Gillard's carbon tax dead on its feet

Her political judgment is woeful. Abbott gets the steelworkers on his side

THE Gillard government's plans to put a price on carbon have suffered a body blow, with key unions demanding exemptions for industry that are unacceptable to the Greens. With his own job under threat from a hostile membership, the national secretary of the Australian Workers Union, Paul Howes, demanded yesterday that the steel industry be given a complete exemption from the carbon scheme and that there be generous compensation for the aluminium, cement and glass sectors.

Mr Howes issued the demand after a fiery crisis meeting with nine union branch secretaries from across Australia. It is understood Mr Howes, who is up for re-election before the next federal election, faced being dumped if he did not issue the demands. The AWU is influential in the Right faction of the ALP and was instrumental in Julia Gillard's coup against Kevin Rudd last year.

Immediately after Mr Howes's announcement, he was backed by the powerful Australian Manufacturing Workers Union, which influences the party's Left. The loss of support from the industrial wing of the party leaves the government stuck between the unions and the Greens, whose support is critical.

The government is negotiating with the Greens to put a price on carbon and one key sticking point is the level of compensation for trade-exposed industries. The other is the starting price for a tonne of carbon. As a starting point, the government was proposing the same generous levels of industry assistance devised under the emissions trading scheme negotiated with Malcolm Turnbull. The Greens derided this as "backroom deals for rent seekers" and want less compensation this time.

As well as exempting steel altogether, Mr Howes wants the compensation for aluminium, cement and glass to be "at least" as generous as that negotiated under the old scheme.

If the Greens vote for this, they would be signing on to a weaker scheme than the one they blocked in 2009 because, in part, they felt the compensation was too generous.

The Greens climate change spokeswoman, Christine Milne, was unhappy with the unions' backdown but said she would confine her negotiations to the multi-party climate change committee which meets again next week. "Conducting negotiations is not well served by threats to withdraw support if you don't get your way," she said. "Paul Howes should follow the example of many of his colleagues in the union movement who, like us, see the tremendous jobs potential in building a new clean economy."

The unions stuck with the Rudd government during the original ETS process and, until yesterday, had been rock solid with the Gillard government. But the steel sector, which is a big exporter, has been crying foul for weeks, saying it is already under pressure from the high Australian dollar and high input costs caused by rising prices for ore and coking coal.

This week the Climate Change Minister, Greg Combet, challenged the industry, saying a carbon price of $20 would add just $2.60 to the price of a tonne of steel.

But Mr Howes sided with the steel makers yesterday. "We think there is a special case to be made for steel," he said. "Steel is going through a hard time at the moment, not because of carbon pricing. "When the dollar sits at 1.05, all export-based industries are under a huge amount of pressure. But there is no solid argument we shouldn't be making steel in this country."

Tony Maher, from the Construction, Forestry, Mining and Energy Union, said Mr Howes has "got a very good argument and I would urge the government to consider it". "The economic circumstances of today are not those of two years ago."

Mr Combet refused to exempt steel. He said current economic circumstances were already being factored in and steel would again be in line for generous compensation. "A very significant level of assistance has been proposed," he said. "This assistance will be designed to stop 'carbon leakage' of jobs overseas and is the subject of continuing discussion with the steel industry and other industries."

One source said the Opposition Leader, Tony Abbott, had undermined Mr Howes by whipping up worker resentment during recent visits to BlueScope at Port Kembla, and OneSteel in Victoria. Mr Abbott welcomed Mr Howes's stance yesterday.

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Youth vote splits as young desert Labor

LABOR'S youth vote is diving under Julia Gillard, with young voters close to being evenly split between the Coalition, the ALP and the Greens.

Tony Abbott has defied commentators who claimed he would have a problem with young voters by stabilising youth support for the Coalition on a primary vote of 31 per cent.

But an analysis of Newspoll surveys over the past decade shows Labor's youth vote has been hemorrhaging, with many of their young supporters defecting to the Greens since March 2002.

The Newspoll data shows Labor's youth vote crashing from 46 per cent in 2002 to 32.1 per cent for the corresponding quarter this year.

This was from a high of nearly 52 per cent in 2007, as the "Kevin Rudd for prime minister" momentum was building for Labor.

The Newspoll analysis shows Labor's youth support fell 10 points in the year to last month. Ms Gillard assumed the Labor leadership in June last year.

The Newspoll graph suggests that if the trends continue, Labor is in danger of falling below the Coalition's youth support numbers.

But both major parties have been left to watch the Greens' support among the young soaring to 27 per cent, while in 2002 Bob Brown's minority party could attract only 8 per cent support among the youth vote.

Newspoll chief executive Martin O'Shannessy examined data from the most recent March-quarter demographic analysis of voting intentions, comparing it with the same quarter for each year going back to 2002.

He notes that the Greens were a big winner in total primary vote growth over that period. "However, the rise of Tony Abbott as Liberal leader has restored the Coalition primary vote to past levels generally and within the youngest cohort of voters," he says.

Analysis of separate Newspoll figures taken about the same time as the so-called Tampa election in November 2001 shows that rather than losing the youth vote during the controversy, the Coalition picked up support.

The longer-term challenge for Labor appears to be that the growth in the Greens vote across all ages has been in part at the expense of the ALP.

