Prime Minister John Howard
Press Conference on the Application of the Anzus Treaty
September 14, 2001
Well ladies and gentlemen the federal cabinet had a special meeting today primarily
to consider the consequences of the awful events that have occurred in the United
States in recent days. We came very quickly to the view that the provisions
of the ANZUS Treaty should be invoked in relation to the attack upon the United
States. Quite clearly these are circumstances to which Article IV of the ANZUS
Treaty applies. We have discussed this matter with the United States and I would
expect that this is a view with which the Administration will concur. The consequence
of that is that we will consult the Americans regarding responses which might
be deemed appropriate to what does amount to an attack upon the metropolitan
territory of the United States in accordance with the provisions of the ANZUS
As I indicated in Washington and I repeat today, and its the unanimous
view of the Cabinet, that Australia stands ready to cooperate within the limits
of its capability concerning any response that the United States may regard
as necessary in consultation with her allies. I do want to stress of course
that although the greater loss of life, the overwhelmingly greater loss of life
as a result of these attacks, has been American, there are still some 80 or
90 Australians unaccounted for and there are confirmed deaths of at least three
Australians. And at no stage should any Australian regard this as something
that is just confined to the United States. It is an attack upon the way of
life we hold dear in common with the Americans. It does require the invocation
of ANZUS. The provisions of ANZUS do in our view apply and the Cabinet came
to that view and I have released a formal statement to that effect that will
be available to you at the end of this news conference.
I might also say that we discussed the situation surrounding the putting of
Ansett into liquidation. I must say for myself, and I know I speak for many
of my colleagues, that this is a very sad event, particularly for the Ansett
employees. Its a company that I was certainly well served by for a period
of more than 20 years. I was a regular customer of Ansett. I found their staff
on all occasions to be unfailingly energetic and polite and helpful. And I feel
very deeply for the staff of Ansett. Many of them have served that company loyally
for a period of more than 20 years. The proposition of the Leader of the Opposition
that we should fund the operation of the company for another two weeks is monumentally
irresponsible. Weve been told that it would cost between 120 and 170 million
dollars to keep the company operating until tomorrow evening. If you extrapolated
that out, youre looking at a cost of up to a billion dollars on the budget
if you were to pick up Mr Beazleys suggestion.
And where do you stop? Do you fund for a period of two weeks every other company
that gets into severe financial difficulty? Plainly that is not the solution.
And I made it very plain to the union and other representatives of the employees
of the company that I met this morning - I saw two groups, one in Sydney just
after my return from the United States, I heard that they were in the vicinity
and I agreed to meet a delegation. I explained to them directly that the Government
could not bail out Ansett. And I repeated that advice to a group that I saw
in Canberra. We believe that there is strong legal advice to the effect that
ultimately this is a matter that the liquidators got to nail down because
hes now in charge of the affairs of Ansett which after all was a private
company and is not an organisation in which the Government had any financial
stake. Thats been apparently forgotten by the Leader of the Opposition.
Its a matter for the liquidator to sort out the precise legal position.
But there are grounds for believing that Air New Zealand has legal obligations
in relation to the obligations of Ansett, particularly in relation to employee
entitlements. We would expect that the liquidator pursue any obligations that
Air New Zealand might have as vigorously as the legal circumstances would allow.
We are nonetheless as a Government concerned about the employees entitlements
and we would not wish to see them denied their entitlements. And without prejudice
to the pursuit of Air New Zealand, we would seek to see a situation where essentially
what could be called the statutory entitlements of the Ansett employees, that
is unpaid salary although there may not be any unpaid salary, I dont know
thats a matter for the liquidator, long service leave and holiday
pay, matters of that nature. Those statutory entitlements, that they should
be met and also redundancies up to what could be loosely called the community
standard thats no more than eight weeks. There are some redundancy
arrangements in the Ansett company that are particularly generous by community
standards. Obviously for the Government to meet those it would be a very severe
budgetary burden and we therefore would consider it necessary the introduction
of a special levy on airline tickets to fund those obligations. Now those remarks
of mine and those dispositions of the Government are without prejudice to the
pursuit of Air New Zealand.
It is our understanding that quite a large number of the employees of Ansett
could find quick reemployment in other .in Qantas and Virgin, and there
are a number of indications, and Mr Anderson may say something further about
this, of interest in parts of Ansett by other companies. Its a little
too early to be hard and fast about that. But theres no way that we can
be expected as a government to bail out a company that through no fault of the
Government has got into difficulty. I do feel very sorry for the employees.
