RBA signed death warrant on jobs: Howes

9 Feb 2012, 1:07 pm   -   Source: AAP
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Mr Howes told Melbourne radio MTR the main pressure facing the latest company to shed jobs - aluminium maker Alcoa, was the dollar, not the carbon price. (AAP)

Mr Howes told Melbourne radio MTR the main pressure facing the latest company to shed jobs - aluminium maker Alcoa, was the dollar, not the carbon price. (AAP)

Union boss Paul Howes says the Reserve Bank has put jobs at risk by putting the cash rate on hold and forcing up the Aussie dollar.

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Australian Workers' Union boss Paul Howes says the Reserve Bank has signed a "death warrant" for manufacturing by putting its cash rate on hold.

But the coalition insists it is the threat of the carbon tax, which starts on July 1, that is making industry nervous.

The RBA this week decided to keep the cash rate steady, contrary to most forecasts for a cut of 25 basis points.

The decision has pushed up the Australian dollar, which already is putting pressure on exporters and has led to a number of car makers and other manufacturers shedding jobs.

Mr Howes told Melbourne radio MTR on Thursday the main pressure facing the latest company to shed jobs - aluminium maker Alcoa, which operates a smelter in Geelong, Victoria - was the dollar, not the carbon price.

"This plant with a carbon price can be incredibly profitable if the dollar sits at 104, 99 (or lower)," Mr Howes said.

"But when you're sitting at 110 and when there's no signs of it coming down, when the Reserve Bank is basically trying to sign a death warrant on Australian manufacturing industry, yes, these jobs are under threat."

Opposition Leader Tony Abbott agrees the high dollar is an issue.

"But the thing is the carbon tax is a further structural change that will operate to the detriment of these industries," he told the same network.

Australia should have a "natural advantage" in making aluminium and steel because of its affordable energy and abundance of coal and gas.

"But because of the policies of this government, unfortunately these industries are on the way out," Mr Abbott said.

Australian Industry Group chief Heather Ridout, who joins the RBA board next week, said Alcoa had confirmed the carbon tax was not a factor in the job cuts.

"I think Alcoa is saying it's not a factor, the car industry is saying it's not a factor and I think that's right," Ms Ridout told ABC Radio.

"I mean, you can't play politics over a lot of job losses and a lot of pain in industries."

Australian Greens leader Bob Brown said the carbon tax was about "job gains" and an excellent start to climate change, one of the biggest problems facing the Australian economy.

"It is going to ravage global economies in the years ahead and we have to be addressing it now," he told reporters in Canberra, adding the coalition's inaction on climate change would lead to a cut in gross domestic product of between five-and-20 per cent in decades to come."

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