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September 9, 2010

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Tensions emerge in Aussie coalition

THE first full day of Australia's new minority government revealed tensions yesterday between the deputy prime minister and a kingmaker independent legislator over plans to make mining companies pay more tax.

The disagreement between Deputy Prime Minister Wayne Swan and Tony Windsor underscores the fragility of the center-left Labor Party administration that could be brought down by a single lawmaker defecting.

Gillard left Canberra, the capital, to attend yesterday's funeral of an Australian soldier killed in Afghanistan. She will return to Canberra today, when she could name her Cabinet.

The Cabinet will include Kevin Rudd, the prime minister whom Gillard ousted in an internal party mutiny in June, and might include independent Rob Oakeshott. Oakeshott has yet to accept the Cabinet job offer.

As part of a deal to get Windsor and Oakeshott to support a Labor government on Tuesday, Gillard and Swan promised to hold a public summit of tax experts by June 30 next year to discuss options for tax reforms recommended last year in a Treasury department report.

But Swan surprised Windsor by saying that Labor's plan to impose a new 30 percent tax on iron ore and coal miners' profits, which are burgeoning with the voracious demand for raw materials from Chinese and Indian manufacturers, will not be submitted for review at the summit.

Swan said some of the 10.5 billion Australian dollars (US$9.6 billion) to be raised from the tax over two years was needed to pay for other sweeteners offered to Windsor and Oakeshott, including A$10 billion for upgrading rural schools, hospitals and other infrastructure outside major cities.

"There are going to be vigorous debates and the mining tax is one where we do disagree," Swan said.

Swan said he hoped to introduce the mining tax legislation in Parliament as soon as possible.

Windsor said he understood that the mining tax plan would be scrutinized at the tax summit.

"I thought it was going to be included in any discussions in relation to taxation" and the Treasury report, Windsor told Australian Broadcasting Corp radio.

After that interview, Swan said he had "a very constructive discussion" with Windsor on the tax.

Opposition leader Tony Abbott has refused to back the mining tax because Abbott argues it would reduce investment in the industry and cost jobs.





 

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