Feb 26, 2014

Doorstop interview, Parliament House

Subject: Qantas

ALBANESE: Good morning. This is a government that had a plan to get into government but doesn’t have a plan to govern. Because of that they are struggling to find their narrative.

One of the potential narratives that the government is trying to create is that they are tough on spending. Hence you see them on a range of issues that relate to employment thrashing around looking for an answer. But they’re looking for it in abstract from what the impact of their deliberations is.

Nowhere is that clearer than when it comes to the issue of Qantas. Qantas had their downgrade in October. Since October you’ve seen this government floating ideas, having thought bubbles, but not acting.

That is having real consequences for the workforce employed directly by Qantas but also for the workforce that is dependent upon the national Australian airline remaining strong.

When it comes to Qantas, we have said for months that it is time for the government to act. What we’ve seen is different noises coming from the government in abstract from the impact it is having in terms of the job security of Australians.

We have now the issue of the floating of whether they’ll pursue getting rid of the conditions that are there in the Qantas Sale Act. Those conditions are there for a reason.

They’re there for pragmatic reasons – like the fact that international aviation occurs due to agreements between nation states –  air services agreements that allow airlines to fly from country to country.

That’s why Qantas and Virgin and Delta and United fly between Australia and the United States. That’s why Singapore Airlines doesn’t fly between Australia and the United States.

I noticed only yesterday that Warren Truss for the first time acknowledged the fact that this is the way aviation works – and the fact that if you removed the foreign restrictions in regard to Qantas you would have to split up Qantas and have its international arm remain majority Australian-owned in order to comply with the Air Navigation Act and those international agreements that are in place.

It is time for the government to say what its position is on Qantas. Qantas as an Australian airline is important, not just in terms of a brand, although that is important because every time people see the flying kangaroo that’s an ad for Australian tourism and Australian jobs. The other provisions that are there are important as well: provisions that include the need for the company to be based here in Australia; that maintenance has to be done here.

Australian-based activity means Australian based jobs. The fact that it has to engage with rural and regional Australia – it’s there in the Act as well.

All of this means support for Australian jobs. It’s about time that Tony Abbott and Warren Truss said actually said what is their plan is for Qantas, instead of sitting back and watching threats be made to the job security of those people that work at Qantas and those people who depend on this national airline.

REPORTER: Can you envisage any circumstances under which Labor would support amending the Act to remove those provisions on jobs and foreign ownership?

ALBANESE: Labor supports Qantas remaining an Australian-based airline.

The whole debate about support for Qantas as an Australian-based airline would be removed if you got rid of the provisions that are there in terms of foreign ownership restrictions.

If Qantas is opened up in terms of removing those restrictions, what you will see is what occurred in Air Canada’s case. What you would see, as common sense tells you, because the share price total value of Qantas is less than the value of the assets of Qantas, it represents a real potential target for someone to come in, break up the company in terms of its divisions, with a consequential loss of service particularly for regional Australia, but also a loss in terms of having an Australian national airline.

There is a reason why countries, whether they be large countries or small countries like Brunei, have a national airline. That is because it is in the national interests. It’s in the national economic interests. It’s in the interests of national security.

It’s not just an academic exercise and if Qantas was opened up the likelihood is, given that eight out of the world’s top ten airlines are essentially government-backed, the likely owners of Qantas and controllers of Qantas would be another airline which is backed either wholly or in part, through the sort of subsidies that occur around the world, by another government.

Now at that point in time Qantas effectively ceases to exist as an Australian-based airline.

REPORTER: We haven’t heard yet from Qantas exactly what it wants. It hasn’t been willing to talk publicly, even though we all know that this idea of a stand-by debt facility is out there on the agenda. Do you think it’s time for Qantas managers to be upfront with the Australian taxpayers about what they want in terms of assistance from Canberra and open the books in a sense so that people can see how it would work?

ALBANESE: Well the problem here is the government. The government haven’t said what their position is. It’s pretty clear that there are some options that Qantas would see as favourable. It’s clear because of the speculation that’s there.

