Subjects: ANZUS Treaty; Ansett
E&OE................................
PRIME MINISTER:
Well ladies and gentlemen the federal cabinet had a special meeting today primarily to consider the consequences of the awful events that have occurred in the United States in recent days. We came very quickly to the view that the provisions of the ANZUS Treaty should be invoked in relation to the attack upon the United States. Quite clearly these are circumstances to which Article IV of the ANZUS Treaty applies. We have discussed this matter with the United States and I would expect that this is a view with which the Administration will concur. The consequence of that is that we will consult the Americans regarding responses which might be deemed appropriate to what does amount to an attack upon the metropolitan territory of the United States in accordance with the provisions of the ANZUS Treaty.
As I indicated in Washington and I repeat today, and it's the unanimous view of the Cabinet, that Australia stands ready to cooperate within the limits of its capability concerning any response that the United States may regard as necessary in consultation with her allies. I do want to stress of course that although the greater loss of life, the overwhelmingly greater loss of life as a result of these attacks, has been American, there are still some 80 or 90 Australians unaccounted for and there are confirmed deaths of at least three Australians. And at no stage should any Australian regard this as something that is just confined to the United States. It is an attack upon the way of life we hold dear in common with the Americans. It does require the invocation of ANZUS. The provisions of ANZUS do in our view apply and the Cabinet came to that view and I have released a formal statement to that effect that will be available to you at the end of this news conference.
I might also say that we discussed the situation surrounding the putting of Ansett into liquidation. I must say for myself, and I know I speak for many of my colleagues, that this is a very sad event, particularly for the Ansett employees. It's a company that I was certainly well served by for a period of more than 20 years. I was a regular customer of Ansett. I found their staff on all occasions to be unfailingly energetic and polite and helpful. And I feel very deeply for the staff of Ansett. Many of them have served that company loyally for a period of more than 20 years. The proposition of the Leader of the Opposition that we should fund the operation of the company for another two weeks is monumentally irresponsible. We've been told that it would cost between 120 and 170 million dollars to keep the company operating until tomorrow evening. If you extrapolated that out, you're looking at a cost of up to a billion dollars on the budget if you were to pick up Mr Beazley's suggestion.
And where do you stop? Do you fund for a period of two weeks every other company that gets into severe financial difficulty? Plainly that is not the solution. And I made it very plain to the union and other representatives of the employees of the company that I met this morning - I saw two groups, one in Sydney just after my return from the United States, I heard that they were in the vicinity and I agreed to meet a delegation. I explained to them directly that the Government could not bail out Ansett. And I repeated that advice to a group that I saw in Canberra. We believe that there is strong legal advice to the effect that ultimately this is a matter that the liquidator's got to nail down because he's now in charge of the affairs of Ansett which after all was a private company and is not an organisation in which the Government had any financial stake. That's been apparently forgotten by the Leader of the Opposition. It's a matter for the liquidator to sort out the precise legal position. But there are grounds for believing that Air New Zealand has legal obligations in relation to the obligations of Ansett, particularly in relation to employee entitlements. We would expect that the liquidator pursue any obligations that Air New Zealand might have as vigorously as the legal circumstances would allow.
We are nonetheless as a Government concerned about the employees entitlements and we would not wish to see them denied their entitlements. And without prejudice to the pursuit of Air New Zealand, we would seek to see a situation where essentially what could be called the statutory entitlements of the Ansett employees, that is unpaid salary although there may not be any unpaid salary, I don't know - that's a matter for the liquidator, long service leave and holiday pay, matters of that nature. Those statutory entitlements, that they should be met and also redundancies up to what could be loosely called the community standard - that's no more than eight weeks. There are some redundancy arrangements in the Ansett company that are particularly generous by community standards. Obviously for the Government to meet those it would be a very severe budgetary burden and we therefore would consider it necessary the introduction of a special levy on airline tickets to fund those obligations. Now those remarks of mine and those dispositions of the Government are without prejudice to the pursuit of Air New Zealand.
It is our understanding that quite a large number of the employees of Ansett could find quick reemployment in other..in Qantas and Virgin, and there are a number of indications, and Mr Anderson may say something further about this, of interest in parts of Ansett by other companies. It's a little too early to be hard and fast about that. But there's no way that we can be expected as a government to bail out a company that through no fault of the Government has got into difficulty. I do feel very sorry for the employees. I don't think they've been very well served. There is a well founded belief that Air New Zealand has tried to cast Ansett off. I find that a strange thing, a difficult thing to accept given that Ansett is a wholly owned subsidiary of Air New Zealand. But that is a matter that ultimately has got to be resolved in accordance with the law and the initiative lies with the liquidator. We remain concerned about the entitlements. We would expect Air New Zealand to meet its legal obligations and without prejudice for that being vigorously pursued, we would not want to see the employees go without, broadly speaking, their statutory entitlements and community standard payments in relation to their redundancies and if that's necessary that would be funded by a levy on airline tickets.
