Strong Australia broadcast Hobart14 February 2019
Speakers: Business Council of Australia chief executive Jennifer Westacott, Qantas chief executive Alan Joyce, Huon Aquaculture Group managing director and co-founder Frances Bender, Tasmanian Chamber of Commerce and Industry chief executive Michael Bailey and Sky News host David Speers.
David Speers, host: Good evening, welcome to the program, live from Hobart this evening as part of our Strong Australia series with the Business Council of Australia. Where we've been travelling around the country looking at what the private sector is doing to grow regional economies and grow our national economy as well. What they should be doing, what they are doing. Here in Tasmania right now of course, particularly the south of this state, it's been for the better part of two months gripped by a bush fire crisis. Now fortunately, their firefighters are getting on top of that. And well I was here a couple of weeks ago and this city was covered with smoke haze. But things have cleared since then. But now, a big recovery effort as well. That's going to take more than just government hand-outs, it is going to take some private investment. Now that's really what we're talking about. With these sorts of programs, looking at, as I say, what the private sector is doing. What it can do, what it should be doing as well. Fortunately, here in Tasmania, well things are pretty good right now. It's in fact out-pacing the rest of the economy, the Tasmanian economy. There really is well, a moment of pride here, that we're going to talk about as well. And why that is, why conditions are particularly good right now for a state that isn't always a state that you could say is leading the nation economically. We've got a terrific panel here tonight, both national and local business leaders. Let's start with Alan Joyce, the CEO of Qantas. Thank you for being here in Hobart tonight. Good to see you.
Alan Joyce, chief executive, Qantas: It's great to be here.
David: Jennifer Westacott, the CEO of the Business Council of Australia. We also have Frances Bender, is the executive director and co-founder of Huon Aquaculture Group and Frances, we're going to have a look at your business in particular this evening. And Michael Bailey who's the chief executive of the Tasmanian Chamber of Commerce and Industry. Welcome to you all. But Michael, I might in fact start with you, because I just mentioned the bush fires and the nation's been hearing about the situation, particularly in the south of the state, the west of the state as well.
Michael Bailey, chief executive, Tasmanian Chamber of Commerce and Industry: Yeah.
David: I know there are still fires burning, this is an ongoing situation, but fortunately in the Huon Valley in particular, things have cleared up. So, what now for the recovery effort? Are there any estimates around what this going cost?
Michael: Oh, look I think the first thing is to remember is that Tasmania is open for business for tourism. The fires were significant...
David: They didn't stop coming.
Michael: Absolutely. In fact, it's quite the opposite. Though only about three per cent of Tasmania was impacted, and pleasingly of that three per cent, only about five per cent is really a high-conservation area. The fighters did an amazing job to keep the fires back.
Michael: An incredible effort, so we must take our hats off to them. [inaudible] The fire started the 28th of December and firefighters came from all over the country. There was a group from Queensland that had never seen snow before until last week where the snow came to the Highlands. The areas that they were fighting fires in 30 degree plus temperatures...
David: That's something.
Michael: [crosstalk] suffering from snow, which is great.
David: Well, what about some of those small businesses? A lot of these...and anyone who's been in Tasmania, particularly that southern part of Tasmania - a lot of small businesses in beautiful little villages.
Michael: Yeah. Absolutely.
David: How are they going?
Michael: Look, it's going to be a battle and we need to get people back down into those communities quickly. We learned a lot after the Dunalley brush fires of about six years ago where a fire swept through that little community, and we learned as a state how to react to help businesses through what's a very difficult time. And quite often what happens is you get a lot of support from donations and lot of it goes to householders, not to businesses. So, we learned how to better protect businesses and help businesses through this tough time. So again, my role is, along with a lot of other Tasmanian business people, is to help those businesses get through these next few months.
David: So, I guess your message is pretty clear to anyone watching around the country. Come to Tasmania.
Michael: It's a beautiful part of the world.
David: It is a beautiful part of the world, I don't think anyone's going to dispute that.
Alan: We're absolutely seeing no drop-off in traffic.
David: Is that right?
Alan: So, we have over 65 per cent of the market and people are coming, and they're coming...[crosstalk]
David: Well tell me a bit about Alan Joyce, tell me a little bit about what's been happening with the tourism market in Tasmania compared to other parts of the country.
Alan: It's a great growth story. What we've seen here... we carry 2.7 million people in and out of Tasmania each year. And we've seen Qantas grow by 63 per cent in the Hobart since 2013 and Jetstar by 17 percent.
David: Would that be one of your biggest growth margins?
