Companies sound alarm
AUSTRALIAN companies have promised higher prices and warned of stunted growth in parts of the economy, as the market took its first opportunity to pass judgment on the Gillard government's carbon tax plans.
AUSTRALIAN companies have promised higher prices and warned of stunted growth in parts of the economy, as the market took its first opportunity to pass judgment on the Gillard government's carbon tax plans.As the carbon tax combined with foreign factors to drive the market down, the nation's two biggest companies gave the plan a cool response yesterday.BHP Billiton, the company widely credited with reviving the domestic debate on a carbon price last year, said it required more detail about the Government's $1.2 billion support plan for the coal industry before it could offer its support."We still need more clarity around transitional arrangements, such as those promised for the coal sector, before we can make a precise assessment," the company said in a statement.That response was calm compared to the roasting delivered by Rio Tinto, which said it was "disappointed" by a carbon plan that would "hinder investment and jobs growth without reducing global carbon emissions".Rio Tinto's Australian managing director David Peever labelled the tax "unfair", and warned that it had failed to shield the export sector.Richard Morrow, the director of EL&C Baillieu Stockbroking, said the carbon tax appeared to be poorly received."The region was weak, the lead from the US market was weak, so really there wasn't a lot of positives for the market to cling on to."Renewable energy companies were among the few winners as investors stepped away from the sharemarket and they tried to digest the details of the long-awaited carbon tax announcement.Geothermal energy explorer, Geodynamics, surged 22 per cent. Carnegie Wave Energy jumped 22 per cent. Energy World, a gas and oil exploration company, was up 8 per cent. Infigen Energy was up 7 per cent. But those roses were small compared with the falls of major mining companies, and more than 1.5 per cent of the value of the S&P/ASX 200 index was wiped off in the process.Airlines, energy, coal and steel companies were among the poorest performers.Every industry sector lost ground, with the exception of telecommunications.BlueScope Steel led the decline, ending the day down 6.67 per cent at $1.26. Qantas closed down 3.25 per cent at $1.935. OneSteel fell 5 per cent, and Alumina 3 per cent.OneSteel said it would seek to reduce its use of coking coal in steel manufacturing, but the sector was technologically constrained in its ability to reduce carbon emissions.Economists said the policy would take time to work through the market."The precise incidence and impact on the economy is difficult to assess with confidence," said the chief economist of Nomura Australia, Stephen Roberts.