No blank cheque for Alcoa: Wayne Swan

TREASURER Wayne Swan says the Gillard government won't be writing a "blank cheque" to bail out the aluminium industry.

With Alcoa to review the future of its Geelong aluminium smelter, Mr Swan said the government was talking to the aluminium industry about the challenges it faced.

“We're talking to the industry and I am not necessarily signing up for any cheque at all,” he told ABC radio.

Mr Swan said the government was talking about how it could help the industry, which has been hit by unfavourable global conditions.

“We will continue to have those discussions and what we will do in the process is behave responsibly,” Mr Swan said.

Alcoa said this week it was reviewing the viability of the Point Henry smelter because low metal prices, a high Australian dollar and input costs had made it unprofitable.

The Victorian government today began talks with Alcoa on how to save the 600 jobs at Point Henry, as debate continued about the impact of the carbon tax on the smelter.

Victorian Regional Cities Minister Denis Napthine said today's dawn meeting between the Baillieu government and Alcoa had discussed the impact of the new tax.

While blaming a high dollar, lower aluminium prices and higher input prices for forcing the review, Alcoa said this week a carbon tax would “make life more difficult”.

The Coalition is using the tax as a blunt political instrument, accusing the Gillard government of undermining industry.

“With the carbon tax, the aluminium industry is essentially dead in this country,” Tony Abbott told reporters in Melbourne.

“So the best thing the government can do to help the workers of Point Henry and Portland and all the other aluminium facilities in this country is drop the carbon tax,” said the opposition leader, who later met Alcoa management in Melbourne today to discuss the smelter's future.

However Julia Gillard said again today that Alcoa had made it “crystal clear” the company's Point Henry plant was not under threat because of carbon pricing.

“It's about the structural changes that are going on in our economy because of the structural changes that are going on in the global economy,” she said in Sydney.

“Our dollar is very high, that's because we are in the right region of the world that is growing and we are selling a lot of resources to the region of the world we live in. That makes our dollar strong. “Our dollar is also strong because we are increasingly viewed as a safe haven economy.”

Ms Gillard said other proposals for additional relief for Alcoa, such as a cut to payroll tax, were a matter for the states.

“Payroll of course is in the domain of state governments and I know that Premier Baillieu in Victoria has had some discussions with Alcoa.”

Mr Napthine, who with Premier Ted Baillieu met senior management at the plant today, said the state government had pledged to help the company during its review process.

Dr Napthine said today's discussions, which went for about 90 minutes, included possible industry assistance and a range of other issues.

“The discussions were wide-ranging and they discussed issues such as the high Aussie dollar, the world market and projections for world markets and they discussed the issue of the carbon tax,” he said.

“And (Alcoa) made it very clear, as they did in their press release on Wednesday, the carbon tax will add costs to their production at Point Henry, which is a factor they'll have to consider.”