PRIME MINISTER
TRANSCRIPT OF THE PRIME MINISTER, THE HON P J KEATING, MP
INTERVIEW ON ABC PM WITH MAXINE MCKEW
CANBERRA, 2 JUNE 1992
E& OE PROOF COPY
Prime Minister thank you for coming in.
PM: Good Maxine.
MM2: How much money, your most optimistic figure, how
much money will a merged _ Qantas Australian, attract
do you think?
PM: I think the net proceeds for the Budget will be
about $ 1 billion, now that is Important and it's
quite important, but I think the most important
thing is that it is the best result for Australian
aviation. That is, Qantas has long lacked the
capacity of operating as a full airline by not
having a domestic carrier, a domestic compacity. It
would have that by the Government'Is decision today
to acquire Australian Airlines, and the Government
will now approa'ch the . Labor Party in its federal
structure for the sale of 100 per cent of the merged
entity. But the synergy, so-called, much over the
years termed, but the benefits and efficiencies that
could arise from the operation of the two companies
is quite substantial and as a result of the change
Qantas will pay the Budget $ 400 million for the
purchase of Australian Airlines which is much more
then we would have been offered at sale.
MM4: I was Just going to ask you that. Has the trade
sale process revealed that Australian by itself
would have attracted very little?
PM: For the reeson that the last couple of years have
been very tad in terms of earnings they have run
losses becauise of the pilot strike in 1990, in 1991
Australian had the problem of the very heavy
discounts from Compass, discounting is still on,
profits are low, and I think probably the price
would have been too low, it would have been selling
have done another one today in the national
interest.
MM: Just one other question, Prime Minister, if I can
about that $ 1 billion, you have announced ajqt
summit today to look at you~ th unemployment. Would,
for iristance, you consider pouring some of that
money into programs for young people?
PM: Well it may not be the money that comes from there,
but that is certainly a Budgetary option in the
course of the Budget preparation.
MM: To what extent has this course of action been forced
on you by the realities of that $ 9 billion deficit?
PM: Not at all. What's happened to us is that we have
reached a stage in the sale process where we had,
first of all, the exploratory processes, then
indicative bids. The indicative bids have now been
lodged and the Government would have to then embark
on what's called a due diligence of the bidders
looking through the assets and then confirmed bids.
We are at that point of decision, that's what has
brought us here.
MM: But Ralph Willis has been promoting this concept of
a merger for some years. Why has it taken until now
to get to this point?
PM: I don't really believe that Australian and Qantas,
even though Qantas might have wanted Australian, I
am not sure Australian wanted Qantas. I think it
probably does now, and I think that is part of the
reason, but the efficiency gains, the since socalled
synergies, are so apparent that now it is the
obvious and sensible thing to do. And of course
part of this is the Government is now going to
introduce legislation this week to set-up a
Commnission to allocate international routes to a
second carrier, and that carrier in the first
instance will be Ansett Airlines. So we will be
developing an international market from Australia,
so the sole designated carrier will not be Qantas.
In that case it makes sense to have Qantas and
Australian together and have then juxtaposed against
that, Ansett Airlines as a domestic carrier but with
international routes. So it becomes an
international carrier as well. And of course that
will operate from the city of Melbourne.
MM: You said today to your Press Conference that this
had been a painful decision, which would indicate
that if you had a choice you wouldn't be selling the
family silver?
PM: Painful for some, not for me.
MM: Does the rest of the Party appreciate the synergies
that you are talking about?
PM: I think so. A lot of people in the Labor Party have
had the warm inner glow about Qantas and they can
get dewy-eyed talking about some of these public
authorities, but nobody will put any money into
them. On the Left, the Right, or the Centre, no one
will commit a budgetary dollar to them, because they
always have their social and infrastructure programs
ahead of them. Qantas is 90 per cent debt and
per cent equity, it has limped along with Government
guarantees and not enough capital. And you will get
lots of expressions of interests at Labor Party
Conferences f or it, but no one really cares about
it.
MM: What do you think the mood is beyond the Caucus,
have you any concept of that?
PM: I think a lot of Labor Party members would think we
shouldn't sell these, but if you say to them, well
look we have got high unemployment, we ought to be
looking at labour market programs and other
structural changes in the economy, but look we need
$ 1 billion to recapitalise Australian and Qantas.
