MAJORITY OF STEEL INDUSTRY HUNG OUT TO DRY BY LABOR
11-October-2011
Under the Steel Transformation plan Labor has abandoned the majority of firms in Australia’s steel industry with all of the proposed carbon tax assistance set to go exclusively to the two largest domestic steel manufacturers.
This is despite the Prime Minister being on record as saying on 13 September:
“That is what the government’s steel transformation plan is all about – transformation.”
“It is a bridge to build industry resilience and competitiveness.”
“It is a way of helping your industry muscle-up and face the world with confidence.”
An eligibility criterion for compensation under the Steel Transformation Plan Bill 2011 requires an applicant to have produced at least 500,000 tonnes of crude carbon steel annually from 2009/10. In Australia only two companies meet that criterion: BlueScope and OneSteel. Therefore, the remaining businesses which employ about 80% of Australia’s steel workers will not benefit under this plan.
Steel industry SMEs operating in Australia experience the same conditions as the big two: they are energy intensive, trade exposed and compete against foreign dumping. The carbon tax will have a devastating impact on these 2nd tier, often 3rd or 4th generation family owned manufacturing businesses with many firms simply unable to squeeze profit margins any further.
Recently, BlueScope announced that they would be exiting their export business, effectively aligning their future prosperity to a vibrant domestic market. The negative impacts of the carbon tax will affect every part of the domestic value chain ultimately impacting on the big two firm’s capacity to generate domestic orders.
The compensation proposed in the Bill serves as nothing other than a $300m admission of guilt by this Government.
The most effective measure to prevent further harm to Australia’s steel industry is to axe the toxic carbon tax.