Opposition to the Toxic Carbon Tax Continues to Grow

12 Feb 12

With a spate of bad news and job losses coming from the manufacturing sector, pressure is growing on the Gillard Government to scrap the toxic carbon tax.

Dubbed the toxic tax because it will deepen the current pressures that our manufacturing sector is facing, being competition from cheaper imports, lack of local content in Australian and Government projects, and the high Australian dollar. The strong dollar is politically good but in the longer term is having a disasterous side effect on all sectors of the economy except mining, which is going through a cycical boom.

Some overseas Governments such as China, USA, India, Russia, and Germany that are perhaps more economically responsible and less politically motivated, and not hamstrung by a minority Green element, that cares little for the environment but enjoys the political limelight, are moving away from carbon reduction schemes in order to save their economies and their people's jobs.

Prime Minister Julia Gillard has quickly and disgustingly come out to the media to say that Alcoa's review of its Point Henry plant in Victoria has nothing to do with the forthcoming Carbon Tax from July 1.

It appears she has it all wrong as aluminium production in this country has always thrived on cheap local bauxite supplies and cheap electricity. Under the carbon tax, cheap electricity will vanish and in the face of the dollar making aluminium exports unattractive, coupled with falling prices, this is just another example of how the Gillard Government is totally disconnected from manufacturing which is one of Australia's largest employing sectors. When the jobs are lost they will be near impossible to get back.

In an interview with The Australian this week, Alcoa's senior management figures explained the flawed assumption at the heart of the Gillard Government’s carbon dioxide tax compensation - that the carbon pricing model assumes brown coal-supplied smelters will emit about 20 per cent less carbon than they actually will. Tim McAuliffe, Alcoa’s director of government relations and carbon tax expert, said: “It is all to do with the intensity of power. “Smelters use an enormous amount of power and the way the carbon pricing mechanism is structured, it assumes you will get carbon pass-through effectively at one tonne of carbon for every megawatt hour. You can’t get power in Victoria at that intensity.”

Julia Gillard will most likely be voted out of office in 18 months or so if the opposition play their cards right, and the manufacturing distruction that has been allowed to go unchecked by the labor Government will be left for someone else to clean up. Gillard could make herself a hero and provide herself a political lifeline by dumping or deferring this toxic tax. Economic fundamentals at present do not support the imposition of a new tax, particularly an internationally ground breaking tax that will do little for the environment given how small Australia's carbon foot print is.