Phillip Coorey April 11, 2012
"A country that doesn't manufacture steel has no hope of manfacturing anything else" ... Paul Howes, AWU national secretary. Photo: Andrew Sheargold
THE Australian Workers Union wants the government to expand its minerals resources rent tax to slow the mining boom, lower the value of the dollar and alleviate the worsening crisis gripping the steel and manufacturing sectors.
The proposal to embrace the original and more comprehensive resources super profits tax is among several controversial ideas, including pegging the dollar to another currency, aimed at depreciating the dollar contained in a report by the AWU national secretary, Paul Howes.
It will be presented at a crisis conference in Melbourne today of 80 steelworker union delegates.
The conference will be addressed by the Industry Minister, Greg Combet, and will coincide with the next meeting of the Prime Minister's manufacturing taskforce, a regular gathering comprising Julia Gillard, relevant ministers and union and industry representatives aimed at trying to help the manufacturing sector.
The AWU paper argues that the high dollar, coupled with high input costs, is the most significant factor behind the manufacturing crisis.
''Should Australia allow industries and jobs to be destroyed in the short-term as this acute crisis ravages manufacturing and is it smart to double down on our bet in mining?'' the paper asks.
The proposed ''potential policy options'' to lower the value of the dollar also include pressuring the Reserve Bank to cut interest rates by between 0.25 and 0.5 percentage points. This, the AWU argues, would not be large enough to cause an inflation outbreak but would bring the cash rate closer to those of other nations and help depreciate the dollar.
The AWU also argues that by pegging the dollar to another currency, it would ''move up and down relative to the performance of other currencies''.
The proposal to boost the mining tax by reverting to the original resources super profits tax ''would slow down the mining boom, take pressure off the terms of trade and boost government revenue which could be placed in a sovereign wealth fund''.
The government watered down the original tax following a fierce campaign by the minerals giants BHP Billiton, Rio Tinto and Xstrata. The minerals resources rent tax, which will take effect on July 1, will raise less revenue.
The government has thus far resisted all other calls to boost the minerals resources rent tax, including those from the Greens who also believe the original tax should have been reinstated and a sovereign wealth fund created.
However, it does have the mining industry in its sights before next month's federal budget with plans to reduce further the $2 billion diesel tax rebate miners enjoy, as well as paring back other tax perks such as accelerated depreciation.
Mitigating all this, the paper notes that a slowdown in the Chinese economy, as is now occurring, would take significant pressure off the dollar.
This would affect Australia's two most lucrative exports, coking coal and iron ore, which in turn would reduce input prices for the steel industry.
Mr Howes told the Herald: ''After 12 months of being absolutely hammered, it's important to bring together all of our key delegates from the steel industry to map out a way to save what remains of our steel industry.
''A country that doesn't manufacture steel has no hope of manufacturing anything else, and that's why our union will put all the resources necessary behind a campaign to save the sector.''
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