Canberra resists mining lobby over tax proposal

Australia, the world's biggest shipper of coal and iron ore, has signalled it will press ahead with its mining profits tax without making big changes after holding initial talks with producers last month.

"The Government is absolutely determined to proceed with the tax within the framework that I outlined on May 2," Treasurer Wayne Swan told ABC radio yesterday. "There is a very strong case for them to pay more."

BHP Billiton, the biggest mining company, and Rio Tinto Group are leading a campaign to pressure the Government to water down the planned 40 per cent tax.

Prime Minister Kevin Rudd is failing to win over voters, with 41 per cent opposing the tax and 36 per cent in favour, a Newspoll survey published yesterday in the Australian newspaper shows.

Support for the Greens rose 4 percentage points to a record 16 per cent from two weeks earlier as the major parties battle over the tax, according to the telephone survey of 1149 people between May 28 and 30.

Both Labor and the opposition Liberal-National coalition slipped 2 percentage points in their primary vote to 35 and 41 per cent, the survey showed.

Rudd's Labor Party leads Tony Abbott's coalition 51 to 49 on a two-party preferred basis, after being tied two weeks earlier.

"The election is wide open," said Malcolm MacKerras, visiting fellow in political science at the University of New South Wales. "Even the slightest swing can create a landslide either way.

"Public opinion is very fluid, people are confused about the tax," said Mackerras, who expects the election to be held in October. "They tend to think the mining industry saved the economy from recession."

Treasury executive director David Parker, head of the consultation panel in talks with the resource industry, handed his first report to Swan on May 28, completing the initial phase of 18 months of negotiations. The tax is scheduled to be introduced in 2012.

The panel "is considering all of the concerns identified throughout those discussions", Parker told the Institute of Chartered Accountants in Australia forum in Melbourne on May 26.

Fortescue Metals Group, Australia's third-largest iron ore exporter, said last week that the Government was unwilling to compromise on the tax.

"It's just naive if anybody thinks that some of the biggest companies in the world, some of the biggest mining companies in this country, are simply going to lie down and agree to pay a bit more tax," Swan said.

Rudd and Swan say the industry is spending A$100 million ($124 million) to fight the tax.

- BLOOMBERG