• Transcript, E&OE
Topics: COVID-19, exports, payments, economy
24 April 2020

Denis Napthine: But first up my guest, very special guest is the Honorable Senator Simon Birmingham, the Federal Minister for Trade, Tourism and Investment. Simon, welcome to the show. Our exporters have been hit for six with the COVID-19 pandemic — so what’s your Government doing to help our exporters particularly in regional and rural areas?

Simon Birmingham: Well, good morning, Denis, and good morning to your listeners. You’re right, that Australia’s exporters, and all of our international facing businesses, have encountered real challenges as a result of COVID-19. So some in the services face, like our tourism industry and our international education providers, obviously decimation for them in terms of the loss of custom. And we’re supporting them through measures, like the massive JobKeeper payment; the support, the payments out to small businesses where the Australian Tax Office has already paid out some $3 billion to 177,000 businesses across Australia to support them with their cash flow and their survival.

But for our goods exporters there’ve been plenty of challenges as well. Some of them have seen markets dry up because other countries go into shutdown, some have seen huge logistical challenges because of the loss of freight capacity. You know, more than 90 per cent of Australia’s airfreight traditionally goes out of the country in the belly of passenger aircraft. Well, those passenger flights just aren’t happening now and so what we’ve done as a Government is step in with a $110 million program that we think will support and underpin hundreds of millions, if not billions of dollars of exports of fresh, high quality agricultural produce, to support dedicated freight flights out of the country and to make sure that our farmers don’t lose those all important markets that they usually supply.

Denis Napthine: Minister, can you give us some examples of the sort of assistance you’ve provided that might be relevant to us in south west Victoria?

Simon Birmingham: Absolutely. We’ve had some very direct local examples. So we’ve supported three flights of lamb coming out of Midfield Meats — predominantly working with them to get to the Middle East. This is a huge market for Australia’s meat industry, it supports thousands and thousands of jobs and those three flights that we’re initially supporting won’t be the end. We’ve got more work that we’re doing for the fresh meat, and particularly the lamb sector, to make sure they can continue to get access into the Middle East, as well as support we’re providing up into parts of Asia for our seafood industries and the like as well.

You know, these are sectors that have put Australia in a position, where going into this pandemic we were regularly recording trade surpluses in the country, exporting more than we import and our premium high value agricultural producers have been such a key part of that and we have to make sure that they don’t lose their foothold in those markets.

Denis Napthine: Minister, we know that Australia is an exporting nation and so world trade will be a really key component of rebuilding the economy after coronavirus. So, what- what are you doing as Minister, and what’s the Government doing to put building blocks in place to rebuild world trade, rebuild business confidence and rebuild the associated jobs?

Simon Birmingham: Where we can, the first important thing is to maintain those trade activities that can still be had, and so that’s exactly what we’ve just been talking about. But then looking to how we can restore, as well as expand and diversify into the future. And so we’re doing a lot of planning work around the type of things Government can do to further open up new trade and export opportunities for Australian businesses.

Just before travel shutdowns occurred I led a large delegation into India as part of our India Economic Strategy — of course a huge growing market, huge population, booming middle class that had been developing there. And that will remain a key part of our strategies for the future as will finalizing, ideally, our planned Free Trade Agreements with the European Union — already one of our largest trading partners, but with huge potential upside for the growth in terms of Australian exports to that market of hundreds of millions of people across the EU. Similarly, with the UK we will be pursuing a free trade agreement there.

And we cannot let this pandemic see the world simply erect greater barriers and shut down trade flows because our country depends on getting premium food, resources, high quality services out to the rest of the world. We produce enough food to feed nearly three times our population, around 75 million people, and we want to make sure that our farmers, and our mining sector, and tourism sector, and all parts of our export-orientated businesses are able to get back to work as quickly as they can afterwards.

Denis Napthine: Minister, you’re responsible for tourism and we know that air travel is very key to tourism internationally and locally. So given the importance of air travel in Australia, why did your government decide not to bail out Virgin Airlines?

Simon Birmingham: So we took a long, hard look at Virgin Australia and the various requests that they made of government prior to their move into voluntary administration. But our concerns related to the fact that first and foremost, in any of these commercial businesses, a commercial solution should be found.

Virgin’s ownership structure is overwhelmingly one held by foreign airlines and foreign partners and we felt that they should be stepping up and providing additional funding into the business as it was currently structured if they felt it was viable, before the Australian taxpayer stepped in and bailed out those foreign owners of the airlines.

We also were very mindful of the fact that Virgin had only recorded one or two profits in the last decade, was carrying heavy debt. And in the end our view was that voluntary administration, which is not liquidation — it’s not a closing down of the business but is an opportunity to restructure — was going to provide a better pathway for Virgin Australia to come out more sustainable in the future. We hear reports that there are potentially up to 10 different interested parties looking at buying the airline. We will see probably a new structure, a new ownership structure that has different players from those current foreign owners there and there’ll be an opportunity to deal with some of the debt that sits on Virgin’s balance sheet.

We remain committed to having two airlines in Australia — a competitive domestic aviation market. We want to make sure that Virgin is a long-term viable airline — not to have simply stepped in, provided potentially hundreds of millions of dollars of taxpayer support as a bailout that may still not have succeeded and might have seen the foreign owners back asking for more in another six or 12 months’ time.

Denis Napthine: And Minister, finally, are you positive about our economic future in this pandemic crisis? Or- and what gives you that confidence?

Simon Birmingham: I am positive. Australia went into this pandemic in a strong position. We had seen record jobs growth over recent years, with many- around 1.5 million new jobs created during our term in government to date. We’ve managed to bring Australia’s balance sheets, the Government budget, back to a point of balance before this had occurred and our level of debt, compared to many other countries of the world, was in a much more manageable position.

That’s enabled us to respond with the type of economic support we have. We are spending large amounts of money and it will increase the national debt, but our debt will still be lower than many other parts of the world. And really importantly, the spending decisions we’ve made are temporary, targeted, proportionate and scalable. And in the vast majority of cases, they’re spending decisions that last for a defined six -month period, we’ll revisit them where we need to, but our determination is not to repeat the mistakes that occurred in the past, where during the Global Financial Crisis we saw big spending baked into the budget for years and years to come. Instead, we’ve been very careful to keep these spending measures temporary.

There may be other responses we have to apply as part of the recovery, but we’re determined to make sure that Australia uses our advantages in areas like agriculture, like tourism and our export sector to come out of this strongly.

Denis Napthine: Minister Simon Birmingham, thank you very much for being on the Great South Coast Today,and we wish you and your team well as we deal with his pandemic and particularly, as we come out the other side in a very positive way. Thank you for being with us today.

Simon Birmingham: Thanks so much Denis. Thank you so much and all the best to you and all of your listeners.