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Gillard Takes Campaign for Mining Tax to Western Australia as Polls Narrow
Prime Minister Julia Gillard took her battle for a mining tax to Western Australia, a state whose commodities bankroll the nation’s economic growth, as polls narrow in the lead up to next month’s general election.
“There is a choice here,” Gillard told reporters in Perth today. Voters can support a tax that will “deliver benefits that will strengthen our economy” or scrap the tax as opposition leader Tony Abbott proposes, she said.
Gillard ousted Kevin Rudd as leader last month and scaled back his proposed 40 percent levy on mining “super profits” to win the backing of BHP Billiton Ltd., Rio Tinto Group and Xstrata Plc, and deprive Abbott of an election boost.
Support for Labor in the state fell to a record low of 26 percent before Rudd was ousted, according to a West Australian newspaper. About four times the size of France, the state generates a third of the nation’s exports and accounts for 62 percent of mineral production, 73 percent of natural gas and 64 percent of crude oil and condensate.
“Gillard was so desperate for a quick political fix,” Mathias Cormann, a Liberal senator and chairman of the Senate’s fuel and energy committee, said by phone from Canberra today. “This whole process has been very bad for our reputation as a destination for international investment.”
Tax Breaks
Mining levy revenue, forecast by Treasurer Wayne Swan at A$10.5 billion ($9.4 billion) in its first two years, will fund tax breaks for small businesses and the roads, rail links and ports that Labor says are needed to support the industry in Australia, the world’s biggest shipper of iron ore and coal.
Miners in Western Australia, which Gillard is using as a “cash cow,” will pay A$7 billion of that total, Cormann said. Earlier today, he issued the Senate’s report on the mining tax, calling for planned levy to be scrapped.
While Gillard reduced the levy to 30 percent on iron ore and coal profits, small companies say the tax will still cost jobs and deter investment.
If they “nail that sector, then it’s not going to grow,” Andrew Forrest, chief executive officer of Fortescue Metals Group Ltd., Australia’s third-largest iron ore producer, told Sky News Business today. “It’s discriminatory, it’s complex, and it was done in secret.”
Voters support Abbott’s Liberal-National coalition as a better economic manager by 47 percent to Labor’s 35 percent, while Labor’s overall lead narrowed to four percentage points, according to two Newspoll surveys published in the Australian newspaper on July 26 and 27. A week earlier, Gillard’s party held a 10-point lead over the opposition and led on economic management 42 percent to 41 percent.
Tax Dispute Alive
“If the prime minister thinks that the mining tax issue is dead and buried, she is wrong,” Simon Bennison, head of the Association of Mining and Exploration Companies Inc., said in Perth on July 26 as he restarted an anti-tax campaign supported by Forrest.
Australia mines everything from diamonds and titanium to nickel and zinc in an industry worth about 10 percent of the A$1.2 trillion economy. Demand for resources to fuel power stations and steel mills in China and India helped the country skirt the global recession.
To contact the reporters on this story: Marion Rae in Canberra at mrae3@bloomberg.net; Gemma Daley at gdaley@bloomberg.net
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