2nd UPDATE: Australia Appoints First Female PM After Labor Mutiny

24th Jun 2010 05:29

(Adds comments by opposition leader, BHP) By Rachel Pannett Of DOW JONES NEWSWIRES CANBERRA (Dow Jones)--Australia swore in its first female prime minister, Julia Gillard, on Thursday after the once-popular Kevin Rudd was forced to step down following a mutiny in the governing Labor Party, clearing the way for a potential back down on a controversial mining profits tax, talks on a new climate deal and a federal election within months. Rudd quit before a leadership ballot could be held, after his former deputy Gillard, a Welsh-born 48-year-old former trial lawyer, challenged him for the top spot in the governing center-left Labor Party, a post that carries with it the premiership. She stood unopposed at Thursday's vote of Labor's 112 lawmakers. Switching leaders is a high-stakes political strategy for Labor. It is the first ousting of a sitting prime minister since Bob Hawke was unseated by Paul Keating as Labor leader in December 1991. Keating went on to win the 1993 election. By law, the next election must be called by April at the latest. Parliament breaks later Thursday for an eight-week winter recess. Gillard on Thursday promised go to the polls in "coming months" to seek a fresh mandate from voters, conceding that Labor under Rudd had "lost its way". Gillard said she challenged Rudd because she feared a return to conservative government, which would result in reduced spending on education, health and a loss of rights for workers. "She should call an election straight away while the excitement, euphoria and the honeymoon period are still strong," said Griffith University political analyst Elizabeth van Acker. That would deprive the main opposition Liberal-National coalition of center-right parties of the opportunity to hammer Gillard on policy issues that plagued the final days of Rudd's leadership, she said. They include a decision to shelve a proposed cap-and-trade system meant to fight climate change--abandoning a key 2007 election campaign pledge--and a plan to levy a new 40% tax on "super profits" by Australia's mining companies--a critical industry for the resource-rich country. Opposition Liberal leader Tony Abbott said the government has "changed the salesman, they haven't changed the product", adding that Gillard is "committed to the same dud policies that Kevin Rudd was committed to". Gillard vowed to throw the door open to the mining industry to reach a deal on the mining tax proposal, as well as re-examining the case for a price on Australia's greenhouse-gas emissions. But she remained committed to meeting the budget targets underpinned by the tax. "Australians are entitled to a fairer share of our inheritance, the mineral wealth that lies in our grounds," she told reporters. "But to reach a consensus we need to more than consult, we need to negotiate and we must end this uncertainty that is not good for this nation." Mining stocks rallied Thursday on expectations Gillard will overhaul the tax proposal. "Certainly the resources rent tax is going to be watered down or completely canned," said ICAP economist Adam Carr. The government had thought the tax would win popular support by spreading the wealth from the booming mining sector, but it instead backfired as the public worried it would damage Australia's credibility as an investment destination. "The removal of Kevin Rudd as prime minister is obviously positive for the Australian equity market, Australian resources and the Australian dollar as it removes a degree of sovereign and regulatory risk," said Southern Cross Equities Director Charlie Aitken. Mining giant BHP Billiton Ltd. (BHP), which with rival iron-ore producer Rio Tinto Ltd. (RTP) has led the fight against the proposed levy, on Thursday suspended a multimillion dollar advertising campaign attacking the tax. "The industry has consistently been calling for the government to take the time to properly engage on all aspects of the tax, and we welcome the opportunity to do so," a BHP spokeswoman said. The pair had warned that billions of dollars of investment are at risk, as the tax would make Australia one of the highest-taxed jurisdictions in the world. Miners' criticism of the tax has resonated with many Australians who own shares in mining companies, often through pension funds. Mining, a top export sector, helped Australia sidestep the global recession, thanks to demand from developing countries like China and India for the country's vast stores of iron ore and coal. Still, some said the removal of Rudd as prime minister is unlikely to substantially change the tax. Tony Sage, executive chairman of Cape Lambert Resources Ltd. (CFE.AU), said that Labor's new leadership team, with Treasurer Wayne Swan appointed as Gillard's deputy, are wedded to the tax. "Wayne Swan is the architect of this tax and he has been virulently opposed to any compromise, so it would be a big back-down for him personally. Gillard is from the left and was never a favorite of the mining industry," he said. A mining analyst at an international bank in Sydney added that the tax was too important to the government's plans to close its budget deficit by 2012-2013 to be lightly sacrificed. "You'd have to be extremely brave to assume it wouldn't continue in some form," he said, speaking anonymously because his views didn't represent those of the bank. In its budget papers released last month, the government estimated it would raise A$3 billion from the tax in 2012-2013 and A$9 billion the following year. A senior union source said the government will press on with the tax, which is yet to be legislated and is due to kick in July 2012, but it may be more open to reviewing aspects of the proposal. Gillard's candidacy was backed by the Labor Party's right wing but also by key worker unions on the left. Her elevation marks an unprecedented fall for Rudd, a 52-year-old Chinese-speaking former diplomat, who swept to power in November 2007, ousting the long-ruling conservative Liberal-National coalition. Replacing Rudd would have been unthinkable just a year ago when his approval rating was well above 60%. A prominent poll this week put his rating at just 36%. The poll found Labor eking out a 52%-48% edge against the Liberal-National bloc, calculated on the basis of Australia's preferential voting system. On a straight match-up, Labor was trailing 35% to 40%. "I think the Labor Party have made a very smart move and they made it in the nick of time," political expert and respected pollster Malcolm Mackerras said. "I think Abbott would've won the election if Rudd had stayed on. I had been saying 50-50 (election odds) all year, I was on the verge of coming off the fence and saying Abbott would win the election." Mackerras said women voters are unlikely to vote out a female prime minister and that female swing voters could vote for the Labor Party as a result of Gillard being in power. Gillard, elected to Parliament in 1998, has risen swiftly through the Labor ranks and held the key portfolios of education, employment, and workplace relations before her leadership challenge. She has shown sharp political elbows in the past. When a political opponent said in 2007 that the unmarried lawmaker wasn't qualified to lead the country because she had chosen not to have children, Gillard shot back that her accuser was "a man of the past, with very old-fashioned views." -By Rachel Pannett, Dow Jones Newswires; 61-2-6208-0901; [email protected] (David Fickling, Cynthia Koons, James Glynn and Enda Curran in Sydney and Alex Wilson in Melbourne contributed to this article) (END) Dow Jones Newswires June 24, 2010 00:29 ET (04:29 GMT)