MICHAEL ROWLAND:
Treasurer, good morning. Let’s start with Virgin.
JOSH FRYDENBERG:
Good morning, Michael.
MICHAEL ROWLAND:
We have the expression of interest by ten parties, which is great news but still no guarantees at this stage of the airline surviving. Is the Government, are you completely comfortable with your decision to reject Virgin’s pleas for help?
JOSH FRYDENBERG:
We’re very comfortable that this process will now play out and it is in the hands of the voluntary administrator and that is Deloitte. We have appointed Nicholas Moore to engage with Deloitte. As you say, Michael, there is a great deal of interest from commercial parties. It’s important for your viewers to understand that voluntary administration is a path to the recovery for Virgin. It is not liquidation. It is not Ansett. It is not the end of the airline, far from it. In fact Virgin said in their statement yesterday that they can bounce back stronger after the coronavirus as a result of this process. They were saddled with a lot of debt, around $5 billion worth of debt. This will allow them to restructure their balance sheet, continue to employ many people, continue to provide good competition in our skies, continue to help lower prices for consumers and help the Australian economy overall.
MICHAEL ROWLAND:
If the sale process does not yield results, is the Government prepared to be a buyer of last resort for Virgin?
JOSH FRYDENBERG:
We’re not in the business of owning airlines and we’ve made that very clear. Paul Keating sold off Qantas back in 1993, some twenty-seven years ago. What we want to see though, is two commercially viable airlines in the sky. That is good news for the Australian economy and we will work with the administrator towards that end.
MICHAEL ROWLAND:
Okay. Do you concede, though, that if a new airline or a rebadged Virgin will emerge from this, it will be a slimmed down airline and as a result, not all of the 16,000 people employed by Virgin directly or indirectly, will still have their jobs?
JOSH FRYDENBERG:
I’m not going to speculate on the process ahead in the next couple of months. But I can point to the comments yesterday by the administrator that there won’t be redundancies. I also want you to understand and your viewers to understand that the JobKeeper package, the $1,500 a fortnight, is available to Virgin employees as it is to millions of other employees across the nation because the business continues to operate and in that case, in voluntary administration, JobKeeper applies.
MICHAEL ROWLAND:
In the interests of having a two airline industry in Australia, will the Government make a condition of sale the new owner flying those unprofitable regional routes in Australia for Virgin?
JOSH FRYDENBERG:
Again, these will be business decisions that will be taken by the operator of the airline through the voluntary administration process and thereafter…
MICHAEL ROWLAND:
Would you strongly suggest, or indeed try to enforce that as a Government to ensure those regional communities are still serviced?
JOSH FRYDENBERG:
Of course we want to encourage as widest service as possible across the country, not just for tourism but also for freight routes and Virgin was performing that important service. What we will do and what we have already started to do is engage with the ACCC as the regulator of competition across the economy to ensure that major market power is not abused and that Virgin, on the other side of this coronavirus crisis, can continue to operate and not be squeezed out of the market.
MICHAEL ROWLAND:
Okay. Moving on to our other big story. The Reserve Bank Governor as you know, Philip Lowe, yesterday urged the Government to embrace sweeping tax and IR reforms once we’re through this. Including as he says, looking at ways we tax consumption. Will the Government look at increasing the rate of the GST?
JOSH FRYDENBERG:
We have no plans to do so. When it comes to tax reform, we have already passed through the Parliament as a result of the last two Budgets Michael, more than $300 billion of tax cuts. We’ve got a situation now with our legislated tax system that if you earn between $45,000 and $200,000, you will pay a marginal rate of tax of no more than thirty cents in the dollar. That is 94 per cent of tax payers paying no more than thirty cents in the dollar. We’ve also cut company tax for small and medium-sized businesses and in our first package of responses to the coronavirus, we announced an extension of the instant asset write off and also 50 per cent accelerated depreciation which will go into next year. So, we are absolutely focused on tax reform, as well as broader productivity enhancing reforms across infrastructure, skills and education, deregulation and of course, industrial relations as well.
MICHAEL ROWLAND:
‘No plans’ to raise GST is not exactly a ‘no,’ as you well know.
JOSH FRYDENBERG:
You can play that rule in, rule out game…
MICHAEL ROWLAND:
I’m not playing a game. You said no plans. If you’re not intending to raise it, why not say ‘we are not intending to raise GST’?
JOSH FRYDENBERG:
We’ve got no plans to raise GST…
MICHAEL ROWLAND:
But plans can change, of course, Treasurer, as you know.
JOSH FRYDENBERG:
Well, so can TV hosts. I’m not going to get into that game and ask you about your future career. What I’m going to say to you is that we have no plans to change the GST. What we do have a plan for is obviously lower taxes and that has been our track record. We have a tax to GDP cap, Michael, of 23.9 per cent. At the last election there was a stark and very clear contrast with the opposition and their tax to GDP which would have gotten to 25.9 per cent and it would have seen $387 billion of higher taxes. Thankfully, the Australian people chose to ignore that proposition.
MICHAEL ROWLAND:
Just before we go. China is pretty cranky with Australia at the moment over our support for an independent investigation into the Chinese origins of coronavirus. It has accused your colleague, Peter Dutton, of dancing to the US tune of Australia being pitiful. What is your reaction to that and is China behaving like a good international citizen here?
JOSH FRYDENBERG:
I think they are unwanted and unjustified comments. What is clear is that we maintain a good relationship at a commercial level with China. They’re our largest trading partner and we want that to continue. We obviously have some differences from time-to-time on the political and strategic levels. But like with many countries, we make those points clear. But ultimately, Peter Dutton’s role, the Prime Minister’s role, my role and all our colleagues’ role is to defend the Australian national interest. That is what we will continue to do and we will speak up about it as required.
MICHAEL ROWLAND:
Do you trust China?
JOSH FRYDENBERG:
I happily engage with China constructively…
MICHAEL ROWLAND:
That wasn’t the question. Do you trust China?
JOSH FRYDENBERG:
It is not a question of trusting them. It is a question of can we work with them. And we do and we do so constructively and we do so in Australia’s national interest. They are a country of more than one billion people. They are in our region. They are our number one trading partner. Many Australian livelihoods and many Australian jobs rely on those strong trading relationships with China. We don’t want to move away from that, what we want to do is obviously defend Australia’s national interest in whatever realm that is and we will continue to do so.
MICHAEL ROWLAND:
Okay Treasurer, we’ll leave it there. I’ll just clarify as well there are no plans on the TV host front here. Just quietly.
JOSH FRYDENBERG:
Good to see you.