OneSteel boss says government got the carbon tax right

OneSteel chairman Peter Smedley provided his view on the carbon tax and what it will mean for OneSteel moving forward. Smedley was speaking at the company’s annual general meeting to shareholders last month.

"I would now like to make some comments on the Carbon Tax – a policy that has attracted significant public interest and debate and an area in which we have invested a considerable amount of time in recent years," said Smedley.

"Last year I informed you that it was imperative for the Government to ensure it gets the design of the Carbon Tax right to avoid potential damage to the competitiveness of the Australian steel industry for no environmental benefit.  

"Following the Government’s announcement in July of details of its proposed Carbon Tax, we announced that we were pleased that the Government had listened and responded to our call for a sectoral approach to be adopted for the steel industry."

Steel Transformation Plan

"We also said that we believe this approach, including the Government’s $300 million Steel Transformation Plan assistance package, is both sensible and appropriate, and substantially addresses our concerns over the potential impact of the tax on the industry’s competitive position,  at least during the four-year life of the package. Of particular concern to us in our discussions with Government was what would happen to our competitive position at the conclusion of the assistance package," said Smedley.

"We were  pleased that the Government agreed to include a review mechanism to assess the merits of continued support at the conclusion of the four-year period.  

"The Government has also included a review mechanism to address circumstances where we believe the cost impact of the Carbon Tax related to scope 3 emissions from coal is being passed through.    

"OneSteel’s share of the $300 million steel assistance package is estimated at 39%.  Both the Carbon Tax and the assistance package have now passed through the senate and are due to commence 1 July 2012.  However, the Government has indicated that we may apply for an advance against the assistance package of up to $64 million to help us in addressing the current difficult market conditions."

Mining Tax

"Another area of policy where we have invested a significant amount of time during the year is the proposed Mining Tax. The Government released exposure drafts in June and September this year and recently entered new draft legislation into parliament," said Smedley. 

"While we are encouraged that there have been improvements made in the process of the tax to recognise both the importance of maintaining the competitiveness of the Whyalla Steelworks and the integrated nature of our Whyalla operations, we do not have sufficient certainty around outcomes at this time to provide guidance in relation to its financial impact on the company should the tax be implemented."

Read Smedley’s full speech at the OneSteel annual general meeting here.