Alan: It's the biggest growth of any market we have in our entire network. So, it's phenomenal what's been occurring. And what we are seeing is international grown is also big. Of those 1.3 million visitors that come in to Tasmania each year, 300,000 are international and the biggest growth is from the Chinese, which grew nearly 15 per cent last year - 52,000 Chinese coming into Tasmania. So, what they've done here is phenomenal. They've got Mona as a catalyst to start it, they put the infrastructure together in hotel rooms. There's amazingly, even today, there's nearly 3,000 rooms under construction. They put in the infrastructure around the experience for people to come in and see it and the airlines responded to it. The growth that we've put in has been profitable ground and we've been doing it with unbelievably low airfares - and we can make money. $42...
David: Here comes the plug.
Alan: 42 dollars from Melbourne to Hobart...
David: There you go.
Alan: ... on Jetstar.
David: That's pretty good I've got to admit.
Alan: You would spend more on parking your car at a Melbourne airport than you would on the flight to get here. [crosstalk]
David: So, tell me what, apart from this fabulous price that you've got, why... there's a lot of beautiful parts of Australia. Jennifer you'd notice this as well. When being the many of them, is it Mona? Could it really be that simple of just having this one great attraction? Why is there this sudden interest, or not sudden, increased interest now in Tasmania?
Alan: I think there's a lot of...and Frances was talking about this today at the lunch. I think Tasmania has got its act together in terms of the key message about what they represent and...
David: What is that message then, Frances? What's the message about, 'what is Tasmania?'
Frances Bender, executive director and co-founder, Huon Aquaculture: Group: Tasmania is a whole story. It's an experience, it's a place, it's the people, it's the quirkiness. And to the point about Mona. I think Mona did two things for Tasmania. Firstly, it put us on the world map. We've always been here doing what we've been doing. Perhaps unrecognised and the poor cousin to mainland Australia. But the second thing that it did that I think the community really, really is so proud of is they actually turned on the Tasmanian pride and the ability for us to think that we can do this, and we are a special place. And so, from that time really, everything has just fallen into place. So, the challenge for us now, which is what we were talking about today, is how do we match this phenomenal growth of tourism and activity in Tasmania with basic infrastructure and the needs in planning for the future.
David: I want to come back to this infrastructure question but Jennifer, I mean as they say, what's the lesson here for other parts of Australia that would be saying, "Oh, we've got great stuff." Maybe they don't have the art gallery like Mona but what's the secret ingredient?
Jennifer Westacott, chief executive, Business Council of Australia: It's a good question. I think vision, like this is one person's vision and not giving up on that vision. And then designing a magnificent building as well as obviously a tremendous collection. But just the whole experience. I think what people want is an experience. Going out on the ferry, getting the glass of champagne which, I didn't drink because it was 9:30. But, you know, that whole experience of being treated in a kind of really special way. Everyone being excited on the ferry as we went out. And then a magnificent environment. So, I wouldn't underestimate the role of Mona. But then you go to Alan's point about the hotels. You know, years ago when you would come here, there'd be one hotel. Now there's lots of hotels. They're not just hotels, they're very good quality hotels. And then you think where will we eat? And there's lots and lots of choices; be they high-end, mid-sized or cheap. You know, all of those things are what people want for all kinds of tourists. The other thing, to Frances' point, it's just got a buzz to it. You know, you arrive here, and the place is buzzing. The confidence is high and that makes you, as a tourist, feel terrific.
David: Obviously those tourism numbers are good. The economy is outpacing, as they say, the national growth is the story of the moment. Unemployment though, not quite and youth unemployment has been high here. And I want to come back to some of these challenges as well. But it sounds, Michael, and back to you, that if you're in the tourism game things are pretty good in Tasmania. Is that fair? What about the rest of...?
Michael: It's broader than that. What's terrific about Tasmania is how many really exciting things are happening. So yeah, tourism is great but so is manufacturing, so is agriculture, so is aquaculture and so is education. A whole range of things are coming together at an amazing time in our state. You know, our challenge is to keep this momentum going to keep the ball rolling.
David: So, what's the challenge? As you say, it's the challenge. One of the difficulties here as well as so many other parts of the country is infrastructure.
David: How do you keep up with that growth and make places, like Hobart, liveable? I mean it's not as congested as Sydney, Melbourne or Brisbane, that's for sure. But, how does business prosper without the infrastructure it needs to grow?
Michael: And that's a great question at the moment that we're trying to answer. There's a real need for infrastructure in Tasmania. And Hobart in fact, has some of the worst congestion of any capital city at the moment which is extraordinary.
