Australian PM may call election within days-media

July 13, 2010 By Leave a Comment

SYDNEY, July 12 (Reuters) – Australia’s ruling Labor party is set for a narrow victory in upcoming elections, two new opinion polls showed on Monday, as speculation grew that Prime Minister Julia Gillard could call an election as soon as this week.

While the robust economy, in its 17th year of growth, should be a winning ticket for Gillard, voters believe the opposition is the better economic manager, according to the polls.

Gillard has also been seeking to reframe government policy in key areas such as climate and asylum seekers.

Opinion polls published in Fairfax and News Ltd newspapers put Labor ahead of the conservative opposition at 52 percent versus 48 percent. For Reuters Poll Trend [ID:nSYU010167]

“They’re in front and they’ve got a primary vote that can deliver victory,” John Stirton, research director with pollster Nielsen, told local radio. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

TAKE-A-LOOK-Australia’s Greens to sway policy [ID:nSGE667085]

Reuters Poll Trend [ID:nSYU010167] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Gillard, 48, is Australia’s first woman prime minister. She replaced Kevin Rudd on June 24, in a move that has resurrected Labor’s electoral standing and reshaped Australian politics.

Speculation Gillard may be set to call an election grew after Governor-General Quentin Bryce delayed leaving for a trip to Europe by a day until Saturday, sparking talk that Gillard could ask the representative of Australia’s head of state, Queen Elizabeth, to dissolve parliament as early as this week.

Gillard declined to comment on the timing when questioned by reporters on a trip to Adelaide, but said in a speech “in the days to come I will be putting forward more detailed arguments about some of the biggest challenges facing our nation.

“I will be explaining the steps I think we need to take and asking for people’s consideration of those steps. I will ask for the Australian people’s trust to move Australia forward,” she said.

Political commentators said Gillard’s words meant she may seek to call an election on Thursday or Friday this week.

But commentators warned that Labor still risked losing an election expected in late August. [ID:nSGE6600MU]

“The coming of Julia Gillard to the Labor Party leadership appears to have stopped the decay in her party’s fortunes,” said The Age newspaper’s national editor Tony Wright.

“She has stopped the Rudd rot, though she hasn’t been able to make any serious inroads into Labor’s loss of the disaffected to the Greens.”

Labor took power in 2007 promising to tackle climate change, but under Rudd failed to implement a carbon trading scheme, a disappointment that saw Green voters desert Rudd.

Labor needs to woo them back to ensure victory over the Liberal-National opposition.

Gillard has acted quickly on key policies, ending a three-month row with mining companies over a new tax that was hurting the government in the polls, and proposing a regional asylum processing centre, possibly in East Timor, to curb boatpeople arrivals. [ID:nAUTAX]

The tax deal has been generally accepted by voters, but her asylum policy has received criticism for being in its infancy.

The cabinet will meet on Tuesday and was expected to discuss a new climate policy, but it is not clear whether Gillard will go as far as announcing a carbon tax as an interim measure before a full blown carbon trading scheme can be created.

She has said a carbon price is inevitable, probably via a market-based scheme, but that any decision on such a scheme would not be until 2012 and not without community consensus.

But voters want quick action on climate change, according to opinion polls and public comments in local media.

Until now the political risk of announcing a carbon price ahead of an election has been the threat of rising power bills. But two new surveys suggest power bills will rise and energy investment will fall because of a lack of a carbon price.

The lack of an emissions trading scheme and price on carbon would cost the Australian economy and consumers an extra A$2 billion by 2020 due to investment in less energy efficient coal-fired power plants, The Climate Institute estimates. (Additional reporting by Ed Davies; Editing by Alex Richardson)

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New Australian PM pledges to end mine tax row

June 26, 2010 By Leave a Comment

(Reuters) – New Australia Prime Minister Julia Gillard pledged to end a mining tax row as soon as possible after spending her first day in power speaking to world leaders and assuring Washington of Canberra’s commitment to Afghanistan.

World | Stocks | Global Markets

The Labor government appointed Gillard as prime minister on Thursday, fearing defeat at elections later this year as voters deserted incumbent Kevin Rudd over his handling of the tax row and a failed climate policy.

Global miners such as BHP Billiton and Rio Tinto say a planned 40 percent “super profits” tax will damage the resource-dependent economy which underpinned Australia through the global financial crisis.

“My priority obviously is that we deal with the question of the mining tax,” Gillard told a news conference.

“It has caused us uncertainty. I think that uncertainty has caused anxiety for Australians. I want to make sure Australians get a fair share of our mineral wealth, but we want to genuinely negotiate.”

Deputy Prime Minister and Treasurer Wayne Swan signaled on Friday the government was open to renegotiate the tax headline rate. Miners want the tax scrapped or for the government to lower the 40 percent headline rate and raise the 6 percent profit threshold to 12 percent.

No fresh mine tax talks are expected before Gillard’s new cabinet is sworn in and with Swan at the G20 meeting until Wednesday.

Global miner Xstrata Plc on Friday called on Gillard to exclude existing projects from the proposed tax.

“We will participate in those negotiations in good faith but believe that it is of the utmost importance that negotiations are concluded as rapidly as possible to avoid further damage to the industry’s growth prospects in Australia,” Xstrata said in a statement to Reuters.

WORLD LEADERS

Gillard, Australia’s first female prime minister, said she had also spent her first morning as leader, “introducing” herself to other world leaders, including U.S. President Barack Obama.

“I fully support the current deployment and I indicated to President Obama that he should expect to see Australia’s efforts in Afghanistan counting,” she said.

Australia has about 1,500 troops in Afghanistan and will start to reduce troop numbers in two to four years after Afghan forces take over security operations in Uruzgan province.

Sixteen Australians have been killed in Afghanistan since late 2001. An opinion poll published on Monday found 61 percent of those surveyed believed Australia should withdraw its troops, while 24 percent believed troop numbers should be maintained.

Gillard is also not expected to shift policy toward China, Australia’s largest trade partner and a big buyer of commodities such as iron ore and coal.

Unlike her predecessor Rudd, a Mandarin-speaking former diplomat, Gillard has little foreign policy experience and is expected to rely more on current Foreign Minister Stephen Smith. However, analysts said could also appoint Rudd as her foreign minister.

