Carbon Tax Reality Belts our Manufacturers

12 Oct 11

Media reports following the passing of the carbon tax legislation say, sealed with a kiss. More like a kiss of death for some of our manufacturers.

The Gillard government has got 19 carbon tax bills through the House of Representatives.

Despite pre-election promises that there would be no carbon tax under the Gillard led government, it has now become a seeming reality with the legislation expected to pass through the senate.

This is not news that Australia's manufacturing sector wanted to hear. Already facing the headwinds of the strong dollar, international competition and insufficient local content in major government and other projects, the unwanted carbon tax is another slap in the face of one of Australia's largest employing sectors.

It is reported that last week the Senate Carbon Tax Inquiry, the most comprehensive parliamentary inquiry into the tax, released a report with findings based on evidence from a wide cross section of experts, that the tax is not effective action on climate change. It is – as a US Congressman perceptively observed about Australia’s proposed carbon tax – an act of unilateral economic disarmament.

Some media reports suggest that despite severe opposition to the introduction of the tax from a broad cross section of the community, including the manufacturing sector, the passing of the carbon tax legislation is one of the only agenda items keeping the Gillard government in power, by pandering to the Greens, who have shown no interest in the effects of the legislation on the manufacturing sector and jobs.

Regardless of how many economic models that have been done that both unsupport and support the legislation, the uncertainty surrounding the effects will act as a further headwind to confidence in not only the manufacturing sector, but Australia's economy as a whole.

Recent claims by the Prime Minister and the Treasurer that the carbon tax will not result in fewer jobs cannot be believed or proven. In fact some reports suggest that Treasury never modelled the impact of the carbon tax on jobs.

Many believe there are better ways for the economy and for the environment. Direct investment in better cleaner technology, further improvements in energy efficiency, better land care etc. The carbon tax is a penalty rather than a much needed incentive for businesses to invest in newer and cleaner technology which would also help them to remain globally competitive.

The devil is still in the detail and the reaction of all Australians.