TRANSCRIPT: ABC AFTERNOON BRIEFING INTERVIEW, 21 April 2020

E&OE

Subjects: Virgin Australia, coronavirus;

PATRICIA KARVELAS

Virgin Australia's executive said the airline will emerge from voluntary administration leaner, stronger and fitter. The struggling carrier has brought in accounting firm Deloitte to take charge of its books after failing to secure a $1.4 billion taxpayer funded lifeline. The Federal Government says a market-led solution would be the best in the long term. The Deputy Prime Minister, Michael McCormack, is the Minister for Transport and Infrastructure. And he is my guest this afternoon. Minister, welcome.

MICHAEL MCCORMACK

Thank you Patricia.

PATRICIA KARVELAS

Why did the Government ultimately decide not to offer Virgin Australia a loan or even take a stake in it?

MICHAEL MCCORMACK

What's happened is the best way forward and Paul Scurrah, the CEO of Virgin, has also recognised that. The statement today mentioned the fact that they can see a way forward now. They can see that with recapitalisation, refinancing, restructuring, that there is a pathway forward. They're taking it and have engaged the services of Deloitte. This does give their 10,000 employers and 6,000 suppliers, I believe, confidence that there will be a way through. We've supported the aviation sector in a sector wide benefit to the tune of $1.28 billion already. Much of those initiatives Virgin has engaged in and benefited from and we look forward to continuing to keep in close discussion with Virgin and with the administrators and we want to see two commercially viable airlines through this crisis and indeed Virgin has identified that very objective today.

PATRICIA KARVELAS

You say that you want two airlines to emerge, but you haven't taken the necessary action to ensure that that does happen.

MICHAEL MCCORMACK

Well, we have put Nicholas Moore in place to make sure that he looks at the books, engages with the administrators. Paul Scurrah said this is the way forward. We have already put in place money that is available and has been taken up, indeed tens of millions of dollars Virgin has benefited from by backdating the announcement that I made on March 18 to waive certain Government fees, as in fuel excise and Airservices Australia fees and security screening fees. They have benefited to the tune of tens of millions of dollars. They have also taken part through their network the ability to fly some of those routes to some of the 138 destinations placed on the March 28 announcement for $198 million. And indeed, the repatriation flights and the domestic trunk network that has subsequently come as a result of the intervention, they have taken part in that. As well as the freight assistance network, which takes such things as lamb and salmon to international ports and markets.

PATRICIA KARVELAS

The Government has been hit up by a lot of different companies and industries for money. Is this your way of saying don't come to us for a bailout?

MICHAEL MCCORMACK

Well we want to make sure that we get as many businesses through this COVID pandemic as possible, Patricia and that's what we are doing. We have already invested more than $320 billion of taxpayer money and JobKeeper, $130 billion. That is benefiting Virgin employees, $1500 a fortnight that Virgin can avail themselves of and I know that this is going to provide some comfort for business. We want to see as many businesses through the other side as possible. I am encouraged by the words of the Reserve Bank Governor Dr Philip Lowe who, in the economic outlook speech, that he saw a way forward, as do we thanks to some of the initiatives from the Treasurer.

PATRICIA KARVELAS

You mention Josh Frydenberg, he said ideology is not a thing. Ideology is not part of this, yet you've made a decision it seems based on ideology that the Government shouldn't own an airline or shouldn't step in. Why ideology on this one?

MICHAEL MCCORMACK

What we have done is sector wide, what we have done with all of the initiatives that we've put forward, we've made them available to everybody. Sadly, Virgin came to COVID-19 starting with $5 billion of debt and taxpayers could quite rightly look at that situation and say, well, they are owned by Sir Richard Branson and Etihad, they are owned by a Chinese consortia and Singapore Airlines, why should taxpayer dollars support an almost entirely foreign airline.

PATRICIA KARVELAS

Do you accept this is a forced shutdown of the industry so it's unlikely that any of those names would step up given the uncertainty in the industry? This isn’t the time you launch in?

MICHAEL MCCORMACK

We forced shut down because we want to save lives, Patricia.

PATRICIA KARVELAS

Absolutely, but either way the economic reality is that they have been shut down. It is not just an economic failure on their own behalf. They have been forced to shut.

MICHAEL MCCORMACK

It is a health pandemic and economic crisis that we are trying to address as best we can and if you look at the results thus far and compare to the results overseas, we've done very well. Yes, for the 70 or so families who lost loved ones, our condolences and sympathies go out to them, but we don't want to pick winners in this. We want a market-led resolution to these issues and that is why we have said we will support our airlines and we have. But there is a market-led solution to this and I am already encouraged by up to 10 potentially would-be investors already signalling their intention is to have a look at Virgin and to look at their books and to see if that could be a possibility going forward for them.

