Oz Election Thread #4 - Gillard's Labor

... Minerals bosses have been in talks with the Prime Minister and her senior ministers today and it is believed the government is ready to back down on its resources super profits tax.

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In what insiders are describing as a make or break day in the mining tax saga, a meeting has been underway involving Marius Kloppers of BHP, David Peever of Rio Tinto, Peter Freyberg, from Xstrata, Ms Gillard, the Treasurer, Wayne Swan, and the Resources Minister, Martin Ferguson.


The miners are refusing to back away from their key demands that the tax does not apply to existing projects and that the 40 per cent headline rate not apply to all commodities.

Under former Prime Minister Kevin Rudd, these conditions were non-negotiable, but Ms Gillard is keen to shut down the issue to clear a path to call an election and is prepared to give ground on both.

One source said the Labor government was prepared to cede "pretty much everything" to end the saga. ......

I wonder how much influence mining had with the labour power brokers on Rudds dismisal.

If we are to believe a number of recent media reports, Rudd & the mining bosses had reached, or were very close to reaching, a compromise agreement on the mining tax.

Mining tax breakthrough
MALCOLM MAIDEN
July 1, 2010 - 2:01PM/the AGE

The Gillard government and Australia's big three miners have made significant progress in talks about a resources tax compromise and are now on the brink of an agreement that would end one of the biggest government-private sector brawls in history.

It's understood that BHP Billiton, Rio Tinto and Xstrata have agreed with the government now on the key elements of a new resources tax structure, including the creation of a new trigger point for the imposition of the tax, set at the 10-year Commonwealth bond yield plus 7 per cent.

With Prime Minister Julia Gillard in far north Queensland today for the funeral of killed Afghanistan soldier private Ben Chuck, the formal announcement of a deal could be held over.

The proposed new trigger point for the ''super profits'' tax to kick in is currently equal to a rate of about 12 per cent, around about the average cost of capital in the mining industry. The original tax cut in above the bond yield only, currently just over about 5 per cent.

The government is also believed to have resolved the miners' concerns that the tax will be retrospective in its application, by agreeing that the miners can inject their existing assets including the huge Pilbara iron ore mines and the rich east coast coal mines into the revised tax regime at market value. This is a huge concession.

Retrospectivity, the rate at which the tax is imposed and the headline rate — set originally at 40 per cent — were the three key mining sector objections to proposed new tax. It was unclear at midday, east coast time, what deal had been struck on the headline rate, but the government is believed to have also given ground on this point, with people with knowledge of the talks saying the two sides were "nearly there" on an agreement.....

Greens will vet mining tax deal in Senate: Bob Brown
The Australian

GREENS leader Bob Brown warned today that any deal on the resources super-profits tax struck behind closed doors could be amended in the Senate.

Senator Brown predicted a “cave-in” by the Gillard Government to the mining industry as he responded in Sydney to reports Rio Tinto boss Sam Walsh has demanded an iron-clad guarantee from Julia Gillard that any deal struck in the current negotiations will remain intact after the federal election.

“There's a small thing called democracy here, and a big thing called the Australian parliament,” Senator Brown said.

“Unless Labor gets control of both houses, and that's not going to happen, the agreement will be subject to parliamentary scrutiny.”

He said the ability of the Greens to improve such a package had been “established” in negotiations over the Government's economic stimulus package last year.

“We saved the country from recession in the process,” he said.

Senator Brown, who wants part of the estimated $12 billion windfall from the tax paid into an infrastructure fund, said the focus of the Greens “is to see the Australian public gets a dividend out of this, not just the mining barons”.

“We've got an eye on the key factor, which is the $12 billion in the forward estimates that's going to come from this tax,” he said.

“We don't want to see that $12 billion reduced. Each billion that goes back to the mining industry, and will in substantial part flow overseas, is a billion that has to be made up for in some other way, against the public interest.”

I still reckon Gillard is going to announce the settlement and then the election in short order.

As long as the buggers pay a decent amount I'm good to go.

The proposed new trigger point for the ''super profits'' tax to kick in is currently equal to a rate of about 12 per cent, around about the average cost of capital in the mining industry