Interview on ABC South Western Victoria Breakfast with Jeremy Lee

  • Transcript, E&OE
Topics: Federal Government’s assistance package for export markets.
16 April 2020

Jeremy Lee: Simon Birmingham is the Minister for Trade, Tourism and Investment, and with us this morning. Simon Birmingham, good morning to you.

Simon Birmingham: Good morning, Jeremy. Thanks for the opportunity.

Jeremy Lee: Thanks for joining us. Now, just explain for us I guess what the Federal Government's done. So you've stepped in to try to assist some of these businesses that particularly might- might have quite a large export market?

Simon Birmingham: We have, that's right, Jeremy. Around 90 per cent, or more than 90 per cent of Australia's air freight, it goes out in the belly of passenger aircraft. So that often contains things like chilled meats as well as other premium high value agricultural products. But of course, as listeners would well appreciate at present, they're basically no passenger aircrafts at present which has left many of our farmers, fishermen and others completely stranded in terms of how it is they get their goods to market. And while we've got so many other challenges happening in the economy at present the last thing we wanted to see was that our farmers and fishers were going to miss out and lose those markets and create other problems right through- through the economy.

So we put in place a freight assistance mechanism run by the Federal Government. We've got a former CEO of Toll Holdings and Linfox in specially to help us coordinate it so that we can drive taxpayer dollars as far as we can. We’re investing around $110 million across the economy to do so and, pleasingly, one of the top three services that's going – or the first three services that’s going out of Australia under this new mechanism using indeed getting lamb from Victoria and particularly from Midfield Meats off to Abu Dhabi to service the- the burgeoning Middle East market that is so important to our lamb exporters.

Jeremy Lee: Yeah. Look, I don't know if you know a great deal about the individual circumstances of each of the businesses who might be benefiting from that flight which I understand is due to leave today. But I'm presuming because things sort of hit so quickly and things stop so quickly — and not just the exports but also just local outlets like restaurants and so on. Do you know much about how a business like Midfield might have been? Or what, what issues they might have had with I imagine a glut of stock suddenly with- with nowhere to go?

Simon Birmingham: I’m talking to- talking to Dan Tehan locally as well as the teams who’ve been dealing directly with Midfield Meats. And Dan obviously been very passionate about getting this type of support for local farmers. I understand that for local producers, you know, they've seen significant changes and disruptions in their domestic supply. Obviously, people are buying all through supermarkets but less through other distribution channels so it changes the nature of domestic distribution and that means they had to adapt there. But, you know, the real hit has been to those who rely significantly on export markets.

So Midfield employs and supports directly around 1500 local jobs and- and of course many, many other farmers and so on, on top of that and if they were to lose what is a multi-billion dollar export market in the Middle East — in total, we send more than $200 billion worth of lamb there. And each of these three flights they're going to initially send to Abu Dhabi under this scheme contains around 45 tonnes of chilled lamb. And so you can imagine what that means in terms of local job losses if that 135 tonnes were not to actually exit the country and be bought in those export markets.

Jeremy Lee: Yeah. What’s your hope I guess for what sort of lifeline this is going to throw to a business like Midfield? It still, of course, doesn't represent the full volume of product that they would normally be exporting but obviously, it's- it's better than nothing. But what sort of – I don’t know, looking more long term I suppose — what sort of, yeah, help are you hoping this will give to a business like that?

Simon Birmingham: Australia's exporters and companies like this really do trade on their reliability and their quality. Now, our quality is always going to be there — we’re a premium producer and we make sure that we send premium product out into the marketplace. We've got to be reliable as well and that means you've got to be able to deliver to customers when they need it, and the risk is always there. But if you don't maintain that reliability they'll take their custom elsewhere and you've lost it, and lost it potentially for a long period of time.

So support like this, at a time like this, really builds their reputation for reliability; ensures they don't lose those contracts; and doesn't just help support and sustain the 1500 plus jobs that they support locally right now, it helps to sustain those jobs for quite some time into the future too.

Jeremy Lee: What are you hearing about how they're going with maintaining workforce and so on? Have you heard of many businesses like this having to lay staff off?

Simon Birmingham: The meat sector has been a little more resilient than perhaps seafood, for example, which saw a really huge hit in the early days of this crisis. A lot of our live seafood exports at the premium end going to the Asian markets, and particularly when the Chinese Lunar New Year celebrations were switched off, they found a huge loss of, of their markets there as restaurant trade and everything else basically shut down.

