Labor Party to show new flexibility on mining tax

JULIA GILLARD says dealing with the controversial mining tax will be her first concern as Prime Minister, and is leaving open the chance her government will back down over the proposed 40 per cent rate.

Ms Gillard used her first full day in the top job yesterday to introduce herself to world leaders, including the US President, Barack Obama, work on a strategy for talks with mining companies, and meet with her cabinet.

"My priority obviously is to ensure that we deal with the question of the mining tax," Ms Gillard said. "It has caused uncertainty, I think that uncertainty has caused anxiety for Australians."

Treasury officials had been inching towards an accommodation with the resources industry about parts of the tax. But negotiations will now be conducted on a more open footing after Ms Gillard and the Deputy Prime Minister, Wayne Swan, said all elements of the tax were on the table.

The government had previously insisted the 40 per cent tax level was not negotiable. However Mr Swan, who met with Ms Gillard and the Resources Minister, Martin Ferguson, early yesterday, indicated the government had limited the range of its demands. "I'm not going to speculate publicly about the scope of those negotiations except to say that we are committed to a profits-based tax and to getting a fairer share of the value of our mineral resources," the Treasurer said.

Before her first cabinet meeting as Prime Minister, Ms Gillard insisted she was not beholden to the union and factional support that helped elevate her to the prime ministership. The demise of Kevin Rudd also did not mean that hard, unpopular reforms were no longer possible. "It is completely absurd for anybody to look at my track record in this place and to conclude anything other than that I have made my own decisions. I am a person of strong mind and I made my own decisions," she said. "It would be completely absurd to conclude that I am not prepared to stump up to hard reform."

As well as Mr Obama - to whom Ms Gillard apologised for not being able to attend the Group of 20 conference in Chicago - she also spoke to the leaders of Indonesia, Malaysia, Britain and Canada.

Ms Gillard will be based in Canberra in the coming days, rather than tour the country to strengthen her profile. "We need to get the government back on track. To do that we need to step-by-step take a series of decisions, and that is best done while I am here in Canberra," she said.

The former Labor leader Mark Latham warned that Ms Gillard could find herself victim to the same forces that helped install her as Prime Minister. "The modern Labor Party is so focused on polling, so focused on marketing … it has given up on getting these reforms through," Mr Latham said.

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Miners resume hostilities over super tax

MINING critics of the super-profits tax have wasted little time in resuming their attack on it, which suggests the truce with Julia Gillard could be short-lived.

But as miners keep the pressure on the government, industry leaders also say they want to compromise with Ms Gillard. Two companies tipped to be among the big losers under the scheme - Rio Tinto and Macarthur Coal - took yet more shots at the tax yesterday while saying they were also hopeful about reaching a deal.

Macarthur's chairman, Keith De Lacy, dismissed consultation so far as "meaningless" and called on the government to remove revenue from the tax from its forward estimates. "It is not possible to negotiate in good faith with a big hairy monster like that looking over your shoulder," Mr De Lacy, a former Queensland treasurer, said. "Forward estimates should be the outcome of successful negotiations, not the starting point."

The Treasury has forecast that the tax would raise $12 billion in its first two years. Mr De Lacy said this assumption undermined the negotiations. If the government changed its estimates, he said the mining industry would be "fair dinkum" [genuine] in negotiating a policy that provided a "fair return" for Australians from natural resources.

The head of Rio Tinto's iron ore operations, Sam Walsh, said he hoped the stoush [fight] would be resolved before the election. "I'm very hopeful that with the recent changes in the structure of the government we can actually get in and engage and negotiate an arrangement," he said in Perth. But Mr Walsh also proclaimed the initial proposal "dead," and said he was "very frustrated" with the government's approach until now.

Owen Hegarty, the former managing director of Oxiana who is now vice chairman of the Chinese group CST, said Ms Gillard's actions had been "swift and positive" so far. "The simple fact that the 'negotiation' olive branch was offered in the earliest of paragraphs of the new leader's speech gives a clue, not only to the RSPT's deadly political potence, but to her determination to resolve it," Mr Hegarty said.

But market analysts doubt that the government and the miners will reach an agreement on the tax before the election. The head of resources at Fat Prophets, Nick Raffan, said the government appeared to be relying on the tax to bring the budget into surplus early, and they would be reluctant to make changes demanded by miners.

He said the most likely source of compromise would be a rise in the rate at which the super profit tax kicks in - 6 per cent under the current proposal. "The best outcome is probably a change in the threshold," Mr Raffan said. "I would think something north of 11 per 12 per cent would be more in the ball park."

A resource analyst at MineLife, Gavin Wendt, said he believed the government's pledge to negotiate with the mining industry was "electioneering," a view shared by many investors. "I am yet to be convinced that we are going to see any softening in the government's stance."

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Turn off cash tap from the wasteful "Building the Education Revolution" program, say senators

THE future release of billions of dollars from the Building the Education Revolution program should be suspended until a taskforce investigation presents its findings, an interim Senate report recommends.

The Liberal-majority committee called for the suspension of payments until the taskforce's chairman, Brad Orgill, releases his initial findings on 100 schools in August.

The government had planned to sign off in July on the remaining 40 per cent of primary school building spending - about $5.5 billion. The government is already holding back $75 million in payments to seven master contractors while claims of waste in NSW school projects are being investigated.

The committee also believes Mr Orgill needs to be given greater powers to access all costings and relevant contracts to identify waste in the $16.2 billion program.

The Prime Minister and Minister for Education, Julia Gillard, was unavailable for comment.

Evidence given to the hearing from NSW presented contradictory views on the stimulus program.

The NSW Teachers Federation gave evidence to the committee that there would be less than $10 billion in actual value from the $16 billion allocated under the scheme.

A teachers federation research officer, Dr Mary Fogarty, said there was evidence of management fees of up to 30 per cent. In most projects cited, management fees were upwards of 13 to 15 per cent.

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Global cooling hits Australia again

Warmists always say that hot weather proves global warming so ....

PERTH shivered through the coldest June night for four years and one of the coldest nights on record, with the temperature plunging to 0.1C. The city was at its coldest at 7.07am, when most people were climbing out of warm beds to head to work, with the temperature hitting a near-freezing 0.1C. It was equal fourth coldest night for Perth since records began at the Mt Lawley Bureau site.

Jandakot Airport recorded the coldest metropolitan area temperature, reaching -2C at 7.44am, but that was well short of the -3.4 on in June 2006. Perth Airport recorded 0.3C and Pearce RAAF base reached a minimum of -0.4C at 6.09am. Dwellingup, 97km south of Perth, also recorded -2C.

This morning was the coldest for June in Perth since 0.9 °C was recorded on June 18, 2006. Perth Metro's coldest night ever was -0.7 C on June 17, 2006. And it won't feel much warmer tonight, with a minimum of 2C forecast for Saturday morning.

The coldest ever night in June in Western Australia was -6C at Collie on June 17, 2006.

Light winds and clear skies plunged temperatures over much of the state, with Norseman in the Goldfields recording the state's lowest - a finger-numbing -4.7C.

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