SYDNEY: New Australian leader Julia Gillard`s peace accord with the powerful mining sector overcomes a significant political hurdle and sends a critical message as she clears the decks for national elections.

Gillard made a tax row with the deep-pocketed resources industry her priority after sweeping aside ex-prime minister Kevin Rudd last month in a lightning coup driven largely by his battering in opinion polls on the issue.

Rudd`s damaging war of words with global resources giants BHP Billiton, Rio Tinto and Xstrata turned him, in a matter of months, from one of Australia`s most popular leaders to a liability for the ruling centre-left Labor party.

His unceremonious dumping and the installation of Gillard, the nation`s first female prime minister, paid immediate dividends in the polls.

And just one week after taking power Gillard achieved what Rudd failed to do in eight -- bring the key resources export industry on-side with a compromise that neutralises the debate and shows her as a can-do leader.

"The only thing I could say to Australians is to judge me on how I do the job," Gillard told the Sydney Morning Herald newspaper on the weekend.

"What we`ve achieved with the mining industry is one way of showing that I`m very happy to sit down with people and work through difficult issues."

Gillard has been anxious to distance herself from Rudd and his centralised, autocratic style by emphasising that she has a consultative approach.

"I do believe I put my stamp on the process here," she said after announcing her tax backdown, describing herself as a lawmaker with a "stomach for hard reform".

Paul Kelly, editor of The Australian newspaper, said Gillard`s deal on iron ore and coal mining profits, which slashed the tax rate from 40 to 30 percent and doubled the threshold at which it applied, was a sign of her pragmatism.

"This deal signals Gillard`s election strategy," Kelly wrote in The Weekend Australian. "She will be chasing the middle ground that Rudd lost."

The conservative opposition was quick to reject the compromise, which still needs to be passed by parliament, with leader Tony Abbott declaring that the battlelines had been drawn and "the next election will be a referendum on tax".

Though he will have support from some of the smaller miners and business owners who will now only get a one percent cut in the company tax rate to 29 percent, instead of 28 percent as promised by Rudd, Abbott`s strategy is a gamble.

"The mining argument has lost important allies," wrote the Herald`s Phillip Coorey. "Without the big miners screaming and yelling it will be a harder argument to sustain."

Gillard`s maiden speech as leader singled out the three issues likely to be election flashpoints: the mining tax, climate change and the steady flow of asylum-seekers from Sri Lanka and Afghanistan.

Having neutralised the first, Gillard has already indicated immigration is next on her to-do list, and she faces a major policy hurdle this week, with a review due of Rudd`s freeze on processing Sri Lankan asylum claims.

She has warned there is "no quick fix" on the historically fraught issue, but signalled a tough line and distanced herself from Rudd`s policies.

Rudd scrapped the harsh policies of his conservative predecessor John Howard in favour of a more "humane" approach, while Abbott has vowed a return to the so-called "Pacific Solution" of locking up and processing refugees offshore.

Gillard also signalled a tough approach when she said "political correctness or niceties ... need to be swept out of the way".

"I do understand the concerns when people see boats looming on the horizon," she told the Sunday Telegraph.

Gillard, a childless atheist, must strike a delicate balance between Labor`s more conservative working class base and its supporters on the middle class, progressive left.

The latter abandoned the party after Rudd shelved an emissions trading scheme, and Gillard`s promise to "re-prosecute the case for a carbon tax" has been credited with drawing left-leaning voters back to Labor.

She`s hosed down suggestions of an early August election, saying she had "some governing to do first", but the media have speculated widely that she will go to the polls early to capitalise on her honeymoon with the public.

"The story is Gillard," wrote Kelly. "Negotiating in broken traffic, she has delivered a political win for the Labor party that backed her. As her authority builds, Abbott is threatened."

BDST: 8:47 HRS, July 4, 2010