Following the Queensland government’s cabinet reshuffle, newly minted treasurer Cameron Dick tabled a bid to buy a stake in struggling airline Virgin Australia; a move that has been heavily criticised by a number of federal ministers.
Dick said the government’s investment could take the form of a direct equity stake, a loan, guarantee, or other financial incentives.
“My number one focus as treasurer is to retain and create jobs for Queenslanders, particularly as we move beyond the COVID-19 crisis,” Dick said in a statement on Wednesday, May 13.
The state-owned management group, Queensland Investment Corporation, will advise the government on all aspects of the bid under the direction of chief executive Damien Frawley as part of “Project Maroon.”
Speaking to reporters in Canberra on Thursday, May 14, Prime Minister Scott Morrison said that he’s not interested in providing commentary on the progress of Virgin’s voluntary administration. He did, however, say that early calls for his government to use taxpayer money to buy a stake in Virgin amid the pandemic were “dangerous.”
He stood by his position that Virgin must find a market-based solution to its problem, and for the sake of its employees, Virgin should be able to “stand on its own two feet and employ the thousands of Australians that it does and be successful.”
“We want a competitive aviation market here in Australia. We want to see these two airlines flying and competing and giving a great deal to the flying public and to ensure that the freight keeps moving around this country,” Morrison said.
Prior to entering voluntary administration, Virgin had amassed a $7 billion debt owed to about 12,000 creditors.
Federal treasurer Josh Frydenberg spoke after Morrison and reiterated that the federal government was not in the business of owning an airline.
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Home Affairs Minister Peter Dutton said it was “laughable” for Queensland Premier Annastacia Palaszczuk’s government to put in a bid considering it is $90 billion in debt.In a Twitter post, Dutton said, “Annastacia Palaszczuk and Labor have almost bankrupted Queensland and they can’t even get their trains to run on time. How on earth could they run an airline?”
Transport minister Michael McCormack has echoed the prime minister and federal treasurer’s views.
McCormack said that there is no doubt that Virgin will be back in the air, and went on to say that the Queensland bid is a “political stunt” ahead of state elections.
Agricultural minister David Littleproud told reporters on Thursday that the Queensland government was taking a “populist” approach to the problem.
However, the state’s treasurer believes Queensland can be a serious contender to take over the carrier. “We need to strike a hard bargain. I want those foreign banks and those foreign bond holders to take a hair cut,” he told ABC Radio.
QIC’s Frawley said the restructure of Virgin is a significant opportunity for Queensland.
“We are well-equipped to manage the state’s interest in Virgin Australia Holdings should the consortium be successful,” Frawley said in a statement on Wednesday.
Frawley said Deloitte “has set an ambitious time frame” as they seek to conclude the sale process by June.
Deloitte has said that they are creating a shortlist of interested parties. Bids are expected to be tabled on May 15.
