Tony Abbott criticises the bailout of Point Henry smelter as 'hush money'

Tony Abbott labelled the expected $42 million bailout of aluminium giant Alcoa's Port Henry smelter "hush money" yesterday as Julia Gillard accused him of a misleading campaign to demonise the carbon tax, which comes into effect on Sunday.

The Opposition Leader seized on reports that the government is preparing to announce a bailout package for Alcoa.

In a spiteful question time, Mr Abbott labelled the mooted $42m package as "hush money" to help save 600 jobs and cited the government's own Treasury modelling predicting a 61 per cent decline in aluminium output by 2050.

He asked the Prime Minister whether similar payments would be made for the other 16,000 workers in the aluminium sector he said would be affected by the carbon tax.

But Ms Gillard accused Mr Abbott of attempting to profit politically from the aluminium industry's woes and said Alcoa was under pressure caused by low international prices for the metal, the high dollar and the age of some of its capital stock.

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"We have worked with Alcoa because we believe these jobs are precious. We have always worked to protect jobs," she said.

Ms Gillard said the government was determined to see carbon pollution cut while Mr Abbott was "determined to mislead".

The exchange came in a question time dominated by the impending start of the carbon tax and last week's asylum-seeker boat tragedy.

Climate Change Minister Greg Combet attacked Mr Abbott's predictions that the carbon tax would kill the coal industry, pointing to the announcement of an $833m investment by BHP Billiton in Illawarra Coal.

"The closer we get to the introduction of a carbon price from Sunday and the more facts that come out, the more utterly ridiculous, hypocritical and misleading the Leader of the Opposition's comments have been," Mr Combet said.

The government has insisted that Alcoa's financial difficulties have nothing to do with the carbon tax.

But opposition climate action spokesman Greg Hunt said the proposed bailout package could be equal to Alcoa's carbon tax bill, which would be an "absurd situation".

The opposition has declined to say whether it will support the package until it sees the details.

Ms Gillard said yesterday she did not believe Mr Abbott would repeal carbon pricing if he won the next election.

"We will see a little fiddle here, a little fudge there but he won't take away carbon pricing," she said.