Miners welcomed Gillard’s appointment, but called for a “sign of good faith” that the government was genuine in its desire to resolve the tax row.

“This is a major breakthrough as previous negotiations were never serious,” said Macarthur Coal Chairman Keith De Lacy.

But De Lacy said that in order to demonstrate good faith the government needed to remove A$12 billion ($10.41 billion) in mining tax-related revenue from the forward budget estimates.

“It is not possible to negotiate in good faith with a big hairy monster like that looking over your shoulder,” said De Lacy.

“In return the mining industry would be fair dinkum (genuine) in its desire to negotiate a fair return for the use of the non-renewable resources that belonged to all Australians.”

(Additional Reporting Michael Perry and Jim Regan in Sydney; Editing by Ed Davies)

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Australia’s Gillard unlikely to shift foreign policy

June 26, 2010 By Leave a Comment

(Reuters) – Australia’s foreign policy and strategic reliance upon the United States will be unlikely to change after Julia Gillard replaced Kevin Rudd as prime minister, analysts said on Friday.

World

Gillard was sworn in as Australia’s first female prime minister on Thursday after the ruling Labor Party dumped Rudd due to falling opinion poll support ahead of elections due before the end of the year.

She spoke to U.S. President Barack Obama and Indonesian President Susilo Bambang Yudhoyono on Friday, and told reporters she remained committed to the 60-year Australia-U.S. strategic alliance and would maintain Australian forces in Afghanistan.

“Nothing will change. I can’t see that she will make any changes to foreign policy,” Michael McKinley, from the Australian National University’s school of international relations, told Reuters on Friday.

“She has reassured the Americans that Australia will be as obsequious as we have been in the past. And I can’t see her changing our commitment in Afghanistan, or to the U.S. alliance.”

Rudd, a Mandarin-speaking former diplomat, kept tight control over the foreign affairs portfolio. Gillard, however, is likely to focus more on domestic issues as she tries to rebuild voter support ahead of national polls expected around October.

That means Gillard could retain Stephen Smith as foreign minister when she announces her cabinet, although there is strong speculation she could give Rudd the foreign affairs portfolio as a consolation for losing the prime ministership.

“If Rudd wants it, he would get it,” McKinley said, adding Rudd might prefer not to join the Gillard cabinet until after an election.

Andrew O’Neil, director of the Asia Institute at Griffith University, said it would be difficult to see any changes in Australia’s key relationships under Gillard because the Labor Party was committed to a strong regional focus.

“But it is equally hard to see how she will be able to match Rudd’s natural affinity with, and genuine knowledge of, Asian affairs,” O’Neil wrote on the website of foreign affairs think tank the Lowy Institute on Friday.

“The fall of Kevin Rudd also robs President Barack Obama of one of his key political allies on Afghanistan, climate change, and global economic reform. The two have struck up a close working relationship — an ideal fit as two like-minded policy wonks — and Obama will probably miss Rudd’s close counsel on these, and other, issues,” he said.

Foreign policy analyst Graeme Dobell, in a column for the Lowy Institute, said Gillard would make little difference to the key U.S. relationship.

“Australia has its first left-wing Labor prime minister in a lifetime, but one thing that will not change is Labor’s adherence to the U.S. alliance,” Dobell said on the institute’s website (www.lowyinterpreter.org/).

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Major Australia investors urge quick action on climate

June 26, 2010 By Leave a Comment

(Reuters) – A group of major investors on Friday urged Australia’s new Prime Minister Julia Gillard to take swift action to fight climate change and cut carbon emissions blamed for heating up the planet.

Green Business | COP15

Gillard should outline her road map on climate change as soon as possible and set priorities for consensus building over the issue, said the Investor Group on Climate Change (IGCC) that represents institutional investors with more than $500 billion under management.

“We consider that climate change presents real risks to the Australian economy, which must be addressed,” the group said in a statement.

Gillard moved to revive a stalled carbon trading scheme on Thursday, within hours of becoming prime minister after incumbent Kevin Rudd stepped down. Opinion polls had shown a slump in support for Rudd and he was also unpopular within his own party.

Gillard pledged more consultation with industry and voters to win support for a price on carbon pollution, an issue that has split the nation.

Rudd had championed the carbon trading scheme but it was rejected by a hostile Senate for a third time in March.

His decision in April to shelve the scheme till 2013 angered voters who wanted action on climate change and was a major reason for the plunge in his popularity in opinion polls.

IGCC said its members would continue to support strong climate change policy action but neither the government or the main opposition party had an adequate policy to address risks to the Australian economy from global climate change.

Australia is the world’s top coal exporter and among the highest per-capita emitters of planet-warming carbon dioxide, with coal used to generate about 80 percent of electricity.

While the government has embraced renewable energy and energy efficiency, analysts say putting a price on carbon emissions is the most effective way for Australia to cut greenhouse gas pollution.

“We see indications of significant policy progress in China, Europe and in many U.S. states and do not accept that stalled international progress is sufficient reason for further policy delay in Australia,” said IGCC chief executive Nathan Fabian in the statement.

U.N. climate talks on a successor to the Kyoto Protocol, whose first phase ends in 2012, have bogged down and agreement on a broader pact covering all of the world’s major greenhouse gas emitters is now thought to be more likely by the end of 2011.

(Reporting by Bruce Hextall; Editing by David Fogarty)

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Q+A: PM Gillard changes Australian govt election hopes

June 25, 2010 By Leave a Comment

(Reuters) – Australia’s ruling Labor party elected Julia Gillard as the nation’s first woman prime minister on Thursday after former prime minister Kevin Rudd quit on losing the support of his lawmakers.

World

Gillard, 48, has promised a more consensus-driven government to help her party reconnect with disgruntled voters after months of poor opinion polls and with an election expected around October.

Here are some questions and answers on how Gillard’s appointment changes the political outlook in Australia. IS

LABOR MORE LIKELY TO WIN THE NEXT ELECTION?

Gillard’s election should help Labor re-build voter support ahead of the election, and should give the party a stronger chance of victory. Opinion polls regularly find Gillard to be more popular than Rudd, and betting agencies have already reported Labor is now the firm favorite to win the election.