Will we put it there? They say no, no. I mean a
lot of people pass a motion at the State Conference
but they wouldn't commit a discretionary dollar to
it. Well we can't take that approach, I mean,
Qantas can't limp along in this way. If we are
going to be part of the Asia-Pacific airline market,
it's got to be set up properly and this is the best
way. And of course by a public float all
Australians get a crack at this. I mean in a sense
its not just Government ownership it's private
ownership by the men and women of Australia.
MM: You are faced at the moment of course with the fact
that your policy takes you beyond the limits of
current party policy, is the most likely resolution
at this stage a postal ballot of all delegates?
PM: I don't know, but due process demands that we have
the Labor Party's authority to go beyond the
conference set limits. And we've done that. We did
that, in the first instance, two years ago when this
was last considered as you say. I mean I did it
when I was Treasurer with foreign banks, when we
took it to the Labor Party Conference here in
Canberra.
MM: What you're saying that the National Executive could
perhaps make a recommendation to the next Special
Conference?
PM: The national organs of the Party have got to decide
how best to handle this, but the Government is not
trying to side step them. It understands that due
process is important particularly where high policy
is concerned.
MM: Prime Minister just a few more details, would you be
happy for say a single international carrier to buy
the full 35 per cent of voting equity that is
available?
PM: That's a matter, I think, of who the carrier is and
what Qantas would see for itself in that, or whether
it would be advantaged by a couple of carriers.
From a theoretical point of view it wouldn't worry
me. It may well suite Qantas to tie up with a large
European carrier for instance like British Airways
or a regional carrier like Singapore. Whatever can
best advantage it, I think is the important thing.
And of course, with private stock in the company,
when people have got their own dollars on the line
rather than what they see are the quiet dollars of
the Commonwealth, they'll be voting them much more
carefully.
MM: What are the implications of a merger in terms of
retrenchments?
PM: None at this stage because we are not merging the
companies in that sense. We are merging them but in
a technical sense it will be Qantas acquiring the
stock of Australian Airlines. So Australian
Airlines will still trade as Australian Airlines and
operate as a business.
MM: Sure, but what we've already seen though, in say the
telecommunications area with the new AOTC, they will
be looking at a much reduced work force, and that's
the trade of f for a more efficient organisation
isn't it?
PM: But that is already happening with Qantas. Qantas
has already lost three thousand employees just to be
more efficient. You can never stop efficiency
gains. But this is not a pure merger in that sense.
You're seeing now Telecom and OTC put together in a
merger, it's not just simply Telecom owning OTC, but
that is exactly what the situation is here. Qantas
will actually own Australian Airlines, they still
remain two separate entities for the time being.
MM: one question about Ansett, you've already talked
about them as the second international carrier,
surely they will have to sell down their level of
foreign ownership to 35 per cent. At the moment
Rupert Murdoch, a foreigner, has 50 per cent.
PM: No, I think under the Foreign Takeovers Act,
Newslimited is still classified as an Australian
company because of the level of Australian
ownership.
MM: The proprietor though is not an Australian citizen.
PM: No, but he doesn't own most of the stock. I think
he is now down to 32 or 33 per cent. That is, the
Murdoch interests and even many of those are
Australian, such as his mother, his family. So one
couldn't be certain that's true. Can I say that the
purity squads who live in the broad sheet newspapers
have been alleging the Labor government is sort of
biased in favour of Ansett. They can't say that
now. They can't say that about this position.
MM: Prime Minister, what about the process, I gather
there were some comments in the Caucus this morning
about you're reversal of the usual process, if I can
put it like that going on national television
first to announce the policy then going to Cabinet
and then to Caucus.
PM: Well if one were to go to the Caucus, Caucus
Committees here we all live in the one building,
you live in the same building as the Caucus, you
know members of the Caucus, the Caucus Committees
leak, people know when the meet, there are
discussions later. There is no advantage for the
Government in me going to the Caucus and having a
discussion and that being trafficked around the
corridors.
MM: So is this the way it is going to be in the future?
PM: The Government's advantage is at having been told
Remember this, I made those statements on last
Sunday after weeks of consultation with Bob Collins,
Ralph Willis, before that when Graham Richardson was
in his ministerial chair.
MM: Would you still have taken the same tack had Graham
Richardson still been Minister?
PM: Again, Graham and I never got down to some of the
details which we have now.
MM: Except you say you had been working on this for
weeks, and a couple of weeks ago Graham Richardson
was still the Minister.