I dont think theyve been very well served. There is a well founded
belief that Air New Zealand has tried to cast Ansett off. I find that a strange
thing, a difficult thing to accept given that Ansett is a wholly owned subsidiary
of Air New Zealand. But that is a matter that ultimately has got to be resolved
in accordance with the law and the initiative lies with the liquidator. We remain
concerned about the entitlements. We would expect Air New Zealand to meet its
legal obligations and without prejudice for that being vigorously pursued, we
would not want to see the employees go without, broadly speaking, their statutory
entitlements and community standard payments in relation to their redundancies
and if thats necessary that would be funded by a levy on airline tickets.
Weve also in the context of this given consideration to the general issue
of employee entitlements. Ill be announcing further details of this, or
Mr Abbott will be next week, that were disposed to make the existing scheme
somewhat more generous for future circumstances where entitlements are left
unpaid, broadly along the lines that Ive announced in relation to Ansett.
And one very important change is that we have decided that in future, that is
prospectively, what could be called statutory entitlements of employees in a
liquidation of a company that employed them, will rank ahead of the entitlement
of secured creditors. That is the statutory entitlements pay, long service
leave, holiday pay. There will be some caps in relation to that and some further
details that will be announced next week.
The safety net approach will continue to apply in relation to redundancies.
We think that represents a fair extension. We do not favour the imposition of
a new tax as Mr Beazley does via an increase in the superannuation guarantee
charge. We nonetheless recognise that the issue of workers entitlements
is an important one and we think both in relation to what weve proposed
in the particular circumstances of Ansett and the adoption of a generally more
generous scheme in future along the lines Ive outlined is a reasonably,
indeed very fair response to peoples legitimate concerns whilst not imposing
too heavy an additional burden either on the corporate sector or the general
Mr Howard, what was your personal response to the August 14 letter from the
Air New Zealand Chairman to you claiming the financial .[inaudible]
My personal response, well I dont have personal responses to letters directed
to me in my capacity as Prime Minister. I respond on behalf of the Government.
I think you could glean the situation it is obviously a very difficult
position and our concern is two fold. Our concern is to ensure that the travelling
public is not disadvantaged any more than what is unavoidable given the problems
of Ansett, and I want to thank and congratulate John Anderson and those around
him for the speedy way in which they have put in place arrangements to cope
with the difficulty being suffered by the travelling public and he will want
to say something further about it. Hes a lot more conversant with the
Our other concern of course is with the employees. In the end its got
to be understood that companies are run by individuals and when companies get
into difficulties you dont start sheeting blame home to governments whether
theyre the New Zealand government or the Australian government.
The corporate sector cant have it both ways. It cant assert rugged
individual freedom and the right to do as it chooses to the greater glory of
the market, but when things get into difficulty you turn around and expect governments
to bail them out. Its just not like that. Ansett has been a household
name and Im very sad that its got into trouble and Im particularly
sad for the employees and we want to do what we can to help. But in the end
those who ran the company have to be accountable for what occurred and we of
course will encourage a full and proper investigation. I understand that ASIC
has announced an investigation. We support that and wed like to know the
full story. I think the Australian public would like to know the full story
and that of course includes an investigation in relation to Air New Zealand.
Prime Minister, how does the time line on the entitlements work? You say Air
New Zealand has the obligation, you want to chase that down. That could take
some time. Workers obviously left without any money .
Well Im not going to see them .were not going to see .I
mean the exact timeline is something that we will say something more about early
next week. But were not going to see the workers left swinging.
Mr Howard, are you proposing that your general broadening of the entitlements
scheme will be something like an increase in the Medicare Levy or .
Mr Howard, what type of military support [inaudible] United States?
Well I dont think thats the sort of thing I should speculate about
in advance. Ive said that we would be willing to participate to the limit
of our capability. The Americans havent at this stage made any requests
for particular support but we will consider any requests that is made. The important
thing is that by invoking ANZUS, it puts us in consultation, it represents a
determination on our part to identify with the Americans. If ANZUS is meant
to cover a situation, surely it covers this.
[Inaudible] the enemy Mr Howard.
No, no you dont, not my reading of ANZUS, no.
Did you invoke ANZUS as a gesture of solidarity on your own initiative or was
it sought by the Americans?
Its sort of happened simultaneously. It was something that we though made a
lot of sense and I think the Americans about the same time came to the same
Weve been talking with each other about this.
Yes and its just something that emerged, I mean it wasnt sort of
a question that you know, well ring you and youll ring me kind of
thing, I mean it was just something that emerged.