Gillard has long been one of the government’s best performers in parliament with her ability to sell policies and deflect political attacks. Her promise of a consensus style of government is also in stark contrast to Rudd’s sometimes autocratic style.

Gillard also has wide voter appeal to both men and women, compared to conservative opposition leader Tony Abbott, a former Catholic seminarian who regularly polls poorly with women voters.

She is also likely to now enjoy a political honeymoon period, and every action of the first woman to lead the country is likely to be closely reported by media early in her time in charge.

DOES THIS CHANGE THE ELECTION TIMING?

Gillard’s appointment is unlikely to change the timing of the next election, which is due by the end of the year. She is likely to spend the coming months traveling the country, and making sure Australian voters know who she is and where she comes from.

She has also called a truce in the government’s damaging fight with miners over a proposed 40 percent profits tax. She is likely to need time to broker a deal ahead of the election.

An early poll in August would be risky for a new leader, still getting used to the wider responsibilities of the job. Gillard’s home state of Victoria also has elections set for late November. Both point to an election in early to mid October.

WHAT POLICIES MAY CHANGE?

Gillard has already signaled a more consultative approach on the mining tax and has indicated a stronger focus on the postponed emissions trading scheme if she wins the next election

But Gillard could also make changes to controversial asylum seeker policies. More boatpeople arrivals in recent years has been a simmering issue on talkback radio, and Labor has been vulnerable to opposition attacks blaming Rudd’s policies for the arrivals. At her first media conference, Gillard signaled a firmer stance after stressing she understood why Australians were disturbed about refugee boats arriving in Australian waters.

HOW WILL THE ELECTION BATTLE SHAPE UP?

Gillard’s elevation changes the political battle with opposition leader Tony Abbott.

Abbott is a blunt speaking conservative who grabs headlines with his combative style. Gillard can be a sharp-witted debater, but also retains a calm and composed demeanor when under attack.

Abbott may need to take care in his attacks on Gillard, to ensure the election does not become about personalities, particularly as Gillard’s election adds a gender issue to the political debate.

Gillard, in her first news conference as prime minister, has already made it clear she will focus her political attacks on Abbott’s views on workplace laws, and on health and education. Abbott has stressed that while Gillard is a new face for Labor, she supports the same policies as Rudd.

(Editing by Ed Davies and Miral Fahmy)

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Australia’s first woman PM an old-school Labor leader

June 25, 2010 By Leave a Comment

(Reuters) – Australia’s new prime minister, Julia Gillard, has become the first woman to lead her country, but her leadership style evokes the past, not the future.

World

A quick-witted politician, with a broad Australian accent and a working-class pedigree, Gillard is in many ways an old-school Labor Party politician, more reminiscent of Labor prime ministers from the 80s and 90s than her bookish predecessor, Kevin Rudd.

Like previous Labor prime ministers Bob Hawke and Paul Keating, Gillard stands in stark contrast to Rudd, a Mandarin-speaking ex-diplomat who broke the mold as a Labor leader in 2006 when he took control of a then demoralized opposition.

Rudd won a landslide election victory in 2007, ousting veteran conservative leader John Howard, and then dominated the opinion polls until, suddenly, last April the fairy tale ended.

Thanks to a few big policy failures, Labor’s “Prince Charming” began losing the confidence of voters and, just as suddenly, Gillard was emerging as a new but much more familiar Labor hero, a working-class politician with a talent for plain-speaking.

Where Rudd once told lawmakers about “evidence-based policy” and explained in heavy detail the complexities of his tax or climate-change policies, Gillard stood in parliament on Thursday and launched straight into vintage Labor rhetoric.

“I grew up in a home of hard-working parents,” began the 48-year-old daughter of a former policeman and rail clerk.

“I believe in a government that rewards those who work the hardest, not those who complain the loudest,” she added.

“I believe in a government that rewards those who, day in and day out, work in our factories and on our farms, in our mines and in our mills, in our classrooms and in our hospitals, that rewards that hard work, decency and effort.”

Gillard arrived in Australia, aged four, in the 1960s from south Wales, a cradle of Britain’s own Labour movement. Her father had gone to work before finishing school, his family too poor to support him through higher education.

Gillard initially lived in a migrant hostel in the rural town of Adelaide before her father bought a house. She studied law at university, where she got involved in politics and then became a partner in a law firm specializing in class actions and personal injury cases before working as a political adviser.

CONSENSUS BUILDER

Gillard was first elected to parliament in 1998, and quickly rose to become a leading light of the Labor left, becoming shadow health minister in 2003 and then backing Rudd for the leadership in return for the deputy Labor leadership.

Gillard kept in Rudd’s shadow until this year’s opinion-poll meltdown when, without apparent hesitation or squeamishness, she made her move just months away from a general election, just as Hawke did on the eve of another election in the early 1980s.

Gillard seems to model her leadership style on the Hawke era, when cabinet forged policy by consensus — another departure from Rudd, whose corporate-style management rankled Labor MPs.

“Her consultation skills are fantastic,” said one senior industry figure who negotiated opposite Gillard on labor-market reforms. “She is bloody good,” he told Reuters.

That will be good news for global miners that are threatening to pull more than $20 billion in investment unless the government overhauls its proposed 40 percent mine-profits tax. Gillard has refused to drop the tax so must negotiate a solution quickly.

Even if Gillard shares Hawke’s famed negotiating skills, and Keating’s sharp wit, she also faces a challenge that no previous Australian leader has ever known: being a woman in power.

She has long attracted headlines for her hair, which she recently restyled and dyed an auburn shade instead of its natural ginger, her partner who is a hairdresser and her decision not to have children.

One conservative lawmaker even once remarked her unmarried status made her unfit to govern. He later apologized for the comment but, in the socially conservative heartland of middle-class Australia, it can be an issue.

“She’s not married is she? No children either,” remarked Elvie Santos, a legal secretary, when asked during her lunch break on Thursday whether she liked Gillard.

But she added: “Let’s give her a try. You never know.”

(Additional reporting by James Grubel; Editing by Ed Davies and Miral Fahmy)

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Fortescue chief cheers move to negotiate on mine tax

June 25, 2010 By Leave a Comment

June 24 (Reuters) – Australian iron ore miner Andrew “Twiggy” Forrest on Thursday welcomed overtures by Australia’s new prime minister Julia Gillard to negotiate over a proposed new mining tax.

