Labour may scrape back into power

Canberra: Australian Prime Minister Julia Gillard's Labour government will narrowly win Saturday's election, a Reuters Poll Trend showed yesterday, paving the way for a controversial mining tax and a possible carbon trading scheme.

Australia's small Greens party, on course to gain the balance of power in the Senate upper house, said it would seek to toughen the mining tax if Labour wins.

The proposed 30 per cent tax on iron ore and coal, forecast to raise A$10.5 billion (Dh34.87 billion) over two years starting 2012, has been signed off by mining giants BHP Billiton, Rio Tinto and Xstrata, but is opposed by much of the rest of Australia's key mining sector.

The Greens' stance could force the government to negotiate some changes. The Greens want to raise an extra A$2 billion a year, but party leader Bob Brown said they would not block the tax if it did not secure its changes.

"All I can do is say we will negotiate strongly, inject better ideas into the mining tax proposals Labour has, and I think we will get a dividend," Brown told the National Press Club.

"Given that option, you don't have to be Einstein to know that the Greens will be going with the Labour Party alternative."

A Labour victory would also see a possible carbon trading scheme to combat climate change from 2012 and ensure construction of a $38 billion fibre-optic national broadband network.

The Liberal-National opposition opposes all three policies.

With two days of campaigning left and economic management a key issue, the opposition on Wednesday promised a budget surplus of A$6.2 billion by 2012-13, almost double the government's forecast surplus of A$3.5 billion.

Australians are historically wary of government borrowing due to high levels of personal debt and home ownership, so the opposition also promised to cut the country's A$90 billion ($81.5 billion) debt by a third within four years.