Prime Minister ousted after tax fiasco (in Australia)

Australia has its first female leader - and it might be good news for some big UK miners.

Last Updated: 31 Aug 2010

Poor old Kevin Rudd. Despite ensuring that Australia was one of the only developed countries to avoid the global recession, he's just been forced out as Prime Minister by his deputy Julia Gillard ahead of the forthcoming Election (a leadership coup aimed at salvaging the Labor Party's Election prospects - it'd never catch on over here). Yet in some ways Rudd only has himself to blame. A popular figure until relatively recently, he's suffered a series of policy setbacks in the last few months: as well as a U-turn on his much-vaunted emissions trading scheme, there was also his ill-conceived plan for a windfall tax on the country's biggest miners (including some UK-listed firms). Those who dislike short-term, populist, opportunistic corporate-bashing may argue this serves him right...

The Welsh-born Gillard becomes Australia's first female PM - and she's done it in a way that suggests she has all the ruthlessness a high-level leader needs. Formerly Rudd's deputy, she's spent the last few weeks insisting she fully supported her beleaguered boss. But when the Labor Party's most important union and its most influential MPs swung behind her, she went to Rudd and demanded a leadership contest. And it seems there was so little chance of him winning the ballot that he didn't even bother contesting it - meaning Gillard was elected as party leader - and thus PM - unopposed. 'I came to the view that a good government was losing its way,' Gillard told reporters afterwards (handily allowing her to take credit for the good stuff, but none of the blame for the bad stuff).

It's a rather ignominious end for Rudd, the man once known as 'Mr 60%' for his high approval ratings - and arguably a pretty harsh one, since he was one of the only world leaders to keep his country out of recession. However, his popularity has nosedived lately. Some argue that this is as much about presentation as policy, but there's no doubt that his emissions U-turn and the row with the mining industry over his proposed tax have gone down badly. Rudd claimed the miners should pay a super-tax on their 'super profits' (a 40% levy on anything over and above the Government bond rate) - but they argued, not unreasonably, that it was unfair to single out one industry (and self-defeating, since most of the big miners would just shift operations elsewhere - not that this seems to have stopped the UK, France and Germany cooking up a similar plan for the banks).

Gillard is adopting a much more conciliatory tone, emphasising 'the need to negotiate' and suggesting she was 'throwing open the government's door' to the industry - a prospect which gave mining shares a boost (albeit briefly) on the FTSE this morning. Clearly Australia's first woman PM will have her powers of diplomacy and conciliation tested to the max between now and the Election. But her ascent to the top job is an indication of progress - not to mention an encouraging sign that politicians won't be given carte blanche to hammer industry arbitrarily.

In today's bulletin:

Pension changes: retirement reinvigorated, or working until you drop?
High street sales still falling - despite the World Cup
Prime Minister ousted after tax fiasco (in Australia)
YouTube wins landmark $1bn Viacom case
Letters from Malawi: What is China doing here?

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