Arrium Press Conference

07 Apr 2016 Transcipt

Press Conference in Blue Room, Parliament House


SUBJECT: Arrium steelworks going into voluntary administration

Christopher Pyne: … called in as administrators. The Government's first and foremost concern is with the workers at Arrium, which is not just a Whyalla issue of course, it's an Australia-wide issue. There are 3000 Arrium employees in New South Wales, a thousand in Queensland, a thousand in Victoria, 500 in South Australia- in Western Australian, and 3000 in South Australia. So this is an Australia-wide issue. And the Government will respond in a very methodical and sensible way, in a calm way, without politics.

Our primary concern is that the workers of Arrium keep their jobs. So I would stress that it's good news that the administrators have announced they intend to have business as usual at Arrium around Australia today, and that workers are turning up to their jobs as they would normally do. The surest way for the banks to receive their money back from Arrium, the $2.8 billion that they owe their creditors, is for Arrium to trade out of its difficulties. And there are three good businesses that make up Arrium, all of which can either be break-even or profitable businesses in the right circumstances - and of course, the steel products business is already a profitable business.

So we'll be working with the administrators, I will be waiting with them tomorrow to get a briefing from them. Malcolm Turnbull as Prime Minister has been very hands-on in his dealings with the banks over the weekend and this week, and obviously I've spoken to Malcolm three times today about this issue. We'll continue to work with the State Government in South Australia and Tom Koutsantonis in particular, who has been working well with the Federal Government to try and help this company to stay afloat and keep the jobs in place. But I'd also be calling on the governments in Queensland, New South Wales, Victoria, and WA to take a proactive interest in the outcome at Arrium, because obviously their own citizens are also affected by what happens in the future.

The Federal Government is already in at least two ways, apart from things like abolishing the carbon tax, tried to help Arrium. We brought forward the purchase of 72,000 tonnes of steel for rail for the Tarcoola-Adelaide rail line, which wasn’t to be done until the 2020s, has been brought forward to start this year, which will be at least an $80 million contract, and it's very likely that Arrium would win that contract because it's obviously very close geographically to where the line might be or will be. And I as Minister for Industry have using the powers in the Anti-Dumping Commission to enforce the law as it's intended to be enforced, which is if businesses are being injured by unfair overseas foreign competition then duties can be applied on the products that they seek to bring into the country. And I've been doing that and will continue to do that on the advice of the Anti-Dumping Commission.

I think- I've given radio interviews today and put out a statement, I might leave it there and respond to questions if people have any.

Question: … with Reuters. Is the Federal Government prepared to provide any direct bailout money for Arrium?

Christopher Pyne: Well Arrium hasn't asked, and neither have the administrators for that matter, asked the Government for direct bailout assistance. They have asked us of course to help them not be injured by unfair foreign competition, and we've done that. It was our idea to work with the Australian Rail Track Corporation to bring forward the purchase of the 72,000 tonnes of steel, and we've done that. Of course we will listen to any suggestion made to us by the administrators of Arrium or the banks that are involved with Arrium, the governments that are involved, but the use of taxpayers funds in a bailout is a very blunt instrument when there are other levers that the Government can and has been pulling and could potentially pull in the future to support a business like this. And I understand the South Australian Government, Tom Koutsantonis the Treasurer there, has said that the South Australian Government will put money on the table, but they just need to know how best to do that. So there are support offers being made.

I know that people are very worried and concerned today about the announcement, and I would be too if I worked at Arrium, there's no doubt about that. But there have been many examples in South Australia alone of businesses that have gone into voluntary administration and emerged as successful businesses. Harris Scarfe, Balfours were mentioned by Tom Koutsantonis today, but the other quite good analogy is Pasminco in Port Pirie, which was in administration for 18 months and then emerged as Nyrstar, a profitable or at least break-even business in Port Pirie. So out of these ashes of Arrium could well become a phoenix which will rise and provide the jobs and growth in the economy that we all want to see for the workers of Arrium.

