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Carbon tax to cost billions: NSW Treasury

The federal carbon tax will have a devastating impact on NSW, says a treasury review that found it would cost the state’s economy $3.

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7 billion a year, wipe out 31,000 jobs and inflate household power bills by almost $498.

NSW Premier Barry O’Farrell on Thursday released details of the Treasury study, saying the carbon tax would “tear the heart out of many industries”.

The review found the Hunter, Illawarra and Central West would be hardest hit.

Output of coal-fired generators and aluminium smelters would decline by nearly 50 per cent by 2050, while growth in the mining industry will sink to 60 per cent of what it would have been without the tax, Mr O’Farrell said.

Power prices would rise by at least 15 per cent, with households paying up to an additional $498 annually, and businesses between $927 and $4191 more a year.

“A carbon tax will result in the loss of more than 18,500 jobs in the Hunter region alone,” Mr O’Farrell said in a statement.

“This is an area which needs more jobs, not a crippling tax which is going to push up the unemployment rate.”

Mr O’Farrell said his government would seek compensation from the commonwealth for the impact of the carbon tax on the state’s purse.

Dividends the government receives from power generators would be hit by $45 million this financial year, increasing to $290 million by 2014-15.

A further $71 million of taxpayers money would be lost through higher power prices each year.

“We cannot stand by and allow the federal Labor government to continually damage the state’s economy and revenues,” Mr O’Farrell said.

“We have a duty to seek compensation from the commonwealth so the revenue earmarked by new rail, road, hospital, and school projects is not lost to NSW.”

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