Senator the Hon Mathias Cormann
Minister for Finance
Date: Wednesday, 5 March 2014
INTRODUCTION: Two days after Federal Cabinet decided to amend legislation to allow higher levels of foreign ownership in Qantas that plan looks doomed with a majority in the Senate opposed to it. And Labor is criticising the Government for having no plan B to help the airline as it cuts thousands of positions from its workforce.
To look at the Government’s plans for Qantas and other economic issues this morning Marius Benson is speaking to the Finance Minister, Mathias Cormann.
MARIUS BENSON: Mathias Cormann good morning.
MATHIAS CORMANN: Good morning Marius.
MARIUS BENSON: You were in the Cabinet meeting on Monday night which decided to go for the proposal to change the Qantas Sale Act to allow greater foreign ownership. You know the numbers in the Senate, was that discussed in Cabinet that the Senate would certainly reject whatever Cabinet proposed?
MATHIAS CORMANN: I’m not going to go into the discussions in Cabinet, but suffice to say we made a decision based on what in our judgement was the right thing to do in the public interest.
MARIUS BENSON: But you are a Senator, you know the numbers in the Senate, you know these proposals won’t get through this Senate and when the Senate changes in July and some of the Palmer United Party members are there equally it’s doomed.
MATHIAS CORMANN: We will continue to make the case as to why it is important to let Qantas compete on a level playing field. What the Labor Party is really saying is that they’re not happy to let Qantas compete on the same basis as Virgin. We don’t think that that is a sustainable position for Labor to maintain. So let’s see what happens after this debate continues to develop.
MARIUS BENSON: Well there is much debate about what the effect would be if the Qantas Sale Act is changed to allow greater foreign ownership in Qantas but if this proposal is clearly doomed because of the numbers in the Senate as I said, Qantas says we need immediate action, we need an alternative. Do you have a plan B?
MATHIAS CORMANN: We are putting forward the best possible plan. The best possible plan is to allow Qantas to compete on a level playing field. Right now Qantas is facing restrictions in the Qantas Sale Act, which are not imposed on their competitors. That is making it harder for Qantas to compete in what is a very competitive market and that situation needs to be addressed. Beyond that we are also having legislation in the Senate to scrap the carbon tax which would reduce their tax burden by more than $100 million a year. These are all things that would make it easier for Qantas to compete, which would strengthen their competitive position.
MARIUS BENSON: Just on the carbon tax did the Qantas Chairman specifically, Alan Joyce, do Qantas some harm because it is reported in the Australian Financial Review this morning that a statement by him on Monday before Cabinet met that the carbon tax was not contributing to Qantas’ difficulties, that statement was read to Cabinet by Joe Hockey and he told Cabinet if the airline was untroubled by $106 million carbon tax they couldn’t really be in much trouble in general.
MATHIAS CORMANN: Again I’m not going to talk about what is discussed in Cabinet, but suffice to say it is a peculiar position for any company to say that they would not be happier to pay more than $100 million less in tax.
MARIUS BENSON: So Alan Joyce didn’t win himself any friends in Government with that view?
MATHIAS CORMANN: Look I have no comment in relation to that, but I would have thought that a company that is seeking to save $2 billion, that a company that is seeking to improve its competitiveness, would welcome the opportunity to pay less tax.
MARIUS BENSON: Can I go back to Plan B, the prospect that there is no Plan B, there is only the proposal you have which is doomed in the Senate, can you do anything by regulation for example without relying on legislation that needs to pass through two houses of Parliament to help Qantas?
MATHIAS CORMANN: I don’t accept this proposition that this is necessarily doomed. What we’ve put forward …interrupted
MARIUS BENSON: Sorry, can I stop you there because the numbers are clear, Labor’s against it, the Greens are against it, Nick Xenophon’s against it, John Madigan’s against it, you haven’t got the numbers and the numbers get worse when Clive Palmer’s Party gets in.
MATHIAS CORMANN: We’re only starting to properly engage in this debate in a serious way. We have now this week decided what the best approach is moving forward. We will make the case to the Senate and to the Australian people and let’s see what happens. Let’s just be very clear what is on the table here. Qantas is a private company which is engaged in competition with Virgin. What the Labor Party is suggesting is that we use taxpayer resources to help one business to compete against another business. Now the truth is Virgin is an Australian business, employing Australians, servicing the Australian public in the same way as Qantas is. That competition has delivered benefits for the travelling public. It has delivered improvements in services and lower airfares. It is completely inappropriate for the Australian Government to use taxpayer resources to pick sides effectively in a competitive market. What is appropriate for us to do is to ensure that Qantas like Virgin is able to compete freely on a level playing field on the same basis as any other player in the aviation market. That is what we are proposing to do. It is the right thing to do and Labor should support it.
MARIUS BENSON: Well Senator Nick Xenophon says that Qantas should open its books, the Government should have a forensic look at Qantas’s books. Do you want to see what the numbers are in Qantas?
MATHIAS CORMANN: The Australian Government is not the Board of Qantas. It is not the management of Qantas. Our responsibility is to set the right policy conditions so that all businesses including Qantas have the best possible opportunity to be successful. It is not our job to second guess management decisions or to essentially run the Qantas business by remote control. That is a matter for the Qantas Board and for Qantas management.
MARIUS BENSON: And Qantas meeting unions today and it is reported that they’ll be asking unions to give up pay rises already agreed to. Should unions consider that?
MATHIAS CORMANN: Again that is a matter for Qantas and its workforce to work through. Our job is not to run the airline. This is a business which a previous Labor government privatised. It used to be a government owned business. It no longer is a government owned business. It is a private business and these are issues for Qantas as a business with its workforce to work through.
MARIUS BENSON: Mathias Cormann, thank you very much.
MATHIAS CORMANN: Always good to talk to you.