We've also in the context of this given consideration to the general issue of employee entitlements. I'll be announcing further details of this, or Mr Abbott will be next week, that we're disposed to make the existing scheme somewhat more generous for future circumstances where entitlements are left unpaid, broadly along the lines that I've announced in relation to Ansett. And one very important change is that we have decided that in future, that is prospectively, what could be called statutory entitlements of employees in a liquidation of a company that employed them, will rank ahead of the entitlement of secured creditors. That is the statutory entitlements - pay, long service leave, holiday pay. There will be some caps in relation to that and some further details that will be announced next week.
The safety net approach will continue to apply in relation to redundancies. We think that represents a fair extension. We do not favour the imposition of a new tax as Mr Beazley does via an increase in the superannuation guarantee charge. We nonetheless recognise that the issue of workers' entitlements is an important one and we think both in relation to what we've proposed in the particular circumstances of Ansett and the adoption of a generally more generous scheme in future along the lines I've outlined is a reasonably, indeed very fair response to people's legitimate concerns whilst not imposing too heavy an additional burden either on the corporate sector or the general community.
JOURNALIST:
Mr Howard, what was your personal response to the August 14 letter from the Air New Zealand Chairman to you claiming the financial..[inaudible]
PRIME MINISTER:
My personal response, well I don't have personal responses to letters directed to me in my capacity as Prime Minister. I respond on behalf of the Government. I think you could glean the situation.it is obviously a very difficult position and our concern is two fold. Our concern is to ensure that the travelling public is not disadvantaged any more than what is unavoidable given the problems of Ansett, and I want to thank and congratulate John Anderson and those around him for the speedy way in which they have put in place arrangements to cope with the difficulty being suffered by the travelling public and he will want to say something further about it. He's a lot more conversant with the detail.
Our other concern of course is with the employees. In the end it's got to be understood that companies are run by individuals and when companies get into difficulties you don't start sheeting blame home to governments whether they're the New Zealand government or the Australian government.
The corporate sector can't have it both ways. It can't assert rugged individual freedom and the right to do as it chooses to the greater glory of the market, but when things get into difficulty you turn around and expect governments to bail them out. It's just not like that. Ansett has been a household name and I'm very sad that it's got into trouble and I'm particularly sad for the employees and we want to do what we can to help. But in the end those who ran the company have to be accountable for what occurred and we of course will encourage a full and proper investigation. I understand that ASIC has announced an investigation. We support that and we'd like to know the full story. I think the Australian public would like to know the full story and that of course includes an investigation in relation to Air New Zealand.
JOURNALIST:
Prime Minister, how does the time line on the entitlements work? You say Air New Zealand has the obligation, you want to chase that down. That could take some time. Workers obviously left without any money..
PRIME MINISTER:
Well I'm not going to see them..we're not going to see..I mean the exact timeline is something that we will say something more about early next week. But we're not going to see the workers left swinging.
JOURNALIST:
Mr Howard, are you proposing that your general broadening of the entitlements scheme will be something like an increase in the Medicare Levy or..
PRIME MINISTER:
No.
JOURNALIST:
Mr Howard, what type of military support [inaudible] United States?
PRIME MINISTER:
Well I don't think that's the sort of thing I should speculate about in advance. I've said that we would be willing to participate to the limit of our capability. The Americans haven't at this stage made any requests for particular support but we will consider any requests that is made. The important thing is that by invoking ANZUS, it puts us in consultation, it represents a determination on our part to identify with the Americans. If ANZUS is meant to cover a situation, surely it covers this.
JOURNALIST:
[Inaudible] the enemy Mr Howard.
PRIME MINISTER:
No, no you don't, not my reading of ANZUS, no.
JOURNALIST:
Did you invoke ANZUS as a gesture of solidarity on your own initiative or was it sought by the Americans?
PRIME MINISTER:
Its sort of happened simultaneously. It was something that we though made a lot of sense and I think the Americans about the same time came to the same conclusion.
ALEXANDER DOWNER:
We've been talking with each other about this.
PRIME MINISTER:
Yes and it's just something that emerged, I mean it wasn't sort of a question that you know, we'll ring you and you'll ring me kind of thing, I mean it was just something that emerged.
