$300 million payout ensures steel industry free of carbon tax

$300 million payout ensures steel industry free of carbon tax

BlueScope Steel will be able to share in the Government's $1.1 billion of new manufacturing industry assistance funding announced to soften the impact of its carbon tax.The move is expected to ensure the steelmaker pays next to nothing for at least the first four years of the carbon scheme.The new funding includes a $300 million steel industry assistance plan, to keep the industry in Australia, and an $800 million clean technology fund for manufacturers.

  • MERCURY SAYS: Why we support carbon taxBlueScope will receive 94.5 per cent of its carbon pollution permits for free and about $45 million a year, to help cover its carbon tax costs.The company has emerged as perhaps the nation's biggest single beneficiary under the carbon pricing scheme. As reported by the Mercury last week, its carbon bill will in effect be paid for.Under the proposed clean technology program, the Government will contribute $1 for each $3 industry spends on energy-efficient capital equipment and low-pollution processes.This appears tailor-made for emissions-reducing projects such as the steelworks' cogeneration plant, shelved as BlueScope's dire financial circumstances took their toll in recent years. But BlueScope, which has warned it is on track to make a loss this year, is unlikely to fund the $1 billion project soon.The $300 million in steel industry assistance payments would be shared between just two companies - BlueScope (60 per cent) and South Australia-based OneSteel.The $300 million was not part of the carbon pricing deal reached with the Greens and independent MPs through the Multi-Party Climate Change Committee. It will have to make it through the Parliament under separate legislation if it is to become a reality.BlueScope, despite warning it is on track for a large loss for the 2010-11 financial year, is understood to have gained traction with the Government, based on the argument it would have to borrow money to pay the carbon tax.The Illawarra's coal industry also will receive additional assistance, in the form of $1.26 billion industry-wide, to help protect jobs, plus another $70 million, to help coalminers, particularly smaller operations, to help them reduce their fugitive methane emissions. Climate Change Minister Greg Combet yesterday said this would mean the coal industry paid less than $2 in carbon tax, per tonne of coal it produced."This is in an environment where coal prices have doubled over the past two years," Mr Combet said.He would not say if the steel industry package would leave BlueScope better off than it would be before the carbon tax starts, in 2012, or how the $300 million figure was reached. He said the Government had been in constant contact with BlueScope over the final deal.The steel assistance plan was part of a $9.2 billion jobs and competitiveness program to assist Australian businesses to deal with the start of the carbon tax next year, and an Emissions Trading Scheme in 2015, he said.The Productivity Commission will review the treatment of the steel industry in 2014, but there will be no changes to the scheme for at least six years , and three years' notice will be given to manufacturers before any changes are made.