Isra-Mart srl : Steel must be exempt from carbon tax

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One of Australia's biggest trade unions has sent a clear warning to the Federal Government about its proposed carbon tax.

The Australian Workers' Union says that to protect the jobs of Australian workers, the steel industry should be exempt from the tax at least until there is an international agreement for a price on carbon.

The union's national secretary, Paul Howes says he's hopeful about the future of green jobs but warns that there is a level of over-excitement about their potential in Australia.

The Government says it is considering a "significant" level of assistance for the steel industry, designed to stop jobs going overseas.

From Canberra, Naomi Woodley reports.

NAOMI WOODLEY: The head of the Australian Workers' Union Paul Howes isn't resiling from his claim that the Government will lose his union support if there's just one job loss as a result of the carbon tax.

PAUL HOWES: We are a union. We represent working people. We have a responsibility to the men and women of this country who go to work every day and make products that this country uses. They've done nothing wrong.

Our members are the creator of the problem. They're good, decent hardworking Australians and it's our responsibility, they pay us and they expect us to represent their interests. And it's in their interests to keep their job.

NAOMI WOODLEY: The union held a crisis meeting in Sydney this morning to discuss growing concerns amongst its membership about the plan to put a price on carbon. Paul Howes emerged from the talks with a clear message.

PAUL HOWES: We believe that if Australia is going to continue to be one of the world's leading miners of iron ore and coal then we should also be one of the world's leading manufacturers of steel. A special case for steel needs to be made. We believe there is a solid argument that there should be at least, there could be a 100 per cent compensation for the steel sector or exclusion from the tax.

NAOMI WOODLEY: Earlier this week at the National Press Club the Climate Change Minister, Greg Combet clearly warned industry that there calls for compensation must be reasonable. He used a carbon price of $20 and the compensation proposed under the scrapped Carbon Pollution Reduction Scheme to argue that the increased cost to steel production would be $2.60 per tonne.

But Paul Howes says circumstances since the CPRS have changed.

PAUL HOWES: The dollar was back at 70, between 70 and 80 cents, demand was higher domestically even though we were in the middle of the GFC during the last debate, steel is under huge amounts of external pressure which have nothing to do with carbon pricing.

That is not the Government's fault but we have to accept that there are these pressures on steel, unrelated to carbon, but we need to take that into consideration as we look at how you deal with carbon.

NAOMI WOODLEY: Paul Howes says the CPRS assistance package should only be the starting point in the current negotiations.

PAUL HOWES: Three dollars on steel, on a tonne of steel two years ago wouldn't have been a problem but it will be a problem today. And that's why we think that we need to look at possibilities of going further.

NAOMI WOODLEY: The unequivocal statement from one of the country's strongest unions will be troublesome for the Government, particularly because the Greens, who will be needed to pass the carbon tax legislation through Parliament, have a very different view. The Greens Leader, Bob Brown says Paul Howes' comments are economically illiterate and silly.

BOB BROWN: Any transformation of the economy from the GST to the imposition of a minerals wealth tax to a change of policy, for example on a very sensible change of policy which we've been trying to get on reducing smoking in Australia will threaten somebody's job, you know? Let's be sensible about it.

NAOMI WOODLEY: He says putting a price on carbon will create jobs but Paul Howes is sceptical.

PAUL HOWES: Bob Brown can come and see some of our members who have lost their jobs due to economic restructuring. Come to Newcastle and see former members of ours who lost their jobs when the steelworks shut were yet to receive a single day of employment since.

NAOMI WOODLEY: The Climate Change Minister, Greg Comber is playing down talk of a split between the Government and the union movement. He says Paul Howes is simply representing the views of his members. He says he understands there is a lot of pressure in the steel industry even without a carbon price.

GREG COMBET: I've spent most of my life representing working people. I understand I think their concerns to some degree at least from my experience. I'm going to do everything I can to work with the unions and the employers in those parts of the economy, including the steel industry, to make sure we get the design of this carbon price mechanism right because they are under a lot of pressure from the value of the dollar and high commodity prices.

We've got the highest terms of trade for decades and, so we're mindful in the Government of the economic circumstances in which we're developing this carbon price mechanism and I don't need Mr Howes's comments you know to tell me that. He knows that I understand that. I discussed it with him last week.

NAOMI WOODLEY: Greg Combet's also played down reports that the Government is leaning towards a $20 price on carbon as a starting point for its tax. He says it'll be one of the last factors to be decided.