Interview on ABC Riverland SA, Late Afternoons, with Narelle Graham

  • Transcript, E&OE
Topics: Support for airlines and vulnerable Australian businesses during the COVID-19 pandemic.
20 March 2020

Narelle Graham: The Liberal Senator for South Australia, Simon Birmingham, has made himself available to take your questions this afternoon, so you can phone on 1300-160-222 or you can text on 0467-922-783. He is also of course the Federal Minister for Trade, Tourism and Investment. Minister, welcome.

Simon Birmingham: Hello Narelle, thanks for the opportunity.

Narelle Graham: You- for want of a better phrase, your wings have been clipped. You're not travelling overseas anywhere at the moment, I gather.

Simon Birmingham: Well, no. That's very much the case. And of course, all of my energy and effort is right now dedicated to just making sure that we get Australian businesses through these really tough times that they're facing, particularly those who are tourism and trade exposed businesses, and doing the best we can to help as many survive, to preserve as many jobs as we can, and to make sure that they are there in sufficiently critical numbers afterwards so that we can have as strong a recovery as possible when we do get to the other side of this.

Narelle Graham: That is Senator Simon Birmingham. Your government has announced its first stimulus package. That was announced last week – $17.6 billion. I don't need you to run through the details of that. We’ve spent a lot of time doing that. But what help is there specifically for businesses that rely on tourism and perhaps, even hospitality, Senator?

Simon Birmingham: So obviously, in that package, there's automatic payments that will flow through over coming weeks to small and medium businesses. Up to $25,000 that will come through the tax system to support those businesses. So, that's an important first step. There's also some encouragement to get investment flowing around the economy. So for businesses who can, there's the incentive to have them make purchases off of other businesses of capital items, or to undertake investments that will generate work the contractors or the like, and that's all important to try to stimulate activity where we can, knowing that will flow through other parts of the economy. But obviously, tourism and hospitality businesses, in particular, are going to have limited opportunities for new business; are seeing, in many cases, a loss of their cash flow. And so, those initial payments are crucial; additional support that we're trying to look at to help small business through.

The announcement today by the banks as a result of the interventions that we and the Reserve Bank made yesterday around providing six months of loan deferrals can really take much of the pain off the back of small business in terms of their financing and the repayments they’d have to make. But we're continuing to look at other things – talking to state governments about what they can do to encourage rent relief, and pursuing other ways in terms of relief from utilities with the energy companies, and supporting in a number of different ways.

Narelle Graham: I spoke to Rex earlier today. I want to play you a little bit of what John Sharp said. He's the deputy chairman of Rex.

[Excerpt]

John Sharp: Well, we want to continue operating but there's no way in the world we will even break even over this period, even with these cutbacks. We will lose money. We're going to have to borrow money from the banks in order to keep operating. And we're asking the Government to help us a little bit there by guaranteeing the loans, because banks require very solid security, and in these times, our balance sheet is severely damaged. We want to survive. We think we can. But we'll need to borrow and-

Narelle Graham: How much?

John Sharp: Well, we're not sure exactly yet. Time will tell. But it'll be in the tens of millions. It won't be in the hundreds of millions; it’ll be in the tens of millions. We're not asking them to give us money or to lend us money. We're asking the banks to lend us money and the Commonwealth to guarantee it. And we’ll pay it back over time.

[End of excerpt]

Narelle Graham: Senator Simon Birmingham, in the capacity as the Minister for Trade and Tourism, is that something that you'll be fighting for the Government to do – to be able to go guarantor on a loan for a company like Rex, which is really, you know, just so crucial, so vital for regional Australia?

Simon Birmingham: So Narelle, you saw earlier this week that we did a bunch of things for the aviation sector in terms of providing for fee relief, refunds of fees that had previously been paid, refunds in relation to diesel tax and related types of things, to make sure we can put some cash back into the airlines. Airlines are not negotiable in terms of assets we need, as a country, when we get to the other side of this crisis. Of course, virtually, nobody is flying at present. They're feeling enormous pain and that pain will continue and they're all having to make decisions to downsize. But it is not negotiable that we have viable airlines, particularly one that can service regional areas of Australia as well.

So, nothing is off the table. Rex’s proposal there in terms of Government providing underwriting or going guarantor for certain financing instruments – they're not the only ones. Across the broad, the tourism and hospitality sector has talked about those types of options, and we'll have to work carefully through them on a case-by-case basis to see what is reasonable for the taxpayer to do, but also what is preserving that critical economic infrastructure for our country, such as our airlines, when we do get to the other side.