David: Is that right?
Michael: Because of a lack of thinking in years gone by. Where we have a number of major arterials going into Hobart within normal old streets trying to cope with this influx of people. Plus, also we have the infrastructure needed to keep our smaller communities up to speed with this tourism growth. What we don't want in Tasmania is some communities to feel as if their Tasmania is being lost. So, we need to really work on that too. Plus, also the big picture stuff for us are things like the interconnector to the mainland to ensure we...[crosstalk]
David: Can you explain what this is, because interconnector debate is a really interesting one. For those watching around the country. There is, at the moment, one interconnector between Tasmania and the mainland for surplus energy here to be pumped up to the mainland.
Michael: That's right.
David: I'm not sure if there's any that comes the other way?
Michael: We do from time to time if there are droughts in Tasmania - we can draw on that energy as needed.
David: You have an enormous amount of hydropower here.
Michael: We do.
David: But often too much than you can use. More than you can use. So, a second interconnector could help alleviate the problems in South Australia, in Victoria, in New South Wales...
Michael: It will help. Look, the frustrating thing for me was that I was in Adelaide when the issues with blackouts a few weeks ago. At that time, there was about 400 megawatts of energy in Tasmania that couldn't be sent across the mainland because the interconnector was full. So, if there was a second one in place, we wouldn't have had that problem in Adelaide. Now a few days later, we had similar problems in Melbourne, that again we could have fixed with the latent energy we have sitting in our system.
Frances: The other issue with having a second interconnector is then it makes the whole wind generation option so much more achievable.
David: So, it changes the game here. You have a lot more investors coming in and building wind farms, or pumped hydro if they know they can sell it to the mainland.
Michael: Look David we really do. We have some phenomenal wind generation developments at the moment, but the developers have said they will double the scale if the interconnector goes in; the second one goes in. We also have pumped hydro which we can produce at a cheaper price than the Snowy system. That's just waiting to go. So, if we have that other connection, and we can be... [crosstalk 00:11:39]
David: Is it true? The thing is we've heard the file commitments are made on this big Snowy Hydro 2.0. I know there'll be a bit of competitive tension here, but your view is you can actually do a better bang for your buck by investing here and build an interconnector.
Michael: Absolutely and the numbers have been done. We can actually do that, and it will happen. My argument is let's get it happening now. These sorts of projects take years of development. I think it takes one factory in Europe a year of work to build that sort of cable.
David: So, if it would take a year to build the cable?
Michael: Just that.
David: And then to lay it...
David: I'm told the figure is about $2 billion, something like that?
Michael: Yeah, which is not that much in the scheme of things.
David: Seems a lot to me.
Frances: Well, it is a lot, but we don't have any redundancy. If we've only got one, we've already had that line break once before. Then it doesn't matter how much energy we're generating here if we've only got one and something happens. Then we have no redundancy. We have no backup. [crosstalk]
David: I'm sure the locals would be manning the argument for this second interconnector. But Jennifer, let me ask you, from a national perspective. We've heard this endless debate about how to solve our energy woes in Australia. How important is this piece of the puzzle?
Jennifer: I think this is a really important piece of the puzzle because what no one can solve is the peaks and troughs issue. And this is dilemma of renewables in terms of wind and solar. They're terrific but the sun isn't always shining, and the wind doesn't always blow. And then you've got a reliability problem. They've pushed the baseload out of the system, and we've ended up with these problems. Leaving aside all of the issues, of course, high cost. So, if you're going to look at big nation-building projects, why not look at this. Because it solves problems on the mainland, it solves problems here but also would be another big catalytic piece of infrastructure that has this flow on effect across Tasmania. And it's those sorts of projects that around the country we just need to prioritise, get them done. Also, I'm understanding your time issue. I think it's got a shorter time frame than building lots and lots of other things.
David: I was saying earlier though, we're here talking about what can be done without the government, what the private sector can do. Why aren't any of the big energy companies doing this? Why aren't they saying...
Jennifer: Well it's got to get onto someone's priority list and because certainty. Companies have got to feel that they would get the planning approvals. I think they've got to feel that government would de-risk the project to some extent.
David: That they won't be forced to divest it...
Jennifer: That they won't be forced to divest that asset down the track. And they've got to be certain of the rules and obviously they've got to be certain that things aren't going to change.
David: Even if they've got the rules of the road right with the energy policy, the private sector would do this?