Basic Materials

Forrest, chief executive of Fortescue Metals Group (FMG.AX), has been at the centre of attacks on a tax that he described as a veiled act of nationalisation of Australia’s mining sector by former Prime Minister Kevin Rudd.

“Ms Gillard and her new government have realised that government policy is best effected through open and honest consultations with the Australian people and industry,” Forrest said in a statement. (Reporting by James Regan; Editing by Ed Davies)

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Australian Finance Minister Tanner to retire

June 25, 2010 By Leave a Comment

June 24 (Reuters) – Australian Finance Minister Lindsay Tanner on Thursday said he would retire at the coming national election and would not re-contest his marginal Melbourne seat.

Tanner made the announcement in parliament, but said his decision was not related to the ruling Labor Party’s decision to elect Julia Gillard as prime minister to replace Kevin Rudd.

(Reporting by James Grubel; Editing by Ed Davies)

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UPDATE 1-Australia govt, Telstra agree on broadband project

June 21, 2010 By Leave a Comment

CANBERRA June 20 (Reuters) – Australian phone giant Telstra Corp (TLS.AX) agreed on Sunday to help build a national broadband network worth up to $37 billion, a deal that could win votes for the government and ease uncertainty for Telstra investors.

Under the deal, Telstra agrees to convert its old copper-wire network into a superfast web of optic-fibre and then rent it out to the government’s National Broadband Network Company (NBN Co) in return for A$11 billion ($9.6 billion) in long-term payments.

Australia has slower and more expensive Internet services than many rich nations, a problem viewed as a serious economic bottleneck, but Telstra had been reluctant to become involved with such a costly, political and state-planned project.

That changed last year when the government threatened to split Telstra up and force it to sell one of its crown jewels, a stake in pay-TV firm Foxtel, unless it cooperated. Since then Telstra shares have mostly underperformed the wider market.

“The war is over,” Communications Minister Stephen Conroy said in announcing the heads of agreement with Telstra.

The details of the non-binding deal have yet to be finalised but it envisages NBN Co effectively leasing Telstra’s fixed-line network. In today’s money, the long-term income stream would be worth a total A$11 billion for Telstra, the two parties said.

Telstra will not take equity in the broadband network, which still faces an uncertain future, given the conservative opposition has promised to scrap it if they defeat Prime Minister Kevin Rudd at general elections expected to be held in October.

“It is a commercial transaction which commits NBN to pay for certain prices for access to Telstra assets,” Conroy said. “There is no equity involved,” Conroy said.

PM HOPES BROADBAND PLAN WILL WIN VOTES

Rudd hopes the Telstra deal will remove the last major roadblock for the broadband network, which he promised on assuming power in 2007, and will enable him to tell voters at the next election that he is fulfilling his pledge.

Rudd’s popularity has been sliding in the run-up to the election, with opinion polls suggesting he could lose. Voters are particularly upset at his recent decision to shelve another 2007 election pledge: to set up a national carbon-reduction scheme.

For Telstra shareholders, the agreement at least eliminates a major source of uncertainty over Telstra’s share price.

By signing up to the government’s broadband network plan, Telstra can now keep its stake in Foxtel.

“This agreement reflects a commitment by all parties to reaching a mutually beneficial outcome for Telstra investors, customers, employees and the industry,” Telstra Chairman Catherine Livingstone said in a statement.

The Telstra agreement must still be vetted by the competition regulator, which will want to be sure that the government-controlled NBN Co is a neutral body that allows private operators to compete fairly over the new network.

Under the overall network plan, the government plans to invest A$26 billion over seven years to develop the network and then look to fully privatise it five years after it is launched.

Once crucial details of Sunday’s Telstra deal are hammered out in coming months, shareholder approval will also be needed.

“Should those (detailed) agreements be finalised, Telstra expects they would be put to shareholders in the first half of calendar 2011,” the company said.

(Writing by Mark Bendeich) ($1 = A$0.87)

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FACTBOX-Key political risks to watch in Australia

June 16, 2010 By Leave a Comment

June 15 (Reuters) – Australian Prime Minister Kevin Rudd is struggling to regain voter support ahead of elections expected in October, with polls showing he may be ousted after only one term, due to a series of policy backflips and a controversial mining tax.[nSGE65E006]

Following is a summary of key Australian risks to watch:

* RUDD’S LEADERSHIP

Despite speculation of a leadership challenge due to his falling popularity and a planned mining “super profits” tax, Rudd is unlikely to be toppled before the election.

His popular deputy Julia Gillard, whom some Labor politicians believe would offer a more conciliatory face and lure back jaded voters, has shrugged off suggestions she will mount a leadership challenge.

Rudd can expect a boost come the poll, due to a robust economy, with unemployment half that of Europe and the United States.

Rudd’s popularity has plummeted in recent months after he shelved a series of policies, including a landmark carbon trade plan. Opposition policies are similar in most aspects, although the opposition will abandon the mining super profits tax.

A further dive in Rudd’s re-election prospects, or a leadership change, is unlikely to have a major impact on markets. For a factbox on key policy differences, click on [ID:nSGE64R07F]

But over the longer-term, Rudd’s leadership may be drawing to a close, with Gillard possibly poised to replace him if Labor loses the election, or early in a new term if Rudd wins with a reduced majority in parliament.

What to watch:

– Opinion polls. The Reuters Poll Trend shows Rudd could lose, or face a hung parliament, although he is still favoured to win the coming election. The government held a narrow 0.4 point lead, down from 10.4 points a month earlier. [ID:nSYU010055]

* ECONOMIC AND TAX POLICY

Economic management is always a key election battleground. Traditionally, conservative parties have claimed this mantle, but the ability of Rudd’s centre-left government to steer the country through the global crisis and avoid recession has given it economic kudos among many voters.

Homeowners, particularly in crucial marginal mortgage belt electorates around Sydney, Melbourne and Brisbane, are concerned about rising interest rates. The central bank has lifted its key cash rate by 150 basis points since October to 4.50 percent, with mortgage rates now around 7 percent. [ID:nSYC002333]

The booming resources sector is also angry at plans for a 40 percent tax on mining profits, to start in mid 2012, which underpins Rudd’s plan to restore the budget to surplus in 2012-13.

