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Hon. J.B. HOCKEY Treasurer TRANSCRIPT DOORSTOP SYDNEY THURSDAY 28 NOVEMBER 2013 E&OE……………………………. JOURNALIST: Qantas.

Do you think that it should be allowed to have a lot more foreign ownership in the company? TREASURER: This is an issue that Australians need to consider carefully. Almost all countries around the world have foreign ownership restrictions on their airlines and Australia does as well. But clearly, we have a changing environment and the question for Australia is “do we want to keep a national carrier, and if we do are we prepared to pay the price that is going to come for that ?” The status quo is not going to work for Qantas. I think they have made that very clear. Therefore there is a proper national debate that should be happening. JOURNALIST: Is this the Government’s position, or is this yours? TREASURER: The Government has spoken about it and I think we want to see a public discussion about this. We have been engaged in talks with Qantas. We have also had talks with Virgin. We recognise that the biggest shareholders in Virgin are state-owned enterprises owned by other Governments. They come into play with very powerful interests. Most airlines around the world that are national carriers are Government owned. Qantas - in that sense – is an exception rather than the rule. JOURNALIST: What are the benefits then for retaining majority Australian ownership of Qantas? TREASURER: These are the things that Qantas needs to explain to the Australian people. I think there are a number of stakeholders that need to contribute to this as well. I heard that Mr Albanese made a

considered contribution in this matter in contrast to Bill Shorten. Bill Shorten is more interested in crisis management than crisis aversion. The fact is that we do not want to have to come back and deal with this in 12 months or 18 months. I think this is something that we need to think about as a nation and identify that there are significant benefits in having a dedicated national carrier, but at the same time there is a cost associated with it. JOURNALIST: Is the report on your comments that is your preference that the Qantas Sale Act is relaxed to allow more foreign ownership or more foreign investment?: Is that correct, is that your preference? TREASURER: We will leave that to the community to identify. I am a great believer in free trade but I also recognise that there is significant community benefit in having a national carrier. JOURNALIST: What is your preference? TREASURER: Let’s see how the debate flows and what my view in this particular area is very much subject to more information coming from … JOURNALIST: Did you say that yesterday? TREASURER: Yes. JOURNALIST: So it is your preference? TREASURER: Yes. JOURNALIST: Why can’t you just say that now? TREASURER: Because I am encouraging others to express a view. You have got a view, haven’t you? JOURNALIST:

Sure. What’s yours? TREASURER: I am asking you. JOURNALIST: You are the Treasurer. TREASURER: I am. It’s a good observation. Anyone else? JOURNALIST: What is your view, Treasurer? TREASURER: I have given you my view. JOURNALIST: If the community do want to keep majority Australian ownership, would the Government be prepared to put money into it? TREASURER: We would have to be. We would have to be prepared to look at all options if that is the community view. Ultimately Qantas has its challenges and they have got to be dealt with as part of the national debate about having a national carrier. JOURNALIST: Does a decision on this need to be made within 12 months? TREASURER: Yes. JOURNALIST: Why is that? TREASURER: You need to ask Qantas. They are the ones that have been very actively lobbying both the Coalition and the Opposition. So this is not anything new. It is just, I suppose, more public and I think you need to have transparency in this debate rather than having interests come to Canberra and deliver their own opinion. I think the nation needs to be brought into this debate. Qantas has been very active in discussions on this with the Labor Party in government who, in many

ways, chose to put it aside as an issue. They came to see us. It was widely reported they came to Canberra two weeks ago. Now we are laying it on the table for the Australian people so that it is not just a decision on high from Canberra – it is a decision for the nation. JOURNALIST: How did the discussions go with Qantas go in Canberra? My understanding is that some people in the Coalition were disappointed at the public stance that Qantas has taken against the Virgin foreign capital raising. TREASURER: I am involved because I approved the other airlines potentially increasing their stake in Virgin. On the one hand, it is a foreign investment decision – but that is in relation to Virgin. We want Virgin to be a strong competitor in the market. On the other hand, Qantas said that decision would impede Qantas’ ability to maintain 65 per cent of domestic market share. This is a discussion for the nation. Should Qantas be able to have 65 per cent market share – domestically – in order to maintain its international operations which are running at a loss? These are issues for the company. But I think we all as Australians need to carefully consider whether we retain restrictions on shareholdings on Australian companies and if we do in the national interest then we need to be prepared to pay a price for that. As far as I am concerned we should not be in the business of putting taxpayers’ money or putting taxpayer guarantees on the table if it is not the view of the taxpayers that that should happen. JOURNALIST: If the national conversation comes back and recommends no change at all what does that mean for Qantas? Does it mean job losses? Does it mean … TREASURER: That is a matter for Qantas. They will need to engage in this and I am glad that Mr Joyce is publicly engaging. JOURNALIST: They must have told you - they must have said that jobs will go? TREASURER: The previous Government was warned of that sort of activity. Now is the time to start dealing with it. We end up dealing with the issues that were not properly dealt with by the previous Government. This is one of the challenges that we face. JOURNALIST: Can I just get you to confirm that you are saying jobs are on the line? TREASURER:

