Transcript Of Press Conference By Australian Deputy Prime Minister John Anderson And New Zealand Finance Minister Michael Cullen.

The lead negotiator referred to in the formal press statement is Rob Cameron from Cameron and Co, a merchant bank which has been providing expert advice to the Treasury on the aviation industry.

This is not a full transcript but an attempt to report any comments that add to the press statement.

MC. I should emphasise that both governments have an interest in this issue and at the end of the day one of any number of possible changes to Air New Zealand will involve regulatory approvals on both sides of the Tasman. So this is not purely an issue for the New Zealand Government at all.

On likely timing of a decision:
Air New Zealand produces its financial statements in early September. It is important for the markets that there are some clear roads forward before that time.

JA. Australia has some very real interests in this. We want to see a soundly competitive regional aviation outcome, not just in the short-term but in the medium to long term as well. As part of that process we recognise that New Zealand has a very good airline in Air New Zealand and understandably want to see it secure a strong future with good growth prospects as your national flag carrier.
We also have a perspective which sees us wanting to ensure that Ansett is recapitalised and able to carry forward in a meaningful way into the future, and we also want to see Qantas not confronted by a behemoth at some stage in the future.
To that end, Australia's perspective, which I have explained to the Minister, is strongly that the Qantas proposal should be fully developed and considered. That is not because we in any way do not respect Singapore. We do very much and we would welcome direct investment by Singapore in Ansett but we have a concern - five, ten 15 years down the road - that in regional terms we have a strongly competitive aviation sector.

JA. Qantas needs to recognise that their proposal faces considerable challenges. They have to explain how the competition aspect of their proposal would work and they also have to be able to demonstrate why it would be in New Zealand's interests. Qantas has to look at the short-term issues of trans-Tasman and Auckland beyond competition. That is part of the challenge and that has got to be evaluated.

JA. Singapore, Air New Zealand and Ansett in the longer run would be potentially a very large business indeed.
[Q] What's wrong with that.
JA. Well we have to consider the competitive impact on Qantas. We want to ensure that Qantas is not at some point in the future facing a situation where it is not able to compete effectively.

What effect would it have on bilateral relations if New Zealand were to pursue the Singapore option?
JA: Look, we have a very close relationship. I don't think there is any need to get into hypothetical difficulties that might arise.

Do you want Ansett sold to SIA?
JA. Well, we think that is potentially a better option in everyone's interests and we would welcome that. We have a very high regard for Singapore.

Is it an Australian Government preference that Qantas should take a 25% share in Air New Zealand?
We think it should be very strongly explored because long term it will offer a better competitive balance.

Singapore Airlines has all the cards. They don't have to listen to any of this.
JA: Well we think Singapore would be very interested in the views of the governments in the region about how we see a strong aviation sector unfolding in the region.

If SIA won't sell its Air New Zealand shareholding to Qantas and won't buy Ansett, how can the Qantas proposal go ahead?
JA. Well that is an issue Qantas needs to work up and they need to clearly demonstrate why their option is attractive for New Zealand and workable for the other players.

MC: You're going to hear both Singapore and Qantas make all kinds of claims and assertions. They are to be regarded as negotiating positions as much as anything on their part, not a statement of where they may end up finally. And of course neither Government can say at this point what the outcome will be. That is why there needs to be negotiations to work out the detail.

MC. The most important outcome for New Zealand is to preserve the Air New Zealand brand and its global reach, and the expansion of that global reach and to do what is possible to encourage domestic competition within New Zealand.

What about trans-Tasman?
MC. Trans-Tasman we have difficulties obviously with the Air New Zealand-Qantas proposal. That is why we need to enter further negotiations and discussions. Those [unclear] on the face of it appeal to the Singapore proposal but of course if Singapore was in control of Ansett it would not be an unreasonable assumption that it would want progressively to move into the trans-Tasman traffic in any case.

Have you given a signal that you don't want Singapore to buy further into Air New Zealand?
MC. No, definitely have not given that signal. Definitely not at all. The
issue of Singapore taking an increased share in Air New Zealand is alive and very much on the table and part of the further negotiations and discussions which will occur.

Are you saying you now have less difficulty raising the cap?
MC. I think you have to look at it in the context of what kind of different proposals there may be. Singapore has made a specific proposal. I continue to say it would be very very difficult for that proposal to be approved by the New Zealand Government. Whether there are other configurations which might be possible is a matter to explore further with Air New Zealand and Singapore.

Journalist: Air New Zealand prefers Singapore.
MC. It depends on who you are talking to in Air New Zealand of course.
Journalist; I was talking to Mr Toomey.
MC: I'm sure that's the message you got from Mr Toomey.
Journalist: Are you saying the board has a different view?
MC. I'm saying there are a variety of positions and I'm saying there are a variety of possible outcomes.

JA: I know the various airlines will push their particular barrows but you need to go and have a very close look at all of this yourselves because, as the Finance Minister here has said, it is very very complicated.

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