What to watch:

– Mining tax: The government is locked in negotiations with more than 80 mining companies on details of the new super profits tax. The 40 percent headline rate appears set in stone, but the government appears more flexible on the definition of a super profit, and may compromise by increasing the threshold for the new tax rate, currently set at around 6 percent. For full coverage of the mining tax, click on [ID:nAUTAX]

– Mining firms say the move puts new investment at risk, and expansion plans have been put on hold. Mining shares have tumbled and the government faces heavy opposition from the resource sector, which has financed an advertising campaign against the changes. The conservative opposition has also promised to abandon the tax if it wins power, putting the issue at the centre of the coming election campaign. The government has countered with its own taxpayer-funded advertising campaign.

– The government could reach a deal with miners, but the fate of any compromise will hang on changes in the composition of the upper house. The post-election Senate is expected to have fewer conservatives but more crossbench Greens. Rudd also faces an outside chance of needing key independents to hold a majority in the lower house. [ID:nSGE64T02H]

– Monetary policy. The Reserve Bank of Australia (RBA) left interest rates unchanged at its policy meeting on June 1, with expectations rates will remain on hold in the near term. [ID:nnSYC002333]

* POLICY SWITCHES

Ahead of the election, Rudd is postponing policies that risk being vote-losers, delaying them to next year and a future parliament in which he hopes to have a stronger hand. The government withdrew its twice-defeated carbon emissions trading scheme from parliament, where it faced a third defeat in the obstructive Senate where it is seven votes short of majority. The government also postponed its planned mandatory Internet filter, which had angered the U.S. government and web heavyweight Google (GOOG.O). Rudd also dumped a troubled scheme to give free home insulation to all houses after the programme was blamed for house fires and linked to four deaths.

What to watch:

– Broadband. The government is bogged down in talks with the country’s biggest phone company, Telstra (TLS.AX), and other telcos on a A$43 billion super-fast broadband spanning the country. Communications Minister Stephen Conroy says difficult negotiations on folding Telstra’s telecoms infrastructure into the network are reaching a conclusion, with parties either reaching a deal soon or breaking off negotiations. The government also has laws before the Senate designed to force Telstra to join the broadband plan by forcing the company to split its retail arm from its wholesale business. The laws face an uncertain future, and the row has weighed on Telstra’s share price.

– Health. Rudd has struck a deal with all states except conservative-ruled Western Australia to take control of health and hospital funding, using consumption tax revenues reserved for states. The deal, popular with voters, could still unravel if Rudd is unable to reach agreement with Western Australia to include it in the scheme. If he fails, it will be a major blow to his authority and could fuel criticism he has not delivered most of his big reform visions. [ID:nSGE63I051]

– Climate policy. Plans for a sweeping carbon trade plan have been put on the backburner until 2012 at the earliest. Rudd has said he will wait until the Senate is more receptive and the direction of world climate talks is more certain. Once the likely outline of long-term climate change policy becomes clearer, the expected impact on corporate profits will be reflected in Australian stocks .AXJO.

(Editing by Sanjeev Miglani)

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Oil spill forces Obama to postpone foreign travel

June 5, 2010 By Leave a Comment

(Reuters) – With the worst oil spill in U.S. history presenting a key test of his presidency, President Barack Obama postponed a trip scheduled for this month to Australia and Indonesia, the White House said early on Friday.

Politics | Indonesia | Barack Obama

It was the second time in a little more than two months that Obama canceled a trip to the two countries. He previously was due to have gone in March but postponed to stay at home to give a final push to his healthcare overhaul plan in Congress.

White House spokesman Robert Gibbs told Reuters in an email that Obama postponed the trip again in order to deal with the Gulf of Mexico oil spill and other important issues.

The president is due to travel to the Louisiana Gulf coast to visit affected communities on Friday, his third trip there since an April 20 offshore oil rig explosion that killed 11 workers and triggered the huge spill.

After a series of failed attempts to plug the gushing mile-deep BP-owned oil well, the Obama administration has come under growing pressure to take a more direct role in the oil spill crisis. Opinion polls show many Americans are unhappy with Obama’s handling of the disaster so far.

In an already difficult congressional election year for Obama’s fellow Democrats, a foreign trip in the midst of what the president himself has called an unprecedented environmental catastrophe would have been hard to sell to Americans frustrated and angered by the six-week-old crisis.

The White House said in a statement that Obama had spoken on Thursday night to Australian Prime Minister Kevin Rudd and Indonesian President Susilo Bambang Yudhoyono to inform them of his decision. The trip had been scheduled for June 13-19.

“President Obama underscored his commitment to our close alliance with Australia and our deepening partnership with Indonesia. He plans to hold full bilateral meetings with Prime Minister Rudd and President Yudhoyono on the margins of the G-20 meeting in Canada,” the White House said in a statement.

RARE CANCELLATION

The rare double cancellation of a presidential trip abroad underscored how Obama’s challenges at home have begun complicating his activity overseas.

The trip would have been his first major foreign travel this year and was aimed at deepening U.S. ties in the Asia-Pacific region in the face of rising Chinese influence.

Indonesia is the world’s most populous Muslim nation and where he spent four years as a child. Australia is a stalwart U.S. friend in the Pacific and key military ally in Afghanistan.

There was no immediate response from the two countries to the White House announcement.

Cleaning up the biggest oil spill in U.S. history and capping the well has become Obama’s top priority, complicating his efforts to keep the focus on job creation in an economy in which unemployment is still close to 10 percent nationwide.

The White House announcement on the trip came shortly after BP managed to lower a containment cap onto its ruptured deep-sea wellhead to siphon off some of the billowing oil. U.S. authorities called it a positive development.

Obama said in an interview with CNN’s Larry King broadcast on Thursday night that he was furious at the situation in the Gulf of Mexico and again vowed to hold BP accountable.

“It’s imperiling not just a handful of people,” he said of the oil spill. “This is imperiling an entire way of life and an entire region for potentially years.”

From the beginning of the crisis, the Obama administration has sought to show that it is control, but it has struggled to shake off a public perception that it has been too reliant on BP for solutions and too slow to bring the full force of the federal government to bear on the crisis.

Obama said on Thursday that his administration had mobilized scientists, hundreds of ships and thousands of military personnel to deal with the disaster.