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Pro-Asian, anti-Muslim will deemed discriminatory

A man wanted to leave his estate to people whom in his opinion would benefit most from it: Non-Muslim young Asians. There would be many people in that category but anti-discrimination laws mean that his executors cannot advertise for people of the sort he specified

A man who instructed the funds of his estate be donated only to non-Muslims may have his wishes overturned by the Queensland Supreme Court. Abraham Werner, who died in Brisbane in 1989, has had his will deemed discriminatory in several states. The estate executor, Perpetual Trust, has sought a court order to allow them to distribute the funds outside of his strict conditions.

Mr Werner's will bequeathed almost $700,000 with conditions the executor "first consider destitute male orphans of Asian parentage without any known relatives". Further conditions were that his money not go to followers or devotees of Islam, those not in "good health and mentally alert of good intellect and of good behaviour" or to anyone older than 21.

He also wished his funds not to go anyone involved in "using or marketing any form or drug of addiction" and that beneficiaries "must speak English adequately or undertake to learn to speak English within two years".

Mr Werner, who was originally from Holland, had never married nor had children. He donated his body to science.

In documents filed last month in the Supreme Court in Brisbane, Perpetual Trust says between 1991 and 2001 it managed to grant funds to charities which fell within Mr Werner's conditions. But in 2002 lawyers advised the organisation the criteria they put forward on Mr Werner's behalf could be unlawfully discriminatory in three Australian states and the ACT.

Lawyers considered the exclusion of "followers of Islam" was unlawful in Tasmania, Western Australia, the ACT and possibly unlawful in New South Wales.

Andrew Thomas, of Perpetual Trust, wrote in an affidavit the organisation "had difficulty identifying potential benefits because it could not advertise for applications given the discriminatory nature of criteria to be applied".

"Charities that assist disadvantaged children could not provide any assistance to Perpetual Trust as they either could not distinguish between individuals on criteria such as those set out in the will, or were not prepared to," Mr Thomas said.

He said the organisation ceased dispersing Mr Werner's funds in 2005. Almost $600,000 remains in the estate.

The court documents seek an order from the court to allow Perpetual Trust to distribute the remainder of Mr Werner's money to The Smith Family. Perpetual Trust say the charity would then pass on the money in a manner as near as possible to Mr Werner's wishes. Mr Thomas said Mr Werner's funds would go to a program The Smith Family operates to assist disadvantaged children.

"Negotiations with The Smith Family .. confirmed it is not able to confirm the religion [of children] and it's not its practice to collect such information," he said. "Perpetual Trust considers that it now has no other option but to make this application to the court for an order to apply the income from the trust [as close as possible."

The case has been adjourned will return to court on a date to be fixed.

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Dodgy traffic forecasts in the gun at last

Less than two months after the spectacular collapse of listed toll road operator RiverCity Motorways, its traffic modelling forecaster Aecom faces a $700 million class action.

Litigation funder IMF will bankroll the class action and alleges that Aecom's statements in the PDS were misleading and deceptive and failed to provide investors with full information about another set of traffic figures it compiled on the project 18 months earlier.

The case will be a landmark as it is the first time a traffic forecaster has become the target of a class action. It could also open up a can of worms as the spotlight turns to other traffic forecasters, particularly given the poor track record of such forecasting in toll road projects in the past decade.

What will make this case interesting is that Rivercity provided an indemnity if the modeller was sued. The action will rely upon the insurance of RiverCity. RiverCity collapsed on February 25 after it was found that it only had enough cash to cover interest payments for a few months.

The class action will be thrown open to all shareholders who took up shares in the float of RiverCity, which floated on the ASX in 2006.

The issue of two instalments at 50 cents each raised $690 million. A number of shareholders went back into the market and bought more shares when the share price started to tank on the basis they still believed the traffic forecasts in the PDS.

The nub of the claim is that in the Product Disclosure Statement (PDS) Aecom forecast daily traffic numbers in the Clem7 Tunnel, which were chronically inaccurate.

Aecom also failed to mention that it provided a different set of traffic figures 18 months earlier to Brisbane City Council's Environmental Impact Study on Clem7m, which were vastly different and would have raised questions about the viability of the project, according to the claim.

In the PDS distributed to shareholders, Aecom forecast the average daily number of vehicles using the tunnel would be 90,676 within six months of operation and jump to 94,706 after 12 months. By 2011 they would hit more than 100,000 passing through the 6.8 kilometre tunnel, which runs between Bowen Hills in the north and Kangaroo Point and Wolloongabba in the south.

In the PDS, Aecom refers to this earlier study and suggests that the modelling in the PDS is an “enhanced” form of the modelling used in the environmental impact study. What Aecom did not reveal in the PDS was that in their modelling for the EIS Aecom had forecast traffic volumes in 2011 of only 57,000 per week assuming a $3.30 toll.

The PDS contains no reference to the fact that Aecom's PDS forecasts for 2011 are more than 65 per cent higher than its EIS forecast, made only 18 months earlier.

IMF believes investors may have rights to recover their losses in RiverCity under the Corporations Act 2001 because Aecom's statements in the PDS were misleading or deceptive; and/or Aecom omitted to provide investors with critical information relevant to their decision to acquire the units.

The actual traffic numbers are averaging less than 24,000 per day. RiverCity's financial performance has been so disastrous that on 25 February 2011 it was placed in administration.

RiverCity was a tale of woe from the beginning, and follows a number of other listed tollroads across the country that have suffered similar failures and left shareholders will little or nothing.

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