Mr Howard, what does invoking ANZUS .[inaudible] ANZUS as a living document
that doesnt really need to be invoked. What is the formalising thing ?
Theres no I mean theres no particular theres no form
thats laid down but the fact that I have said after a cabinet discussion
with the full authority of the Government, and I did communicate the Cabinets
decision, I couldnt get Mr Beazley because he was in the air, but we communicated
with his office our decision and I gather from the response, but I mean I may
have misunderstood, that he would support the action that was being taken by
the Government but thats a matter for him to speak on. We think it appropriate
to make it clear. It has both a symbolic resonance but it also means something
in substance and it does mean that if there is action taken then we will naturally
consider any requests from the Americans for assistance.
Prime Minister, is there any consideration of taking action against Air New
Zealand with regards for instance to their rights in Australian air space.
No. And I think that would be foolish. I mean weve got to, this is a difficult
position, we have a strong view about the treatment of Ansett and the Ansett
employees. On the other hand, New Zealand is a close friend. We have no closer
friend and we have to balance it, and I dont think this is a time for
punitive behaviour. There is no merit in that kind of response at all and I
am totally against it.
Do you think Air New Zealand misled the Australian Government?
Well, Mr Anderson can better answer that question than I. I mean hes been
the captain of the ship on the sort of the detail on this and I think Id
better let him do it.
DEPUTY PRIME MINISTER:
Let me make the obvious point at the outset Jason, that this is a New Zealand
managed company and its a private company, so firstly we did not have
access to the books. That 14th August letter to the Prime Minister copied to
me, did not contain financials. It was not the opening of the books. It was
a lobby, a strong lobby in graphic language for us to support their recapitalisation
programme. But in relation to that the New Zealand Minister for Finance has
today released a very interesting statement which I commend to all of you, you
may find it in your pigeonholes up in the gallery which sets out very clearly
what happened and the reality is that they didnt know, members of the
board didnt know, shareholders didnt know what the true situation
was. They couldnt have. They were putting up a recapitalisation plan which
would have raised around $850 million at best, New Zealand not Australian, and
as we now know in retrospect and as the New Zealand Minister has pointed out
would not have saved them, wouldnt have gone anywhere near it, particularly
if Ansett had remained part of the group.
The other thing about that letter that I want to say is it made it very plain
that the two companies were intermeshed and could not be disentangled. That
was the boards position three weeks ago and I just wonder when it was
that they started to talk amongst themselves about disentangling it and letting
Ansett go free. The first that we heard of that was a phone call on Sunday morning.
So did we have complete information brother we did not. But were
looking for it and ASIC has today asked the New Zealand Securities Commission
to have a look at what happened in terms of disclosure. This is a company that
eight days ago gave a report to the New Zealand Stock Exchange saying steady
as she goes, our recapitalisation plan is still on the table. They obviously
didnt know what they were doing.
[inaudible] they met Gary Toomey and John Sharp met you and the Prime
Minister and told you that they were losing $2.6 million a week. How can you
insist that you had no idea this company was in such bad shape when [inaudible]
DEPUTY PRIME MINISTER:
Linda, weve never denied that it was in trouble and it needed recapitalisation
mainly because they were saying they needed new aeroplanes. And the Prime Minister
was well aware of that and we talked about it. Alexander and I talked about
it. In fact we talked about it in all of the forums of the Government. But while
they were saying they were losing .actually the figure given to me at that
meeting was around $15 million a week and they were saying obviously were
trying to rectify that and fix it. Remember it wasnt so long after what
happened at Easter Time. Were trying to get our costs down and our yields
up. But, and this was also said in the media, weve got around a billion
in cash reserves. Now we need to restructure, the timetable was basically early
September when weve got to report to the markets and the process then
would have involved due diligence and all the rest of it and then the issuing
of a prospectus as they went out in the market place to try and raise more money.
As Mr Cullen points out today that might have all happened about November. What
do you think would have happened if a proper due diligence had been done, you
know, as part of this process and they started to have a really close look at
it all? Exactly whats happened now.
.Cabinets today about access, continued access particularly for
regional areas now that Ansett has come out .?
DEPUTY PRIME MINISTER:
Yes, we put a lot of work into that and I thank the companies that have helped
us. As it states look it hasnt been easy in our major airports. Things
are starting to ease today. There was a stoppage at Sydney Airport today, I
understand that that was in large part about workers entitlements and
we understand that concern and were now addressing it and Im very
thankful theyve gone back. Now the major airlines believe that they can
basically have the major trunks back in reasonable shape over the next couple
of days. Qantas has started to pick up those regional networks or many of those
regional centres that were previously serviced by Ansett alone and had no alternatives.
