QLD Mining and Energy Bulletin
Issue link: http://ebook.aprs.com.au/i/42546
INDUSTRY RESPONDS TO CARBON TAX After months of speculation, the Gillard Government in July laid out the details of its carbon tax. But mining and resources groups have sharply criticised the deal. Jarrod Fitch reports. P rime Minister Julia Gillard declared that from 1st July 2012 Australia will effectively tax carbon emissions on its 500 biggest polluters at a rate of $23 per metric tonne of carbon dioxide emissions, fi xed to infl ationary rises until moving to a proposed market-based price in 2015. Queensland Resources Council Chief Executive, Michael Roche, told Queensland Mining and Energy Bulletin (QMEB) that the deal is likely to deplete the sector of thousands of jobs, especially in coal mining. "Using actual cost data from Queensland mines, economic consultants ACIL Tasman have calculated the carbon tax is going to cost 2700 Queensland coal workers their jobs, possibly as early as 2018. Taking into account the fl ow-on to industries servicing the industry, total job losses of more than 13,000 have been forecast to follow the premature closure of mines," he said. Roche added that compensation does not go far enough to relieve costs of CO2- intensive 'gassy mines', criticising the $1.26 billion compensation package compared to the estimated $18 billion in liabilities over the fi rst 10 years. "There is a better way to address emissions reduction and for that Australia need look no further than Europe's transitional approach to imposing a carbon price on their emissions-intensive trade-exposed industries... Europe's emissions trading system extends a proportion of free allowances to selected industries until 2020 to reduce the costs for those deemed to be exposed to signifi cant competition from outside the EU," he said. Roche was also critical of increases to 'off-road' diesel costs, saying they will rise by an estimated 16 per cent. He says [6] QLD Mining and Energy Bulletin Spring 2011 increased costs will put Australia at an international disadvantage. "Indonesia, Colombia, South Africa, USA, Canada and Russia are all competing actively in the same markets as Australia but will not be paying a domestic carbon tax in the foreseeable future. These countries and others such as Mongolia and Botswana will be able to take advantage of global demand at the expense of Australian jobs, government revenues and investment." NSW Minerals Council (NSWMC) CEO, Dr Nikki Williams, agrees, saying that despite being "100 per cent behind action on climate change" the deal represents "another nail in the coffi n." A spokesperson from NSWMC told QMEB that the transitional arrangements don't go far enough to protect the thousands employed in associated supply industries. "The assistance only targets gassy mines, not others with a high-cost profi le that may now fold under the weight of the carbon tax. The assistance simply pushes out job losses and mine closures until the compensation dries up in six years. The carbon tax will stunt the industry's growth because the transitional arrangements don't cover new mines or the expansion of existing mines." "No other country has a tax on fugitive emissions from coal mining or plans for one. The EU started with a modest scheme and has been sensibly adding industries and gasses over time. But no other scheme taxes emissions from mining because there is no technology anywhere in the world that can measure and capture fugitive emissions from open cut mines." The Chamber of Minerals and Energy (CME) Western Australia Acting Director, James Edwards, said the carbon tax is another burden on top of the proposed Mineral Resources Rent Tax (MRRT), risking Australia's international competitiveness. "This tax simply increases the sovereign risk profi le of investing in Australia, something which has already taken a battering under the original Resource Rent Tax and lingers on under a MRRT," he said. A spokesperson from CME told QMEB that the group has backed climate change policy, but only when aligned with international agreements. "It is in Australia's best interest that the resource sector remains strong. The imposition of the carbon tax questions the federal government's understanding of what's driving our economy." Economists weigh in Following the announcement, The Economic Society of Australia surveyed 140 economists attending its annual conference. Sixty per cent of attendees agreed that the carbon price represents 'good economic policy', with 25 per cent in the negative. "About a quarter of the respondents were unable to give a clear opinion this early in the piece, but of those who did have an opinion, around 85 per cent said they did not think the Coalition's direct action plan is sound economic proposal to reduce carbon emissions," President of The Economic Society, Professor Bruce Chapman, told the ABC. Environmental conservation group WWF in June released an Economists' Open Letter Supporting a Price on Carbon Pollution 2011 which advocated a market-based carbon pricing scheme. The letter was signed by leading economists from organisations including Citigroup, BT Financial Group, Grattan Institute, Westpac, Macquarie Bank, Australian Business Economists, Universities Australia, and notably former Liberal Party Leader John Hewson. "We are all of the view that the introduction of an emissions trading scheme is a NEWS