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Transcript of joint press conference: Parliament House, Canberra: 3 March 2014: Qantas

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JOINT PRESS CONFERENCE, PARLIAMENT HOUSE Monday, 3 March 2014 Canberra Prime Minister Deputy Prime Minister Treasurer Subjects:

Qantas. E&OE PRIME MINISTER: I’m sorry to call you to this press conference quite late but to put you in the picture, Cabinet met at 5 o’clock. The principle item on the Cabinet agenda was a discussion of Qantas. That discussion went for almost two hours. It was a very full discussion. It canvassed all points of view and all perspectives. Every single member of the Cabinet spoke and we've come to a decision and I'm very confident that this is a decision which is best for our nation and, ultimately, best for Qantas. Cabinet is not proposing at this time, on the evidence before us, to offer Qantas a debt guarantee or a line of credit, but we will seek to repeal Part 3 of the Qantas Sale Act. We will seek to repeal Part 3 of the Qantas Sale Act in its entirety and I will be writing to Qantas as soon as this press conference is over in those terms. I have enormous faith in the ability of Qantas to compete and to flourish but I think it is best placed to compete and to flourish if it is unshackled and un-propped up by government, I hasten to add. If you look at the history of Qantas over the last decade or so, it was hugely profitable for most of that time and that demonstrates to me that a well-managed Qantas is more than capable of competing, and not just surviving, but of flourishing. I think this decision that we've made today also says something significant about this Government. We do not believe in government by chequebook. We do not believe in government by chequebook and we certainly don't believe in any normal circumstances that government should be playing favourites between competing private businesses. We just do not believe that and we do not intend to act that way. On election night I said two things. I didn't just say that Australia was open for business. I also said that Australia was under new management and I think this decision tonight, coming on from earlier decisions that the Government has made, well and truly demonstrates that Australia is under new management and, I believe, much better management than the management that we had between 2007 and 2013. I want to thank all of my colleagues for the strong and spirited discussion that we had and I'm going to ask Warren and then Joe to add to these remarks. DEPUTY PRIME MINISTER: Well, Qantas asked for one thing above all else and that was to be given a level playing field. By repealing Part 3 of the Qantas Sale Act we give to Qantas the opportunity to compete fairly and without restraint against other competitors in the aviation sector. We have a very, very strong and competitive aviation market in Australia at the present time. It's quite clear that the competition has been vigorous. That's meant that it's been hard for Qantas, hard for Virgin, hard for its competitors and good for travellers. We have every confidence that Qantas - a national icon - will continue to be a strong airline well into the future. It has the capacity to continue to provide service, to trade profitably and to make a substantial contribution to the Australian economy, and we think that the legislation that we're proposing to bring into the Senate gives them that opportunity to be able to compete fairly and squarely with others who want to service our

market but then also to give them the opportunity to grow and expand in the confidence that they will have the sort of unrestrained capacity to trade normally in our marketplace. PRIME MINISTER: Joe? TREASURER: Well, Qantas is in a fundamentally sound financial position and in order to level the playing field this is the very best option. Other options are decidedly unattractive. So, removing the shackles on Qantas and allowing it to compete on a level playing field is the best guarantee for the workers. It is the best guarantee for the sustainability of Qantas as both a domestic and an international airline. This is the best option. Fundamentally, it is a sound company and, sure, it's a difficult marketplace from time to time but airlines around the world have faced difficult environments and obviously we will continue to closely monitor the situation. QUESTION: Prime Minister, could you explain, when you say removing Part 3 of the Qantas Sale Act, exactly what that removes and will it leave any sort of requirements or restrictions or keeping the headquarters in Australia or maintenance in Australia? Could you go through what would be removed and what would stay and do you have any concerns about a foreign government-owned airline buying Qantas? PRIME MINISTER: Well, what it means is that Qantas would be henceforth governed by the ordinary Foreign Investment Review Board requirements and that it would be governed by the Air Navigation Act. Now, as I understand it, the Air Navigation Act does put some requirements on Australian-based international carriers - they do have to have 51 per cent Australian ownership, they do have to have their headquarters and the substance of their business based in Australia. So, obviously under what