Jennifer: Well, let's have a look at the feasibility study. You sort of say, "Why wouldn't they have a look at this?"
Alan: But there are infrastructure projects where you do need government because they're very long-term projects. Like Western Sydney Airport is a government initiative and this could be one of them. It could be one that could be justified commercially but depends on the payback and how it's going to work.
David: Western Sydney is one that could be sold off if...
Alan: Eventually a lot these assets will have real value eventually and we know that.
Jennifer: A government might have to make a stand on this, the most important thing is that you've got to get the funding so that the cost is not passed onto consumers. That's the critical thing. Because you've got a small population here relative to the mainland. They can't bear the cost of that. So, let's do the work on it. Let's do the work and then the private sector gets something like, "Okay, people are going to back this." But they're not going to get behind things if they think someone's going to change their mind, someone's not going to get the planning approvals. "Is this going to take me 5 years? I'm going to be forced with a whole lot of cost. I don't know what the rules are going to be." This is not just for this project but for many projects across the country. This is the sort of thing that you need to unleash private capital.
David: Well, we've got an election coming up federally. I know there's various politicians saying they've been looking at it and thinking about it but one government policy that's been shelved today but still is government policy is this 'big stick' legislation would see the taxpayer underwrite new investment in energy generation. Labor has a similar policy as well, don't forget. Are you saying this should be one of the first things?
Jennifer: Well separate the two things. The divestment legislation is not the same as the underwriting legislation.
David: But they are part of the same... [cross talk]
Jennifer: People have put them together, probably mischievously. But, you know, the divestment legislation says that a government has got to step in and divest a company of its assets over a dispute on price.
David: You don't like that at all?
Jennifer: Well because, you know, I could spend hours talking about the complexity of prices. We want people to have lower prices, but Treasury when they turned up to the Senate Inquiry said, "Oh we haven't done the work on whether this will lower people's prices." So, what it will do is say to a company, "Why would I put the shareholders money at risk in these big projects, whether it's this project or something else, or keeping a coal fired power station going, investing in renewables," if someone is going to come and split up my company.
David: Does anyone think this divestment idea is a good one? I mean, you know, you all have business involvement that involves a lot of energy costs. Not a good idea?
Alan: I think Jennifer is absolutely right. I mean, the uncertainty it creates not only for the energy sector but for potential for dissipating to other sectors. I think it's actually got everybody worried about it. So, it's...[crosstalk]
David: You think when are they going to come after us?
Alan: It's not good policy and it creates this other risk that a lot of other countries avoid like the plague because it actually has a speed break on investment in those countries and that's the real danger for us if this goes through.
Jennifer: And it would lower people's prices. So, you put all of this investment at risk, and it won't lower people’s prices.
Frances: We can't afford as a nation to continue this ongoing swapping and changing of policy. We need a policy that gives people surety to be able to invest in renewables. Just imagine the flow and benefits for Tasmania to be the battery of the nation, which has been touted. So just imagine the benefits to be able to carry some of the load up the eastern seaboard and enable the renewable sector to be able to be built alongside that as well.
David: What would you like to see? This has been debated for a decade. The two sides of politics haven't been able to sort it out and reach agreement on this and maybe they never will, but there's an election coming. What would you like to see them do on energy? Does anyone have...
Frances: What I'd like to see governments do on most things is take a longer-term vision. As a business person, we have to take long-term decisions. Sadly, these days with politics the way it is, there's so many short-term decisions. And so, what gives anybody the surety to actually keep investing and to keep trying to grow and keep... It's very, very difficult if you don't know that the rules are going to change under you and to Alan's point, sovereign risk is a real issue.
David: Would anyone like to see the National Energy Guarantee revived, brought back to life?
Jennifer: Yeah. I mean, we thought it was going to work. I've been around this issue for as long as you have and seen lots of policies start and fail. But this is the one policy that every single person I spoke to in business said, "Yep. We can make that work." We can make it work for all because it solves the two problems of reliability and it solves the problem how emissions are going to be treated. Those two things will solve the problem of affordability because they drive investment. So, you know, look, the question is how do we moved past that point? It was a real disappointment to see that policy not get up, but we have to do something. No policy doesn't mean nothing will happen. Lots of things will happen.
David: Are you worried though that Labor's idea of a higher emissions target is going too far?
Jennifer: Let's see the modelling on that target. This idea that we're going to get to 26 per cent, we're not across the whole of economy.
David: Government says we will and [inaudible].
