Industry uncertainty over carbon tax

KEY industries in the Hunter say they face uncertainty under the government's carbon tax, despite the significant financial support to be provided to some.

The Hunter's mining and aluminium industries, both major employers, say the tax will reduce their competitiveness internationally.

The Hunter provides one-third of Australia's aluminium and production is expected to double in the next 10 years, but the industry says the tax will force a lot of it overseas.

The industry would receive free carbon permits covering 94.5 per cent of average costs under the government's proposal.

The coalmining industry is still warning of job losses in regions such as the Hunter despite the government's $1.3 billion support.

An effective carbon price would extend to a range of businesses, including the mining, rail and shipping sectors, through reduction of fuel tax credits.

Agriculture has escaped many aspects of the tax but the National Farmers Federation said the average farmer would still incur an additional $1500 in operating costs.

The Hunter's large tourism industry is concerned the combination of small cost increases on items such as airfares could make domestic travel less attractive, while businesses face a rise in operating costs.

Reductions in fuel tax credits would affect cruise operators, for example, and tour operators, such as those through the vineyards, Hunter Tourism boss Sheridan Ferrier said.

"It's going to hurt the domestic market because when you add a few dollars here and there up, it makes the difference," she said.

The government has said the region is positioned to capitalise on the move towards renewable energies that the carbon price would bring about.