Monday, May 02, 2011

The carbon price as Treasury tells it

When asked by Swan. Story below

Impact of Carbon Price

Treasurer Wayne Swan will forecast an unemployment rate of just 4.5 per cent on budget night, predicting Australia will get there in a year. And he says 500,000 extra jobs will be created over the next two years whether or not Australia gets a carbon tax.

Going on the offensive against “outrageous” claims the tax would wipe towns off the map Mr Swan said Treasury analysis showed it would have one twentieth the effect on the steel industry as the gyrations in the Australian dollar over the past four months.

A Treasury executive minute seen by the Herald says a $20 per tonne carbon tax with compensation of the kind proposed in 2010 would cost the industry $2.60 per tonne of steel produced. So far this year the rise in the Australian dollar has cost it $50 per tonne.

Coking coal prices have fluctuated between $100 and $400 a tonne between 2005 and 2010. By comparison coking coal producers faced “a carbon cost per tonne of around $2.80"

Aluminum prices had swung between $1200 and $3000 per tonne. This compared to a carbon tax impost after assistance of $19 per tonne...

The Treasury minute said the carbon price would also be less volatile than the exchange causing fewer problems in budgeting.

“There needs to be a calm and rational discussion about this,” Mr Swan said. “Talk of communities being wiped off the map and industries closing down is not only false, it’s irresponsible.”

“The government does not underestimate the competitive pressures faced by industries such as steelmaking caused by the high dollar, high commodity prices and the fallout from the financial crisis, but let me be clear, the carbon price is not driving these pressures.”

Opposition leader Tony Abbott dismissed the analysis saying the carbon tax would “very badly damage steel making, aluminium making, motor manufacturing and cement manufacturing.”

“It will export jobs to China and Indonesia and it will import emissions. We’ve had the South Australian branch of the Australian Workers’ Union talk about turning Whyalla and Port Pirie into ghost towns if the carbon tax goes ahead. This Government can’t credibly talk about job creation if it’s not going to talk about the jobs impact of its carbon tax.”

The proposed carbon tax will not be incorporated in the forecasts to be released on budget night. They will be updated later in the year in a second statement to be released after the carbon tax becomes law.

The Treasurer accepted the proposition that public service jobs would be lost as a result of the so-called enhanced efficiency dividend planned for the budget saying he did “not necessarily expect any forced job losses”.

The Community and Public Sector Union said he statement amounted to an admission admission frontline public services would be cut.

“The government has gone from promising not to change the efficiency dividend, to promising no cuts to overall public service numbers, to the Treasurer’s weak comments about ‘no forced job losses’,” CPSU national secretary Nadine Flood said.

The decision to increase the efficiency dividend from 1.25 per cent to 1.5 per cent for two years will cost government departments $465 million as part of the drive to return the budget to surplus.

Published in today's SMH

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