Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Tuesday, 21 April 2020
DAVID KOCH: The future of Australia's second-largest airline is up in the air with Virgin Australia going into voluntary administration. The move is expected to be confirmed this morning following crisis talks overnight. It comes after the Federal Government refused Virgin's request for an emergency loan. At least 10,000 jobs are now on the line, with an additional 6,000 also at risk, as well as over $1 billion in pre-paid customer tickets. We're joined by Finance Minister Mathias Cormann. Good morning to you, Minister. Why wouldn’t you help bail Virgin out? It’s been done before in the global financial crisis in America. American Government lend airlines, auto manufacturers, banks money, take a stake, make billions of dollars in profits later.
MATHIAS CORMANN: We have provided substantial support to the economy and to businesses around Australia, but we have done so on an economy-wide and sector-wide basis. In relation to Virgin, Virgin was dealing with some serious challenges prior to the coronavirus pandemic. Yes, the coronavirus pandemic brought them to a head, but administration will offer the opportunity to restructure the business, to refocus on performing parts of the business and, indeed, it will offer the best possible opportunity from here on in to have a strong and viable second airline into the future.
DAVID KOCH: Okay, so you’re saying it was a badly run business anyhow, let it go into administration, restructure and then could you then lend assistance after that?
MATHIAS CORMANN: In terms of a business like Virgin, the first responsibility always to bail out a business is with its owners, its shareholders. Virgin has very substantial owners. Singapore Airlines, Etihad Airlines both own 20 per cent of their shares. 40 per cent of the shares are with substantial Chinese investors. There are a whole range of issues there. We have provided significant support to the aviation sector and of course a business like Virgin is eligible for our JobKeeper program, which will continue to remain even under administration. We have not picked individual businesses to support or not support. There is a public interest in maintaining two airlines. We do want to see competition in the aviation sector on the other side of this crisis. The process from here on in, we will engage with it of course, but we want to see a private sector, market-led solution to this and we believe there is an opportunity for it.
DAVID KOCH: Okay, so the door is certainly not shut. Speaking of JobKeeper, the Grattan Institute has come out and forecast unemployment could go to between 17 and 28 per cent in the coming weeks. That's a scary number of people out of work. Does JobKeeper need to be expanded or a new initiative, economic stimulus 4.0?
MATHIAS CORMANN: JobKeeper is a very substantial $130 billion program. The Treasury advises that we expect unemployment to go from 5.2 per cent in March up to about 10 per cent at the end of June. It would have gone to about 15 per cent if it wasn't for JobKeeper. We will continue to monitor the situation as it continues to evolve and if further support is required, we will make those judgements as appropriate. But we don't believe that there is a need for anything like what we have had to do in the last few weeks and months.
DAVID KOCH: Okay. Amidst all of this chaos in this crisis, Malcolm Turnbull has released his new book. The former PM says you betrayed him by supporting Peter Dutton's leadership coup in the final week of the leadership. Take a look at what he had to say.
MALCOLM TURNBULL: If Cormann had not betrayed me in the shocking way he did, the Dutton coup would have been over by Tuesday.
DAVID KOCH: What is your response? Are you feeling embarrassed about this? He basically accused you of lying.
MATHIAS CORMANN: Malcolm has presented his version of history. It substantially differs from my very clear recollection of events, but I am not going to get distracted by this… interrupted
DAVID KOCH: What’s your recollection?
MATHIAS CORMANN: We are dealing with a major pandemic and the public health and economic implication of a major pandemic. I am just not going to get into it. I am not to get into a blow by blow assessment of his recollection of history.
DAVID KOCH: Don’t you think we should know, we have a right to know the facts?
MATHIAS CORMANN: David, we have dissected these events some years ago in great detail. I have said everything there is to say about it. I’m quite happy to send you the detailed articles and interviews I have given on this in the past. I am just not going to keep getting distracted by it.
DAVID KOCH: He’s not on your Christmas card list?
MATHIAS CORMANN: I wish Malcolm and his family very well. I don’t have any ill will towards Malcolm at all.
DAVID KOCH: Alright, at least you’re calling him by his first name. He’s not calling you by yours. Minister, thanks for joining us.
MATHIAS CORMANN: Always good to talk to you.