Jennifer: Yeah, well in electricity. But not across the whole of economy so you can't get to 45 if you haven't got to 26. Let's see the modelling on the impact on aluminium, on steel and on cement. We've got to decide in Australia, do we want to be a diversified economy with a strong industrial base? Or do we want to walk away from steel, from cement and from aluminium smelting from industries? I can't remember how much you were paying under the carbon tax, but it was a lot of money.
Alan: It's over 100 million dollars.
Jennifer: 100 million dollars. I mean things...
David: What would you like to see happen Alan?
Alan: I'm absolutely with Jennifer on this. I think these industries are really important for the diversity of Australia and all that's going to happen is if we price them out, this is going to move to other countries and it's probably actually going to be worse for the environment.
David: So, don't go as far as 45 per cent emissions?
Alan: Well, I think what Jennifer is saying is that do the modelling. How do we get there and what's the plan?
David: You're not convinced right?
Alan: And if the plan can do it without trashing the economy. If the plan can do it in a realistic way that we know that the investment is not going to be massive in order to get there, then everybody will want to do what they can. But if it's going to trash the industry, it's going to destroy the economy and it's not going to solve the world problem, then why would you go down that path?
Jennifer: And we keep talking about the target without the plan to get there. So, I mean our attack could be anything but if you don't have a plan to get there and you don't know what the implications of that will be and you don't know which sectors will be impacted...This is why we keep making false starts at this though. We've done this for a decade. We set these ambitious schemes, we set a high carbon price in a carbon tax under the former government, and then everyone does the work finally and they go, "Oh my god, there's the steel industry really heavily hit. There's Qantas paying 100 million dollars." Now we have to have these very complicated compensation packages and the community says, "Hang on, what are we trying to do here?"
Alan: An example we were using today, an example in the aviation industry where we have introduced a price on carbon. It's going to be introduced globally from 2021. The aviation industry has made a commitment, as an industry, that we will reduce our CO2 emissions to 50 per cent 2005 levels by 2050. We'll do that through a whole range of activities including new technology, computer systems, intelligence, artificial intelligence systems, sustainable aviation fuels and carbon-offsets - which we have the largest program. But there's a plan. We know what we need to do in order to get there and there's a lot of things that have to be put in place in order to get there but we are making that very strong commitment about what we're going to do in terms of our CO2 production on the base of that plan.
David: Alright. We do need to get a break, but after that we're going to take a look at your business in particular. It's a great a great story of a Tasmanian business that's grown now bigger in fact than the entire dairy industry in Tasmania, just your business alone. We'll take a look at that right after this.
David: Welcome back, we're live from Hobart tonight. We're talking to Alan Joyce, the boss of Qantas, the Business Council CEO Jennifer Westacott, Frances Bender is the co-founder and head of Huon Aquaculture, and Michael Bailey the chief executive of the Tasmanian Chamber of Commerce and Industry. I want to come back to your business, Huon Aquaculture. If anyone's enjoyed a nice piece of Salmon lately, chances are it may well have come from your business. We've got a little piece here that we're going to show people exactly what you do and a bit of the story behind your business. Let's take a look.
[video package plays]
David: Well Frances, it looks great. It is a terrific success story - the growth is. We were talking about tourism earlier on in Tasmania but this food, wine side of things is really important here as well isn't it? Explain to me how you did manage to start from nothing to grow this business?
Frances: Well we started...the industry actually didn't exist just over three decades ago. So, we actually now are the largest fishery by value in the nation from a standing start which is actually quite amazing, really. It began from a few people having an idea that perhaps you could grow salmon in Tasmania.
David: So, it hadn't been grown in Tasmania before?
Frances: No, it's an introduced species.
David: What about 30 years ago?
Frances: It was about 35 years ago and there was a joint venture organised between a Norwegian company to start with.
David: They're the big guys?
Frances: They're the big boys. They're the Goliath of the world salmon industry. And just to adapt to be really successful. When we began, the interesting thing about the journey is that there was virtually no knowledge. We had to learn on the job. The Australian consumer didn't eat salmon. Didn't even know what fresh salmon was. So not only have we had to learn how to grow it, we've had to develop all of the technologies around it. We've also had to teach the Australian consumer what to do with a piece of salmon.
David: How do you do that?
Frances: Well, it's just been a process of education and getting into the marketplace. When we first started growing... it's an amazing story... the entire industry's production for one year, the first year was 50 tonnes. We couldn't sell that in Australia. The Japanese market was actually developed because they understood fresh salmon. So, we've had a very long-standing export relationship with Japan. But, when we're talking about 50 tonnes as an entire production for the very first year that the industry began, we actually probably harvest 100-150 tonnes a night, six nights a week now.
