Australian Car Makers Want Carbon Tax Compensation

by Mary Swire, Tax-News.com, Hong Kong

29 June 2011

Car manufacturers in Australia are looking for some sort of compensation for the country’s proposed carbon tax, with the chief executive of one of the large automotive producers saying that there is the need for a government co-investment.

Mike Devereux, CEO of GM Holden in Australia, was unhappy when the government took the decision to put a halt to the Green Car Innovation Fund in January to pay for rebuilding costs after the Queensland floods. Holden had accessed AUD200m (USD209m) of that funding, and Devereux said that losing that amount made it difficult to look forward.

He said that there was no question that emissions need to be reduced, but he anticipates that the carbon tax will add between AUD35 and AUD50m a year to his company’s costs.

A financing fund is under discussion by the multi-party climate change committee, however members are not in agreement as to which industries should be helped.

Tony Abbot, Leader of the Opposition, jumped on the bandwagon, saying: “The last thing we want is to see those investment decisions prejudiced and jeopardized because this is a government which changes the rules after the game has begun”.

The opposition’s Industry Minister, Sophie Mirabella, added that car manufacturers were fed up with “the Gillard government’s incompetence, deception and hostility, and are now being forced offshore.”

“Mr Devereux’s comments point again to the disastrous consequences of the government’s policy duplicity and inconsistency – and the damaging uncertainty it is creating through its lack of vision and direction."

“It’s extraordinary that we should now learn there was no consultation and not even so much as a phone call to the car industry before the government broke close to AUD2bn worth of promises to it earlier this year."

“What makes it even worse is the government demanded access to detailed long-term business plans from the carmakers as a condition of establishing those policies in the first place."

“After all of the errors and misjudgements, the least it can now do is ditch its ridiculous carbon tax – which will be the final straw for the many Australian businesses that are already struggling against international competition,” said Mirabella.

The controversy would have been disappointing news to Julia Gillard, who this week has been keen to promote the compensation that will be available to householders.

“We’re of course going to get polluters to pay the price of polluting. At the moment they can put carbon pollution in the atmosphere for absolutely nothing so why wouldn't you put it up there and up there and up there? We’re going to say big polluters pay a price and because they pay a price they’re smart business people, they will say how can I reduce that price, by making my production processes cleaner?”

“So the 1,000 big polluters will pay and then we’re going to use that money to assist households. Nine out of 10 households will get a tax cut or a combination of an increase in family payments or an increase in pension. That is 7m Australian households getting a tax cut or payment increase.”

“I can tell you too, 3m of the lower income households will get a safety net buffer of 20% more than the expected impact on them of the flow through of the carbon price, because we understand they are the ones with the tightest budgets and most at risk.”

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