PM hands out $90m for polluters as carbon tax looms

THE Gillard government has revealed $90m in industry bailouts on the eve of the introduction of the carbon tax to protect more than 3000 jobs

carbon tax pollution

THE Gillard government has revealed $90 million in industry bailouts on the eve of the introduction of the carbon tax to protect more than 3000 jobs as it emerged that 50 manufacturers in four states had been handed a two-year deadline to switch to low-emissions energy supplies.

Energy Minister Martin Ferguson announced $50m for a two-year restructuring package for Energy Brix to allow the plant, in Victoria's Latrobe Valley, to maintain briquette production during that period.

This would give regional businesses time to switch to cleaner fuels such as gas.

The announcement came after Climate Change Minister Greg Combet confirmed a $40m bailout for Alcoa's Port Henry Smelter for two years, protecting most of the plant's 600 jobs.

The moves came as business leaders criticised the arrival of the scheme and Tony Abbott again vowed to scrap it as the first order of business of a Coalition government. In an email to members yesterday, Business Council of Australia chief executive Jennifer Westacott asked members to provide detailed data on the costs and impacts of the policy as they unfolded.

"The artificial focus on the 1 July date is unhelpful because the reality is that the effect of the carbon tax, the mining tax and the RET (Renewable Energy Target), on top of other issues affecting productivity, is cumulative," Ms Westacott said in the email, which was obtained by The Weekend Australian.

"It is important for the community to be informed of the impact of the carbon tax on Australia's competitiveness over time. By focusing on what happens, or doesn't happen, on July 1, the risk is that Australians will be given a false sense of security."

Ms Westacott said the data would allow the BCA to contribute to a national discussion based on "an honest understanding of the real impact of emission reduction policies on the ground".

"Without it, we run the risk of aiding and abetting a situation where the carbon tax is blamed for everything and the community switches off to the real impacts as they emerge over time," she said.

The BCA criticism came as Australian Chamber of Commerce and Industry economics director Greg Evans said the carbon tax had already disrupted the investment plans of many companies, "particularly energy-reliant processors and manufacturers ... We are going to continue to see more compensation arrangements put in place as the carbon tax impact is realised and it becomes clearer which jobs are at greater risk.

"We now have a ridiculous situation where the government is compensating businesses for the deliberate handicapping of their competitiveness," he added.

"This merry-go-round is not a sustainable policy path and it would be better if governments concentrated more on policies to enhance competitiveness than opportunities to hinder it."

The criticism came as the government confirmed it would continue to pursue the negotiated closure of 2000 megawatts of high-emissions, brown-coal electricity generation, despite missing the original June 30 deadline.

Mr Ferguson said the timeframe for contract-for-closure negotiations would be extended because of the complexity of the negotiations.

"At the moment, there are a number of complex commercial issues yet to be resolved, including the need to ensure value for money."

However, he said the delay would not have an impact on the budget bottom line as the money was contained in the contingency fund.

Greens leader Christine Milne last night urged the government to persist with the negotiations.

"The contracts to close coal power stations are an important step in building a cleaner, healthier, smarter economy," Senator Milne said.

Having held off completing the contracts and talked themselves up, the coal companies may now find that, with energy demand falling and wholesale prices dropping, they end up with a lower price than they had been bidding for."

With the government planning to use the arrival of the scheme to mount a major counter-offensive against Tony Abbott's demonisation of the carbon tax, the Opposition Leader will use an address to the Liberal Party federal council in Melbourne today to repeat his pledge to abolish it.

Julia Gillard plans a two-week blitz to discredit Mr Abbott's attacks on the scheme and Trade Minister Craig Emerson and Special Minister of State Gary Gray will visit Whyalla in South Australia to ridicule claims that it would be "wiped off the map" by the carbon price.

In announcing the Energy Brix package, Mr Ferguson said there was no alternative supplier of cost effective briquettes and making the transition to other cleaner forms of fuel or feedstock would take time and adjustment.

The package effectively gives the businesses that rely on briquettes - ranging from abattoirs, horticultural and char producers, food processors, diary processing plants and electricity generators - two years to find alternative forms of energy, which will most likely be gas.

The companies employ more than 2500 people in NSW, Victoria, South Australia and Tasmania.

Energy Brix Australia Corporation said the briquette restructuring package would enable briquette manufacturing to continue for the next two years and provided time for briquette customers to transition to alternative fuels. The company had conducted a review of its operations and found that the high dollar and the increased costs as a result of the carbon tax meant it was not sustainable on a business and usual basis.

In Geelong Mr Combet said the $40m Alcoa package would help the plant modernise in the face of a high dollar and a slump in aluminium prices. He said the government had worked closely with the company to minimise the impact of the carbon tax and it was less than $1.30 a tonne.

The commonwealth grant, which Alcoa is contractually obliged to use on improving and maintaining the ageing plant, has all-but guaranteed the smelter will continue to operate until July 2014. Alcoa management said the future of the plant beyond then would be heavily dependent on the strength of the Australian dollar and world aluminium prices, which have collapsed since the global financial crisis.

But negotiations will continue between Alcoa and the Baillieu government over a looming $60m-$70m carbon tax bill on power used by the facility.

The opposition seized on the bailouts, and reports that East Timorese joint ventures would also be exempt from the carbon tax.

Opposition Climate Action spokesman Greg Hunt said: "There have been three bailouts in three hours on the eve of the carbon tax. There is clearly chaos. And coupled with the fact that the carbon tax is going to hit funerals there is also farce.

"If they are going to bailout everyone they are taxing, the question everyone has to ask is what is the point of the whole tax from the outset."

Mr Hunt said the absurdity of the carbon tax had been revealed with confirmation that Australians would be paying the carbon tax even on their funerals.

"Speaking on the Neil Mitchell program on Radio 3AW, Le Pine Funerals communications manager, Karl Wolfenden explained that there would be a price rise," Mr Hunt said.

Additional reporting: CHIP LE GRAND