June 23, 2010 / 10:45 AM / 8 years ago

Mining tax in focus as Australia PM faces challenge

CANBERRA (Reuters) - Australian Prime Minister Kevin Rudd said he would call a leadership ballot for Thursday after a challenge by his deputy Julia Gillard, backed by disgruntled government members fearing electoral defeat later this year.

Australia's Prime Minister Kevin Rudd announces a leadership ballot at a news conference at Federal Parliament House in Canberra June 23, 2010. REUTERS/Andrew Taylor

Gillard, 48, would become Australia’s first female leader if she topples Rudd, but a Gillard government is expected to differ little in substance from one led by Rudd.

Rudd said on Wednesday he was confident he would win the vote but Australian media websites and analysts immediately started writing his political obituary.

“He’s a goner. You can stick a fork in him,” Monash University analyst Nick Economou told Reuters.

A takeover by Gillard, a left-wing politician with strong trade union roots, could set up a fiery election campaign — expected around October — where a proposed new mining tax could become an even hotter issue.

Gillard has fought miners over labour laws in the past.

Rudd has been bleeding voter support since April after shelving his main climate policy of a carbon trading scheme, a key platform for his election in 2007.

The planned “super profits” mining tax — which has been staunchly opposed by big miners like BHP Billiton and Rio Tinto — is also now worrying voters who are concerned it will damage the economy and risk jobs.

Such worries are despite a A$52 billion (30.3 billion pounds) stimulus package under Rudd’s centre-left Labour government which helped Australia avoid recession during the global crisis.

Some economic analysts saw a change of leadership and divisions within the government over the proposed 40 percent mining tax as a sign the policy may now be softened.

“Whilst it’s too early to predict a precise outcome, it has become increasingly clear that there is material opposition to the tax from within Rudd’s own party,” said Michael Rawlinson at Liberum Capital in London.

CLOSED-DOOR MEETINGS

Rudd told a news conference Gillard had asked him to call the leadership ballot, which will be held at 9.00 a.m. (2300 GMT Wednesday). Gillard confirmed her challenge but would not comment further.

“I believe I am quite capable of winning this ballot tomorrow,” Rudd said on Wednesday after hours of closed-door meetings with Gillard and senior ministers.

Even if Rudd retains the leadership, his political standing with voters may be seriously damaged as he battles a resurgent conservative opposition led by Tony Abbott, a former university boxer who also once trained for the Catholic priesthood.

His slump in opinion polls has been so dramatic that he now risks becoming the first one-term prime minister since 1932 if he survives the leadership challenge but loses the election.

Rudd said he was proud of his achievements, such as signing the Kyoto Protocol on climate change, apologising to disadvantaged Aborigines and steering Australia through the global financial crisis.

“We have made mistakes on the way through but in navigating this economy through the worst (financial) crisis the world has seen, and keeping hundreds of thousands of Australians in jobs who would otherwise have been in unemployment queues, of that I am fundamentally proud,” Rudd said.

Rudd said he would not change policies on asylum seekers and climate change if he wins the leadership ballot.

Rudd has been under attack for failing to have a hostile upper house Senate pass his carbon trading scheme, which he has now postponed until 2011.

“The only viable option for Labour now is for Gillard to win,” Economou said. “I think she will have a firmer emissions trade scheme position and will put that back on the agenda.”

Rudd’s unsuccessful steps to stop boatpeople also angered both voters opposed to asylum seekers and those who demand a more humanitarian policy.

“This party and government will not be lurching to the right on the question of asylum-seekers though some have counselled us to do so,” said Rudd.

Writing by Michael Perry; Editing by Paul Tait

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