CHRIS UHLMANN:
Taking you to Joe Hockey who is being interviewed on AM. I'm joined by Treasurer Joe Hockey.
TREASURER:
Good morning Chris.
CHRIS UHLMANN:
If this plan went ahead, there would be nothing to stop Qantas becoming foreign owned, nothing to stop the maintenance and jobs heading overseas?
TREASURER:
No, that's not right. The Air Navigation Act, which will apply to Qantas, as does apply to Virgin International, has certain restrictions on it, including a 49% limitation on foreign ownership. But even more so, international air services agreements which Qantas is a part of, as is Virgin to a lesser degree, have a huge number of restrictions in them which include limitations on foreign ownership, the chairperson must be an Australian citizen, head office in Australia, operational base has to be in Australia, no more than 49% of the total value of the issued share capital can be held by foreigners. So the restrictions apply, but what we are doing is removing the burden of a single piece of legislation that applies only to Qantas, and, you know, the Labor Party in 2002 advocated this. In 2002, they actually advocated removing these restrictions on Qantas. Somehow they're going backwards, 12 years later.
CHRIS UHLMANN:
So why is foreign ownership bad for GrainCorp and good for Qantas?
TREASURER:
Well, I made an assessment on a number of criteria in relation to GrainCorp, including its monopoly status, essential monopoly status, in a part of the market in Australia, and I made a number of other criteria; as you know, laid down a number of additional criteria. But, having said that, Qantas is competing vigorously offshore and it's losing market share in the international marketplace, and in many ways it is constrained by its burden of costs here in Australia.
CHRIS UHLMANN:
To be clear, for example, if China decided that it wanted to take over Qantas, you could still stand in its way even if you levelled these rules?
TREASURER:
Yes, of course, because it’s foreign investment. We still have absolute discretion over foreign investment.
CHRIS UHLMANN:
So the Government does intervene with companies when it seems it needs to?
TREASURER:
Well, we will prevent a foreign takeover of an Australian company where the takeover would be contrary to the national interest, absolutely.
CHRIS UHLMANN:
Now, the Government keeps raising the Carbon Tax as one of the main problems at Qantas, but the company itself says that's not its main issue at all?
TREASURER:
Yes, I was surprised at Qantas' statement yesterday which came in the middle of our Cabinet meeting, but it is entirely inconsistent with what they actually said in their statement a few days ago, where they identified that the unrecovered cost of $106 million associated with their carbon tax liability was one of the reasons why they had a substantial half-year loss. Now the fact is, if a $106 million carbon tax bill is immaterial, well, it’s certainly not going to help with the justification for a multimillion-dollar loan facility.
CHRIS UHLMANN:
Well maybe it’s a part of their problem but not the biggest part. And about a month ago, you seemed to be signalling that you did think Qantas is a special case and it could get a government debt guarantee?
TREASURER:
Well, I laid down four criteria. The first criteria we are addressing, which is to get rid of the legislation that restricts Qantas. This is the biggest and most significant step forward for the longer term that we can undertake for Qantas, and we want to do it because we want to see Qantas survive and grow. That's what we want. We want competition in Australia. We want competition to Australia, and this is the best way we can facilitate that.
CHRIS UHLMANN:
Do you have a Plan B because this looks likely to be knocked back in the Senate?
TREASURER:
Well, we are not writing out blank cheques. There are a lot of companies in Australia that would love to have a multibillion dollar unsecured loan from the Federal Government. Well, we are not doing that…
CHRIS UHLMANN:
(Inaudible) Banks in the past…
TREASURER:
Well, that was systemic wide, systemic wide for the whole banking system. Now we are not going to do that for an individual company. We are not going to guarantee billions of dollars of debt, as every small business in Australia would probably want as well.
CHRIS UHLMANN:
Is this a plan for the revival of Qantas, or also a plan to wedge the Labor Party?
TREASURER:
No, this is not about politics, this is about good policy. Labor used to believe in good policy. In 1992, the Labor Party privatised Qantas. Some of their own front bench haven't come to terms with that. In 2002, they advocated removing foreign ownership restrictions. So there they are, the Labor Party, skiing down the hill in favour of privatisation, in favour of removing foreigner ownership restrictions and near the bottom of the hill, Bill Shorten puts up his hands and says, "let's go ski back up the hill."
CHRIS UHLMANN:
Finally Treasurer, do you think people are getting a little unnerved by the number of job losses they see at the moment - Holden, Qantas, iconic companies - this unnerves people, doesn't it?
TREASURER:
Well, I would say to the Australian people, this is the formula that delivers long-term growth and jobs. This is the way to do it. To allow business to get on with the job of business. A successful and profitable business employs more people. A business making a loss on a regular basis starts to sack people, and that's what's happening with Qantas. How is Qantas going to be profitable? Well, it has to be able to compete without the ball and chain of government regulation.
CHRIS UHLMANN:
Joe Hockey, we’ll have to leave it there, thank you.
TREASURER:
Thank you, Chris.