If Qantas says they are, then that is their call. I do not run Qantas, and frankly don’t want to run Qantas. I think if Australians want to place regulatory handcuffs on Qantas then we need to accept that that will come at a cost to taxpayers. Frankly it is not something that I am willingly prepared to do. To go back to your question, I do not like the idea of putting taxpayers’ money or taxpayer support behind Qantas but if it is the view of the Australian people that we should have a national carrier that carries our flag then that does come at a cost. JOURNALIST: You view that Qantas Sale Act as a set of handcuffs? TREASURER: It is a handcuff, no doubt about it. Virgin, obviously, does not have the same set of handcuffs on its expansion in Australia that Qantas does. JOURNALIST: Australians have traditionally had a bit of warm, fuzzy feeling for Qantas because it was our national carrier. Are you sad that warm, fuzzy feeling that we feel may disappear if there is more foreign investment? TREASURER: I am not going to give you a commentary on warm, fuzzy feelings. It is not the job of the Treasurer, for a start. JOURNALIST: What is your thinking of the GrainCorp issue? TREASURER: I am not too far off. JOURNALIST: Just back to that issue of foreign ownership. Does the National Party have warm, fuzzy feelings about Qantas and are they going to oppose this if you try and get it through? TREASURER: I think when it comes to handing out warm, fuzzy feelings I am not the person to do it as Treasurer. If someone else wants to have a warm, fuzzy feeling that is up to them. JOURNALIST: [inaudible] selling off assets? TREASURER:

I think we need to start recycling precious taxpayers’ money into assets that are going to help to be more productive. If we do not get the infrastructure machine moving in Australia we may well end up with a lesser quality of life over the next decade and that is not acceptable. Precious taxpayers’ money needs to be recycled now from brownfields infrastructure into greenfields infrastructure that is going to create more jobs and improve our productivity as a nation. JOURNALIST: Would you provide incentives to the Queensland Government …? TREASURER: We are in discussions. JOURNALIST: Just before you go, are you concerned that China’s anger over the South China Sea issue could impede our negotiations for a Free Trade Agreement? TREASURER: No. I think, from my perspective, Julie Bishop is doing exactly the right thing. This is what government is about. It is about making hard decisions but also it is about being honest and frank with each other and in this case, with other countries. JOURNALIST: Even if it is upsetting our biggest trade partner? TREASURER: The best friend you can have is an honest friend. Maybe you can apply that from my view about Qantas as well. JOURNALIST: It has been reported the Greens are supporting removing the debt ceiling entirely. Would you support that? TREASURER: I have not received any correspondence from the Greens and frankly we have tried to engage in a discussion with them and so far they have not wanted to engage in that discussion. This is a very serious issue for Australia. We are now a very short way from reaching the debt ceiling. I would implore Mr Shorten and Senator Milne to think very carefully about their actions when we put the debt ceiling limit back to the Parliament next week. This is not a game. This is very serious. Whether they want to get rid of the debt ceiling, or it be $500 billion, the bottom line is we do not want to even get there. We do not want to get to that. If the other option is to remove, then remove it. But there is no way we can have a sensible debate within the framework of hardball, pathetic nitty-bitty politics out of Labor and the Greens on the debt limit.

JOURNALIST: Mr Hockey, would those changes to the Qantas Sale Act be one for this Senate or more for the next one after July next year? TREASURER: It is a matter for the Parliament. This has some way to go. We are as interested in the feedback from the community as everyone else. When the limit was imposed back in the early 1990’s it was a very different operating environment that constrained Qantas’ ability to expand, raise capital and engage in partnerships. If you want to have the restrictions there is a cost associated with it and now is the time for the Australian people to work out whether they are prepared to pay that cost. JOURNALIST: [inaudible] to change the taxation rules, share options to put us on a competitive level with the US and the UK. Have you given that any thought? TREASURER: Yes we have. We are working our way. It is a very important issue. JOURNALIST: I just want to ask you briefly on the closure upcoming of the North Sydney Local Court? TREASURER: To be honest that is the first I have heard about it because it is a state government issue. Obviously it has been a local court for many, many years and I would hope that there is a very good justification for it closing. I will need to find out more. JOURNALIST: There has been an increased $200 million bid by ADM for GrainCorp. How does that affect [inaudible]? TREASURER: I have not got any further comment on that matter. Thank you. [ENDS]