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THE nation’s most powerful union leader has demanded Julia Gillard exempt steel production from the carbon tax, with workers and bosses uniting for the first time to warn of job losses and the potential collapse of the industry.

And more unions have locked in behind Australian Workers Union leader Paul Howes to insist the Prime Minister protect members’ jobs as she attempts to engineer one of the biggest economic transformations in the nation’s history.

Mr Howes’s move to place a marker on the steel sector – one of the nation’s heaviest carbon polluters – complicates Ms Gillard’s push to price carbon.

Ms Gillard yesterday played down Mr Howes’s criticism of Labor’s attempts to sell the carbon tax, with Australian Greens leader Bob Brown attacking the union boss as an economic illiterate and conceding that the switch to a low-carbon economy would cost jobs.

But Mr Howes, one of the so-called faceless men who helped elevate Ms Gillard to the prime ministership by removing support for Kevin Rudd last year, hardened his approach, declaring himself “agnostic” about whether a carbon tax was the best way to deal with climate change.

A source close to Mr Howes told The Weekend Australian that while the AWU leader had not “gone off the reservation”, he was under heavy pressure from his members, who feared for their jobs.

Asked how seriously the government should take Mr Howes’s comments, one source close to the union leader said: “It’s a first warning. He’s saying: ‘Listen, fellas, we’re ready to go on this’ “.

Other unions yesterday piled in to back the AWU, including its traditional rival – the left-wing Construction Forestry Mining and Energy Union – and the Transport Workers Union.

Ms Gillard plans to place a price on carbon from July next year as an interim step to a full carbon trading system within three to five years. The tax will apply to big polluters and the proceeds redistributed to consumers to help them cope with the effect on consumer prices.

Ministers played down the seriousness of Mr Howes’s intervention, describing it as a case of the union leader “talking to his constituency”.

But his comments were welcomed at a meeting of AWU officials in Sydney, with some demanding tougher rhetoric.

Steel giants BlueScope and OneSteel also seized on Mr Howes’s comments to argue for special treatment of their industry, which employs more than 20,000 people and has been hit by the soaring value of the dollar.

BlueScope Steel chief executive Paul O’Malley said: “BlueScope and the AWU now both agree that a carbon tax would do irreparable damage to the Australian steel industry.”

OneSteel chief executive Geoff Plummer also declared there would be “no global environmental benefit” to impose a carbon tax on Australian steel when a similar tax was not imposed on direct overseas competitors. “We understand the point that Mr Howes is making is that to tax Australian industry is also to tax Australian jobs,” he said.

Participants at the AWU meeting widened their concern about the Gillard government beyond climate change, criticising its decision this week to press for further trade liberalisation and a lack of action on anti-dumping laws.

After the meeting, senior union sources said their concerns went further than simply speaking to their members and were symptomatic of growing concern about Labor’s general political management. One source said it seemed the government was determined to alienate workers with a series of decisions that threatened job security.

Ms Gillard played down the concern. “I want to make sure people have jobs too,” she said when asked about Mr Howes’s comments to The Australian. “That’s why we are working with Australian business to design this scheme right and to get the assistance that helps industry to get this change right.”

Industry Minister Kim Carr said the government would not run away from its responsibility to act on carbon change. “Paul is speaking to a constituency,” Senator Carr said.

Wayne Swan, speaking in Washington, said a failure to transit to a low-carbon economy would threaten the economy. “It’s a difficult transition but it’s one that the government wants to make working with the community because our No 1 objective is to support employment and future prosperity,” the Treasurer said.

Tony Abbott said Ms Gillard should guarantee no jobs would be lost under the tax. “Now, if she can’t guarantee that no job will be lost because of the carbon tax she should withdraw the tax and I think its good that Paul Howes and other union leaders have belatedly come out to stand up for the workers of Australia rather than simply apologise for a bad government,” he said.

Mr Howes said the most important issue in the move to pricing carbon was prevention of job losses. “We believe there is a solid argument that there could be 100 per cent compensation for the steel sector or exclusion from the tax,” he said. “Even (economist and government adviser) Ross Garnaut said there is a special case for steel. The effects of dumping, the effects of the dollar and the effect of the carbon price could be the straw to break the camel’s back.

“Over 80 per cent of AWU members work in emissions intensive trade exposed industries . . . We think there is a special case to be made for steel.”

CFMEU president Tony Maher said Mr Howes was correct.

“It shouldn’t cost a job and we won’t stand by if it costs jobs,” Mr Maher said. “Paul is responding to a rational economic situation and he’s got our backing.”

The Australian Manufacturing Workers Union was more measured, backing Ms Gillard’s view that more jobs would be lost in the absence of a carbon price than if one was put in place.

The Australian, 16 April 2011