Coalition should not scrap carbon tax: Carnegie

By a staff reporter

Revoking the carbon tax would create more uncertainty for business and put the Coalition at odds with major resources players in support of the scheme, according to prominent Sydney investment banker Mark Carnegie.

Speaking yesterday at a Sydney luncheon hosted by Business Spectator and the Australian British Chamber of Commerce, Mr Carnegie questioned the Coalition’s "scaremongering" tactics on the carbon tax given the likes of ExxonMobil, Shell and BP supported the tax.

"He (Abbott) is going to turn around and roll back the carbon tax at a time when it is clear revenue from the budget is under immense pressure and one of the least painful ways to raise revenue has been the carbon tax," Mr Carnegie, a principal of MH Carnegie & Co, said.

Repealing the tax also ignored the reality of global warming, which Mr Carnegie said was "clearly a fact".

Mr Carnegie further predicted that Tony Abbott would “unequivocally” become a two-term prime minister beginning with the September federal election, and more clarity is needed on how he would unravel the carbon tax and Minerals Resource Rent Tax (MRRT).

The investment banker was among a trio of panellists at the luncheon fielding questions from Alan Kohler, editor-in-chief of Business Spectator, on the outlook for financial markets.

Also on the panel were Magellan Financial Group chief executive officer, Hamish Douglass, and Jillian Broadbent, who sits on the Reserve Bank of Australia (RBA) board.

Lack of commitment to continuity in public policy was a key concern for Ms Broadbent.

“Unfortunately the pitch from the opposition has been, 'we will unwind everything', which is dangerous,” Ms Broadbent said.

Mr Douglass lamented the vacuum that existed for the country’s most profitable non-mining export sectors, a concern heightened by his prediction that the iron ore price will fall dramatically within three years.

“I don’t believe we’ve had any sensible policy for this over the past 20 years that has addressed areas where we have a competitive advantage," he said.

"Supporting the car industry is complete stupidity in this country. (We need) investment in other areas where we have a financial advantage; education, tourism, financial services.”

As China approaches peak steel intensity in two to three years, the price of iron ore will shrink to sit marginally higher than the cost of production, or $70 to $85 a tonne, he said.

Though the blow to BHP Billiton and Rio Tinto would be softened by their low cost bases, other producers of the metal faced “a world of pain”.

The panellists also discussed navigating mining investment hurdles in Africa and the effect the United States' newfound energy independence would have on the global resources market.

Mr Carnegie also noted that Mr Abbott was the “least committed to free markets” when compared to Julia Gillard and one-time party leaders Kevin Rudd and Malcolm Turnbull.

"He (Abbott) is essentially an old-time DLP’er," Mr Carnegie said, invoking the original Democratic Labor Party.