PRESENTER:
Treasurer Joe Hockey, good morning.
TREASURER:
Good morning, Neil, I do not know if I should say it but Merry Christmas.
PRESENTER:
Why?
TREASURER:
We are getting close aren’t we?
PRESENTER:
I know but why wouldn’t you say it?
TREASURER:
Well I was just wondering whether I should wait until December, if I am a bit early.
PRESENTER:
Well I appreciate that thank you very much. Why do you want a debate around foreign ownership of Qantas?
TREASURER:
Because aviation I think over the last few years has become an essential national service. You think about it, can we sustain a pilot strike that went for 12 months as it did back in the 80s? The answer is definitely no. We could barely be down for a day without aviation services. Qantas is also facing very significant challenges at the moment. I don’t think that is a secret. Various banks are suggesting that they could have a very significant loss in the first half of this year. Unquestionably their growth is impeded in part by the restrictions that the Parliament has placed on their share registry. As you identified there is a 49% limitation on foreign ownership – which is common across the world. In the USA it is 25%. There is no secret about that. We limit a foreign owner to a total value 35% and in any one airline 25% - so the Government on behalf of the people have imposed these restrictions.
PRESENTER:
In 1992 though.
TREASURER:
That is right, in 1992. In an environment when Qantas was the 800 pound gorilla in the market place, it was going hell for leather. Times have changed. We have seen the emergence of these massive Middle Eastern airlines – Etihad and Emirates. We are going to see the Chinese airlines that are going to be even larger than those, come into play. We have opened up the skies over Australia – particularly the route to the United States. The market has changed but still the restrictions are in place.
PRESENTER:
Would you accept seeing Qantas foreign owned?
TREASURER:
That’s an issue that I think Australia needs to debate. If Australians, understandably, say ‘no, we think it should remain not only Australian owned, but Australian controlled and we need to have a national carrier’, and I think there are many good reasons for that as well, then we have got to accept that we may have to pay a price for that. That’s a burden that the taxpayers may have to pick up.
PRESENTER:
You either get a Government subsidy or you get foreign ownership? It is one or the other is it not?
TREASURER:
It seems to be the way it is heading at the moment.
PRESENTER:
Then what size Government subsidy are you talking about? Massive?
TREASURER:
That is the issue, what does a government have to do if it does not have a national carrier? For example, Qantas isn’t just a brand, it spends hundreds of millions of dollars each year marketing Australia to the rest of the world. Does that mean we have to put more money into tourism marketing to fill the hole? Qantas is a major buyer of Australian wine. In fact, I understand it is the biggest buyer of Australian wine, the biggest individual buyer of Australian wine – and promoting it to the world. Do we have to provide subsidies to the wine industry for marketing purposes? What about the non-profitable routes? If a foreign airline or someone else takes over Qantas, will they walk away from routes to country towns or various other places that are not profitable?
PRESENTER:
What about jobs?
TREASURER:
Jobs too, of course. Jobs too. I do not have a magic bullet here, but what I do know is that I can see, coming down the pipeline, the fact that because of the changing aviation environment around the world, Australia needs to decide whether it is prepared to pay a taxpayer price for owning a national carrier. That’s what every other government in the world has done. I am trying to get ahead of the debate so that we have had the debate, so whatever comes down the pipeline, we are ready for it as a nation, rather than simply waiting for things to unfold. New Zealand had Air New Zealand fall over. The New Zealand Government had to step in and buy it. Air New Zealand is still 53% owned by the New Zealand Government. Air New Zealand, which is a state owned enterprise, Etihad which is a state owned enterprise, and Singapore Airlines which is a state owned enterprise are now increasing their stakes effectively, or, it’s been mooted that they will increase their stakes in Virgin. So, effectively Virgin Australia the domestic arm, is overwhelming majority owned by foreign state owned enterprise..
PRESENTER:
If we allow Qantas to be foreign owned, it will be foreign owned by foreign airlines won’t it?
TREASURER:
It is most likely that it would be owned by other governments.
PRESENTER:
Is there a bad symbolism in that?
TREASURER:
That’s for your listeners.
PRESENTER:
You’re saying you want to see what the public reaction is, if the public don’t want Qantas sold, will you not sell it, not approve its sale?
TREASURER:
That is a matter for the Parliament, but I think that would send a powerful message to the Parliament that Australians do want to have a national carrier and they are prepared to do what they have to do to ensure they continue to have a national carrier.
PRESENTER:
Then you have to find the money for it.
TREASURER:
Yes. Hopefully we do not have to get to that point. But it’s a rapidly changing market place and I can see the pressure points coming down the pipeline.
PRESENTER:
How close?
TREASURER:
We will see.
PRESENTER:
Not to lock you into a decision, when do you think we will be facing a decision like this?
TREASURER:
That is a matter for Qantas. Qantas have legitimately come to government and say “look, you have put all these handcuffs on us. We find it difficult to compete on a level playing field with all these other airlines for these reasons.” It is a legitimate point. It’s a legitimate point. The question for our country is, do we want to continue with the restrictions on Qantas. That is obviously a debate we want to hear because if the view of the Australian people is, ‘Yes we do want to have a national carrier, we do want to keep Qantas as an Australian, a majority Australian owned enterprise and we do want it to engage in all these other community activities as well’, then the days of sitting back and letting the regulation do the heavy lifting are over. We may need to actually put our hands in our pocket or provide guarantees that ensure that Qantas can continue as the national carrier.
PRESENTER:
Thanks for your time, just quickly on one other issue, I noticed a report, too, after your meeting with the State Treasurers yesterday, that you’re sort of talking about encouraging them to sell-off, to privatise assets, I don’t think we have any left in Victoria have we? Didn’t Jeff sell them all?
TREASURER:
Not all of them. This is actually a far bigger issue then Qantas or many of the other things. That is the fact that if we do not start spending more money on infrastructure, public and private money on infrastructure …
PRESENTER:
On roads and the like?
TREASURER:
… then our quality of life is going to deteriorate. There is no doubt about that over the next ten years. We have to massively increase our output in order just to maintain our quality of life. Governments don’t have a lot of money, as we were just talking about, they don’t have a lot of money. We have got to recycle our money, we have got to recycle it. If we do have an asset and there is a willing buyer and the asset can continue, what we have got to do is take the money out of that asset and put it into another new asset that is going to grow our economy. If we do not recycle precious taxpayers’ money now in order to drive economic growth, then we are going to pay a heavy price in a few years.
PRESENTER:
Thanks for talking to us, are you enjoying the job?
TREASURER:
I am. It is terrific, but it is also challenging, I must say.
PRESENTER:
You sound surprised that you’re enjoying it.
TREASURER:
I am not surprised, because I love serving my nation, I really do. I think it is an incredible privilege. There’ are a lot of issues on, and you would expect me to deal with them and that is what I am trying to do.
PRESENTER:
Thank you for your time.
TREASURER:
Any time, thanks.