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BUSINESS opposition to Julia Gillard’s carbon tax has intensified, with food and grocery producers falling into line with miners to warn the levy could destroy jobs and slash living standards.

And negotiations between the government and business appear close to flashpoint, as seven out of the government’s hand-picked 15-member industry advisory group have signed a letter to the Prime Minister warning the tax could drive investment overseas.

Corporate tempers flared yesterday as Climate Change Minister Greg Combet urged business leaders they were “better off inside the room” and should keep talking to the government over the implementation of the carbon tax, due to take effect from July 1 next year.

Mr Combet also vowed pensioners would be protected from the impact of the change to a low-emissions economy, but Wayne Swan was unable to guarantee that jobs would not be lost as he conceded some polluting industries already faced pre-existing challenges to their viability.

The comments came as Tony Abbott headed to Western Australia’s rich Pilbara mining region to urge miners to continue to demand their unions oppose the tax in the wake of the Australian Workers Union warning last week that it would withdraw its support for the change if a single job was lost.

During the five years that the Howard, Rudd and Gillard governments have grappled with the need to put a price on carbon to tackle climate change, mining companies and power generators have been the biggest critics.

But yesterday it was revealed that 19 food and grocery manufacturers had joined the resistance, alongside mining and power companies, to sign a letter to Ms Gillard warning of dire consequences if the tax was not carefully designed.

Companies represented included Goodman Fielder, George Weston Foods, Nestle Australia, CSR, Laucke Flour Mills, Yakult Australia and Bundaberg Sugar.

Crucially, seven of the signatories — mainly from mining companies — went public despite their membership of the government’s business roundtable, which is advising Ms Gillard on the design of the tax.

The letter to Ms Gillard, which was sent last Friday, argued that jobs could easily be lost in emissions-intensive industries competing with overseas rivals that did not tax carbon. “These businesses operate in fiercely competitive global markets and have no capacity to pass direct or indirect carbon costs on to our consumers,” the letter says.

“A carbon pricing scheme that fails to include measures to fully preserve the international competitiveness of Australia’s export and import-competing industry during a period of uneven or limited international action will cost jobs, investment and reduce the living standards of all Australians.

“This could lead to a perverse outcome whereby global greenhouse gas emissions actually increase as market share or new investment shifts to nations using less-efficient production methods.”

Australian Food and Grocery Council chief executive Kate Carnell said imported food and grocery items produced overseas without the imposition of carbon taxes would be cheaper than locally produced products facing the carbon tax through their supply chains.

“These products are already relatively cheaper as a result of the high Australian dollar, so the proposed carbon tax will just make Australian products less competitive, and that will cost jobs,” Ms Carnell said last night.

“Whatever decision is made, the government must ensure that Australian-manufactured food and groceries will not be made less competitive as a result of the carbon tax.”

Opposition finance spokesman Andrew Robb said the letter was proof the government had lost its battle to convince the business community of its case for action.

“Everyone keeps asking me when the election can be brought on,” Mr Robb said. “People just see this as a tax — not even something good for the environment. The government has been inept.”

Mr Combet and the Treasurer stressed that businesses should negotiate with the government.

“People need to sit down at the table seriously, do their sums and work carefully with the government on the design of the arrangements that are of importance to business,” Mr Combet told the ABC’s Inside Business program.

“It’s better off being inside the room talking these issues through and trying to get the best possible outcome.”

Mr Swan, appearing on Sky News’ Australian Agenda from Washington, would not concede pricing carbon would inevitably cost jobs, and said he was not surprised by the vigour of the debate.

“No doubt energy-intensive, trade-exposed industry does deserve assistance,” Mr Swan said. “We’re engaged in those discussions with that sector and other sectors. We’ll continue to have those discussions. There may well be in some sectors there are particular challenges and particular problems that pre-exist this debate about the price of carbon — what we’ll have to do is thoroughly assess that as we go through.”

Amid expectations the new scheme will be similar to the Rudd government’s carbon pollution reduction scheme, which Labor dumped last year, Australian Workers Union national secretary Paul Howes said the steel industry was under greater pressure now than two years ago because of the high dollar. It was clear steel needed greater assistance than was the case two years ago.

Offering a hypothetical scenario, Mr Combet said that if the carbon price were $20 a tonne, the average carbon price after 94.5 per cent assistance for the core pollution-intensive activity would be about $2.60 per tonne.

“Of steel — that’s out of a steel price of $800 per tonne,” he said.

“Steelmakers would immediately say that is not the only carbon cost they will face, and that is true. I am referring to the carbon cost in their core activity, and this will be the largest component of their carbon costs.”

The Opposition Leader, whose forays on to worksites over recent months caused AWU members to press Mr Howes for action, will continue his political guerilla tactics in the Pilbara today.

Mr Abbott told The Australian last night: “What I repeatedly hear from workers is their genuine concern about a carbon tax and its impact on their jobs and cost of living. Unions are finally understanding the impact the carbon tax will have on their members, who rightly fear for their jobs.

“The Prime Minister should finally start listening, put the workers of Australia first and dump this toxic carbon tax.”

The Australian, 18 April 2011