August 3, 2010 / 4:33 AM / 9 years ago

Australian mining towns key election battleground

KALGOORLIE, Australia (Reuters) - Small mining towns may decide the fate of Australia’s knife-edge August 21 election, with a looming protest vote against Prime Minister Julia Gillard’s government in key marginal resource seats.

The ruling Labor party’s plan for a 30 percent resource tax on coal and iron ore miners from 2012 has left many mining town residents worried about their livelihoods.

Conservative opposition leader Tony Abbott, who has clawed back support from Labor to now be neck-and-neck in opinion polls, has promised to dump the controversial resource tax.

“When the mining tax was announced everything stopped in its tracks in Kalgoorlie. It was incredible, forget about the global crisis,” said Ashok Parekh, owner the Palace Hotel in the Western Australia gold mining town of Kalgoorlie.

“A lot of people in Western Australia would like to see the Labor party out of power,” Parekh told Reuters in a packed “skimpy bar” where miners drink beer served by topless barmaids.

Abbott needs to win only nine seats to form government with four independents, or 13 seats to take office outright.

Mining towns like Biloela and Moura, in the coal-rich Dawson Valley which sits in one of five key marginal seats in Queensland state, will be key to Labor’s re-election hopes.

Moura, experiencing an economic downturn on worries over the mining tax, hopes a A$2 billion underground coal project at nearby Belvedere planned by Australia’s Aquila Resources and Brazil’s Vale) will not be killed.

“Walk down town today and there is a nervous expectation with the Belvedere project knocking on the door,” said Ian Robertson, president of the Moura Chamber of Commerce.

“I think Labor is going to have a problem keeping the seat (of Flynn),” he said, adding there was a looming protest vote against the government over its mining tax.

FLY-IN, FLY-OUT POLITICAL RISK

In the sprawling Western Australia resource state, where some mining towns are company owned, the political risk is with fly-in, fly-out miners. These miners will voice their concerns in Labor’s marginal urban seats of Swan and Hasluck in Perth.

The importance of mining town voters in the 2010 election was witnessed even before the poll was announced, with the government setting out a A$6 billion infrastructure fund — A$4 billion to be spent in Queensland and Western Australia mining communities.

Many small to medium-tier miners is angry that only the three big miners, BHP Billiton, Rio Tinto and Xstrata negotiated the tax.

“This tax remains, in my view, a form of economic terrorism,” said Barry Eldridge, chairman of Diggers and Dealers, an international mining conference underway in Kalgoorlie.

“We must take a political stance against the proposal to rape essential resources from companies that allow them to grow and continue to entice investors...,” said Eldridge.

About one hour east along the Dawson Highway is Biloela, population 5,700. Some retailers in town have experienced a 12 percent slump in sales since May as residents tighten spending, fearing job losses and a loss of investment due to the mining tax.

Di Morris, president of Enterprise Biloela, the local business group, believes voters in Biloela are evenly divided and that the August 21 election in her town will be a cliffhanger.

“Its going to be damm close. Its like throwing three balls up in the air and trying to catch all three,” she said.

Writing by Michael Perry; Editing by Kazunori Takada

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