PM Agenda

07 Apr 2016 Transcipt


Sky News Live – PM Agenda
07 April 2016

SUBJECTS: Arrium Steel in voluntary administration; anti-dumping legislation; shipbuilding in Australia.

David Speers: Let’s return though to our top story this afternoon, which of course is the plight facing workers at Arrium Steel, which has now gone into voluntary administration. The Industry Minister Christopher Pyne joins me from Sydney this afternoon. Minister, thanks for your time. There are a number of reasons, of course, why Arrium is in trouble, but the one that you’ve been pointing to, the dumping of cheap steel in Australia, flooding the market here, making it tough for local producers. Let’s call a spade a spade – is China to blame?

Christopher Pyne: No, China is not to blame on its own, David. There’s a lot of reasons why Arrium went into voluntary administration today, primarily because of their $2.8 billion debt, which is unsustainable in terms of their businesses, their three major businesses. They can’t repay it, or the banks have made the determination that they can’t repay it in a satisfactory way, and the banks have not been convinced with the recapitalization plan that Arrium put to them. So that’s the primary reason.

In terms of the international market for steel, it’s certainly true that there is a glut of steel in the market and that China is responsible for that glut. So what the Government’s been trying to do through a number of measures, with me as the Industry Minister, is we’ve brought forward 72,000 tonnes of steel being purchased for the Adelaide to Tarcoola rail line. That’s worth $80 million as a contract that Arrium could win, and they’d be most likely to win it because they’re geographically located right next to the line. And secondly, I’ve been using the anti-dumping reforms …

David Speers: [Interrupts] But they won’t necessarily win it, will they?

Christopher Pyne: Well it would be very surprising if they didn’t win it. They’re like- the line runs effectively past Arrium at Whyalla, so any other business, it would be impossible for them to compete. But that’s by the by. You could assume that they will win it. Secondly, we’re using our powers under the anti-dumping reforms to ensure that Arrium is not being unfairly competed with by foreign companies, whether they’re Taiwanese, Chinese, Malaysian and South Korean, and I’ve been making decisions in that regard. So we’ve certainly been putting our best foot forward for the Whyalla workers, but not just Whyalla of course. There are 1500 workers in New South Wales, 1000 in Queensland, 1000 in Victoria and 500 in WA, as well as the 3000 in South Australia, and they are our primary concern.

David Speers: Just on the rail track that they- you assume they’ll win that contract – perhaps they will. Labor’s point of difference here is they’re saying Government should guarantee that government-funded infrastructure projects use Australian steel. What do you say to that?

Christopher Pyne: Well that’s a very irresponsible policy, David, because what the Labor Party is saying is that they’re going to remove all the competitive tension from the market and give Arrium a monopoly for construction steel in Australia, and Port Kembla BlueScope Steel a monopoly for sheet flat steel products in Australia. A monopoly means they can charge whatever price they want, and that means the Australian taxpayer could in theory be fleeced by the steel industry because there’s no competitive tension. It’s the kind of irresponsible economic policy I expect from Bill Shorten and the Labor Party.

Our policy is that we should definitely encourage local procurement, and we’re using our dollar to do that from Government. We should always support Australian standard steel, and the states and territories should insist on Australian standard steel and that that should be checked, and the states and territories should enforce those laws, and we already have procurement policies around that. But removing competitive tension by granting monopolies to any business in Australia is bad policy.

David Speers: Now, clearly whatever government-funded steel work is going on is a good thing for the local market. As you’ve indicated, it puts them in the box seat to win such contracts. The big one of course is the submarine decision; we don’t have it yet from the government, but if the subs are built in Adelaide, surely that too would be good news for Arrium?

Christopher Pyne: Well building ships, whether it’s the Future Frigates, or offshore patrol vessels, or submarines, or the Pacific patrol vessels – decisions that Labor never made when they were in office, I hasten to add – building ships uses a lot of steel. And of course, Arrium have said, and BlueScope Steel have said in the past that shipbuilding contracts are great business. So of course we’re going to use our defence procurement dollar to support Australian industry. Malcolm has been saying that ever since he was the Prime Minister, and defence is a very good example of where we can help the steel industry. Not every aspect, of course, of a ship has steel that can be made in Australia, but the vast majority of the steel that goes into ships can be made and is made in Australia, so that would be a great advantage down the track too.

David Speers: And you’ve been hinting we’ll get an announcement at least on where they’re built this side of the election.

Christopher Pyne: Well we always said the competitive evaluation process would be completed by mid-2016. That is still on track. Marise Payne, Malcolm Turnbull, myself, the National Security Committee, are working overtime to make sure that we can give certainty to people about naval shipbuilding. We’ve already announced there’ll be 12 ships built …

David Speers: So it is now up to a Cabinet decision?

Christopher Pyne: And a Cabbet(*) decision of course, that’s right, but it will be on a recommendation from the National Security Committee.

David Speers: That’s where it’s up to now? The experts have done their work, it’s now up to the Cabinet?

Christopher Pyne: No, I’m sorry, I misheard you, I didn’t say that, no. The matter has not been decided by NSC or by Cabinet, and I’m not going to comment on the speculative stories in the papers today about at what stage the competitive evaluation process is. But the competitive evaluation process will be completed; we’re working apace to make sure that that happens, and we want to give more certainty to people. But you can be absolutely certain of one thing: we are the party that’s promising 12 submarines for the navy, we’re the one that’s promising nine Future Frigates to be built in Adelaide, offshore patrol vessels and the Pacific patrol vessels. That means we’re using our defence industry dollar to create jobs and growth here in Australia.

David Speers: And just one other bit of newspaper speculation, it was in the West Australian newspaper today, that the Government might privatize ASC and split it into two – one in presumably South Australia for building subs, the other one in Western Australia for surface warships.

Christopher Pyne: Well look, it’s a highly speculative piece, David. There’s absolutely no foundation in it in terms of my understanding of Government policy. I expect the Western Australian to be spruiking for West Australia, but it’s quite inconceivable that the centre of naval shipbuilding will shift to Perth. The largest ship lift in Australia exists at Osborne, it’s the only one capable of lifting submarines, therefore submarines can only be built if they’re build in Australia, in Adelaide. And the Government has already promised that the nine Future Frigates will be built in Adelaide at Osborne. So I don’t begrudge the Western Australian trying to get a bit of local flavour for their newspaper, but there is no possibility at all that naval shipbuilding could move to Perth. That’s why the Centre for Defence Industry Capability has been housed in Adelaide, which we announced about a month ago, because Adelaide is the centre of naval shipbuilding in this country.

David Speers: Spoken like a true South Australia.

Christopher Pyne: It’s just the truth. I speak the truth.

David Speers: Thank you for joining us this afternoon. We appreciate your time, thank you.

Christopher Pyne: Thanks David.