Narelle Graham: That is Senator Simon Birmingham, and if you've got a question you want to flick through on the text line: 0467-922-783. It's certainly uncertain times. You might want to hear from a very senior member of the Government in Simon Birmingham, if you've got a question for him. It's really quite generous of you to be offering up your time like this and I hope that people make the use of it.

People on Twitter heard you, Minister, say on Sky News and they're asking: did you say we need a national airline, a government-owned one; that the Government wants to take back Qantas?

Simon Birmingham: No. No, I certainly didn't say that. I certainly would have- and I can't remember the exact words, but as I was just saying to you, it's not negotiable that we have a strong national airline sector. That doesn’t require us to have a government-owned airline. Ideally, on the other side of this, we have two viable domestic carriers who both assure me at present, in Qantas and Virgin, that they have cash reserves, that they are viable, and that they have plans to see through this. They might need assistance depending on just how deep or long it goes, but neither are asking for further measures immediately. We just spoke about Rex. We want them through on the other side as well, giving that opportunity for regional communities to have certainty they will still be connected to the rest of Australia. So, we’re not looking to nationalise things, but these are unprecedented times and we’re already doing unprecedented things.

Narelle Graham: Is now the time, Senator, to be putting assets back into Government hands? Is this a wakeup call?

Simon Birmingham: I don’t think so, Narelle. I don’t think we’d be in a better place if we had one government-owned national airline than we are by having a competitive airline market where there’s actually pressure on Virgin and Qantas, under normal circumstances, to offer the most competitive prices, to offer the best service. Now, I realise that sometimes we have real pressures in terms of regional services, and that’s a different story where we don’t think that we get the best prices all of the time and we do want to put more pressure in that market, but I don’t think having a national carrier is the way to solve that. I think we have to address and get better competition into those markets as well, and make sure that we have anti-competitive practices that airlines are held to account for so that they price fairly on those regional routes too.

Narelle Graham: Well, Rex made a profit, they said, of $18 million last year. Now, they'll be lucky if they even break even this year. So are you saying that when all this is over we need more competition in there and less profits maybe, of less cheaper airfares in regional areas?

Simon Birmingham: I think for, you know, for regional tourism, for people who rely, living in regions, on being able to access service in cities and so on, we want the cheapest airfares possible in those communities, and I think having viable commercial carriers is the best way for us to get that outcome. All of the airlines, as I say, assure that they came into this crisis in a strong enough position. We just have to make sure we get them through it. And then if there are particular issues for particular regional routes, we can deal with those then.

Narelle Graham: Phil is asking me on the text line - 0467 922 783 - with reports of people going into regional areas to get, you know, take all the stock off the supermarket shelves. Do we need to be rationing groceries?

Simon Birmingham: No, we need Australians to behave sensibly. And I think the Prime Minister, the Premier and others have been pretty strong in this. There's no shortage that people need to worry about in relation to basic goods or basic foods here in Australia. The only shortages being created are because some Australians are behaving irrationally and hoarding goods to too great an extent at present, and that's putting pressure on the supply chains in terms of keeping up with goods coming into supermarkets. But if everybody was buying the normal amount at present, then we would have everything on our shelves as normal. And so, that is the first message.

The reports, more from interstate than SA, but the reports of people having bus trips into regional areas to undertake mass shops are appalling. They're abusing those regional areas by depriving them of stock, and they're also, frankly, ignoring the social distancing warnings we’re giving by getting on such buses or the like. So, I think we'll be watching that space very closely as to whether there do need to be any interventions. And particularly, the Home Affairs Minister’s made clear that there's been some suggestion that there could be criminal activities – gangs or the like – particularly in terms of large purchases out of pharmacies that are perhaps seeking to create supply pressures and then operate in disruptive ways in the market or ways of underground sales. And we’ll certainly be putting all law enforcement effort into making sure that’s not the case if it is occurring.

Narelle Graham: That is Senator Simon Birmingham.

What would be your message for us to assist people involved in regional tourist businesses?

Simon Birmingham: Where you can, get out and help them. Still provide some degree of custom. We're not in a position to all go about life as normal at present. There are strict warnings that are there in good place for people to undertake social distancing. But that's not to say that you can't still book a bed and breakfast, or stay in an apartment with your family just as you would at home away from other people, go out to a restaurant that's adhering to all of the social distancing requirements of only having one person per four square metres, or pick up some take away and go and eat it in a park or a vineyard or by the beach. There's lots of little things people can do to still support local small business operators or other regional small business operators. And so, while you can, if you can, please do so because you might not only be helping yourself by having a mental health break; you might also be well and truly helping to keep afloat a small business person.

Narelle Graham: Senator, thank you.

Simon Birmingham: Thanks, Narelle.

Narelle Graham: Senator Simon Birmingham, a very senior member of the Liberal Party in South Australia.

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