PM: Yes, but in terms of airline policy Bob Collins had
it as Minister for Aviation even though Graham was a
portfolio minister. Graham basically had pay
television and I really hadn't settled that with
him. But Ralph Willis, Bob Collins, myself, John
Dawkins and our Departments have been discussing
this now for some weeks so I made my statements on
Sunday after a long process of discussion. We then
took it to the Caucus Committee, then to the Cabinet
and then to the full Caucus and beyond that to the
Labor Party. So due process will be observed.
MM: And in doing so though, you challenged the Party
haven't you, you've taken it to the brink and said
look you have just got to face these realities?
PM: We are the custodians of Labor's fortunes and the
public purse for the moment, and you'Ive got to do
what you think is right by the institutions, and
also by public policy, and also do it with a Labor
heart. But it doesn't mean that you can change
these things without rolling the dice. I mean I
don't ever mind rolling the dice.
MM2: If you don't mind rolling the dice it does raise the
question, I suppose, of why you selectively
challenge. I mean you were prepared to challenge on
big policy issues like this, why though weren't you
prepared to say, intervene in the ministerial
process last week?
PM: Because I just don't think it was proper.
MM: Do you think we now have the best system, the
Government has the best system for selecting the
best talent for the Ministry?
PM: There's not much point in me debating it, it's not a
point that I want to be wasting time on. The fact
is I've got more important things to expend my
energies on than running a selection system from my
office.
MM: But it's a question of the best team to run the
country, what could be more important than that?
PM: The best people I believe that were on offer when
this Government came was selected to be in Cabinet
and the Ministry and there has been a lot of change
since. There's only nine of the twenty seven
original ministers from 1983 now there.
MM: Are you really saying you wouldn't prefer to have
Senator Bob McMullan in the Ministry?
PM: There is no point in me debating personalities,
factions, I know the ABC loves these things and so
does the Sydney Morning Herald, the Age and all
these navel gazers good on them.
MM: Well finally Prime Minister, you expressed
frustration yet again today with the Opposition for
not asking any questions about either aviation or
communications, but surely they are going to pursue
this course until you agree to either a judicial
inquiry which is what has been passed
PM: Why should I take any notice of them. Richardson
has done nothing improper, but becaus6eewasunguardedly
associated with this person and we knew
this would go on, he resigned. What moral basis
does the Opposition have to pursue this and what
moral basis do journalists have in pursuing it for
the Opposition? Now the truth is John Hewson has no
views, he's got a GST tax. What the last two days
have shown in Question Time we've had the National
Accounts out today which shows the economy in
recovery now for the third quarter, great news for
Australians, low inflation, low current account
deficit, higher profits. Not one question, not one
question about aviation, not on question about
telecommunications, not one question about technical
and further education, all the issues of the week.
MM: Well they're not playing to your agenda they're
playing their own.
PM: Yes, but they are playing to the low grade agenda.
MM: And that's surely a legitimate political strategy.
PM: As long as people understand they're playing to the
base agenda. It's just another version of ' Reds
under beds', ' The Chinese coming to get us in their
sampans', old Senator Currack's ' Red arrows from
China' when he used to run the party, I mean it's
the same stuff. These people are always bereft of
any good instincts in public policy or the public
good.
MM: Prime Minister, it maybe a base agenda but surely
politically it is going to continue to dog you until
there is some sort of agreement to either a Senate
or judicial enquiry?
PM: Why should it?
MM: Because as we saw today, and as we saw yesterday in
the Senate and in the House of Representatives,
question after question.
PM: If they persist, regardless of any moral basis for
the questions we should then say oh well this is
going to persist therefore we should let the
Opposition have an enquiry. Look, we'll stand them
right up on this and you shouldn't be helping them,
nobody should be helping them. The issue has
nothing going for it and the public are entitled to
high policy, good policy and they can see Dr Hewson
for what he's worth a shallow character who has
drifted into politics from a merchant bank and
outside of a computer driven model developed by some
accountancy firm with a GST what has he got to say
about trade training, young people, about TAFE,
about transport, about infrastructure nothing,
what is it? He is now telling us now we should not
let unions negotiate with employers. The Burnie
dispute is what we would see across the whole
country, the country lit up in one dispute after
another under the industrial relations policy he
has. He wants to explode the wage system and
inflation rate with a crazy industrial relations
policy while introducing a GST and what's his
literature talking about frightening old ladies by
saying people are going to hand hand-guns to them,
putting pamphlets in letter boxes saying you're not
going to be safe unless there is a GST. How is the
GST on your Weetbix going to stop someone marching
through your front door?
MM: Prime Minister, we'll have to end it there. Thank
you very much for joining us this evening.
PM: Thank you.
ENDS