THERE is still no certainty regarding the Gillard Government’s carbon tax despite the legislation passing through Federal Parliament today.
The Prime Minister’s Clean Energy Bill will slug major emitters with a $23 per tonne levy from July 1, 2012.
Grattan Institute program director and economist Saul Eslake suggests the carbon tax will suffer the same fate as the unpopular Work Choices industrial relations policy.
“Even though the current government got enough votes to get the carbon tax through parliament, the next government will abolish it,” says Eslake.
“If they can’t get the abolition legislation through at the coming election, they can go for a double-dissolution of powers. There is no more certainty now than when the proposed legislation was first announced.”
The 500 biggest polluting companies will pay the tax, while residential and industry users will receive compensation for any flow-on price effects.
Queensland Resources Council chief executive Michael Roche warns that the state economy will lose almost $13 billion of income in the 10 years to fiscal 2022 due to cancelled coal mines.
“That loss of coal income translates to a loss of more than $1 billion in royalties to the Queensland Government over 10 years,” says Roche.
Australian Mines and Metals Association director Minna Knight believes the carbon tax will erode the resources sector’s international competitiveness.
“For every resources job lost as a result of the carbon tax, another three Australians in related sectors face unemployment,” says Knight.
“These newly-unemployed workers certainly won’t pick up new positions in construction, tourism or agriculture – our other key economic drivers that are clearly still struggling.”
However Carbon Conscious executive chairman Steve Lowe has welcomed Labor’s climate change action, saying it paves the way for expansion in carbon forest sink operations.
“We have 8000 hectares of Mallee Eucalypt trees under management and are aiming to more than double this in the next planting season to accommodate the anticipated new demand for carbon abatement,” says Lowe.
CSIRO estimates that with a $20 per tonne price for carbon and carbon forest bio-sequestration projects will potentially capture 350 million tonnes of carbon dioxide equivalent per year by the year 2050.
According to the chief executive of one of Queensland’ largest coal explorers, the carbon tax alone won’t cripple growth in the mining sector.
Macarthur Coal boss Nicole Hollows says the minerals resource rent tax (MRRT) will scoop 22.5 per cent out of the profit pool and affect future growth, employment and delay the construction of further sites.
“Without a doubt the MRRT taking 22.5 per cent from our bottom line will have an impact,” says Hollows.
“Projects cannot achieve as much with the interim hurdle. We can’t start new projects with secure future growth as a result. What people don’t realise, is that mining companies do not make huge profits in the long term. Returns do not compensate for this [MRRT] risk.”
MRRT (an estimated 30 per cent) is set to be implemented on July 1 2012 replacing the resource super profit tax (RSPT) at 40 per cent, taking a slice from limited iron ore and coal companies whose resource profits exceed $50 million per annum, including Macarthur Coal.
Comparatively, the Gillard Government Clean Energy Bill would add up to around $1.40 per tonne.
She says although the figure would be accounted for across over 5 million tonnes per year within her ASX-listed company, the significance of the costs would barely touch the surface, when put side by side with the brunt of a 22.5 MRRT.
Although Hollows reiterated that the MRRT would swipe 22.5 per cent from Macarthur Coal’s bottom line, research points to a 30 per cent non confirmed rate.
Macarthur Coal is the target of a $5 billion takeover bid by Peabody Energy and ArcelorMittal. The board has recommended shareholders accept the $16 per share offer.