8 September 2010 / REUTERS, CANBERRA
Australian Prime Minister Julia Gillard secured a wafer thin parliamentary majority on Tuesday, ending a political impasse but hardly cheering investors worried about the fragility of her government and its plans to tax mining profits.
Gillard’s Labor Party, which was punished by voters in Aug. 21’s inconclusive elections despite a robust economy, secured enough support from three independents and one Green lawmaker to form a one-seat majority in the lower house of parliament. Her narrow victory means Labor can implement its proposed 30 percent mining tax, a prospect that dented resources stocks and the dollar, as well as pursue a $38 billion telecoms project, which supported shares in phone company Telstra. Shares in mining heavyweights BHP Billiton and Rio Tinto extended losses on Tuesday after the independents backed Labor, dashing hopes that the conservatives -- who were opposed to the tax -- would take power. Gillard’s plans to put a price on carbon emissions is also now firmly back on the agenda, given her support from the Greens, who will hold the balance of power in the upper house from mid-2011.
