CANBERRA: Australia`s next minority government will be under pressure to retain a proposed mining tax, with three out of four independent and Green MPs who hold the balance of power saying they supported the controversial tax.
Australia`s mining-share index hit an intraday low, shedding 1.6 percent at one point after the news.
The market has been hoping the tax, a key platform for the Prime Minister Julia Gillard`s ruling Labor party, could be ditched after Saturday`s elections left a hung parliament.
"The concept of a rent resource tax I think should be endorsed, because it`s a more effective and efficient way to tax profit than to tax production," independent Tony Windsor told a press club lunch.
But the independents said Labor`s current mining tax may need to be revised as part of wider tax reforms.
Opposition leader Tony Abbott opposes the plan for a 30 percent profits tax on big coal and iron ore mines.
Tim Schroeders, fund manager at Pengana Capital, said: "We would still assume the majority probability is that the mining tax gets implemented but would be happy to be pleasantly surprised if it were otherwise."
The independents said economic issues would guide their thinking on who they support, warning of fresh elections if a deal cannot be struck.
The three independents said they had delivered seven broad demands to Gillard and Abbott, including a briefing by top Treasury officials on budget finances.
"We do think this is about the economy and we do think the next three years needs some consideration of things such as election promises and election commitments, and both the costings and the impact on the budget and the economic cycle for the next three years," said independent Rob Oakeshott.
Another independent Windsor, a former farmer, said if talks broke down, he and the others were not afraid to withhold support from either side and force fresh elections in the hope of breaking an impasse that has unsettled financial markets.
"If there`s not goodwill displayed by both leaders and their party members, and if we can`t see a future in terms of some longevity in terms of the parliament itself...then I won`t support either," Windsor said. "There is a third option, and that is another poll."
The chances of a conservative government appeared to have risen slightly after the ruling Labor party looked to have lost another seat to a fourth independent in Tasmania.
As well as the fate of Labor`s mining profits tax, the next government will also decide the future of the government`s planned $38 billion broadband network and a future carbon price. Abbott`s conservative coalition oppose these policies.
Bookmakers now put the opposition under Abbott as slight favourites to form a minority government ahead of Gillard, but shortened the odds of an early election.
Latest projections give Labor 72 seats and the opposition conservatives 73 seats, with 76 seats needed to command a majority. That would leave four independents and a sole Green MP holding the balance of power.
The three independent MPs are due to meet both Gillard and Abbott on Wednesday. They have said they would not leap to any decisions on who to back and see talks stretching into late next week after the completion of vote counting for the 150-seat lower house.
The three could also become four, with former government intelligence analyst and Iraq war whistle-blower Andrew Wilkie expected now to win a tight contest with ruling Labor in the seat of Denison, in the island state of Tasmania.
BDST: 1100 HRS, August 25, 2010
