The future for 16,000 Australian families is up in the air
There won’t be much public sympathy for the wealthy foreigners who own 90 per cent of stricken Virgin Australia, including billionaire Richard Branson, but it is a high-risk strategy for the federal government to hope that a truly competitive airline will re-emerge from voluntary administration by accounting giant Deloitte. Federal treasurer Josh Frydenberg was at pains today to stress that Virgin was going into administration, not liquidation, saying [$]: “this is not Ansett”. He was backed up later this afternoon by Prime Minister Scott Morrison who was encouraged that 10 potential investors were reportedly interested in taking over the operation of the airline, and stood by the government’s refusal to provide a bailout. “All we would have ended up doing is sending a billion dollars to foreign shareholders,” he said, with some justification. Virgin boss Paul Scurrah said today the airline was “not collapsing” and would come back “leaner, stronger and fitter” and although there are currently no plans for redundancies there will be a lot of uncertainty and heartache ahead for the company’s 16,000 employees.
The ACTU called for immediate government intervention today with president Michele O’Neil accusing the government of sitting on its hands. “It is not too late,” she said in a statement. “Virgin Australia can still be rescued. It must keep trading in administration, and then come out of administration with new shareholders that include the federal government. This is do or die for the Morrison government. They can choose to save the jobs of 16,000 Virgin Australia workers, or they can choose to abandon all these workers and hand Qantas a monopoly.” The treasurer has appointed former Macquarie Bank chief Nicholas Moore to negotiate with the administrators but it is not clear why the government would compete with other interested parties for a stake in Virgin, much less buy the whole thing as the Greens leader Adam Bandt – who worked on the collapse of Ansett as a lawyer – has again called for today.
A restructured and recapitalised Virgin could take the fight up to Qantas, and if existing investors take a bath, so be it. The vital and urgent public policy question – on a day fresh ABS figures show some 800,000 workers lost their job last week, and Reserve Bank governor Philip Lowe predicts ten per cent unemployment by June – is how many jobs can be saved at Virgin, especially as the federal government is paying some $15 million a fortnight in JobKeeper subsidies to the airline’s employees expressly for the purpose of keeping them on the payroll, a point the PM stressed this afternoon. Administrator Vaughan Strawbridge said Deloitte’s intention was to “preserve as many of those jobs as possible. As we go through the expressions of interest as they [come] in, we’ll be mindful of the impact on those going forward.” Insolvency practitioners are not known for their social conscience, however at a joint press conference this afternoon, former TWU secretary and now Labor senator for NSW Tony Sheldon spoke forcefully: “If Scott Morrison allows this company to bleed out and allow corporate raiders to feed on the carcass of Virgin, then that’s not a national aviation policy.”
Scott Morrison has shown a strange mix of largesse and parsimony – $214 billion in fiscal stimulus, but not $83 million for the ABC which is helping to keep Australia’s schoolkids on task during the lockdown. This is clearly deliberate, and in the Virgin case parsimony has prevailed. If the Virgin turnaround fails, and thousands of workers lose their jobs, this will be looked back upon as a grave mistake, because the government clearly had the wherewithal to prevent it. When he was asked this afternoon about the possibility of an underspend on the government’s stimulus measures – given the coronavirus curve has been flattened – the PM did not rule it out, saying only “we’re still a long way I think from knowing the full extent of these costs.”
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Paddy Manning is contributing editor (politics) at The Monthly and has worked for the ABC, Fairfax, Crikey and The Australian. He is the author of Body Count: How Climate Change Is Killing Us, Inside the Greens and Born To Rule: The Unauthorised Biography of Malcolm Turnbull.
There won’t be much public sympathy for the wealthy foreigners who own 90 per cent of stricken Virgin Australia, including billionaire Richard Branson, but it is a high-risk strategy for the federal government to hope that a truly competitive airline will re-emerge from voluntary administration by accounting giant Deloitte. Federal treasurer Josh Frydenberg was at pains today to stress that Virgin was going into administration, not liquidation, saying [$]: “this is not Ansett”. He was backed up later this afternoon by Prime Minister Scott Morrison who was encouraged that 10 potential investors were reportedly interested in taking over the operation of the airline, and stood by the government’s refusal to provide...
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