SYDNEY — Australia's embattled Prime Minister Julia Gillard Monday vowed to retain a controversial tax on mining profits if she succeeds in forming a government following deadlocked national polls.
Gillard said she had brokered an agreement with the mining sector ahead of Saturday's elections, which ended with neither her centre-left Labor Party or the main opposition Liberal/National coalition holding enough seats to govern.
"I entered a breakthrough agreement with the Australian miners, our biggest miners, about the Minerals Resource Rent Tax and I will be honouring that agreement," Gillard told reporters in Canberra.
Gillard struck a crucial deal with mining giants BHP Billiton, Rio Tinto and Xstrata that will place a 30 percent tax on iron ore and coal profits, within days of deposing Kevin Rudd as prime minister in a party coup.
The deal effectively watered down Rudd's original plan to tax all resources companies at a rate of 40 percent on profits -- a move which provoked a furious backlash from the country's most important export sector.
Liberal leader Tony Abbott has vowed to scrap the levy if he becomes prime minister and major mining shares lifted Monday on the prospect of him forming a government, with BHP shares up 0.55 percent and Rio Tinto rising 0.87 percent.
Votes are still being counted in Australia's national polls, but at least three independents are set to hold the balance of power in parliament and are being wooed by Gillard and Abbott to support their parties.
Gillard said Monday she would negotiate with the independents in good faith, but refused to say what offers could be made to win their support.
"The policies of the government are the policies announced during the election campaign," she said, adding that she was not going to play any "rule in, rule out" game.
Voter concern about the tax, particularly that it could drive jobs and investment overseas, is believed to have contributed to Labor's loss of a swathe of seats in the key mining states of Queensland and Western Australia.
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