SKY NEWS AM AGENDA
TUESDAY, 14 APRIL 2020
SUBJECTS: Support for the Australian Aviation Industry through Covid-19 crisis; Virgin Australia; Unemployment; Extending JobKeeper to Casuals.
TOM CONNELL, HOST: Shadow Transport Minister Catherine King, thanks very much for your time. Labor has been calling for a possible loan that would result in a stake for the Government. Would you agree that the best result is for the majority owners, overseas airlines, to actually come to the party and stump up some more money?
CATHERINE KING, SHADOW MINISTER FOR INFRASTRUCTURE, TRANSPORT AND REGIONAL DEVELOPMENT: Well, I understand that they actually already ruled that out. If you look at what’s happening internationally with aviation, they are all in trouble. And of course, it is natural that those stakeholders in Virgin are saying, look, we’re going to save the furniture in our own countries first, rather than deal with the country in Australia.
I think the reality is that it’s crunch time. If the Government does not step up for Virgin in the next week or so then we are looking at the failure of one of our aviation giants. It is 20 years since Virgin opened here in this country, it has served us very well. And if the Government does not do something soon, then we will see this airline fall.
CONNELL: The specific call from Labor for a loan that would then get a stake in the company – how would that work, for example, how big a stake will the Government get as a result, would it be sold down the track?
KING: Absolutely. You know, what you’d want to do is allow the Australian Government to take an equity stake in the airline now. That equity stake could be sold down and realized later when the company is back in a profitable situation and in fact, potentially benefiting the taxpayers in two ways. One by keeping competition in the aviation sector and making sure prices, when flights do start coming back up again, prices are kept down. It also means we keep 10,000 workers here in Australia employed. And, it also then means of course the Government could realise that stake later down the track.
We’ve been calling for this for some time, I understand we’ve also heard a Liberal backbencher now saying the same thing. The problem we’ve got at the moment is the Prime Minister, in particular, appears completely intransigent on this issue. I think he’s being incredibly poorly advised that somehow or other there’s going to be a second player coming easily into the aviation market. We’ve heard that, they’ve been thinking they might lift cabotage, which means that Australians won’t be employed flying domestic routes, it will be others. If this happens this will basically be the end of the sort of aviation industry we’ve got in Australia at the moment and the end of the competition we’ve got in the sector.
CONNELL: Virgin’s saying it needs $1.4 billion, the current market cap of the company is only $726 million. That would mean, wouldn’t it that the Australian Government would need to own the whole thing and even then, it’s bad value?
KING: It would certainly need to take a substantial equity stake in the company if that was the case, and that’s the route the Government decides to take. Airlines are profitable and they can be profitable. We’ve seen certainly that the Melbourne-Sydney route is one of the most profitable and most prolific in in the world in terms of flights. But I they need time and they need space.
CONNELL: Sorry, just to jump in, wouldn’t you assume Virgin is not going to accept the Government taking a majority stake, for example, that leaves the Government with at best getting about 25 percent of the market cap, of the money it would get from $1.4 billion with a market cap only at $726 million. That just doesn’t seem like value for money for the taxpayer?
KING: Well, at the moment, the Government’s not even talking about doing anything at all. We’re trying to push the Government to make a decision here. Do you want to have a second major airline in this country? Or are you going to see 10,000 jobs placed on the scrap heap.
If Virgin goes into voluntary administration, those 10,000 workers are immediately made redundant. That is what happens and that’s the reality when a company goes into administration. There won’t be any JobKeeper payments for these workers, there won’t be any connection back with their workforce. They will be placed on unemployment queues if that’s what the Government wants to do.
CONNELL: Just to jump in, on the proposition of taking a stake, whatever form that takes, it’s going to have to be in part giving away money right? On the sums we’ve got and the amount of stake, it’s not going to represent value for money on the current price of Virgin Australia?
KING: Certainly not today, but Governments have investments in the long haul. It has decided to pay money, including $100 million dollars for regional aviation. It’s giving Rex, which is 59% foreign-owned, money. It’s giving other regional aviation sector players money. The Government thinks that Rex is worth saving, why does it not think the 10,000 jobs that are in Virgin, that they’re not worth saving as well?
CONNELL: Just finally, Treasury is saying 700,000 more people would be unemployed but for JobKeeper. I know Labor has criticisms around casuals, but just on the size of this package when it was rolled out, does the Government get a bit of a tick for the fact that at least now unemployment won’t be completely out of control in these March figures?
KING: Of course, the wage subsidy that Labor, unions, businesses called for has been incredibly important in keeping people connected with their employer and getting the unemployment rate down. But imagine if you had a million less casuals on that unemployment queue, and that’s what we’re talking about, a million who just miss out. I’ve got one who has come to me, they miss out by three days from that 12 month cut-off point. Three days that mean they do not get that JobKeeper payment. Imagine what the unemployment rate would be – it would be even smaller if the Government extended that more fairly to casuals across the country.
CONNELL: Catherine King, thank you for your time today.
KING: Really good to talk to you.