June 25, 2010 / 8:11 AM / 10 years ago

New Australian PM pledges to end mine tax row

CANBERRA (Reuters) - New Australia Prime Minister Julia Gillard pledged to end a mining tax row as soon as possible after spending her first day in power speaking to world leaders and assuring Washington of Canberra’s commitment to Afghanistan.

Australia's Prime Minister Julia Gillard attends a news conference at Federal Parliament House in Canberra June 25, 2010. The Australia government's first priority is to resolve the divisive mining-tax row, new Prime Minister Gillard said on Friday. REUTERS/Mick Tsikas

The Labor government appointed Gillard as prime minister on Thursday, fearing defeat at elections later this year as voters deserted incumbent Kevin Rudd over his handling of the tax row and a failed climate policy.

Global miners such as BHP Billiton and Rio Tinto say a planned 40 percent “super profits” tax will damage the resource-dependent economy which underpinned Australia through the global financial crisis.

“My priority obviously is that we deal with the question of the mining tax,” Gillard told a news conference.

“It has caused us uncertainty. I think that uncertainty has caused anxiety for Australians. I want to make sure Australians get a fair share of our mineral wealth, but we want to genuinely negotiate.”

Deputy Prime Minister and Treasurer Wayne Swan signaled on Friday the government was open to renegotiate the tax headline rate. Miners want the tax scrapped or for the government to lower the 40 percent headline rate and raise the 6 percent profit threshold to 12 percent.

No fresh mine tax talks are expected before Gillard’s new cabinet is sworn in and with Swan at the G20 meeting until Wednesday.

Global miner Xstrata Plc on Friday called on Gillard to exclude existing projects from the proposed tax.

“We will participate in those negotiations in good faith but believe that it is of the utmost importance that negotiations are concluded as rapidly as possible to avoid further damage to the industry’s growth prospects in Australia,” Xstrata said in a statement to Reuters.

WORLD LEADERS

Gillard, Australia’s first female prime minister, said she had also spent her first morning as leader, “introducing” herself to other world leaders, including U.S. President Barack Obama.

“I fully support the current deployment and I indicated to President Obama that he should expect to see Australia’s efforts in Afghanistan counting,” she said.

Australia has about 1,500 troops in Afghanistan and will start to reduce troop numbers in two to four years after Afghan forces take over security operations in Uruzgan province.

Sixteen Australians have been killed in Afghanistan since late 2001. An opinion poll published on Monday found 61 percent of those surveyed believed Australia should withdraw its troops, while 24 percent believed troop numbers should be maintained.

Gillard is also not expected to shift policy toward China, Australia’s largest trade partner and a big buyer of commodities such as iron ore and coal.

Unlike her predecessor Rudd, a Mandarin-speaking former diplomat, Gillard has little foreign policy experience and is expected to rely more on current Foreign Minister Stephen Smith. However, analysts said could also appoint Rudd as her foreign minister.

Miners welcomed Gillard’s appointment, but called for a “sign of good faith” that the government was genuine in its desire to resolve the tax row.

“This is a major breakthrough as previous negotiations were never serious,” said Macarthur Coal Chairman Keith De Lacy.

But De Lacy said that in order to demonstrate good faith the government needed to remove A$12 billion ($10.41 billion) in mining tax-related revenue from the forward budget estimates.

“It is not possible to negotiate in good faith with a big hairy monster like that looking over your shoulder,” said De Lacy.

“In return the mining industry would be fair dinkum (genuine) in its desire to negotiate a fair return for the use of the non-renewable resources that belonged to all Australians.”

Additional Reporting Michael Perry and Jim Regan in Sydney; Editing by Ed Davies

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