we are proposing, Qantas international would remain in every sense an Australian airline. Qantas domestic, should there be a distinction, would remain a substantially Australian airline. I reject, if I may say so, this idea that Qantas is Australian and Virgin isn't because, let's face it, Virgin is employing Australians and it's serving Australians - so it's hard, really, to say that Virgin is substantially less Australian than Qantas itself and what we want to ensure is that both of these fine airlines are operating under the same rules. QUESTION: That provision also includes the maintenance, keeping local operations in Australia and so forth. Does it worry you that there is a possible scenario where maintenance work might be shifted offshore and Australian jobs may be lost? PRIME MINISTER: Again, the best way to maximise Australian jobs is to maximise Qantas' ability to compete and, yes, the Qantas Sale Act does impose more onerous requirements on Qantas than the Air Navigation Act imposes on other Australian-based international airlines - I accept that. I accept that. What Qantas would do, under the situation that we are proposing is a matter for Qantas management, quite properly a matter for Qantas management, but as I said, the best way the maximise employment at Qantas, the best way to maximise sustainable Aussie jobs is to maximise Qantas' ability to compete. Phil? QUESTION: Mr Abbott, is a consequence of the Cabinet decision now there's pressure on Qantas now to restructure like Virgin split its international and domestic arms. Is there any other way around it for the airline if they want to remain Qantas International wants to remain an Australian airline other than to block a foreign takeover? PRIME MINISTER: Well, Phil, again, it is not the job of government to second-guess management. Brilliant though I believe all of my colleagues are, I actually think that Qantas management are better at running an airline than we are. Once upon a time, the Labor Party used to believe that airline management were better at running an airline than government. Let's not forget for a second that it was the Labor Party that originally decided to sell Qantas and good on them for making that gutsy decision and that was a gutsy decision that they had the support of the Coalition in making. Unfortunately, Labor today is much shrunken from Labor in those days and the point I make to Bill Shorten and his colleagues is, you sold Qantas, now you must free them to maximise their chances of being able to successfully compete and maximise Australian employment for the long-term. Michelle? QUESTION: You said that there was discussion in which everyone spoke. Was there any support for a debt guarantee and I wonder if Mr Hockey can explain his four conditions which he said Qantas had met for special treatment? PRIME MINISTER:

Well, if I could go first and then obviously if Joe can add to the answer. Look, I'm not going to say who said what under all the various circumstances of the meeting other than to say that it was a very full discussion where all points of view were canvassed. So, it was on the table but it was not supported and just for the purposes of giving information to people, I do have here a statement by the then government's Finance Minister, the distinguished Labor cabinet minister Ralph Willis, who said at the time of the Qantas Sale Act, he said “the Commonwealth cannot countenance the possibility of its still being potentially liable for Qantas debt once control of the airline shifts to the private sector.” So, Ralph Willis, Labor minister at the time of the Qantas Sale Act, was absolutely crystal clear that government should not be responsible for Qantas debt. Ralph Willis was right. Bill Shorten is wrong because, as we see so often, the Labor government of a generation ago was a better, braver government than the Labor government which was turfed out six months ago. Joe? TREASURER: Well, the first condition that I said was firstly has the parliament and the government imposed restrictions on that single business that are not imposed on other businesses in the same industry. The answer in relation to Qantas is yes. Well, today we are resolving to get rid of that discrepancy that works against Qantas. That's what we're doing. And the second point I just remind everyone is I said in relation to this matter we are being dragged kicking and screaming and that's because we do not want to be in the business of subsidising any single enterprise. It's not sustainable in the long-term. QUESTION: Isn't it true, Mr Hockey, that you were actually presenting that, those four conditions because of the political difficulties of changing the Qantas Sale Act and isn't it therefore the case that what you're presenting today is in fact a Clayton's solution to the problem because cannot get it through the current parliament? TREASURER: Not at all - no. Emphatically no. The best way to help the workers of Qantas and the best way to help Qantas is to get rid of these legislative restrictions on their ability to compete with other airlines. QUESTION: So, given that response and given the stated positions of other parties both in this Senate and in the next Senate, is this a negotiable position? Will you negotiate on it or is it a take it or leave it