REPORTER: Excuse me. How can it be clear because of the speculation?

ALBANESE: You write about it every day and people still read the newspapers.

REPORTER: So is there no obligation for the company to be upfront about what it wants?

ALBANESE: Well that’s up to them. The difficulty they’ve got is they are in negotiations with a government that said last year they would make a decision last year.

And this year they have, at each and every point in time, extended out the timeline as they’ve struggled for this narrative.

What Qantas have said is that they’re looking for some support in terms of a level playing field – in terms of the position that they find themselves, in terms of access to capital as a result of the downgrade.

Now there’s a couple of options there. One option is of course an equity injection and essentially the government buying a portion go the airline. Another option is some form of debt facility. Qantas have made it clear that they would pay for that facility in terms of not looking for a government hand-out.

There’s a difference in the impact on the government in terms of its liabilities and where it sits on the government balance sheet.

But what the government has to do is to come out with its position.

All they do is in terms of their narrative. One, the narrative about being tough on spending; secondly the narrative that goes on and on as I saw the Prime minister did again today about carbon pricing as if that impacts competition. It doesn’t. It applies to all airlines across the board.

REPORTER: But are you letting the management off scot free? Is there no requirement on them to put detail on what exactly they want?

ALBANESE: They’ve had discussions with me and the government. What I want is for the government to state what its position is. My job is to hold the government to account and the government at the moment through this speculation, through a transport minister who only for the first time yesterday has acknowledged the issue with regard to Qantas and its Australian presence being important for international aviation –  something that I have been saying for months when this issue has been raised.

For the first time yesterday, Warren Truss obviously got a brief and someone reminded him of what those provisions are.

What we want is for the government to end this uncertainty. I know that Qantas wants the government to end the uncertainty as well because it is having an impact – no doubt.

My concern isn’t Alan Joyce or anyone in the management of Qantas.

My concern is the workers at Qantas and those workers in other industries in the sector who depend upon Qantas’s strong ongoing position.

That’s my concern and it appears that for the government it’s just a plaything for them, just like the sort of trashing of the workers at SPC Ardmona that we saw from the Prime Minister, who alleged that they had conditions that they simply don’t have.

REPORTER: Qantas itself says and the government itself says that the current position is unsustainable –  state-backed airlines with Virgin etc. Do you believe that if the debt facility were extended ad infinitum that would be enough to keep Qantas sustainable over the long term but without having to lift the sale act?

ALBANESE: I’ve made it very clear that if you remove the foreign restrictions on Qantas, I think you essentially remove the reason for why Qantas is an important Australian airline. You eliminate the whole debate once you do that.

I think Qantas management has to get the decisions right in terms of the future. We’re not talking about government running the airline. The management has to run the airline.

International aviation is a difficult business. Domestic aviation is difficult as well. But I’ll tell you what: here in Australia we have the most dependable domestic aviation industry in the world.

The Aviation White Paper I brought down as minister was recognised as the most comprehensive plan for aviation in the world and it was recognised by me being given the Aviation Minister of the Year award  as a result of that by the sector because the industry recognises that what Australia was doing was very advanced as a result of essentially the reforms that began with the Hawke and Keating governments and were continued under the Rudd and Gillard governments.

REPORTER: What do you think of the idea expressed yesterday in the Coalition party room that if the debt guarantee is offered to Qantas it should be offered to Virgin as well.

ALBANESE: Well, there are different circumstances with the company. Virgin of course have had access to significant capital injections from airlines that are. in the case of Air New Zealand, Singapore and Etihad, government-backed airlines.

QUESTION: Just a quick question on some of the decisions that Alan Joyce may outline tomorrow such as up to 5000 job losses and selling terminals and so forth in a bid to get the airline back in the black. What do you make of that?

ALBANESE: I’ll wait and see what the announcements are before I speculate on them. I think the critical factor is Australian jobs here.

Qantas need to ensure that they maximise Australian employment, that they provide security for their workforce and the government needs to stop contributing to insecurity by this prevarication and treating this as a plaything.

This is a government that was elected on September 7. It’s about time they governed.