JOURNALIST:
Mr Howard, what does invoking ANZUS..[inaudible] ANZUS as a living document that doesn't really need to be invoked. What is the formalising thing.?
PRIME MINISTER:
There's no I mean there's no particular. there's no form that's laid down but the fact that I have said after a cabinet discussion with the full authority of the Government, and I did communicate the Cabinet's decision, I couldn't get Mr Beazley because he was in the air, but we communicated with his office our decision and I gather from the response, but I mean I may have misunderstood, that he would support the action that was being taken by the Government but that's a matter for him to speak on. We think it appropriate to make it clear. It has both a symbolic resonance but it also means something in substance and it does mean that if there is action taken then we will naturally consider any requests from the Americans for assistance.
JOURNALIST:
Prime Minister, is there any consideration of taking action against Air New Zealand with regards for instance to their rights in Australian air space.
PRIME MINISTER:
No. And I think that would be foolish. I mean we've got to, this is a difficult position, we have a strong view about the treatment of Ansett and the Ansett employees. On the other hand, New Zealand is a close friend. We have no closer friend and we have to balance it, and I don't think this is a time for punitive behaviour. There is no merit in that kind of response at all and I am totally against it.
JOURNALIST:
Do you think Air New Zealand misled the Australian Government?
PRIME MINISTER:
Well, Mr Anderson can better answer that question than I. I mean he's been the captain of the ship on the sort of the detail on this and I think I'd better let him do it.
DEPUTY PRIME MINISTER:
Let me make the obvious point at the outset Jason, that this is a New Zealand managed company and it's a private company, so firstly we did not have access to the books. That 14th August letter to the Prime Minister copied to me, did not contain financials. It was not the opening of the books. It was a lobby, a strong lobby in graphic language for us to support their recapitalisation programme. But in relation to that the New Zealand Minister for Finance has today released a very interesting statement which I commend to all of you, you may find it in your pigeonholes up in the gallery which sets out very clearly what happened and the reality is that they didn't know, members of the board didn't know, shareholders didn't know what the true situation was. They couldn't have. They were putting up a recapitalisation plan which would have raised around $850 million at best, New Zealand not Australian, and as we now know in retrospect and as the New Zealand Minister has pointed out would not have saved them, wouldn't have gone anywhere near it, particularly if Ansett had remained part of the group.
The other thing about that letter that I want to say is it made it very plain that the two companies were intermeshed and could not be disentangled. That was the board's position three weeks ago and I just wonder when it was that they started to talk amongst themselves about disentangling it and letting Ansett go free. The first that we heard of that was a phone call on Sunday morning. So did we have complete information - brother we did not. But we're looking for it and ASIC has today asked the New Zealand Securities Commission to have a look at what happened in terms of disclosure. This is a company that eight days ago gave a report to the New Zealand Stock Exchange saying steady as she goes, our recapitalisation plan is still on the table. They obviously didn't know what they were doing.
JOURNALIST:
[inaudible] they met - Gary Toomey and John Sharp met you and the Prime Minister and told you that they were losing $2.6 million a week. How can you insist that you had no idea this company was in such bad shape when [inaudible] for months?
DEPUTY PRIME MINISTER:
Linda, we've never denied that it was in trouble and it needed recapitalisation mainly because they were saying they needed new aeroplanes. And the Prime Minister was well aware of that and we talked about it. Alexander and I talked about it. In fact we talked about it in all of the forums of the Government. But while they were saying they were losing..actually the figure given to me at that meeting was around $15 million a week and they were saying obviously we're trying to rectify that and fix it. Remember it wasn't so long after what happened at Easter Time. We're trying to get our costs down and our yields up. But, and this was also said in the media, we've got around a billion in cash reserves. Now we need to restructure, the timetable was basically early September when we've got to report to the markets and the process then would have involved due diligence and all the rest of it and then the issuing of a prospectus as they went out in the market place to try and raise more money. As Mr Cullen points out today that might have all happened about November. What do you think would have happened if a proper due diligence had been done, you know, as part of this process and they started to have a really close look at it all? Exactly what's happened now.
JOURNALIST:
..Cabinet's today about access, continued access particularly for regional areas now that Ansett has come out..?
