Gillard's carbon tax dead on its feet



Her political judgment is woeful. Abbott gets the steelworkers on his side

THE Gillard government's plans to put a price on carbon have suffered a body blow, with key unions demanding exemptions for industry that are unacceptable to the Greens. With his own job under threat from a hostile membership, the national secretary of the Australian Workers Union, Paul Howes, demanded yesterday that the steel industry be given a complete exemption from the carbon scheme and that there be generous compensation for the aluminium, cement and glass sectors.

Mr Howes issued the demand after a fiery crisis meeting with nine union branch secretaries from across Australia. It is understood Mr Howes, who is up for re-election before the next federal election, faced being dumped if he did not issue the demands. The AWU is influential in the Right faction of the ALP and was instrumental in Julia Gillard's coup against Kevin Rudd last year.

Immediately after Mr Howes's announcement, he was backed by the powerful Australian Manufacturing Workers Union, which influences the party's Left. The loss of support from the industrial wing of the party leaves the government stuck between the unions and the Greens, whose support is critical.

The government is negotiating with the Greens to put a price on carbon and one key sticking point is the level of compensation for trade-exposed industries. The other is the starting price for a tonne of carbon. As a starting point, the government was proposing the same generous levels of industry assistance devised under the emissions trading scheme negotiated with Malcolm Turnbull. The Greens derided this as "backroom deals for rent seekers" and want less compensation this time.

As well as exempting steel altogether, Mr Howes wants the compensation for aluminium, cement and glass to be "at least" as generous as that negotiated under the old scheme.

If the Greens vote for this, they would be signing on to a weaker scheme than the one they blocked in 2009 because, in part, they felt the compensation was too generous.

The Greens climate change spokeswoman, Christine Milne, was unhappy with the unions' backdown but said she would confine her negotiations to the multi-party climate change committee which meets again next week. "Conducting negotiations is not well served by threats to withdraw support if you don't get your way," she said. "Paul Howes should follow the example of many of his colleagues in the union movement who, like us, see the tremendous jobs potential in building a new clean economy."

The unions stuck with the Rudd government during the original ETS process and, until yesterday, had been rock solid with the Gillard government. But the steel sector, which is a big exporter, has been crying foul for weeks, saying it is already under pressure from the high Australian dollar and high input costs caused by rising prices for ore and coking coal.

This week the Climate Change Minister, Greg Combet, challenged the industry, saying a carbon price of $20 would add just $2.60 to the price of a tonne of steel.

But Mr Howes sided with the steel makers yesterday. "We think there is a special case to be made for steel," he said. "Steel is going through a hard time at the moment, not because of carbon pricing. "When the dollar sits at 1.05, all export-based industries are under a huge amount of pressure. But there is no solid argument we shouldn't be making steel in this country."

Tony Maher, from the Construction, Forestry, Mining and Energy Union, said Mr Howes has "got a very good argument and I would urge the government to consider it". "The economic circumstances of today are not those of two years ago."

Mr Combet refused to exempt steel. He said current economic circumstances were already being factored in and steel would again be in line for generous compensation. "A very significant level of assistance has been proposed," he said. "This assistance will be designed to stop 'carbon leakage' of jobs overseas and is the subject of continuing discussion with the steel industry and other industries."

One source said the Opposition Leader, Tony Abbott, had undermined Mr Howes by whipping up worker resentment during recent visits to BlueScope at Port Kembla, and OneSteel in Victoria. Mr Abbott welcomed Mr Howes's stance yesterday.

SOURCE.

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