position? PRIME MINISTER: Well, Lenore, this is the position of the Government and it is in fact the position of Qantas. What Qantas have said to us is that in order to secure the long-term future of the airline they have to be unshackled. They have to be freed up and that's what we want to do and I'd certainly expect the strong support from Qantas to help alert the Parliament to the pressing need to make this change if we are to maximise Qantas' ability to compete and maximise Qantas' ability to employ Australians in good jobs for the medium and long-term. QUESTION: Prime Minister, as Lenore has just said, the Parties aren’t going to support either in the Senate or in the next Senate - you are at a stalemate. What are you going to do about it? PRIME MINISTER: I don't believe that even the Labor Party, as currently constituted, is going to stand aside and let Qantas bleed. I don't believe they are going to do that. We've seen recently a former member of the Labor cabinet of great standing, Martin Ferguson, step into the arena and say, "Look, let's get real here. Let's get real here," and I suspect that we are going to see other Labor figures of substance say, "Come on, let's get real. Let's finish the job that a better Labor government than the one we have just experienced started back in the 1990s." QUESTION: Isn't there probability here that jobs could be moved offshore and that is going to be the major stumbling block for Labor, isn't it? How are you going to get past that? PRIME MINISTER: It's deeply regrettable whenever an Australian job goes offshore, but in the long run, the best way - even in quite the short run as well - the best way to maximise good jobs in this country is to maximise the competitiveness of our businesses. That's the best way, to maximise the competitiveness of our businesses. Now, if some jobs have to go offshore in order to ensure that Qantas has a strong and viable long-term future, it may be regrettable, but nevertheless it is the best way to guarantee Australian jobs for the long term. Look, I know that the Labor Party will or the current leadership of the Labor Party will be tempted to play the short term populous politics here, but as I said, back in the 1990s, we saw decent patriotic Labor ministers put reforms in place, that helped to set this country up for a quarter century of unprecedented prosperity. I think there are still people like that inside the Labor Party, or in the orbit of the Labor Party, and I expect them to speak out in the weeks and months ahead. QUESTION:

Prime Minister, I think that a section of the Qantas Sale Act also requires a majority of directors to be Australians. Are you proposing to remove that? Do you not think it's important for Qantas to be run by Australians? PRIME MINISTER: It obviously is best for Qantas to be a strong and competitive Australian airline, and that's the sort of condition that could be placed on Qantas were there to be a proposal come forward under the foreign investment review process. The other point I want to make is just because a business is not wholly owned by Australians, doesn't mean that it is not in a real sense an Australian business. As I said, look at Virgin. Virgin employs Australians, it carries Australians. It provides a great service to our country. I defy anyone to stand up and say Virgin is not, in a meaningful sense, an Australian operation. Of course in a very meaningful sense it is an Australian operation, and we should give Virgin credit. We should give Virgin credit for what is does for our country and our people. DEPUTY PRIME MINISTER: Could I add just one thing to that? The Air Navigation Act has requirements in that regard and so do our international treaties that expect that a country that is exercising Australian landing rights has indeed a genuine Australian identity. QUESTION: You say and your Treasurer says that the best way to help Qantas is this way, by changing the Act. Alan Joyce says the best way to help is with a debt guarantee and he said that in interviews last week after the results. Who knows best, yourselves or Alan Joyce as to what's best for Qantas? PRIME MINISTER: Well, we have been in receipt of all sorts of communications from Qantas, and there are all sorts of things that Qantas would like. I think what Qantas would like most of all is for the Government to play favourites. I think Qantas would like most of all for the Government to say that we are backing Qantas vis-a-vis the competition. Well, that's not how this Government operates. We don't play favourites. We want to give everyone a fair go, and that's what the Government's decision today is about. It's about giving everyone a fair go on a level playing field, and as the Transport Minister and Deputy Prime Minister said a moment ago, Qantas has, maybe not tonight, but they certainly have said on other occasions that the thing that we can do to unshackle them, to help them best is to repeal the Sale Act. And again, I refer you to the statement of Ralph Willis all those years ago, saying that it would be just wrong for the Commonwealth to take upon itself Qantas' liabilities, and that's what Bill Shorten is asking us to do. That is what in some of his utterances Mr Joyce is asking us to do, but that would be fundamentally wrong under the circumstances. QUESTION: Prime Minister, there will be people listening to you tonight hearing you say that jobs will have to go offshore in order to save Australian jobs, who will think that that sounds completely contradictory and illogical. Can you explain what you mean by that? Are you saying that if you don't allow some jobs to go offshore now, there will be more Australian jobs lost in the future? And if so, how many more? PRIME MINISTER: Karen, what Qantas does is a matter for Qantas, but no-one has a bigger stake in the long-term survival of Qantas than its management and staff, and they will make the decisions that are in the long-term best interests of the management and staff and the passengers of Qantas. Now, I hope, I hope, that they maximise employment here in Australia, and I'm confident that they will maximise employment here in Australia, consistent with giving Qantas a strong and sustainable long-term future. QUESTION: You touched on one of the four conditions you laid out on February 13, but not the other three. I'm just wondering how you felt about them now? TREASURER: Well, the first one is obviously the key one and at the moment, it is the fact that if you repeal the Sale Act there is a level playing field and Qantas can compete on a level playing field. QUESTION: And the other three things? TREASURER: Well, they've gone some way to fixing their company, but that's obviously a matter for the company. Aviation generally is an essential service, so there will be other airlines that will also have to step up to the plate. As for governments supporting other airlines, it's true, it remains one of the factors at play and we're very aware of that. QUESTION: Should these changes pass the Parliament, what would be the implications for Qantas’ claim to 65 per cent of the domestic market share, does that all go out the window now once the playing field is level? PRIME MINISTER:

That's a management decision of Qantas. DEPUTY PRIME MINISTER: Well, the decision to target a 65 per cent market share was one made by Qantas management, and it is a decision that Qantas can undo just as readily as it made it in the first place. That was a target that they set for themselves. They're slightly below that figure now and I would imagine that that number will go up and down, depending on the market circumstances from day to day. QUESTION: If Labor doesn't support this and you say that that will mean that it will force Qantas to bleed, bleed how badly, in your view? PRIME MINISTER: Well, Alex, I'm not going to try to predict what market conditions are going to be like in six months or 12 months’ time. I'm not going to try to predict what Qantas management decisions might be. That's a matter for the market and that's a matter for Qantas management. QUESTION: What are the consequences for Labor? PRIME MINISTER: Look, I think what Labor are demonstrating yet again that they are very good at complaining, but they're hopeless at leading, that they are very good at obstructing, but they're hopeless at building, that they are good at opposition, but they can't govern. Sure, it's very easy to stand up there and complain on behalf of people. It's very easy to stand up there and say, "Well, isn't this terrible?" But it is incumbent upon serious people in this Parliament to give us a way forward, and the only way that Labor is really offering is basically to get out the cheque book and start writing out a cheque for every business in trouble. Now, that is no way to run a country, it’s no way to run a government. Sure, it's what Labor did between 2007 and 2013 but that was, if I may say so, a deeply unsatisfactory episode in our national history. QUESTION: Mr Hockey, do you regret going as far as you did a fortnight ago in retrospect? TREASURER: Not at all. Not at all. I’ll tell you one of the reasons why. We are dealing with taxpayers' money as well here, so if it is a loan facility, it would be unsecured for billions of dollars, unsecured loan facility. There’s a lot of businesses in Australia that would love that and if it were debt guarantee it could be up to $6 or $7 billion. QUESTION: Mr Abbott, when will you introduce the amendments to the Qantas Sale Act and is it a quite probable flow-on effect from these amendments that Australia might not have a national carrier? PRIME MINISTER: I don't share your lack of faith, Lenore, and it's really interesting how the Labor Party and others have been busily talking down Qantas and, if you like, talking down Australia , over the last couple of weeks, ever since Qantas issues have become very prominent. I have faith in Qantas. I have faith in Qantas staff. I am confident that our country can sustain a great airline into the future, as we have in the past, and my vision, my vision for Australia is a country and an economy where everyone is prepared to have a go, because I know in the marrow of my bones, as I think most Australians do, that if Australians are allowed to have a go, there isn't any field in which we can't do well. And certainly we've demonstrated time and time again that we know how to run an airline, we can run one of the world's great airlines, and I want to give us the best chance to do so again. Thank you. QUESTION: [Inaudible] PRIME MINISTER: As soon as possible. Possibly by the end of this week. [ends]