Beef has been a little bit more resilient but has still been facing intense pressures as demand has wavered in parts of those- those Asian markets where they've had lockdowns to various degrees. They’ve faced the pressures of not being able to get freight flights when they usually would. And even under this Government assistance mechanism that we're putting in place they're still paying a premium. This is not to at the same frequency, the same costs as they would usually be able to get their product out on but it is at least solving the problem in a way that keeps their goods in the market.

Jeremy Lee: Yes. On that issue of cost as well then, what's the sort of ratio there, I suppose? Obviously the Government putting in some money here, but are the businesses involved also contributing?

Simon Birmingham: Yes absolutely. This is not a free handout to business and they are still paying previous commercial freight rates, plus a bit of a premium. So this is about government stepping in both in terms of helping with logistics where we can, albeit Midfield have done an enormous job themselves in helping to put this together and also helping to make sure that it is not completely unaffordable.

So everything has a breaking point in terms of what their product could sell for in the international marketplace. And that's why in supporting these exports to still gets sold and to save those jobs locally what we're really doing is, in some cases helping with logistics and coordination, and we'll be doing a lot more of that coordination over the coming weeks and probably months. But also just bridging the gap between what an exporter can pay in terms of premium freight prices, and it still makes it viable to export, and what would be unviable and that gap that the government is helping to fund at present.

Jeremy Lee: How has it been to, to organise these flights as well? I mean, I'm imagining there are quite a few planes sitting around at the moment and pilots twiddling their thumbs. Has it has been difficult to actually make this happen?

Simon Birmingham: There's a lot of passenger planes sitting around empty at present, but we don’t want to fly a passenger plane that’s empty in all the seats, and only has the room at the bottom. So getting freight aircraft is key.

As I said, Midfield, for these flights, has done a lot of the early coordination. Government only announced this support package for freight around two weeks ago. Now we're into our third lot of exports, having supported seafood out of Tasmania, seafood out of Perth, our lamb out of Melbourne and it's really important that we've got that spread. But we also had gone out in that time to try to put in place a bit more of a less ad hoc and more ongoing operation over the next little while.

So we've put an expression of interest out to market, which came in just before Easter. Our team in Austrade and Coordinator-General of this mechanism worked through Easter and are now about to put some recommendations forward in terms of how we can support airlines, and coordination of freight across the country in a way that can give greater reliability, more routine frequency of flights, and costing for the period of time that we might be facing this crisis. And that's going to be important, particularly for smaller exporters who don't have the type of volumes where they could fill up one plane into Abu Dhabi, as Midfield are doing in this case. What we need is those smaller exporters to be able to aggregate their freight into volume that are then meaningful and commercially viable with a bit of government support to get onto the planes.

Jeremy Lee: Indeed. Simon Birmingham with us here on Breakfast — Minister for Trade, Tourism and Investment. Just a couple more questions before we let you go. Obviously, there's no- nobody knows the end date for any of this at this stage. From what you're saying there, that you're looking at trying to sustain this though as long as is necessary?

Simon Birmingham: We've given commitment to this mechanism for the next few months, and we’re also just having a look at other arms of coordination in terms of these freight flights. I should also say, in putting a lot of thought into what's coming back in these planes — the backhaul of them, the imports into Australia. And unsurprisingly the number one priority that we're giving to that backhaul is medicines, pharmaceuticals, protective equipment — those sorts of things that are key to help see Australia through this crisis.

And so we will, as we've indicated all along, keep a government response that is targeted and proportionate. We’ve targeted our export sector because they had a particular problem of getting access to planes, and it's proportionate in that we’re not paying the whole bill and we're just paying that element that stops it from being viable – it provides the logistic support. And it complements, of course, the many other things we're doing across the economy such as the JobKeeper payments, and support to finance the business just try to see everyone through this very unique and unprecedented crisis we face.

Jeremy Lee: Yeah, indeed. Well look, I'm sure lots of businesses are, as you say, going to really benefit from this and hopefully will be just what they need to stop them from going under. Simon Birmingham, thanks again very much for your time this morning.

Simon Birmingham: Jeremy, thank you and all the best to you and listeners.

Jeremy Lee: Indeed. Simon Birmingham there, the Minister for Trade, Tourism and Investments.

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