We will be putting in measures very quickly to seek to have new suppliers, new
companies servicing those routes that are missing out in the regions. Weve
got a lot of planning going on there and part of the better news is that were
surprised at how much interest is coming out of the woodwork here and internationally
in purchasing various trunk roots, various regional roots. That part of it is
looking quite good. Can I say to you although its flat at the moment in
Australia, the aviation market is a bit flat, in trend terms its been
growing at about 8% a year. There is no reason to believe that that is going
to stop. Its had a hiccup, one that we dont like, one that were
very sorry about indeed. But this is a sector of the Australian economy that
has been growing and will recover. There will be new entrants and well
make certain that the access bar is not inappropriately set. We want more people
like Virgin to succeed.
With the demise of Ansett, do you think that theres some merit in having
price caps on air tickets given the reduced competition? And do you have any
response to suggestions that Air New Zealand took Ansett engines off planes
and other things?
DEPUTY PRIME MINISTER:
Well on the latter one there are some very alarming reports starting to emerge
from around the country and well wait to see how that unfolds. But it
just adds to my sense of outrage at what has happened. If it is indeed true
well I wont say any more than that. But I understand that theres
some stories along those lines circulating now and presumably I dont
know whether theyre true. But if that was an attempt to lower the cost
of trying to restructure and recapitalise Air New Zealand separately from .in
a separated form from Ansett then I can understand why Ansett staff feel even
Im sorry, the other part of your question. Look, can I say to you its
too, in my view its premature to talk like that. We dont know what
the liquidator going to be able to help if you like, put back into an appropriately
robust competitive environment in the Australian aviation sector. Its
premature in my view to be talking too pessimistically about a lack of competition.
I mean Virgin is being very aggressive indeed in saying that they intend getting
out there and expanding their trunk network. Weve got a number of other
players some very, very interesting players I hope they come to
fruition - you realise for commercial reason I cant say too much at this
stage coming out of the woodwork and thats very hopeful. Can I
just say again no one, no one wanted more than me and no one worked harder than
I did and I think the Prime Minister would agree with this, to try and keep
that airline in the skies. You know, we were negotiating until all hours as
late as last night and even down to the wire on trying to secure payment, wages
and what have you, to bring them up to date but in the end when the administrator
finally got hold of some hard numbers and lets put this into some sort
of context those figures released yesterday that everybody sort of withdrew
from in horror the worst corporate result in New Zealand they
are still unaudited figures. They are still unaudited. And when we finally got
some hard numbers to make some decisions on yesterday, we started looking at
the bills that were immediately due if we were to keep them flying, and it was
just appalling. And what Mr Beazleys talking about as he walks around
with a big grin, and very appropriately with a big grin on his face, with a
bit of political opportunism what hes talking about is absolute
nonsense and I dont believe he believes it or would have done it anyway.
Prime Minister are you looking at further fiscal stimulus through extending
the first home owners grant beyond December 31 this year to ensure that the
Australian recovery remains on track, given the events this week in New York
The issue hasnt recently been before me.
Prime Minister can you clarify what you were talking about, the broad scheme.
There is a special levy on ..
The levy is on tickets for Ansett, if thats needed but we have also in
that broad context decided to make our general scheme a little more generous
and to significantly alter one aspect of it, and that is to alter the order
of application of assets in the event of an insolvency so that the statutory
entitlements, not the redundancy, and there is a big difference between a statutory
entitlement and a redundancy. A statutory entitlement under law accrues as time
goes by, whereas the redundancy is not an entitlement until somebody is actually
retrenched and theres often a complete misunderstanding and complete confusion
of these two things. And the idea is that generally speaking, and well
announce further details of it next week, generally speaking the statutory entitlements
- long service leave, holiday pay etc - those things will rank ahead of secured
creditors in future liquidations. Now thats quite a significant change.
Have you thought about a levy to fund?
No were not talking about a levy to fund it, no.
that limit is currently $10,000 youre talking about lifting that?
Well there will be, it will be more generous, and there are . it will be
more generous. You can use whatever description you like about that Fran. But
And Im sure she will.
Im sure she will too. It will be more generous and more details will be
announced early next week.
On the US situation, have you spoken to the Australian families who have lost
people in New York? Or do you plan to?
