This was the message ACA chairman John Pegler pushed at the Clean Energy Future parliamentary inquiry in Melbourne yesterday, while also stressing the $1.3 billion support package for the coal industry would not be enough.

“The $18 billion cost impact of the carbon tax will hit many of Australia’s mines making them uncompetitive on international markets,” Pegler said.

“In our view the government has underestimated the impact of the carbon tax as evidenced by the poor design of the Coal Sector Jobs Package.”

Pegler said the government should heed advice from the International Monetary Fund which warned economic growth in the major coal export markets in Asia could be slashed by a third following the implementation of a carbon tax.

“If the world economy does follow the IMF’s predictions then the coal industry is facing a perfect storm of falling commodity prices, a high Australian dollar and massive new taxes,” he said.

“It is vital then that the Parliament judges the carbon tax against the real world circumstances facing Australia and tells the government to go back to the drawing board.”

Pegler said the federal government should rethink the “poorly-designed” carbon tax proposal because it would inflict enormous economic pain on Australia.

The proposed carbon tax would put a $23-a-tonne price on carbon from July 1 next year.