Isra-Mart srl : Wayne Swan rules out tying carbon tax to dollar, as the currency passes 110 US cents

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Isra-Mart srl news:

TREASURER Wayne Swan has ruled out linking the proposed carbon tax to the level of the booming Australian dollar.

And he says high commodity prices and a fluctuating dollar have hit the resources sector much harder than a carbon tax is likely to.

Mr Swan's comments came as the Aussie dollar passed the 110 US-cent mark in morning trade.

The Treasurer argued in his latest economic note, released yesterday, that the rising dollar had cut the price steelmakers received by about $50 a tonne this year, while the government's proposed carbon tax would cost steelmakers just $2.60 per tonne.

He said a carbon price of $20 a tonne would have about one-twentieth the impact on the steel industry as that caused by the increase in the Aussie dollar over the past four months.

The value of the dollar and commodity price movements “have a far greater impact on these industries than a potential carbon price”.

“The fact is the impact of a carbon price on sectors such as coal, steel and others will be small compared to fluctuations in commodity prices and exchange rates,” Mr Swan said today.

“I understand some of those industries are doing it really tough at the moment, the government understands that and that's why we are having an informed discussion with them about carbon pricing.”

Australian Workers' Union boss Paul Howes has argued that steel should be exempt from the carbon tax, or compensation should be tied to the value of the dollar.

Mr Swan said Mr Howes was entitled to his view and the government would continue to talk to sector about the impact of the carbon tax.

But he rejected the idea of tying the carbon price to the currency level.

Asked if the government was considering such an approach for steel, coal, cement or gas, the Treasurer replied: “No”.

The weakness of the US dollar has helped push the Australian dollar past the 110 US-cent mark.

This morning the Australian unit reached 110.20 US cents, its highest level since the currency was floated in December 1983.

Its previous record high was 109.79 US cents, reached over the weekend.