PATRICIA KARVELAS

The Treasurer Josh Frydenberg said today that Virgin isn't Ansett because it hasn't collapsed. Do you accept though that it is likely that many of the jobs that Virgin will be lost?

MICHAEL MCCORMACK

No, I don't accept that. We want to see as many, if not all of those jobs retained.

PATRICIA KARVELAS

Level with the Australian public who are watching. Are you saying those 10,000 jobs will be saved?

MICHAEL MCCORMACK

That will be a matter for what happens next.

PATRICIA KARVELAS

It's unrealistic.

MICHAEL MCCORMACK

We've got to be confident.

PATRICIA KARVELAS

You have to be realistic.

MICHAEL MCCORMACK

Labor is talking down the economy. Anthony Albanese just wants to throw money at any situation. I am more confident and positive than that and I know the Reserve Bank Governor is, Josh Frydenberg and Mathias Cormann are too and our Prime Minister is.

PATRICIA KARVELAS

Was the basis of your comment to say that 10,000 jobs will remain?

MICHAEL MCCORMACK

There are potential investors already signalling their intention to look at the books and to see if that is something that they would like to invest in. The fact is, we need a two-airline solution in the country. New runways are being built in Brisbane and Melbourne and there is a lot of infrastructure being built. Australia is big enough to have two major domestic airlines and we want to see that happen.

PATRICIA KARVELAS

It is inevitable that there will be job losses as a result of what we are seeing, with administration and then subsequently potentially a restructure.

MICHAEL MCCORMACK

I don't share your view. Let's see what happens. They have placed themselves in voluntary administration. They say themselves, let's see where this takes us. It is the best way forward, it is a pathway to guarantee we have commercially viable airlines and I'm confident we will come out the other side. Yes, it might be different but restructuring ...

PATRICIA KARVELAS

… Jobs will be lost? It might be different. People might lose their jobs.

MICHAEL MCCORMACK

Let's see what happens in the fullness of time.

PATRICIA KARVELAS

Don't we need more than the fullness of time? The Government could have stepped into guarantee that those jobs won’t be lost.

MICHAEL MCCORMACK

The Government will certainly support the aviation sector through the regional routes and the regional subsidisation of regional airlines and the International Freight Mechanism that we are doing, through repatriation flights and the domestic trunk routes from capital city to capital city and taking in some of the key regional ports. We will continue as part of the $1.2 billion we put on the table that Virgin can take part in those things and we look forward to that.

PATRICIA KARVELAS

If whoever buys a restructured Virgin decides to cut jobs, which it looks quite likely, will those people who are sacked be kicked off the JobKeeper payment?

MICHAEL MCCORMACK

We will have to wait and see if anyone loses their job.

PATRICIA KARVELAS

If they do, will they be kicked off?

MICHAEL MCCORMACK

We have JobSeeker and JobKeeper. We have invested in the future of business, of workers and those people who might slip through the cracks. We do have mechanisms in place for those people who are out of work, for those who want to remain as part of businesses which can stay open and can stay in work, whether they are in voluntary administration all operating profitably, we have the mechanisms in place to make sure that we have our economy in the best position coming out the other side. It is difficult for everybody and we acknowledge that, but we want to make sure that our economy is cushioned as well as we can. That is why we've invested $320 billion into the economic situation and through Brendan and the Chief Medical Officers from right throughout the country we've made sure that the right health measures have been put in place.

PATRICIA KARVELAS

The Queensland Government wants a meeting with Virgin administrators, they say that a $200 million loan is still on the table. Is the Federal Government prepared to offer Virgin additional financial support?

MICHAEL MCCORMACK

We will continue to talk with Virgin, we will continue to take the advice of the entire aviation sector. I have been in discussions with aviation executives on a daily basis and of course, as I said, we have Nicholas Moore in place to work with Deloitte and we will take the soundings and advice that he provides Government and act on that.

PATRICIA KARVELAS

It has been suggested regional centres might be the first to experience the easing of lockdown measures. Just a couple of questions on this. Firstly, would you support and welcome that? Do you think there should be a ban on visitors going to those areas?

MICHAEL MCCORMACK

Provided the Chief Medical Officer Professor Brendan Murphy says it’s okay, we will take his advice. He has been very good so far, very solid. We have kept the number of cases and the fatalities to a very low level compared to overseas. We have done very, very well. As far as staying home, that is the best advice and we need to follow it. Keep out of the regions. We don't need to see any outbreaks in our regions because if there is the easing of restrictions ahead of time, I wouldn't like to think that we might have these outbreaks which could cause a lot of deaths in a regional community which just could not sustain that through their level of ICU beds available. We want to make sure that they get through this crisis with limited effects to our entire health sector. We want to make sure we get as many Australians through this as possible. Follow the advice of Professor Murphy that has been working very well.

PATRICIA KARVELAS

Thank you for your time.

MICHAEL MCCORMACK

Thanks Patricia.

Shane Manning