Brendon Grylls has won a bruising contest for the WA Nationals' leadership and unveiled plans for a new mining tax that has left the coalition state government looking unstable and divided.
Mr Grylls emerged triumphant from a seven hour leadership showdown over two days with Terry Redman, who stepped down as leader after three years.
The return of the 43-year-old Pilbara MP, after he quit three years ago follows sharp criticism by him and his supporters of their Liberal party government partners led by Premier Colin Barnett.
He stopped short of ending the parties' alliance.
Mr Barnett said he was disappointed with Mr Grylls' comments that the government was not in a winnable position ahead of next March's election, with Labor ahead in the polls and the budget in bad shape including forecasts for a $3.1 billion deficit this year and net debt rising to $39 billion.
His solution is a mining tax that only applies to the biggest miners BHP Billion and Rio Tinto.
A $5 a tonne iron ore "production rental" charge would raise $7.2 billion and return the budget to surplus, he said.
Mr Grylls described it as a good policy but acknowledged federal Labor's failed mining tax six years ago cost former prime minister Kevin Rudd his job after an industry campaign against it.
"We as a state have facilitated the huge expansion of the iron ore industry at great cost to our state budget, the miners are not paying their fair share," Mr Grylls told reporters.
"The Nationals are making the call that these two miners are the ones to help the West Australian government to surplus."
Those miners would not face the new tax if they could persuade the federal government to achieve a better GST revenue deal for WA, including a minimum of 75 cents per dollar it generates compared to the 30 cents it has received recent years.
The plan was criticised by Liberal figures including Mr Barnett and several ministers and Rio and BHP who questioned why it only applied to them and said it would damage the economy and cost jobs.
That does not rule it out from becoming policy.
WA's costly Royalties for Regions policy, in which regional areas get a 25 per cent share of resources royalties, was introduced when Mr Grylls made it a condition of him supporting and forming government with the Liberals in 2008.
Mr Grylls denied reports he had held talks with senior Liberal MP Dean Nalder to try and remove Mr Barnett as premier but would not support him either.
He and Mr Redman, who will remain WA's regional development minister, presented a united front with the latter saying he had stepped down so the issue did not drag on.
"I still consider Brendon a friend ... obviously these things are scars but we need to get over those scars," he said.
