Australian Prime Minister Julia Gillard won a major victory that may help revive her Labor Party’s struggling fortunes after divisive laws for a profit tax on mining companies narrowly passed through parliament’s lower house.
After 18 months of acrimonious debate that brought down former Australian prime minister Kevin Rudd, key crossbench lawmakers agreed after a marathon sitting that extended into the early hours of yesterday to back Gillard’s minority government on the 30 percent profit tax in return for minor concessions.
Gillard wants the new tax on mining profits to pay for a company tax cut and boost payments into worker pension funds, to spread the benefits of Australia’s resources boom to parts of the economy struggling with the global downturn.
“If we want to leave a stronger Australia for our children, if we want to build the nation, then it takes brave policy proposals like this which spread the bounty of our country to every corner of the nation,” Australian Treasurer Wayne Swan told parliament.
The bills passed by 73 votes to 71 with support from the Greens after the government committed to find A$70 million ($68.4 million) a year of budget savings by delaying a tax break on overseas borrowings.
The legislation will now go to the upper house Senate early next year, where the government and the Greens have the numbers to ensure it is passed into law.
The mining tax, being eyed by other resource-rich nations in South America and Africa, is a key policy for Gillard, who struck a deal on the tax with global miners BHP Billiton, Rio Tinto and Xstrata in July last year.
Polls show her government would be wiped out if an election was held now and Gillard has pinned her hopes of a voter turnaround, and re-election in 2013, on higher payments into worker pension funds linked to the tax, as well as acceptance of a carbon tax designed to curb greenhouse gas emissions and fight climate change.
“For a prime minister with a reputation for policy disasters, deals coming undone and even circumstances outside her control conspiring against her, this week must have had an almost dreamlike quality,” political commentator Laura Tingle said in the Australian Financial Review newspaper.
Industrial and Commercial Bank of China, the world’s biggest lender by market value, said it was already starting to see mining projects in Australia being held up because of the impending mining tax.
“We now have already started to perceive part of the unwillingness to proceed with some of these projects,” Han Ruixiang (韓瑞祥), the head of ICBC Australia, told a business lunch in Melbourne.
“So I think it will negatively affect future investment from the Chinese corporate sector into Australia,” he said.
The tax is scheduled start on July 1 next year and is estimated to raise A$7.7 billion (US$7.5 billion) in its first two years, which is said to be earmarked to fund company tax breaks and compensate businesses for higher payments into compulsory worker pension funds.
It is also said to be earmarked to pay for billions of US dollars of investment in infrastructure in regional Australia, particularly the key mining states of Western Australia and Queensland.
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