Take two on resources tax
Billionaire iron ore producer Andrew Forrest and newly anointed prime minister Kevin Rudd had a deal back in 2010 - one that was only days from being cemented. It was a remodelling of the much-hated resources super profits tax, a compromise that suited Forrest's Fortescue more than the bigger established mineral producers.
It was a proposal designed to save Rudd from political death and appease the mining lobby whose anti-government campaign had reached a damaging fever pitch.
While the prime minister and Forrest were busy polishing the proposal in preparation for an announcement, Rudd's party colleagues led by Julia Gillard and Wayne Swan were busy on their own deal with another group of miners, BHP Billiton, Xstrata and Rio Tinto. Gillard/Swan won the battle for power and the minerals resource rent tax (MRRT) was born.
Forrest, the renegade of the mining industry, and Rudd have remained friends and doubtless Rudd, who has declared that he wants to repair the government's relationship with business, will need to tread delicately.
While the major mining companies that devised the MRRT in conjunction with the government have been happy with the outcome, the lack of revenue raised from the tax has been a major embarrassment for Swan and Gillard.
The three large minerals houses contributed next to nothing to the tax last year and there are expectations that the structure of the tax, combined with the fact prices for iron ore and coal are under pressure, will mean the MRRT will not raise much more over the next couple of years - at least.
There is nothing to stop Forrest revisiting his alternative mining tax proposal with Rudd. The fundamental difference between the two was that the Rudd-Forrest model provided tax deductibility for capital spent on infrastructure and the MRRT provides deductibility for the resources in the ground.
Meanwhile, Rudd owes no favours to the group of three mining companies that cut a deal with Gillard. There would be no point in Rudd moving back towards the universally hated resources super profits tax - which bizarrely would have resulted in the industry paying no tax with commodities trading at their present levels.
The best outcome for the industry would be to see the Liberals win power, given they have promised to dump the MRRT - which would suit Forrest's Fortescue Metals and its larger rivals.
But if Labor looks at all like it could retain power, the game will be on to take a fresh look at the industry tax structure.
In an interview with Fairfax Media on Saturday, Rudd said that before the election he wanted to take a look at and possibly make changes to some policy areas including the mining tax.
If so, it's highly likely he would seek to discuss his plans with Forrest - who, thanks to the falling commodity price and some balance sheet strain, is looking to sell a large minority stake in Fortescue's infrastructure assets.
If Rudd decides to revisit the proposal he nutted out with Forrest, the part-sale of these infrastructure assets will lose some of its financial appeal.
Already Fortescue has pushed back the timing of the deal from June 30 to the end of September.
Forrest, who rallied smaller iron ore miners to campaign hard against the resources tax, may have decided it is too difficult to unscramble the tax, which has cost Fortescue almost nothing.
From Rudd's perspective, he now sits on a flawed tax that raises almost no revenue and faces a troika of big miners that will fight any changes that could increase (or create) a tax impost.
Moving away from a fixed cost to a tradeable carbon tax model - which Rudd has indicated he would pursue - has provided them with a gift that investment bank UBS estimates will increase BHP and Rio earnings by about 3 per cent.