DEPUTY PRIME MINISTER:
Yes, we put a lot of work into that and I thank the companies that have helped us. As it states.look it hasn't been easy in our major airports. Things are starting to ease today. There was a stoppage at Sydney Airport today, I understand that that was in large part about workers' entitlements and we understand that concern and we're now addressing it and I'm very thankful they've gone back. Now the major airlines believe that they can basically have the major trunks back in reasonable shape over the next couple of days. Qantas has started to pick up those regional networks or many of those regional centres that were previously serviced by Ansett alone and had no alternatives. We will be putting in measures very quickly to seek to have new suppliers, new companies servicing those routes that are missing out in the regions. We've got a lot of planning going on there and part of the better news is that we're surprised at how much interest is coming out of the woodwork here and internationally in purchasing various trunk roots, various regional roots. That part of it is looking quite good. Can I say to you although it's flat at the moment in Australia, the aviation market is a bit flat, in trend terms it's been growing at about 8% a year. There is no reason to believe that that is going to stop. It's had a hiccup, one that we don't like, one that we're very sorry about indeed. But this is a sector of the Australian economy that has been growing and will recover. There will be new entrants and we'll make certain that the access bar is not inappropriately set. We want more people like Virgin to succeed.
JOURNALIST:
With the demise of Ansett, do you think that there's some merit in having price caps on air tickets given the reduced competition? And do you have any response to suggestions that Air New Zealand took Ansett engines off planes and other things?
DEPUTY PRIME MINISTER:
Well on the latter one there are some very alarming reports starting to emerge from around the country and we'll wait to see how that unfolds. But it just adds to my sense of outrage at what has happened. If it is indeed true. well I won't say any more than that. But I understand that there's some stories along those lines circulating now and presumably. I don't know whether they're true. But if that was an attempt to lower the cost of trying to restructure and recapitalise Air New Zealand separately from..in a separated form from Ansett then I can understand why Ansett staff feel even more aggrieved.
I'm sorry, the other part of your question. Look, can I say to you it's too, in my view it's premature to talk like that. We don't know what the liquidator going to be able to help if you like, put back into an appropriately robust competitive environment in the Australian aviation sector. It's premature in my view to be talking too pessimistically about a lack of competition. I mean Virgin is being very aggressive indeed in saying that they intend getting out there and expanding their trunk network. We've got a number of other players - some very, very interesting players - I hope they come to fruition - you realise for commercial reason I can't say too much at this stage - coming out of the woodwork and that's very hopeful. Can I just say again no one, no one wanted more than me and no one worked harder than I did and I think the Prime Minister would agree with this, to try and keep that airline in the skies. You know, we were negotiating until all hours as late as last night and even down to the wire on trying to secure payment, wages and what have you, to bring them up to date but in the end when the administrator finally got hold of some hard numbers and let's put this into some sort of context - those figures released yesterday that everybody sort of withdrew from in horror - the worst corporate result in New Zealand - they are still unaudited figures. They are still unaudited. And when we finally got some hard numbers to make some decisions on yesterday, we started looking at the bills that were immediately due if we were to keep them flying, and it was just appalling. And what Mr Beazley's talking about as he walks around with a big grin, and very appropriately with a big grin on his face, with a bit of political opportunism - what he's talking about is absolute nonsense and I don't believe he believes it or would have done it anyway.
JOURNALIST:
Prime Minister are you looking at further fiscal stimulus through extending the first home owners grant beyond December 31 this year to ensure that the Australian recovery remains on track, given the events this week in New York.
PRIME MINISTER:
The issue hasn't recently been before me.
JOURNALIST:
Prime Minister can you clarify what you were talking about, the broad scheme. There is a special levy on...
PRIME MINISTER:
The levy is on tickets for Ansett, if that's needed but we have also in that broad context decided to make our general scheme a little more generous and to significantly alter one aspect of it, and that is to alter the order of application of assets in the event of an insolvency so that the statutory entitlements, not the redundancy, and there is a big difference between a statutory entitlement and a redundancy. A statutory entitlement under law accrues as time goes by, whereas the redundancy is not an entitlement until somebody is actually retrenched and there's often a complete misunderstanding and complete confusion of these two things. And the idea is that generally speaking, and we'll announce further details of it next week, generally speaking the statutory entitlements - long service leave, holiday pay etc - those things will rank ahead of secured creditors in future liquidations. Now that's quite a significant change.
JOURNALIST:
Have you thought about a levy to fund?
PRIME MINISTER:
No we're not talking about a levy to fund it, no.
JOURNALIST:
.that limit is currently $10,000 you're talking about lifting that?
PRIME MINISTER:
Well there will be, it will be more generous, and there are.. it will be more generous. You can use whatever description you like about that Fran. But.
ANDERSON:
And I'm sure she will.
PRIME MINISTER:
I'm sure she will too. It will be more generous and more details will be announced early next week.
JOURNALIST:
On the US situation, have you spoken to the Australian families who have lost people in New York? Or do you plan to?
