TREASURER:
I understand that the consortium bidding for Qantas will be lodging a notification this afternoon with the Foreign Investment Review Board which will enable the Foreign Investment Review Board to carefully scrutinise the bid and carefully determine whether or not it falls outside the national interest. The scrutiny will be very rigorous. The statutory time period is 30 days. The Government will not allow Qantas to go into majority foreign ownership. Qantas at the moment, as you know, has substantial foreign ownership but it is restricted to 49 per cent or less. The Government will not allow foreign ownership to go above that, nor will the Government allow Qantas to go into foreign control. The Government will require that Qantas has majority Australian ownership, that it be under Australian control, that it be located in Australia and that the airline continue to serve important domestic and regional routes. The matters that are the subject of the bid will be put fairly and squarely to the board, the scrutiny will be careful and rigorous and after all of the facts are known the outcome will be announced. But this will be handled under the Foreign Acquisitions and Takeovers Act in accordance with the legislative requirements.
JOURNALIST:
At first blush do you believe the proposed foreign ownership structure will not breach those limits, the 49 per cent cap?
TREASURER:
Well they can’t breach 49 per cent. If anyone tries to lift the foreign ownership in Qantas above 49 per cent they will be stopped. It will be majority Australian ownership and Australian control.
JOURNALIST:
Isn’t it rather unusual Treasurer for you to set out those pre conditions for the bid to have to be met before FIRB considers the application?
TREASURER:
Well these are conditions which are set out in the law, they are set out in the Qantas Sale Act and the point I am making to you is that Act will be enforced.
JOURNALIST:
By who?
TREASURER:
Well the Act will be enforced via itself and the Foreign Acquisitions and Takeovers Act will be enforced by the FIRB and the Treasurer, but that is law. There is a law in this country that says you can’t have majority foreign ownership of Qantas, and that law will be enforced. There will not be majority foreign ownership in Qantas.
JOURNALIST:
Treasurer how disappointed are you that the bidders didn’t volunteer an application and only decided to do so it once you pulled them into line?
TREASURER:
Well in the end they have volunteered and I welcome that fact. I was always of the view that this matter should be notified under the Foreign Acquisitions and Takeovers Act. This was a point I made to the consortium on a number of occasions, and the most recent of which was Wednesday of last week and we had an announcement over the weekend that they would do it and I understand that it is going to be done this afternoon.
JOURNALIST:
The bidders are adamant that there is fact no foreign control or majority entity. Are you suggesting that the consortium bid is contrived in structure?
TREASURER:
No, I am saying that these matters will be fully tested. The law is that there cannot be majority foreign ownership of Qantas and there will not be. The law will be enforced, the requirement will be that Qantas remain under Australian control. And that will be enforced. And the appropriate body which will examine all of those matters is the Foreign Investment Review Board and after it has completed its deliberations it will make its recommendations to me.
JOURNALIST:
Will there be a Senate enquiry in the interest of more transparency and public involvement in that sort of decision making?
TREASURER:
Well I think the Foreign Investment Review Board is the appropriate board to look at this. It is staffed by independent persons, it has a statutory mandate, there is an established process which has legal rights for everybody and it makes its recommendation. And I think a careful legal scrutiny is the important thing here.
JOURNALIST:
Your Party Room tomorrow will probably ask you for assurances on jobs should Qantas be sold. Are you in a position to give assurances, is that the Government’s job?
TREASURER:
Well I don’t manage Qantas, the people that can talk about job opportunities in Qantas are the management and that is for them. And you have to bear in mind that regardless of who owns it and let’s suppose there is no change in ownership at all, the job opportunities are up to the management. So let’s suppose that this application hadn’t come along, the job opportunities in Qantas would be as determined by the board and the management. The fact that this application comes along doesn’t change the fact that the board and the management are responsible for jobs. We will be very interested to hear what they say but if you want to know about jobs in Qantas you would have to ask the management. That is what we will be doing, I don’t run the company.
JOURNALIST:
So do you conceive of any of the conditions being put on approval if they meet the foreign investment guidelines, can or would any conditions be attached to an agreement?
TREASURER:
Well under the Act a matter can be refused permission or a matter can be allowed subject to conditions. But I am not going to pre-judge what the outcome will be.
JOURNALIST:
Jobs would not be an appropriate condition?
