Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Tuesday, 21 April 2020
LAURA JAYES: Mathias Cormann, thank you for your time. What is the status of Virgin this morning as you understand it?
MATHIAS CORMANN: I will let Virgin make its own announcements. But what I would say on behalf of the Australian Government is that we want to continue to see two airlines in Australia. There is a clear public interest to have competition in the aviation sector and we will continue to engage with whatever process follows from here.
LAURA JAYES: What is the Government willing to do for Virgin?
MATHIAS CORMANN: The Government has provided substantial support to the economy and to businesses around Australia, but on an economy-wide or sector-wide basis, including providing substantial support to the aviation sector. Whether that is providing fee relief or financially supporting domestic and international routes through this period with financial support. We have provided substantial support and of course Virgin has got access to our JobKeeper program, which on the same basis as every other business around Australia that has experienced a substantial drop in revenue. These are all supports that continue to be available. We will continue to engage with what processes follows from here.
LAURA JAYES: The situation has certainly become more serious for Virgin over the last twenty-four hours. Shareholders are voting to put it into a voluntary administration. Are the Government’s principles the same as they were last week, which is you are still reluctant to take any kind of equity stake in Virgin?
MATHIAS CORMANN: We want to see a private sector, market led solution to this. Virgin has substantial foreign shareholders. Singapore Airlines and Etihad both hold twenty per cent. Forty percent is held by two substantial Chinese investors. Then there is Richard Branson through his group who owns about ten per cent of Virgin. The first responsibility to bail out a company always rests with its owners, its shareholders. If the shareholders make the decision that they are not prepared to do that, then administration offers an opportunity to test the market to see whether there are any other buyers or potential new shareholders out there that are interested in being part of a restructure and refocusing of the business on its performing parts so that it can be a successful and viable business in the future. The Government getting in the way of this would actually make it harder to have a genuinely viable and strong and sustainable airline on the other side and that is what we want to see happen.
LAURA JAYES: Given the circumstances, and what we have seen in terms of taxpayer funds spent in the last couple of weeks due to COVID-19, wouldn’t $1.4 billion be a pretty cheap way to save 16,000 jobs?
MATHIAS CORMANN: We have provided $130 billion to save jobs all around the economy, including in Virgin. We have taken an economy-wide and sector-wide approach for good sound policy reasons. When it comes to Virgin, again, we are not in the business of picking individual winners here. The precedent that would set across the economy would potentially expose us to quite a long line of similar requests from individual businesses all around Australia. Administration actually does offer now an opportunity to deal with the challenges that Virgin has been dealing with since well before the COVID-19 pandemic. There is now the opportunity to restructure the business, to refocus the business on the performing parts, to recapitalise the business, perhaps for a new buyer to emerge to run the business moving forward. The key here is that we need to have a private sector led, market led initiatives. The Government will continue to engage with that process as appropriate. If there is an appropriate opportunity for us to facilitate this, for example by working with the ACCC to ensure that the regulatory settings are appropriately enforced to protect competition in the market and the like, then of course we will do that.
LAURA JAYES: But would that be a consideration of actually regulating prices?
MATHIAS CORMANN: No, we are not in that space. But clearly we would want to know that there is appropriate competition in the market and that competition is appropriately protected through regulatory settings and through enforcement of existing regulatory settings.
LAURA JAYES: Just back to JobKeeper just very quickly. If Virgin is in voluntary administration do they still have access to that funding?
MATHIAS CORMANN: Yes they do. JobKeeper will continue. That is an important message to the employees of Virgin. If the company announces this process this morning, any company under administration which continues to operate will continue to be eligible to access the JobKeeper payments. So from that point of view nothing changes. But administration does give the opportunity to assess what potential ways forward are available, which makes sense and which help deliver a sustainable and viable and profitable airline on the other side, which is what we all want to see happen.
LAURA JAYES: Any thoughts on Malcolm Turnbull this morning?
MATHIAS CORMANN: I wish him very well.
LAURA JAYES: If Cormann had not betrayed me in the shocking way he did, he thinks he would still be Prime Minister, quote unquote. Is that true?
MATHIAS CORMANN: Look Malcolm presented his version of history. It substantially differs from my very clear recollection of events, but I am just not going to get distracted by this. We are dealing with a serious pandemic and the public health and serious economic implications of that here in Australia. That is what I am focused on. That is what all of my colleagues are focused on. That is what the Australian people expect us to focus on. I wish Malcolm all the very best, but I am just not going to get distracted by any of this.
LAURA JAYES: Mathias Cormann thank you.
MATHIAS CORMANN: Always good to talk to you.