Gillard clearing the decks for election battle

The government has reached a compromise with miners over tax proposals, but MPs are unlikely to vote on it before the election. Photo / Grant Bradley

CANBERRA: Prime Minister Julia Gillard is rapidly clearing the decks for an election before the end of the year, settling the bitter row with miners that helped bring down predecessor Kevin Rudd and preparing to move on to asylum seekers.

With just one week under her belt as the nation's first female Prime Minister, Gillard is setting her own stamp on the Government, embracing a policy of inclusion and compromise that is filling in the political potholes that threatened to dump Labor from office.

Although the deal reached with miners on a new resources tax has still to be squeezed through a technical, legislative and parliamentary wringer, Gillard has moved to effectively neutralise it as an election issue.

The Opposition will continue to oppose the tax and use it as an electoral battleground. Said leader Tony Abbott: "Labor supports a great big new tax on mining. The Coalition doesn't. It's as simple as that. We will oppose it in Opposition and we will rescind it in government."

Greens Leader Bob Brown said Gillard could take nothing for granted and that Parliament would have the final say. But there is no chance the new tax will be presented to MPs before the election.

It will now disappear into a panel led by former BHP boss Don Argus to hammer out the fine print, while Gillard moves on to other issues.

The next headline item will be the sensitive question of asylum seekers and the need to balance compassion with the political reality of alarm in the suburbs at the armada of refugee boats that has crossed the Indian Ocean from Indonesia in the past year.

Under Rudd, the Government axed former conservative Prime Minister John Howard's "Pacific solution" of incarcerating asylum seekers in Nauru and Papua New Guinea, closed grim outback detention centres on the mainland and eased other draconian measures.

But the renewed upsurge in refugee boats has swamped what was the sole remaining detention facility on Christmas Island and again forced the transfer of detainees to the mainland, including a remote Air Force base in northern Western Australia previously condemned by human rights watchdogs.

Rudd also blocked new visas for asylum seekers from Afghanistan and Sri Lanka, the two major sources of asylum seekers. While the Government has claimed that the new surge in asylum seekers is part of a global crisis spurred by war and natural disasters, the Opposition has more successfully portrayed it as a response to Labor's more lenient policies.

Gillard has noted growing popular concern, and has promised to address fears with strong border control. What she intends has yet to be seen.

But the brokering of a framework deal with miners has demonstrated her ability to identify and address major election threats, spurred by a honeymoon with voters that has seen Labor catapult back into the lead in opinion polls.

Treasurer Wayne Swan yesterday identified her intervention as central to the deal reached on Thursday with miners after an eight-week impasse that played a key role in dooming Rudd's leadership.

Immediately after deposing Rudd, Gillard called a truce with the sector and opened new negotiations led by Swan and Resources Minister Martin Ferguson, with the heads of mining giants BHP Billiton, Rio Tinto and Xstrata.

The deal they reached is being portrayed by the Opposition as a backflip and has angered both elements of the mining industry and the wider business community, which will see a promised 2 per cent company tax cut halved.

The deal will also cut forecast Government revenues by A$1.5 billion ($1.8 billion), although Swan said this would be recouped by savings elsewhere - including the smaller company tax cut - and that the budget would still return to surplus within three years.

The mining sector has welcomed the deal, although it says much work remains to be done before it is finalised, and Xstrata has announced it will re-start suspended major projects in Queensland.

Unions have also applauded the agreement.

Under the deal the Government has moved from taxing "super-profits" at 40 per cent to a 30 per cent minerals resources rent tax applying only to iron and coal, with a more generous trigger point. Oil and coal seam gas will be embraced by the existing petroleum resources rent tax.

The detail, however, will bypass most voters.

Instead, what will remain is Gillard's success in brokering the deal so rapidly and a management style that is emphasising the difference between her approach and the more autocratic Rudd Administration.

"What I would say I've learned across my life is that you can work best if you get people around a table and have open, frank discussions," she said.

PAY DIRT
* Former Prime Minister Kevin Rudd had announced plans for a 40 per cent tax on miners' profits.

* Julia Gillard has negotiated a compromise agreement that reduces the rate to 30 per cent for coal and iron ore miners.

* Petroleum and gas operations will pay a pre-existing 40 per cent tax rate, the Government said.

* Smaller iron ore and coal companies, with annual profits below A$50 million ($61 million), will not be required to pay the new tax.