Analysts say Obama’s fellow Democrats risk being punished in November congressional elections that are already expected to erode their majorities in both the Senate and the House of Representatives.

(Reporting by Ross Colvin; Editing by Will Dunham)

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Q+A-Will Australia’s mining tax be watered down?

June 3, 2010 By Leave a Comment

June 2 (Reuters) – Australia’s mining industry and government on Wednesday sought to cool tensions over a planned new 40 percent mining profits tax that has unnerved both investors and voters. [ID:nSGE6500L0]

Miners claim the proposed tax, due to start in mid-2012, will hit economic growth and stifle investment in the booming resources sector. The government argues the tax will make sure miners pay fair taxes on limited national resources and help fund national savings.

WHAT HAS CHANGED SINCE PLANNED TAX FIRST UNVEILED?

Nothing.

Prime Minister Kevin Rudd remains adamant the 40 percent rate for the Resource Super Profits Tax is set in stone. He has said negotiations with miners will be protracted and has discounted a resolution with miners before 2010 elections expected in October. [ID:nSGE650012]

The conservative opposition opposes the tax and has promised to abandon it if it wins office, making the mining tax a central issue for the upcoming election campaign. [ID:nSGE64C0A4]

Legislation for the tax is unlikely to be drafted until early 2011 and then begin its passage through parliament. The government does not currently control the upper house Senate, where the tax legislation must pass, and is unlikely to control it after elections.

WILL THE GOVERNMENT BACK DOWN?

Rudd will not reverse course on the tax. He has lost voter support due to backflips on a range of policies, and more backdowns would hurt his poll standing. It could also undermine his leadership within the centre-left Labor Party

Rudd is also losing poll support to the Greens, who are anti-mining and support the tax and more regulation on the industry. Any major concessions by Rudd could further erode his re-election chances and see more Labor votes leak to the Greens.

Rudd has linked the mining tax to cuts in the company tax rate, and to higher payments into worker pension funds. Some political analysts believe Rudd is happy to prolong the fight with the mining industry because the overall tax package will eventually be a vote winner.

IS TAX THRESHOLD LEVEL THE KEY?

Rudd and Swan have left open the option of changing the threshold profit rate at which the new tax kicks in.

The threshold is set to match the 10-year government bond yield AU10YT=RR of around 5.3 percent. Miners say it is unrealistically low and should be closer to the 12 percent rate used for a similar Petroleum Resource Rent Tax.

But the architect of the tax, Treasury Secretary Ken Henry, has cautioned against changing the threshold because of the generous concessions built into the new tax. [ID:nSGE64H0C9]

WILL THE TAX REMAIN RETROSPECTIVE?

Australia’s two largest miners, Rio Tinto RIO.AX

The government says such exclusions would forfeit too much revenue and discourage miners from expanding.

Miners can currently offset tax credits for exploration and development costs, resulting in a lower effective tax rate than 40 percent. As part of a deal, the government may allow more room for existing projects to offset their previous exploration and development costs.

WILL THE TAX MAKE PROJECT FUNDING HARDER?

Andrew Forrest, chief executive of iron ore miner Fortescue Metals Group (FMG.AX), says unlike company tax, the new mining tax will hit firms higher up the profit statement before deducting interest on borrowings. This means banks will not fund new projects unless businesses stump up more equity.

Playing the nationalist card, Forrest says this opens the door to deep-pocketed foreign firms, especially state-owned Chinese ones, to buy up stakes in new projects. A compromise could involve financing costs being excluded from calculations.

(Additional reporting by James Regan in SYDNEY and Rob Taylor in CANBERRA; Editing by Michael Perry)

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Australian opposition gets tough on refugees

May 27, 2010 By Leave a Comment

The opposition coalition on Thursday promised to pay other countries to take asylum seekers off Australia’s hands if it wins elections this year.

Opposition leader Tony Abbott made Australia’s response to a burgeoning number of asylum seekers traveling to Australia by boat an election issue by launching his conservative coalition’s new policy. An election date has yet to set.

Its centerpiece is a revival of the so-called Pacific solution in which Australia paid impoverished island neighbors Nauru and Papua New Guinea to keep asylum seekers in detention centers.

The message to asylum seekers was that they would never set foot on the Australian mainland. However, many were eventually settled in Australia after sometimes spending years in offshore camps.

Human rights groups attacked the policy as punitive when the previous coalition government introduced it in 2001, months ahead of an election.

Prime Minister Kevin Rudd scrapped the policy when his center-left Labor Party won government in 2007, but he continues to keep most boat arrivals in a crowded camp on the remote Australian Indian Ocean territory of Christmas Island while their refugees claims are assessed.

Abbott has blamed the government’s softening of Australia’s asylum seeker stance for more than 4,000 people arriving by boat in the past year, many of them Afghans and Sri Lankans who paid Indonesian people smugglers to ship them to Australia.

“I am a big risk to people smugglers,” Abbott told reporters. “If I get elected, people smugglers will go out of business.”

Abbott declined to identify the countries he planned to negotiate with or estimate how much they would be paid to house the overflow of asylum seekers from Christmas island.

Rudd attempted to slow the flow earlier this year by imposing a three-month freeze on processing asylum claims from Sri Lankans and Afghans – a development condemned on Thursday in the annual report of London-based human rights organization Amnesty International.

Abbott also promised to revive another measure scrapped by Rudd – temporary protection visas.

Under the visas, bona fide refugees would have to prove after three years that they would still face persecution if they returned to their homelands.

Under the current permanent visas, asylum seekers only have to prove their refugee status once.

During their temporary stay, refugees would also have to work for their welfare benefits, an opposition statement said.

Human Resources Minister Chris Bowen said refugees were already required to work, study English or train to gain employment skills.

The work obligations “are actually rules that we introduced, toughened from the previous government’s arrangements,” Bowen told Australian Broadcasting Corp. radio.

Arguments about which side of politics is tougher on asylum seekers have raged in Australian election campaigns since the first wave of Vietnamese refugees fled to Australia from the aftermath of Vietnam War in the late 1970s.

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Australia, UK first nations to condemn N. Korea over Cheonan sinking

May 20, 2010 By Leave a Comment

Melbourne, May 20 (ANI): Australia and the United Kingdom have become the first Western nations to condemn North Korea for sinking the South Korean warship “Cheonan” on March 26 this year.

