By James Grubel
CANBERRA (Reuters) - New Australian Prime Minister Julia Gillard expressed confidence on Tuesday she would end a damaging mining tax row, as speculation grows she may call an election within weeks to capitalize on her honeymoon period as leader.
Mining industry groups suspended a hostile advertising campaign against the tax after Gillard ousted Kevin Rudd last week and promised to negotiate with the industry over the 40 percent tax, designed to raise A$12 billion ($10.5 billion).
But the Association of Mining and Exploration Companies has since expressed doubts over Gillard's commitment in the talks and said it wanted a quick compromise.
"I have really serious doubts about the government's commitment to finding a workable solution. They have had four days to get something to us," association chief executive Simon Bennison was quoted saying in The Age newspaper.
Gillard, who has revived the ruling Labor Party's election hopes, said negotiations with mining companies were proceeding.
"Genuine negotiations are underway. They will continue. They will have my personal attention and focus," Gillard told Australian radio.
"I believe that in a spirit of goodwill and showing some respect to each other, we can get this sorted out, we can see a meeting of minds."
Media speculation suggests Gillard could call an election as soon as possible once a compromise is reached on the mining tax, but Gillard on Tuesday only said that an election was due in the second half of 2010.
A Nielsen poll over the weekend, the first since Gillard took over, gave Labor a 55-45 lead over the conservative opposition, indicating an eight-point swing to the government.
The Minerals Council said the tax row needed to be resolved before an election, expected between August and year-end.
TAX LONG-TERM NEGATIVE, FUND MANAGERS
The proposed mining tax threatens more than $20 billion in investment, according to angry miners, but no major project has yet been scrapped and several have actually been advanced since the tax was unveiled on May 2.
The Australian mining index has underperformed the global mining sector by about 4 percent since the tax was first announced on May 2, despite a weakening in the Australian dollar over that time.
Four out of five of Australia's leading fund managers said the tax in its current form would have a long-term negative impact on the resource sector, according to Russell Investments' latest quarterly Investment Manager Outlook.
The survey found the tax was expected to increase volatility in local mining stocks over the next 12 months.
None of the 36 fund managers saw the tax as a positive, but the majority believed its impact was "more than fully reflected" in current mining share prices.
"The main concern related to the increase in perceived sovereign risk for Australia," said the survey released Tuesday.
"This in turn was seen as having the potential to lead to lower levels of international investment, a higher cost of capital for local companies, job losses, and uncertainty affecting our broader sharemarket and the Australian dollar."
FRESH TAX TALKS
Talks between Treasurer Wayne Swan, Resources Minister Martin Ferguson and senior mining executives are set for Wednesday, The Australian newspaper said, marking the first full negotiations since Gillard made her pledge to get talks going five days ago.
She has said she wants to resolve the issue as soon as possible but gave no timing and has not made clear whether she would be willing to lower the 40 percent tax rate or raise the threshold at which it applies.
(Additional reporting by Michael Perry in Sydney and Sonali Paul in Melbourne; Editing by Ron Popeski)
