.
Rudd's unsuccessful steps to stop boatpeople angered both voters opposed to asylum seekers and those demanding a more humanitarian policy.
Gillard is under Labor party pressure to shift from her left-wing position and take a tougher stand on boatpeople. She said she understood Australians were "disturbed" by the number of boat arrivals and pledged strong border protection.
Mandarin-speaking and a former diplomat, Rudd was a foreign policy expert. Gillard has little experience in the field and is expected to leave Australia's external relations unchanged, stressing strong ties with both China, the country's largest trade partner, and the United States, its main security ally.
Australian Treasurer Wayne Swan will attend a G20 meeting next week instead of Gillard.
(Additional reporting by Mark Bendeich; Writing by Michael Perry; Editing by Paul Tait)