Australian Prime Minister Kevin Rudd said: “The key findings of the investigation are deeply disturbing.”

According to The Australian, Rudd further said that Australian Navy specialists who were part of the international inquiry panel, found fragments of a North Korean-made torpedo lying on the ocean floor near the sunken corvette.

“The Joint Investigation Group gathered conclusive evidence that the Cheonan was sunk by a torpedo manufactured in North Korea, fragments of which were found on the sea floor at the site of the incident. This hostile and unprovoked act represents a flagrant violation by North Korea of the United Nations Charter and the 1953 Korean Armistice Agreement.
The international community cannot let this act pass without an appropriate response,” Rudd said.

British Foreign Sceretary William Hague said: “The attack demonstrates a total indifference to human life and a blatant disregard of international obligations. The DPRK”s actions will deepen the international community”s mistrust.” (ANI)

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Australian PM welcomes youngest around-the-world sailor

May 16, 2010 By Leave a Comment

Sydney, May 16 (IANS) Tens of thousands of well-wishers, including Prime Minister Kevin Rudd, welcomed back on to dry land at Sydney Harbour 16-year-old Jessica Watson who Saturday became the youngest sailor to complete a solo journey around the globe circumnavigating 23,000 nautical mile.

It was the first time the Queenslander had stepped off her boat, Ella’s Pink Lady, since she set off on her 210-day solo voyage Oct 18, Australian news agency AAP reported.

She was hailed ‘Australia’s newest hero’ by Rudd.

But Jessica said: ‘I don’t consider myself a hero. I’m an ordinary girl who believed in her dream.’

Jessica said she was ‘overwhelmed’ by the reception and was looking forward to washing her hair, eating fresh fruit and going for a jog along the beach at her home town of Mooloolaba.

The teenager, who will celebrate her 17th birthday May 18, said she would love to do more sailing in the future but would be concentrating on ‘slightly more normal things’ in the next few years, such as school and learning to drive.

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Australian girl sailor crosses round-the-world finish line

May 15, 2010 By Leave a Comment

Australian schoolgirl sailor Jessica Watson sailed into history on Saturday, becoming the youngest person to circumnavigate the globe solo, non-stop and without help.

Watson, 16, crossed the finish line at the entrance to Sydney Harbour shortly before 2pm (0400 GMT) in her bright pink yacht after 210 days at sea, one month ahead of schedule and three days before her 17th birthday.

Harbour Master Steve Young sounded a pink hooter to signal the official end to her voyage, and a tugboat sent up a celebratory jet of water as the beaming teen steered through the harbour mouth, waving to the throng of onlookers.

“She’s home,” her mother Julie wept as she passed the official finish.

Rapturous crowds cheered as the young adventurer cruised towards the white sails of the Sydney Opera House, where she was to take her first steps on dry land in almost seven months for a tearful family reunion.

“I have only managed a couple of hours sleep, but I think I’m running on excitement,” Watson said, speaking ahead of the finish.

“I better take a deep breath before I get in.”

Although the World Speed Sailing Council will not recognise Watson’s record, as its minimum age is 18, the seven-month voyage makes her the youngest person to ever sail solo and non-stop around the world without help.

Tens of thousands of people gathered along the harbourfront to witness the feat — many wearing pink and waving banners — while millions more were expected to tune into the live commercial television broadcast.

Prime Minister Kevin Rudd and current world record holder Jesse Martin, also an Australian, were among those gathered to help welcome Watson back to Sydney, where a hundred-strong flotilla of boats flocked to see her in.

Martin set the 327-day record, then aged 18, in 1999, and he boarded Watson’s 10-metre sloop after she crossed the finish line to offer his congratulations and steer her to shore so she could enjoy the moment.

“She’s proven to us all that she can do it,” said Martin.

“I think you can say if she can do this she’ll be right; she can do anything.”

Watson’s 23,000 nautical mile journey took her through some of the world’s most challenging and treacherous waters, pitting her bright pink 10-metre yacht against 40-foot swells and gale-force winds.

She twice sailed over the equator, crossed all meridians of longitude and passed the world’s four capes as she traversed the Pacific, Atlantic and Indian Oceans.

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Hawke denies calling for Rudd’s removal

May 15, 2010 By Leave a Comment

Former prime minister Bob Hawke has denied he told a Labor MP that Kevin Rudd should be dumped as leader.

A Liberal Party staffer says he overheard Mr Hawke tell Daryl Melham that he was heartbroken by Mr Rudd’s performance and wanted him replaced with Deputy Prime Minister Julia Gillard.

Mr Hawke has confirmed he had a conversation with Mr Melham but denies he criticised Mr Rudd.

Mr Hawke has released a statement saying he told Mr Melham he was disappointed with Labor’s performance in the latest opinion polls.

But he says he affirmed his support for Mr Rudd and it is sad that someone has “twisted” his words.

“As you normally do in Canberra, Daryl and I chatted about the latest media speculation in the press gallery,” he said.

“I expressed my disappointment about the polls and my support for Kevin and for the Government.

“It’s pretty sad that someone, who would hardly be an objective observer, twisted my words and misrepresented them.”

Mr Hawke says he “can’t wait” to campaign for Mr Rudd at the next election.

Mr Melham blamed a Liberal Party staffer for the reports.

“Bob and myself were doing nothing more than discussing the usual Canberra press gallery rumour mill,” he said in a statement.

“The fact that some Liberal staffer has deliberately eavesdropped on this conversation and misrepresented it to the media just shows how desperate the Liberal Party has become.”

Leadership speculation has been reignited after a series of poor polls for Mr Rudd and the continued popularity of his deputy.

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Bligh calls for fair budget share for ‘growth state Qld’

May 12, 2010 By Leave a Comment

Premier Anna Bligh says Queensland should be recognised in tonight’s federal budget as the growth state of Australia.

The Federal Government hopes the budget will give it a much-needed bounce in the polls but faced by the debt hangover from its stimulus spending, there is not much scope for pre-election sweeteners.

Federal Treasurer Wayne Swan says his third budget will be responsible with major investments in the health sector and a boost to superannuation.