I plan to. I havent been able to yet. I have, I got back as you know only
just before the Cabinet meeting and Ive been tied up in the Cabinet since.
I have made a number of enquiries, of course when I was in the United States,
through the Ambassador, I was kept regularly up to date and I also had a number
of conversations with the Consul General in New York, Mr Allen, and I also spoke
to Mr Lowy, Mr Frank Lowy, whose company of course is part owner of the World
Trade Centre. And I was able to ascertain from him within a few hours of the
situation in relation to the employees of his company. Fortunately in their
case, the retail activities were on the ground floor and the people were able
to get out. Others, sadly, were not so fortunate, but I will certainly in time
Could I also say a couple of other things about the loss of life Australian
and American in this tragedy. Well be inviting Australians to treat
Sunday, this coming Sunday, as a National Day of Mourning. And wed hope
that flags will be flown at half mast and no doubt special reference and observance
will be kept in churches of .and other faiths throughout the country.
I also intend that a National Memorial Service be held in the Great Hall next
Monday. I will invite the Leader of the Opposition to join myself in reading
one of the two lessons and there will be appropriate contributions from other
people. It will be a religious service and give an adequate opportunity for
observance of the great loss of lives of Americans and Australians and the impact
that this has had on both our communities, particularly the United States.
Ill also introduce, and Im sure will be supported by the Leader
of the Opposition, a resolution condemning what occurred in unequivocal terms
and allowing an adequate amount of debate on both sides and then propose that
the House adjourn after that on Monday as a mark of respect for those who lost
their lives in this very tragic event. I propose that Mr Reith or Mr Downer
on my behalf consult the Opposition regarding the wording of the resolution
and it is proposed that it not only condemn the outrage but also incorporate
a reference to the Governments decision in relation to the application
of the ANZUS Treaty.
Prime Minister on the ANZUS activation, will Australian personnel serve under .whose
command will they serve under and on what basis will they be (inaudible).
Well we wont go into that with any hard and fast view. I mean you have
to be practical. Just as it was practical on the first occasion that Americans
and Australians fought together for the command to be in Australian hands, it
will almost certainly be practical that the overall command on this occasion
be in American hands. I mean we will naturally assert the rights that an independent
nation always does in relation to these matters but when youre together
with somebody the idea is to work together and have a practical attitude towards
Youve got 260 people still at Ashmore Reef. They dont want to go
to Indonesia and you dont want them to come to Australia what will
you do if Nauru wont take them?
Well, we would expect as a result of the agreement made by Mr Reith with President
Harris that Nauru will be willing to take quite a number of people. We had some
further consideration of that issue today. As you know the Full Bench of the
Federal Court, I hope will deliver a judgement on Monday morning. We remain
very strongly of the view that everything the Government has done has not only
been in Australias national interest but also legal, and I can but say
again if the Labor Party had not rejected the Border Protection Bill, this issue
would not be in front of the Australian court.
Prime Minister, Mr Reith suggested yesterday that the events in New York provided
an extra justification for action with respect to asylum seekers, his proposition
being that extra border protection helps to keep out terrorists. Do you think
that the events in New York give a justification that was not there before for
taking this line you have with the people on these ships?
As you know Geoffrey, we took the action we did in relation to the people on
the Tampa before those awful events. I thought what we did before those
awful events - was one hundred percent justified. You cant have anything
more than one hundred percent. I havent seen precisely what Mr Reith said,
Ive been rather preoccupied with other things. I simply make the point
that what we did in relation to the Tampa was a stand alone, 100 percent justified
exercise. People are shaken beyond belief about what happened in New York and
I dont really want to say any more than that.
There is just one other thing I would like to add and I think it is important
to say it. And that is that it is important for all Australians to bear in mind
that there are probably a couple of hundred thousand Australians of Middle Eastern
descent and heritage in our country and like any other ethnic group the overwhelming
majority of them are wonderful Australians, law abiding and committed to the
unity of this country. And it is essential that in the wake of what has occurred
and the not surprising assumptions that have been made about where people may
have come from, that those actions .that the naturally hostile and angry
responses to those actions are kept well apart from our attitude towards Australians
of Middle Eastern descent. They should not bear the burden of things that they
despise as much as I do and its important, especially important at a time
like this, that people of different faiths, indeed people of no faiths at all,
that everyone be treated in a decent, understanding and tolerant fashion. I
know that there are many Australians of Arabic descent who would share my horror
and disgust at what has happened, and I want to make that very plain and I extend
to them goodwill and the hand of friendship as a fellow Australian.