ANDREW GREENE
After starting the debate, is there a general reluctance in the Government to see any more tax payer funds put into the national carrier?
ARTHUR SINODINOS
If we go back 20 or 30 years Andrew, one of the reasons that carriers like Qantas were privatised, TAA was privatised, other government business enterprises were privatised, is because we thought a better use of public capital was in health and education rather than in businesses. And we thought that businesses should be subject, government business, to the same disciplines as private businesses and seek their capital through the capital markets and the disciplines that attach to that.
GREENE
But that would also suggest that there would be a reluctance to see foreign control of Qantas?
SINODINOS
Look, what my colleague Joe Hockey was doing was saying: if there is a view that we have to maintain Qantas as a national carrier, then obviously it limited our options. Because if you decide to remove the Qantas Sale Act or the restrictions on foreign ownership under the Qantas Sale Act then obviously you increase the levels of foreign ownership. It doesn't quite look like the iconic national brand anymore. But this is a debate that we do have to have, because it's a very competitive world in aviation these days and we have to consider our options and what best meets the needs of the Australian economy and the Australian consumers today.
GREENE
But would there be government funds available to put into it?
SINODINOS
My view is that any Government, including this Government, would be reluctant to put public capital into an airline, whether it's Qantas or any other airline. I noticed that Virgin are now saying that if money was put into Qantas, they would like to see that money as well, otherwise it wouldn't be a level playing field. So you do open quite a Pandora's box when you seek to subsidies one firm as opposed to another in the market place.
GREENE
If we can stay on foreign investment. With the decision on GrainCorp the Treasurer was also suggesting that he wouldn't be bullied by anyone, but it is true to say that the National Party ran a very successful campaign and they have won against the more free market forces in the Coalition.
SINODINOS
My perception of this Andrew is that when Joe Hockey made those comments about not being bullied by anybody, he was referring to a whole array of interests, both inside and outside the country, that were lobbying him on what to do. I think he looked at the situation, the Foreign Investment Review Board looked at the situation. It was not clear cut and he made the judgement in those circumstances that the best decision was that it would be contrary to the national interest to allow this particular proposal to go through.
It does not mean that Australia is somehow saying we're not open for business. We are open for business, but what we now have to do in the agri sector is sit down with the various constituent parts and work out a proper plan for how we can promote more capital into the sector. Because it is no solution just to say: well this is blocked, everything is hunky dory. It is not hunky dory. We need to find a way to promote the integration of our agricultural sector into global supply chains and find ways to make it even more attractive for both domestic and foreign capital to go in there. But what this decision indicates is that we as a Government want to sit down with all the stakeholders and be part of a process that facilitates more capital coming in. Foreign ownership will be required, and foreign capital, to build new agricultural enterprises in Australia. Make no mistake of that.
GREENE
Given that view that you've articulated quite well there, doesn't the decision yesterday though leave you with the worst of both worlds? You've got a weakened GrainCorp in terms of its share price, but you've also missed out on those increased funds for infrastructure upgrades that would have come with the takeover.
SINODINOS
The context of the Treasurer's decision, as you noted in his press conference, was also the wheat sector, the grain sector has been going through a process of deregulation. It's been a complex process. I've been involved in the process since 1989 and wheat deregulation is coming, it's irreversible. What we are doing now is making sure any remaining impediments to maximising the benefits of that deregulation are taken out of the way. Because wheat deregulation is here to stay. It will strengthen the industry, just as financial deregulation created a world class financial services industry. So the challenge now is to remove any remaining impediments to making that wheat deregulation process as effective as possible.
GREENE
If we can move to your portfolio Minister. This week you've released a discussion paper on superannuation titled Better Regulation and Governance, Enhanced Transparency and Improved Competition in Superannuation, does that suggest there needs to be a bit of a shake-up of the industry funds that have well and truly outperformed any of the self-managed funds in recent years?
SINODINOS
Andrew, this paper is not targeted at any one particular sector. All parts of the industry, whether it's the big retail funds, the industry funds and others have been changing their governance structures over time. But what we're saying is, we want the best practice we can get in governance, we want to maximise the number of independent directors on boards, independent chairmen and women, because we want the best possible governance. So that everybody can be assured, as a member of a fund, whether it's a corporate fund, a retail fund, an industry fund or whatever that the boards are acting in the interests of the members at all times.
You referred to comparisons about the returns among the different funds. Part of what we're also trying to do in this paper is maximise the transparency around the returns from the different kinds of investments you can make, more disclosure of the actual holdings people have and more information around the products that people are putting up there. This is an area where you know there is a lot of apples and oranges to be compared and we are trying to get a bit more transparency and comparability across products, investment allocations and asset strategies.
GREENE
Minister Sinodinos, before we go, if we look to next week in Parliament, there is ongoing debate about the debt ceiling. Isn't now a time to look at removing that ceiling? Are you confident perhaps that there can be an agreement struck with the Greens on that?
SINODINOS
Our preference has been, as you know Andrew, to raise the ceiling once and for all in this term to 500 billion. Not as some sort of target to achieve that amount of debt, but as a limit that does not need to be revisited, so as to minimise uncertainty in the capital markets. The Greens have raised the issue of whether we need a debt ceiling at all. Certainly in Senate Estimates that was raised when I was present when Christine Milne was questioning Treasury officials. The Treasury officials indicated that this is something that's only been implemented recently, we haven't had it in the past and certainly we are happy to look at whatever options facilitate having a sensible debate going forward on these issues around the debt ceiling.
GREENE
And just briefly on debates, are you a bit discouraged by the tone of the debate on education funding as well, as we head back to Parliament?
SINODINOS
I think the Education Minister was in a difficult position, Christopher Pyne, because 1.2 billion had been taken by Labor out before the election from education funding. We're topping up that funding with 200 million, we're guaranteeing funding for the next year, so people can plan with certainty. And then we're going to sit down with everybody and work out our funding over the Forward Estimates. We're going to give at least the funding envelope that was there under Labor, but we do need to make sure going forward we also reform the Goski proposals going forward. Christopher Pyne made it clear before the election we were not happy with many of the command and control aspects of those proposals. Education reform is about more than money. It's also about how we allow the States to get on with the job of providing the best possible education to suit their local circumstances.
GREENE
Arthur Sinodinos, thank you very much for joining Weekend Breakfast.
SINODINOS
Thank you Andrew.