The mining tax is shaping up to be one of the biggest issues of the federal election and it’s a sore spot for Kevin Rudd.

Yeterday mining company Xstrata suspended two mining projects in Queensland. One was worth $586 million, the other $600 million, and they would have created an estimated 3000 jobs. 60 contractors were sacked yesterday by Xstrata.

QLD Premier Anna Blight stepped in, asking the PM to “put down the baseball bats, to stop the advertising and get on with solving it”. Rudd refutes Xstrata’s claims that the RSPT is to blame for the projects’ suspension.

One week it seems like the government will make a deal with the miners, next week it’s a standoff. Rudd didn’t attend the Mineral Council of Australia’s annual dinner and it’s lost him significant brownie points. There’s talk the miners are chatting to the Greens, since it’s now possible the Greens will hold the balance of power in the Senate.

So should Kevin Rudd stop the whinging and start negotiating with the miners? Or is standing strong his best political option?

Here’s what the pundits are saying:

The Australian

Jennifer Hewett and Dennis Shanahan: Drinks with Kevin fail to lift spirits of mining bosses

They [miners] told him about the damaging impact the tax would have on investment and their unhappiness about the government’s strident attacks. But they say the Prime Minister did not concede any flaws in the design of the tax or suggest ways the government might consider to resolve the differences.

Bryan Firth: Rudd can’t afford to pooh-pooh public statements by miners

That remark simply demonstrates Rudd’s lack of understanding as to how the mining industry works and the long lead and expenditure that has to go into developing a project such as Wandoan to the point where a final decision is made to proceed.

Henry Ergas: Going retro with cash grab

Mining taxation does need fixing. But there are far better ways to do it. The best would be as part of a comprehensive redesign of our collapsing fiscal federalism. Now that would be real, hard, reform. But it would take time. The pay-offs would be long term. And it would not raise huge revenues in the short run. This tax will. Need one say more?

Sydney Morning Herald

Elizabeth Knight: Stick to the facts – some projects are on the line

It was a stupid idea by Xstrata to exaggerate and gloss over the detail in order to push its point. It detracts from the merits of its debate.

The Age

Katharine Murphy: Miners in money suits have a blast

Given Rudd had fled the miners’ dinner to celebrate a one-term Labor prime minister, Andrew Fisher, down the road at another venue, the generals could go for broke. Sorrow, anger, doomsday, explosives, T-shirts, prawn cocktails, anecdotes about drill parts from Broken Hill in 1932, power points on good policy making, high finance, high intrigue.

They could have heaved a giant Kevin07 voodoo doll on to the stage and stuck spears into him.

Michelle Grattan: Rudd’s tax plan mired in the mud

The government might think it weakens the companies’ resistance by pushing the talks out towards the election. The miners know that if Labor is returned, it will be able, politically, to ignore their cries. (If Rudd lost, they would have hit the jackpot.)

But the costs for the government of delaying any changes are high. The row is drowning out other issues, such as the health reforms, and helping Tony Abbott.

The Courier-Mail

Dennis Atkins: Govt refuses to debate $586m in mining developments six times

…if the Government fails to settle or win the mining tax argument it will find it hard to succeed in the bigger debate.

The West Australian

Andrew Probyn: Gloves off in mining tax flight

It’s gone from shadow boxing to a title fight, with real blood and bruises.

Suddenly, we’re not just talking about phantom projects being shelved or non-existent jobs being at risk, we’re now talking about real projects and real workers being lost.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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