David: Get out.
Frances: Just our company alone. So that's how it's grown.
David: That's a lot of fish.
Frances: It is a lot of fish.
David: How much of that is exported, how much is sold in Australia?
Frances: The greatest majority is actually sold in Australia. The market demand in Australia has been growing in double digits now for about the last 15 years. So, growing...
David: What would you put that down to? I mean, it's a great product, I'm sure you'd say. But is changing diet, moving away from red meat?
Frances: Yes, and I think people are understanding that it's now a family protein choice. So, it's easy to cook. It's a healthy protein and it suits a whole range from young people all through to the elderly. They call it a super food.
David: And you've convinced Qantas to sell that [crosstalk]
Alan: We [inaudible] much convincing.
David: But I mean I'm sure with business like that, you run into issues from time to time about environmental impact, impact on native fish species, whenever there's an escape. You must have blow back from environmental groups fairly regularly as well? How are you dealing with that?
Frances: Well, we try to work with the environment. We have to work with the environment. Our entire business and the industry are based on managing the environment. If we don't have the very best environmental parameters, we simply don't have a sustainable business. So, we're continuously improving. The industry has been successful in Tasmania because we've invested hundreds of millions of dollars in research and development. And we have great strong relationships with all the research entities such as the University of Tasmania, CSIRO and international institutes as well. So, it's been a learning journey and we're getting better and better at what we do all the time. We're going offshore now. So, our companies actually farming in some of the roughest warmest waters in the world now and we're leading the world with some of the technologies that are being developed here in Tasmania.
David: We can see a little bit in the piece there with the automation and it's happening in every industry and every business that's succeeding but it's certainly in yours as well. My thought, this is an interesting example, a great example of a business that's grown over a few decades and sells a lot in Australia but the story we've heard here today from others is about finding a niche and selling to the world. Businesses that have almost a 100 per cent of their sales in other parts of the world.
Michael: And look, what Frances is talking about is what we're seeing across Tasmanian agricultural products. That we need to be producing top-quality. It needs to be a very controlled brand. Based on organic, clean green, those sorts of messaging are so important. So, we need to be working with our scientists, working with R&D to make sure that we stay at the cutting edge of the best world production. We're seeing that rolling out with our milk products, with our distilling products, we have the best whiskey in the world at the moment through Lark distillery.
Frances: Our sparkling wines.
Michael: [crosstalk] But with all seriousness, we need to be focusing on top quality, because if we look at commodities exports from Tasmania, they're never going to succeed because of our freight issues.
Alan: I've just to say though. Also, this is a great example, I think, of how ecosystem of small and big business work together. Because one of the things that we all benefit from is a rising tide. It is a virtuous circle we were talking about today because we're buying these great products. We have 13,000 businesses that we buy products around Australia. 98 here in Tasmania. We spent $7 billion on Australian produce. For example, we're the largest purchaser of Australian wine outside of Coles and Woolworths. We consume them on our aircraft. It gives the showcase to the rest of the world about those products and it supports tens of thousands of jobs. That's fantastic but we're also doing it because we want the Australian economy to be successful. Our Frances company, as you have seen tonight, is an amazingly successful company. She's travelling around the world. Who is she travelling on? Qantas. Who is she helping with that? Qantas. So small business helps big business and big business helps small business and that's what I think people are forgetting in this country. How that ecosystem is interconnected. How small and big businesses work together to increase the pie for everybody, increase employment, increase the economy and that's great for Australia and if we keep supporting each other I think...
David: It seems to me just talking...coming back to the food, wine, whiskey... The quality of this brand and you both know a lot about brand and how important that is. How has this part of Australia managed to work on that successfully, to sell that successfully? What would be the lessons for other parts of the country?
Frances: Can I answer that?
David: Yeah, please.
Frances: I think that the reason we've been successful is because every single product that comes out of Tasmania into whatever marketplace it goes into, we're there telling the story of Tasmania - of our place, of our people, of our environment and of our products. And we're there... we're not competing. If we've got a Tasmanian product be it cider or be it cherries or be it salmon or be it liferafts or whatever it is. We're all talking the same story. We're all talking about the place. We're talking about Tasmania - its people. We've been doing that now for decades, and that's now actually got real traction because we've created this story about who we are. And I know that other states of Tasmania envy what we've done, but we've been working on this for a long time. It hasn't happened overnight.
