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Australian Prime Minister Julia Gillard forged an alliance with
the Greens party today to take her party closer to forming a
government, but vowed not to allow the deal to change her plans for
a tax on miners' profits.
"Our election commitments are our election commitments," the Labor
Party leader told a news conference.
"In the days since the election I've been asked will you change
the Minerals Resource Rent Tax, and the answer of course is
no."
Labor's widely expected agreement with the influential Greens party
gives Gillard 73 seats in the 150-member lower house, bringing her
level with the opposition conservative coalition but still three
short of the majority required to rule.
A jostle for the support of four independent lawmakers who emerged
from August 21's inconclusive election holding the balance of power
could still drag into early next week.
Bookmakers shortened their odds on Labor forming a government after
the Greens deal, though they were still well behind the
conservatives, who have promised to scrap the mining profits tax
and carbon-trading plans, and a $54 billion broadband project that
could hurt dominant telecoms provider Telstra.
Despite Gillard's reassurances that policy would not be affected,
the Greens could use their leverage to harden up her plans on both
the mining tax and pricing carbon pollution.
"It does lead to some nervousness. With Greens' control of the
Senate it sets in motion less friendly business policies starting
from mining tax to climate change," said Shane Oliver, head of
Investment Strategy at AMP Capital.
The conservatives, who campaigned heavily on the threat of a
Labor-Greens tie-up, charged that the deal would lead to early
adoption of a carbon trade scheme Gillard had promised to delay
until at least 2013 and after public consultation.
"It demonstrates that the quest for power is now the only principle
that the Labor Party holds dear," opposition leader Tony Abbott
told a news conference.
"What this means is there will be a carbon tax, there will be a
higher mining tax. This is a party that deserves to lose, but which
(Greens leader) Bob Brown has thrown a lifeline to."
Markets unruffled, economy remains robust
If Labor prevails, the Greens deal would commit it to tackling
climate change, holding a parliamentary debate on the war in
Afghanistan and consulting on economic and budget issues.
So far financial markets have not been ruffled by the political
uncertainty.
Investors are more focused on the risk that economic weakness in
the United States and Japan could spill into Australia, undermining
its relatively robust growth.
Data released today showed that Australia's gross domestic product
(GDP) rose by 3.3% in the second quarter from the same period in
2009, well above the 2.9% forecast in a Reuters poll.
As part of their agreement with Labor, which includes a future
referendum on constitutional recognition of indigenous people, the
Greens promised to ensure budget supply bills and back Labor in any
no-confidence motions.
In return, the government agreed to a new climate change committee
of politicians and experts to work out the best way forward for
climate policy, with a view to putting a price on carbon
emissions.
But more contentious issues, including the controversial mining
tax, a price on carbon and gay marriage, were left out of the pact
to avoid driving off more support for Labor from rural-based
independents with conservative leanings.
The independents may take a few more days to decide whether to
support Labor or the conservative coalition led by Abbott.
"I think it might be a bit optimistic to say this week, but I would
be very surprised if it went beyond Monday or Tuesday," rural-based
independent Bob Katter told Australian television.
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