Australia PM: Carbon tax won't kill coal industry

[July 12, 2011]  SYDNEY (AP) -- Australia's prime minister on Tuesday touted a $5 billion bid for one of the nation's coal miners as proof an unpopular new tax on the country's worst polluters won't cause the collapse of Australia's lucrative coal industry.

Prime Minister Julia Gillard said U.S. coal company Peabody Energy Corp. and steelmaker ArcelorMittal's joint bid for Queensland state's Macarthur Coal Ltd. shows companies are not scared off by the tax. It will force the country's 500 worst polluters to pay 23 Australian dollars ($25) for every metric ton of carbon they emit.

"We are seeing the biggest takeover bid in Australian history for a coal company," she told Australian Broadcasting Corp. radio. "You couldn't get a better indication that business people see a good future in coal mining in this country."

Gillard has been working feverishly to defend the tax against critics who say big polluters will pass the higher costs onto ordinary Australians and that it will lead to job losses, particularly in the mining industry. The tax is expected to pass through Parliament and go into effect July 1, 2012.

The government hopes the tax will prompt companies to seek out clean energy alternatives to avoid the higher bills. Australia is one of the worst greenhouse gas polluters in the world because of its heavy reliance on coal to generate power. Coal is also the country's biggest export.

Many scientists say global temperatures are rising due to carbon dioxide and other heat-trapping gases emitted by industry, transportation and agriculture. Without massive reductions in emissions, scientists have warned that melting polar ice caps will inundate islands and coastal areas, certain plant and animal species risk extinction and extreme weather conditions will increase.

The coal industry has been one of the loudest critics of the tax. Ralph Hillman, executive director of the Australian Coal Association, told reporters the tax is expected to result in the closure of 18 mines in Queensland and New South Wales states, cost 4,700 jobs and lead to AU$22 billion in lost revenue.

"Simply because there is one potential change of ownership of an individual coal mining company is proof of nothing except that some coal mines will continue operating," Hillman said in a statement. "Attempting to portray this as vindication for the government's impost on the coal industry is simply not credible."

Climate Change Minister Greg Combet disputed Hillman's figures on Tuesday and said the government's plan to offer a AU$1.3 billion assistance package to the industry would keep jobs secure.

"A couple of years ago it was 9,000 (jobs), only last week it was 3,000, now it's 4,700," Combet told ABC. "They're just plucking numbers out of the air with no credibility at all."

Conservative opposition leader Tony Abbott insisted Tuesday that the plan was an attack on the coal industry.

"This is about closing down coal," he told reporters in Melbourne. "The coal industry is directly in the firing line of the carbon tax. There is no point having a carbon tax if it doesn't drastically reduce the use of coal."

Since announcing details of the tax on Sunday, the ruling Labor party has been on a media blitz promoting the plan to wary Australians, who remain skeptical of the expected rise in living costs. The government has promised compensation in the form of tax cuts and payments to most Australians, and said two-thirds of all households will receive enough assistance to cover the entire financial impact of the tax.

On Monday, Abbott railed against the plan in a speech outside a mine in New South Wales' coal-rich Hunter Valley.

"I figure for people in the coal industry, it's a hit on your potential employment and it's going to be a hit on your standard of living," he said.

On Tuesday, Gillard slammed Abbott's comments as fear-mongering.

"Tony Abbott was predicting Armageddon of the coal mining industry yesterday," Gillard told reporters in Melbourne. "The future of the coal mining industry is bright."

Australia's government is not the first in the world to introduce a carbon tax. The European Union, several U.S. states and New Zealand also make polluters pay for carbon emissions.

[Associated Press; By KRISTEN GELINEAU]

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