The Federal Opposition has warned the Government against unveiling any big new spending measures in tonight’s budget.

Ms Bligh says Queensland needs continued investment in service areas like health.

“I hear the federal Treasurer saying that this is a ‘no-frills’ budget,” he said.

“I do hope that Queensland will be recognised as the growth state of Australia.

“To the extent that there are some good outcomes for Australians, I hope Queensland gets its fair share.

“We need infrastructure investment, our growing population needs continued investment from all levels of government, particularly in those high priority service areas like health.”

Proposed resources tax

Queensland Opposition Leader John-Paul Langbroek says he and Premier Anna Bligh should join forces to fight the Commonwealth’s proposed mining tax.

Mr Langbroek has invited Ms Bligh to fly to Canberra with him tomorrow if as expected the tax is included in tonight’s budget.

He says state jobs are at risk.

“If Kevin Rudd brings in this mining tax, I call on her to have a bipartisan mercy dash to Canberra to stop this tax being inflicted on Queensland,” he said.

“I’m prepared to go with Anna Bligh to represent on behalf of all Queenslanders with Anna Bligh to stand up for Queensland.”

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Political spin checklist

May 12, 2010 By Leave a Comment

You can’t yet be sure which Saturday this year you’ll be going to the polls, but you can guarantee the campaign behind it will be full of spin.

Hundreds and hundreds of journalists are employed by governments across Australia; their brief is to ensure the bosses’ policies are seen in the best possible light.

That means all sorts of underhand tricks are now part and parcel of the political process, and many politicians still don’t think voters are onto them.

To ensure you are, here’s a quick spin checklist you might want to use for the next poll. Feel free to add your own.

* The mea culpa: Perfected by Queensland’s Peter Beattie, the politician will take full responsibility for a bad decision, promise that “heads will roll” and that it will be fixed. They will then hope the issue disappears, and is not raised again.
* The diversionary tactic: Announce something to divert attention away from something less politically palatable. For example, a major new cigarette branding initiative could take attention off a delayed emissions trading scheme promise. Or a state government, reeling from a health crisis where nurses and doctors aren’t being paid, capitulate and announce a review of daylight saving, by Twitter. You’re likely to find examples like these every week, in all levels of government.
* It’s all in the language: Whether it’s the Working Family or WorkChoices, so much depends on the words chosen.
* The greed card: This is played when a politician tries to make us feel bad that we might not be carrying our share of the burden. Example: miners make too much money, they’re foreign, and you miss out.
* The missing transcript: Politicians often put a transcript of their interviews on the internet, or hand them out so that they can be re-quoted by other organisations. Unless of course the interview goes badly. Then sometimes, the transcript just seems to disappear.
* Pick your day syndrome: This is widely played by politicians from all parties – from Kevin Rudd focusing on media appearances more commonly at the end of the week (when polling companies are in the field) to the release of bad news (often on a Friday night) or good news on Sundays and public holidays when there is less competition to head the bulletin. The release of the Henry report is another example. Despite it not being market sensitive, it was cloaked in a secret Sunday lock-up – something the Government’s response certainly didn’t justify.
* It’s not personal, it’s just me: All politicians have their own little ways to help them sell their message, from the tie they pick to the magazine they choose to spill the beans. It goes further than that too. Former prime minister John Howard often breathed mid-sentence which made getting a question in difficult; Kevin Rudd often asks – and then answers – his own questions.
* Tell the partial truth This happens often. You ask a question and a specific answer is given, but not the whole answer. A recent Queensland example involves the death of a toddler after the flu vaccine. After dozens of cases of ill children in Western Australia, the Queensland Government denied there were any cases in Queensland. When it was caught out, a minister explained they were not officially told of the death, and it was too early to tell whether it was a result of the flu vaccine.
* Blame the public servant: This is an increasing spin mechanism, where a government will put up a public servant, rather than the minister, to answer questions. That means the bad press is directed at the public service, not the Government.
* The drip feed: You’ll hear part of what a health or police or education package will be today, more next week, and certainly more come election time. Why deliver the one big package which would show you the big picture, when there can be three bites of the cherry? A twist on this is the half report, where a minister will leak part of a document which shows a government in good light. A good journalist should always ask for the full report, because it’s likely the second half will have something damaging to the government.
* Saved by the review: Used by all parties, the “send it to a review” technique gets it out of the public debate. This means any issue that is too hard to deal with can be subject to a review or an inquiry, until it’s raised again, or at least until after the election.
* The picture opportunity: John Howard out walking. Tony Abbott in lycra. Your local politician on the front page of the paper, shirts rolled up, serving soup at a homeless kitchen. Often, it’s just staged, but it certainly can change how you perceive them.
* The human touch: A variation on the above, with the best example highlighted by former treasurer Peter Costello’s macarena dance on daytime TV. You’ll see a lot more of this in coming weeks, when politicians drag out whole families to colour their image.
* The social media blitz: Do you really think all politicians are doing their own twittering? Sure some are, but others have no idea who they’re following, as evidenced by revelations the Prime Minister is following a porn star.
* The phony sacking: No government wants to give an Opposition a ministerial notch on their belt, so the phony sacking allows responsibility to be removed from a minister, without them being removed. Remember Peter Garrett?

The list could go on, and perhaps you can list your own examples. If for no other reason, it will alert politicians that voters are now canny enough to see announcements through the spin of listening tours, reviews and promises – and make their judgment accordingly.

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State projects depend on Fed Budget handouts

May 12, 2010 By Leave a Comment

The State Opposition says the Government is to blame if today’s federal budget ignores infrastructure funding in Tasmania.

The State Government has established a ten year strategy for water, digital, transport, and energy infrastructure projects.

It is costing $6 billion and the Tasmanian Chamber of Commerce and Industry says federal funding will be needed to ensure the projects go ahead.

Liberals Leader Will Hodgman says the State Government made a poor submission for infrastructure funding before the last federal budget, and he says today Tasmanians will know if Labor has fought any harder for money this time around.

“It’s having a major impact in denying us our true potential to build business to sort out the problems in our forestry industry, to ensure that our rail network’s up and running and to build the important road infrastructure that could unlock our true potential,” he said.

“If we get shafted again by Kevin Rudd in this year’s federal budget it will set back Tasmania even further.”

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