TREASURER:
I am not going to pre-judge the outcome because the application is not yet lodged and scrutiny has not yet been engaged in, and it is during the course of the scrutiny that all of these matters will come out.
JOURNALIST:
On what criteria will the board make its decision? Will it be the national interest?
TREASURER:
There is a power to disallow a proposal if it is contrary to the national interest. You don’t have to find something is in the national interest. You have to apply your mind to whether something is contrary to the national interest.
JOURNALIST:
Part of that might be taxation, the structure of the essentially a negative geared takeover means that the company is likely to pay very little tax, would that be appropriate for the Foreign Investment Review Board to look at?
TREASURER:
Let me make this point that the Australian Taxation Office would be one of the most efficient and well resourced taxation offices in the world and if there is any attempt by anybody to avoid their taxation obligations I have full faith and confidence in the Australian Taxation Office to police that matter.
JOURNALIST:
On the subject of emissions trading Treasurer, do you think that Australia could have a domestic emissions trading scheme prior to possibly joining an international scheme in say, 2012?
TREASURER:
Look I know that the State governments have talked about trading schemes, there may even be some trading going on at the moment, but the reality is that if you are going to trade entitlements it has got to be done at an international level. That is the reality. And I believe that if the world moves towards a trading system, and the trading system brings in the big emitters such as the United States and China and India, that Australia should be part of that.
JOURNALIST:
So why is the Prime Minister talking about an emissions trading system now and accepting that carbon pricing is important?
TREASURER:
Well all I can tell you is the view that I have already put. If the world moves to a trading system and it brings in the big emitters then Australia should be part of it, of course we should be part of it.
JOURNALIST:
So currently you would oppose the introduction of a national emissions trading scheme?
TREASURER:
All I am saying to you is for a trading system to work well and properly you would want to see it operating at an international level. And I think the world is moving towards that and as the world moves towards that I think Australia should be part of it.
JOURNALIST:
But Treasurer, many experts have said that Australia would need perhaps to have a domestic scheme for a couple of years before then phasing into an international scheme, in a way have said, give us time to sort of understand and see how it would operate, you don’t agree with that?
TREASURER:
Look, I think you are just playing semantic games frankly. If there is to be a genuine trading scheme it will obviously have to operate internationally, and if it does operate internationally, I think the world is going to move towards that, then I think Australia should be part of it.
JOURNALIST:
Tim Flannery says we have held the world back by not signing Kyoto, what is your response to that?
TREASURER:
Well look, the largest emitters in the world are the United States and China. If Australia were to close all of its power stations today, China would replace them in nine months, double them in 18, triple them in 27, so the effect that Australia has, whilst important for us, is not large on the global scale. What is affecting global emissions are countries like the United States and China. China by the way has 1.2 billion people which if my arithmetic is right is what, 60 times, 60 times the Australian population.
JOURNALIST:
What about sequencing them Mr Costello, like if we are to accept that there is to be an international emissions trading system, some countries will move to implement a national system which will lock up with another national system. Is it appropriate that Australia be among the first movers to establish that international…?
TREASURER:
Well I think the European Union does this because they are in an association, they have agreements as between themselves and they can do it inside the European Union. But who is Australia going to do it with?
JOURNALIST:
Well it is a large region of which we are part, and…
TREASURER:
And who is in that region? Who are the key players in the region? India, China…
JOURNALIST:
Japan.
TREASURER:
…Japan, the United States. It brings me back to where I started from. If we can move to an international system which brings in India, China, the United States, and I think we are moving to it, and I think Australia should be part of it. That is the way it will go.
JOURNALIST:
Mr Costello, did your Department do any costings on the $10 billion water security plan?
TREASURER:
We have done costings and we have a profile as to what we think will be expenditures, this will be subject of course to the Premiers agreeing. Until such time as we get the Premiers’ agreement and the handover and we have a timetable in relation to that, the profile will not be finalised.
JOURNALIST:
So it hasn’t been comprehensively costed by your Department?
TREASURER:
Well it has been comprehensively costed to the extent that it can be costed before it has actually been agreed. Let me make this point, if the Premiers don’t agree then this could be delayed for years and obviously the expenditure would therefore be delayed. This is why I would say to the Premiers, agree. This is too important to be derailed by State rivalries, hopefully by Thursday it will be agreed, hopefully by Thursday details will be worked out and as soon as that is worked out the final profiles will be set. Okay, thank you.