BlueScope Steel has led the tantrum against the introduction of a carbon price and today it, or more precisely its employees, have fallen victim to an entirely different problem. The rising dollar has been placing obvious pressure on the competitiveness of the Australian steel industry but the company seems to prefer playing politics than proposing a sensible plan for the future.
Despite all of BlueScope’s thundering about the impact of a small carbon price they were largely silent about the real cause of their problems: the mining boom.
Rapidly rising world demand for Australia’s coal and iron ore has driven up our exchange rate as fast as it has driven down BlueScope’s competitive position. Ironically, other countries are so determined to make or buy steel that Australia can no longer afford to make it ourselves. Nobody ever said global markets generate common sense solutions.
The fact is, however, that if BlueScope had spent the past few years making the case for Australia to introduce a comprehensive mining tax and invest the proceeds in a sovereign wealth fund then they might not be in this position today. But instead of making a sincere contribution to the political and policy debate the steel executives chose instead to try and hide their real problems behind the imagined depravations of the carbon price.
The Australia Institute estimated earlier this year that a $20 carbon price would account for only 0.4 per cent of BlueScope’s revenue after their entitlement to 94.5 per cent of their pollution permits for free was factored in. Even with a carbon price of $23, the impact remains 0.4 per cent of their revenue.
The rising dollar, on the other hand, has been placing the company’s operations under serious threat. So why aren’t BlueScope’s management enthusiastic supporters of the mining tax? Why haven’t they been advocating for a sovereign wealth fund to help keep the dollar down? Why haven’t they been more active in building coalitions with other manufacturers, the tourism industry, the agriculture industry, the education industry and all the other sectors of the economy that struggle to compete internationally with an Australian dollar that is above parity with the $US?
The workers of BlueScope are now facing an uncertain future thanks to the determination of BlueScope management to play politics and to shift the blame.
If the carbon price led to thousands of jobs being lost Tony Abbott would be into his hardhat and expressing outrage as quick as you could say ‘photo opportunity’. But since it is the mining boom that is causing this grief he is strangely silent in his criticism of the big mining companies. Indeed, he has promised to roll back any mining tax that the Gillard Government introduces.
A cynic might argue that he doesn’t really care about the manufacturing industry at all.