by JAMES COGAN
The minority Labor government of Prime Minister Julia Gillard is being buffeted by a storm of economic and political crises. On the eve of its first budget, it faces a soaring Australian dollar, corporate dissatisfaction with its policy agenda and early signs that bitter class conflict is about to erupt.
Since the beginning of the year, the government has been under siege from sections of big business over its proposal to impose a tax on the carbon emissions of the largest corporate emitters from July 2012.
The Labor government has presented the tax as a crucial first step in restructuring industry to compete in a “clean energy” global market, in which high carbon emitters like Australia will face the risk of international sanctions. Major companies are denouncing Gillard’s plan as an unnecessary burden on their competitiveness and profitability under conditions where the United States and China have not accepted any binding agreement to reduce emissions.
Coal-based energy generators are demanding near full compensation and have made clear they will pass on any costs in the form of higher power prices. Steel producers have demanded special exemptions, with an implicit threat they will shut their Australian operations if these are not forthcoming. Manufacturing exporters such as CSR have insisted on assistance to ensure they are not put at a “competitive disadvantage” on world markets. Major retail companies have complained that passing on the tax to consumers will depress sales and affect profit margins.
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