Julia Gillard is set to finalise a deal with miners on the contentious resources tax, ending a two-month fight that has threatened Labor's re-election chances.
The prime minister was scheduled to return to Canberra at 8pm on Thursday to meet with mining executives in Parliament House, in what looks to be her first major achievement since coming to office a week ago.
She was to arrive back in the national capital after spending the day at the funeral of fallen soldier Ben Chuck in north Queensland.
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Her deputy Wayne Swan and Resources Minister Martin Ferguson have been in Canberra finalising negotiations with mining giants BHP Billiton, Rio Tinto and Xstrata.
The government is understood to have offered concessions to the mining industry as Ms Gillard strives to have a deal ready for the upcoming election.
While the government would not confirm any details of the parties reaching an agreement on the tax, reporters spotted two drinks trolleys laden with champagne, wine and beer being wheeled into the cabinet room about 5.30pm.
Swan indicates deal likely
Earlier on Thursday Mr Swan indicated the government's willingness to negotiate with miners.
"I don't intend to put any boundaries around those discussions," the treasurer told Fairfax Radio Network.
The government appears to have given ground on where the super profits tax would cut in.
The former Rudd government initially set the threshold at the 10-year bond rate, now hovering at 5 per cent.
But Fairfax reports agreement has been reached where the tax would cut in at the long-term bond rate plus seven percentage points.
Under this deal, the super profit threshold would be 12 per cent.
The level is higher than the 10 per cent threshold of the petroleum resource rent tax, introduced in 1987, which is based on the 10-year bond rate plus five percentage points.
Queensland Premier Anna Bligh has previously lobbied the federal government to amend the resources super profits tax so that the uplift is similar to the petroleum tax.
Former prime minister Kevin Rudd had maintained the government would not budge on its 40 per cent headline rate for the resource super profits tax.
But the Gillard government has signalled it could compromise on this point, Fairfax said.
The mining industry has also raised objections about the retrospective nature of the tax, something which the government is willing to address.
A deal with the miners could also exempt lower value resources like sand, gravel and limestone from the regime, as well as nickel mining and processing, Fairfax said.
Party politics into fold
Politically, this arrangement would dent Opposition Leader Tony Abbott's assertion the mining tax would push up the price of house construction.
But a re-elected Labor government could face another obstacle if the Australians Greens win the balance of power in the Senate.
A day after Rio Tinto iron ore chief Sam Walsh called on the government to keep any deal after the election, Greens leader Bob Brown said Labor should not expect the Senate to be so compliant.
"There's a small thing called democracy here and a big thing called the Australian parliament, and unless Labor gets control of both houses, and that's not going to happen, then the agreement will be subject to parliamentary scrutiny," Senator Brown told reporters in Sydney.
Treasury expects the mining tax proposal in its current to generate $12 billion in 2012 and 2013.
Senator Brown said his party did not want the government's "very secret" negotiations with the mining giants to reduce potential revenue.