Jennifer: I think the other thing is, this niche idea. Because for years we've been saying either we're going to be the food bowl of Asia, which is probably not...I don't even know what that means, or we can't compete. But if you get the right product of the right quality in the right channel with the right marketing... and one of the things that's really impressed me talking to Tim Reid, from Reid Fruits, who produces these amazing cherries, these asparagus produces... the brilliance of going in the counter cycle. So, selling into those markets, in December and January when those things are not available anywhere else in the world. I think Tasmanian producers have defied this idea that Australia can't be on the world stage in high-value added agricultural produce because they can. People are willing to pay a premium for these things and that's the sort of vision that people have overcome here.
Alan: I think the one thing that we got right here as well is the idea of purity and trust around it and I think they go hand in hand because a lot of the world you cannot - we're lucky. We can guarantee it, we expect it, it is here and having that trust is something else. I think it goes back even in our brand, Qantas' brand. What does it signify in general? It does signify premium and when people will pay a premium for it because there's huge trust behind that brand - the safest airline in the world. An airline that's operated for 98 years and while Tasmania's getting it right, it's getting that trust established with its markets. The trust of its supply chain, the trust of the quality of its products and that is really important and its consistent across the board.
Frances: And we're sharing that story. We're sharing that brand so what...
David: Just tell me, because you've mentioned this a few times, how do you do that? Do you all sit down every now and then and say, "Let's work together guys, let's hold hands"?
Frances: No and that's the amazing thing, we don't do that.
Frances: We come together occasionally, and we have a group that's called Brand Tasmania, but we just do that naturally because we're proud of where we are and who we are. We just do it. It's a real generosity of spirit, I think.
Michael: And I think that's the different.
Frances: It's a bit of an underdog thing. I think we've been the underdog for a while and when we started to get some traction, we all realised that this is great. Let's just keep talking about ourselves and talking ourselves up.
Michael: When I was a kid, it was almost embarrassing to be Tasmanian. We were known for growing potatoes and that was about it.
Frances: And having two heads.
Michael: We realised that over time we didn't need to try and be the beaches of the Gold Coast or the nightlife of Sydney or the food of Adelaide. We needed to be Tasmanian and we've become proud of who we are. And now I talk to kids in high schools and instead of talking about us growing potatoes as I heard when I was in high school in Tasmania, I hear about the [inaudible] fires, [inaudible] was called the best beach in the world a couple of years ago, three golf courses in the top ten in the world, Mona, the most amazing experience, Lark, the best whiskey in the world, [crosstalk]. Kids today grow up in a different world than I grew up and we're also proud of that. So that's the message that the whole of the community speaks.
David: One thing I want to get to. We'll take a quick break. One thing I want to get to after that is corporate social responsibility, whether it's your workforce, whether it's your customers. We've focused a lot on the banks, wrecking their corporate brand and social responsibility. So how do you protect that? We'll take a quick break and come back and come back with more.
David: Welcome back. We're live from Hobart this evening. You can't have any discussion about business and the challenges it faces right now, I think, without touching on what's just happened with the banks. It's been through this royal commission process. The report came out a couple of weeks ago, now we're seeing what's going to happen to change it all. At the root of it all, Jennifer, is the bad behaviour of the banks, their social license being broken, I suppose. What are the lessons for the rest of the business world out of all that?
Jennifer: Well, I think the first thing is that corporate social responsibility isn't what you do on the side, it's what you do every day. It's how you do your business, it's how you treat your customers particularly and I always say to companies, you have got to get a laser focus on your customers. You've got to listen to them. You've got to be very cautious about the sorts of things that just wouldn't pass a pub test in terms of conduct. And you've just got to keep at that all the time. And you've got to have clarity of purpose, you know, the purpose of the company is not a return on equity.
David: But this is the thing for many, it is.
Jennifer: Absolutely, and we've got to change that in corporate Australia. We've got to get a clarity of purpose, but also, we've got to get this focus on customers, absolute accountability to the shareholders, but we've got to keep remembering that for a long time in companies there were people who, in the branch corporate social responsibility. Well that's not what it's about, it's everything you do.
David: I mean, Alan Joyce, you're there as CEO of one of Australia's big companies, you've got to deliver for the shareholders, and if you don’t, they'll have your neck.
Alan: But they go hand in hand. I mean, you can't just focus on profitability for the expense of profitability soon it's sustainable. Shareholders are after sustainable profitability, and to do that you have the social license to operate, and if you endanger that and you don't operate that way, or if you don't manage your customers, you'll lose your customers. Or you don't manage your employees the right way, you lose your employees.