PRIME MINISTER:
I plan to. I haven't been able to yet. I have, I got back as you know only just before the Cabinet meeting and I've been tied up in the Cabinet since. I have made a number of enquiries, of course when I was in the United States, through the Ambassador, I was kept regularly up to date and I also had a number of conversations with the Consul General in New York, Mr Allen, and I also spoke to Mr Lowy, Mr Frank Lowy, whose company of course is part owner of the World Trade Centre. And I was able to ascertain from him within a few hours of the situation in relation to the employees of his company. Fortunately in their case, the retail activities were on the ground floor and the people were able to get out. Others, sadly, were not so fortunate, but I will certainly in time do that.
Could I also say a couple of other things about the loss of life - Australian and American - in this tragedy. We'll be inviting Australians to treat Sunday, this coming Sunday, as a National Day of Mourning. And we'd hope that flags will be flown at half mast and no doubt special reference and observance will be kept in churches of ..and other faiths throughout the country. I also intend that a National Memorial Service be held in the Great Hall next Monday. I will invite the Leader of the Opposition to join myself in reading one of the two lessons and there will be appropriate contributions from other people. It will be a religious service and give an adequate opportunity for observance of the great loss of lives of Americans and Australians and the impact that this has had on both our communities, particularly the United States.
I'll also introduce, and I'm sure will be supported by the Leader of the Opposition, a resolution condemning what occurred in unequivocal terms and allowing an adequate amount of debate on both sides and then propose that the House adjourn after that on Monday as a mark of respect for those who lost their lives in this very tragic event. I propose that Mr Reith or Mr Downer on my behalf consult the Opposition regarding the wording of the resolution and it is proposed that it not only condemn the outrage but also incorporate a reference to the Government's decision in relation to the application of the ANZUS Treaty.
JOURNALIST:
Prime Minister on the ANZUS activation, will Australian personnel serve under..whose command will they serve under and on what basis will they be (inaudible).
PRIME MINISTER:
Well we won't go into that with any hard and fast view. I mean you have to be practical. Just as it was practical on the first occasion that Americans and Australians fought together for the command to be in Australian hands, it will almost certainly be practical that the overall command on this occasion be in American hands. I mean we will naturally assert the rights that an independent nation always does in relation to these matters but when you're together with somebody the idea is to work together and have a practical attitude towards command.
JOURNALIST:
You've got 260 people still at Ashmore Reef. They don't want to go to Indonesia and you don't want them to come to Australia - what will you do if Nauru won't take them?
PRIME MINISTER:
Well, we would expect as a result of the agreement made by Mr Reith with President Harris that Nauru will be willing to take quite a number of people. We had some further consideration of that issue today. As you know the Full Bench of the Federal Court, I hope will deliver a judgement on Monday morning. We remain very strongly of the view that everything the Government has done has not only been in Australia's national interest but also legal, and I can but say again if the Labor Party had not rejected the Border Protection Bill, this issue would not be in front of the Australian court.
JOURNALIST:
Prime Minister, Mr Reith suggested yesterday that the events in New York provided an extra justification for action with respect to asylum seekers, his proposition being that extra border protection helps to keep out terrorists. Do you think that the events in New York give a justification that was not there before for taking this line you have with the people on these ships?
PRIME MINISTER:
As you know Geoffrey, we took the action we did in relation to the people on the Tampa before those awful events. I thought what we did - before those awful events - was one hundred percent justified. You can't have anything more than one hundred percent. I haven't seen precisely what Mr Reith said, I've been rather preoccupied with other things. I simply make the point that what we did in relation to the Tampa was a stand alone, 100 percent justified exercise. People are shaken beyond belief about what happened in New York and I don't really want to say any more than that.
There is just one other thing I would like to add and I think it is important to say it. And that is that it is important for all Australians to bear in mind that there are probably a couple of hundred thousand Australians of Middle Eastern descent and heritage in our country and like any other ethnic group the overwhelming majority of them are wonderful Australians, law abiding and committed to the unity of this country. And it is essential that in the wake of what has occurred and the not surprising assumptions that have been made about where people may have come from, that those actions..that the naturally hostile and angry responses to those actions are kept well apart from our attitude towards Australians of Middle Eastern descent. They should not bear the burden of things that they despise as much as I do and it's important, especially important at a time like this, that people of different faiths, indeed people of no faiths at all, that everyone be treated in a decent, understanding and tolerant fashion. I know that there are many Australians of Arabic descent who would share my horror and disgust at what has happened, and I want to make that very plain and I extend to them goodwill and the hand of friendship as a fellow Australian.
Thank you.
[ends]