Resistance to a carbon price is growing, with 45 export companies and industry groups writing to Julia Gillard yesterday to demand they not be disadvantaged and the welfare sector expressing concern about compensation arrangements for the needy.
Despite the assurances of generous compensation for pensioners, the Australian Council of Social Service will today argue that a percentage increase in pensions will disadvantage the jobless because their allowances are much less then the age pension.
ACOSS will demand fixed dollar compensation, which should reflect cost-of-living increases, as well as an additional ”buffer”.
The concerns coincided with big unions backing away from a carbon price last week and demanding significant industry concessions and exemptions.
Countering the surge will be the publication today of research that hits back at claims by industry that it will be damaged by a price on carbon.
The Australia Institute research says export industries such as steel are crying wolf over the impact of a carbon price because it will be much less than that caused by recent movements in the dollar. It would be ”trivially small” once compensation was factored in.
”The introduction of a modest carbon price has a relatively insignificant impact on the ability of Australian exporters to remain price competitive with foreign rivals when compared to recent changes in the exchange rate,” the institute says.
But the letter to the Prime Minister signed by 45 mining, energy, agriculture and food production companies, and industry groups, says they have no capacity to pass on direct or indirect carbon costs to their customers.
”An Australian carbon pricing scheme must not impose costs on Australia’s export and import-competing industries ahead of their international competitors,” it says.
The industries are spooked by the government’s commitment last week that more than 50 per cent of the billions raised from pricing carbon will be returned to low- and middle-income households as compensation.
Under the original emissions trading scheme, 46 per cent of revenue was earmarked for households. Industry has deduced that if that is increased to more than half this time, there will be less for industry.
As a starting it point, it wants the original assistance scheme. Yesterday the Climate Change Minister, Greg Combet, said the government was working on the basis of the original assistance scheme.
Despite this, the steel sector has led industry outcry.
Steel, as an emissions-intensive, trade-exposed industry, will receive at least 94.5 per cent free pollution permits, meaning it will pay only for 5.5 per cent of the emissions it produces.
The Australia Institute calculated this would cost between 0.1 per cent and 0.4 per cent of revenue with a carbon price of $20.
This would equate to $3630 per million dollars of revenue which, for a company like BlueScope Steel, would be a cost of $34.5 million a year. This, the institute said, is less than the $50 million impost caused by a 1 percentage point increase in the costs of raw material such as iron ore and coking coal.
The steel industry has complained that since the Carbon Pollution Reduction Scheme was designed two years ago, circumstances have changed because ore and coal prices have risen and the dollar is much higher, putting pressure on exports.
Mr Combet has said these concerns are being factored in. However, on Friday the government lost the support of the unions, which want steel exempt.