David: So, give us an example then of a moment where you've been willing to say, 'okay well sure that would deliver us a bit of shareholder return, but no, we're going to do this because it's the socially responsible thing to do.'
Alan: Airlines... the best example I have, I've given you an example of QF32. Which was an engine blew up on an aircraft. We had to make a decision about whether we were grounding the entire fleet while the aircraft was in the air. That decision was going to cost us a huge amount of money, we didn't know how much, but when our engineer knew what the issue was, which he was watching TV at the time when the engine exploded, could tell us it was a disc failure, could tell us how bad the issue was, and say 'we have no alternative but to ground the aircraft'. We didn't think of anything but the safety of our people and safety of our customers. We grounded, it cost us over $200 million. We were the only airline that grounded the fleet, the fleet was not safe to operate, and we put it back in the air when we thought it would be. Airlines have to do that, we have to do that and look at the safety of people every day, it's the number one thing that we have as a priority. We say it's the number one priority, it's more than making money, it's more than anything else. And if we ever compromised on that, our ability to operate to survive would be non-existent.
David: Frances, your business operates in communities all through Tasmania. Is social responsibility even more important for a business like yours, than a big global or national company?
Frances: Yes, it is, because it's actually even more personal. Because we're actually in regional areas of the state, and it's the same, I think, for all regional businesses. We actually know the people, we know the families, so we need to look after our customers and behave ethically. We need to maintain the very best relationships. Our biggest asset is our staff, but those staff have families and those families live in those regional communities. So, we now have our industry, and it's something that has become a very, a real concern for me over the last few years, because we're now such a vital part of the Tasmanian economy, we've also got that responsibility of making sure that we have a sustainable long-term business. Because the employment opportunities, and the benefits that flow into our regional communities are so significant.
David: If you fall over, the Tasmanian economy is really going to take a...
Frances: And we've already been there, with the forests industry before, when we've gone through those decades of angst with the forest industry. And I lived in a community that was broken. We had no jobs, we had fly in, fly out families, we had suicides, we had bankruptcies. I actually physically know people that it happened to, and now that our industry has become so significant, in those regional, the same regional communities of Tasmania, and offered all those highly skilled opportunities, we have that responsibility. We can't just talk about it, we actually have to live and breathe it. And by doing that, and by managing our environment and being honest about the way we run, and ethical about the way we run our business, then we will continue on into the future.
David: Now, part of this discussion, we were talking to this earlier in the day, Alan Joyce, when it comes to social responsibility nationally, you have taken the decision, your company has, to take an active stance on some big social issues like gay marriage, gender equality, indigenous rights as well, why? What's the thinking behind a company getting involved in these things?
Alan: Well I think, the public, our employees, they're all calling out for leadership in these spaces. And they want to work or be associated with a company that has an involvement in social activity. I think a piece of Pew research recently said, for generation Y and Z, 80 per cent of them want to work for a company that has a social impact. So, we're all fighting for talent out there, we're all fighting around the globe for talent, and if companies are not active in the space and they're not going to attract the best people. Now similarly, for customers, about 30 per cent of customers, our customers, are minority groups, LGBT, disabled, or indigenous, and they're five times more likely, according to a Deloitte piece of study, to actually associate or go with a brand they believe represents them.
David: It makes business sense.
Alan: It's morally right, and it's getting us a bigger social license to operate, to do the right thing and to defend the rights of minorities, but it's also, actually, a right business thing to do. And shareholders, when we were in the middle of the marriage equality debate, and had a lot of criticism from it, and people were saying 'you're misusing shareholders money', I went to Boston, talked to one of our largest shareholders, and he said to me 'I don't think you're doing enough in this space, and I'm one of your largest shareholders'. Shareholders are investing in companies because they believe good companies, that are more active in this space, develop trust, will outperform bad companies that don't do this. And all of the research shows you.
Frances: It shows that.
Jennifer: If there's a line in the sand, today, about corporate social responsibility, the royal commission, it's this. That doing the right thing by your shareholders cannot be successful if it's not the right thing by your customers, and if it's not the right thing by your communities, because those returns will be short lived. And that's the lesson all over the world, that these things are not exclusive. What shareholders want is growing returns and growing capital, and you can't do that if your reputation is trashed.
David: That is a good note to finish on, because we are right out of time. Thank you all very much for a great conversation tonight, as I say. I wish I could stay here for much longer, I'll be back very soon, I'm sure, to enjoy all Tasmania has to offer. So, thank you all. Thanks for your company as well, we've got a quick break and then Paul Murray live, coming up.