Battling a slide in support in polls, Australian Prime Minister Kevin Rudd may have to re-shape his planned mining tax in case he needs support from independent lawmakers to keep a grip on power after looming elections. Elections are due within six months and Australia could follow the lead of Britain's divided parliament, with disgruntled voters moving away from Rudd's Labor, but still reluctant to throw support behind conservative opposition leader Tony Abbott. The latest Reuters Poll Trend pointed to a hung parliament and found Rudd could need support from three elected independent lawmakers to stay in office. He would win one more seat than the opposition, but would not control a majority. “It is a really healthy moment,” independent lawmaker Rob Oakshot told Reuters. “That balance of power issue is coming into focus. Politics will have to play out on the floor of parliament, not in the back rooms.” Rudd has angered the booming mining industry with his plan for a new 40 percent super profits tax to start in July 2012. Miners say the tax will force investment offshore, harming jobs and expansion plans just when Chinese demand is rebounding. Laws underpinning the tax will go to parliament in 2011, after consultations with the mining giants now taking place, amid industry and media expectations that Rudd will have to water down the tax's definition of a “super profit”. Elections can be held any time from July, but are widely expected in October. Rudd's poll support has slumped in the past two months after he dumped several policies and shelved a landmark emissions trade scheme for at least two years. Despite his recent poll slump, most analysts still consider Rudd the favorite. Independents open to support Rudd All three current independents support the principle of the new profit-based tax, meant to replace a series of state-based royalties, but all want changes. “The new tax is a good idea, a good principle, but there has to be a different approach,” said independent Bob Katter, whose vast Queensland seat includes Mt Isa, where global miner Xstrata Plc runs a huge copper, zinc and lead mine. “I remain positive about a compromise,” Katter said, adding the current 40 percent headline rate was too high. The three independents represent provincial electorates, where mining is often a major source of jobs as well as export dollars. Two, Katter and New South Wales-based Oakshot, were once members of the conservative National Party, which forms part of the formal opposition in Australia. But all three remain open to supporting Rudd's Labor to ensure a stable government if the election delivers a hung parliament. In interviews with Reuters, the independents said they would make their decision on who to support in a hung parliament based on issues of concern to rural Australia, rather than political leanings or former conservative allegiances. “I wouldn't say a hung parliament is likely, but it is always a possibility,” said the senior independent Tony Windsor, who for four years held the key swing vote in a hung parliament in Australia's most populous state of New South Wales. “If it is a hung parliament, regional Australia will do very well,” Windsor said. Windsor said he expected the government and mining companies would reach a compromise on the new mining tax, particularly on the starting super profit threshold pegged to the 10-year government bond yield of about 5.4 percent. “I'm in favor of a rent resource tax rather than royalties. But my reading is that the starting point, the 10-year bond rate, is too low. I expect the government will move on this, and they should,” he said. Newspaper reports this week have suggested the rate could be more than doubled to 12 percent. Treasurer Wayne Swan has said he would not rule in or out any changes to the tax. Katter, an outspoken advocate for regional and remote communities, supports mining but also nominates water supplies and efforts to re-invigorate country towns as key concerns he would want addressed by Rudd in return for his support. Oakshot's electorate takes in the Gloucester basin, where coal miners are fighting with farmers over access to prime farming lands lying over rich mineral seams. Oakshot is keen to protect food producers, and is a champion of the government's shelved carbon emissions trade scheme. He also supports the need to reform mining taxes, but won't commit to backing Rudd's current plan. “Getting rid of state-based royalties is an entirely sensible decision. The tweaking of the scheme is where the politics is playing out,” he said.