Question: If Arrium does fall over though, does Australia lose its capacity to produce structural of steel forever?

Christopher Pyne: Well look, that is a very good question because Arrium is the only producer of construction steel in Australia, and of course BlueScope steel at Port Kembla is the producer of flat steel in Australia. And they are very, very significant industries for any developed economy. So the Government does have to consider the impact of not having a steel producer in Australia, particularly when we are an iron ore producer. So yes, we do have to consider the strategic benefits of the industry, but today, our greater concern is to make sure that the workers at Arrium understand that the Government has not and will not let them down into the future.

Question: Is it the Federal Government’s role though to make sure that these workers do get a new job?

Christopher Pyne: Well the administrators haven't announced any job losses today, so we shouldn't jump the gun and assume that will be the case. As I've been saying since the weekend, the surest way for the banks to get their money back is for the businesses to trade out of their difficulties, and that is our first priority. And the administrators have not announced that there will be widespread job losses, but I understand that the administrators fanned out around the country this morning to effectively take over the Arrium businesses across Australia and continue to trade them, and that's the outcome that we want.

Question: Does the Government need to help manufacturing states then transition away from the sector, and if so what would you do?

Christopher Pyne: Well every State is a manufacturing state in Australia, and in the last quarter we had our best manufacturing growth since 2004, since April 2004. So reports of the end of the manufacturing sector in Australia are vastly premature. In fact in the last quarter manufacturing value increased, manufacturing jobs increased, manufacturing investment increased, manufacturing exports increased, new businesses in manufacturing increased. So we had a really great month in manufacturing in the last quarter. And manufacturing has a big future in Australia, particularly advanced manufacturing and high-tech manufacturing. And the Prime Minister has already said since he has been the Prime Minister last September that we will use the Government's procurement dollar, which is a very powerful engine in the economy, to support Australian industry where we can when it's appropriate to do so. And two good examples are in the National Innovation Science Agenda where we are using the $5 billion of information, communications and technology spending the Government does every year to encourage Australian businesses into that part of the economy. And of course in the defence industry, where we are obviously the only spender, the biggest spender in defence, and the Prime Minister’s indicated that defence capability and defence industry will both be important determinants of how the Government spends the taxpayers dollars in defence to help drive jobs and growth and our national security.

Question: I just want to ask again, you have been critical of management of Arrium in the past. You mentioned a moment ago that you would be stepping up efforts to- on the anti-dumping for instance …

Christopher Pyne: Yes.

Question: … and anti-competition. Where are you laying the blame here today, is it the combination of the two as far as you see?

Christopher Pyne: Look, the steel making sector is a very difficult sector at the moment because of the glut of Chinese steel in the international market. And that is affecting Europe, Britain, the United States, and Australia's steel making industries, there's no doubt about that. There are major world problems in terms of steel making because of the glut in China. And as you know, I asked the ADC, the Anti-Dumping Commissioner to provide me with a report about the effect of Government support in the Asian steel market and whether there was a case for the Government taking further extraordinary action. And I will respond to that when I've had the opportunity to receive it and study it at the appropriate time. But the significant issue at Arrium of course is the $2.8 billion debt. Now BlueScope Steel at Port Kembla, facing the same international pressures, has managed to restructure their workforce business, their model, they have got payroll tax support from the New South Wales Government - they didn't get a Government bailout from the federal taxpayer, and they are trading profitably. The massive difference is this $2.8 billion burden on Arrium, and that- entering into that debt was a decision of the Arrium management, it wasn't a decision of the Federal Government, any State Government or the workers at any of the Arrium plants around Australia. So if anybody bears responsibility for that debt, it was the decision of the management at Arrium.

Question: If the Government is re-elected, should there be a place for Tony Abbott on the frontbench?

Christopher Pyne: Look today is not a day for those kind of questions, today is a day about serious issues to do with the livelihoods of families around Australia who work for Arrium. I'm not going to respond to that kind of question. Thank you.