Emirates Airlines

18 Jul 2012 questionsarchive

I seek leave to make a brief explanation before asking the Minister for Tourism questions on the subject of Emirates.

The Hon. J.M.A. LENSINK: Yesterday, the minister had a question asked of her in relation to the airline announcement. My questions are:

1. What total funding is being provided for Emirates to come to South Australia, and how much of that came from the tourism budget?

2. What measures have been put in place to ensure that money is repaid to South Australians should Emirates renege on this deal?

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for Tourism, Minister for the Status of Women) (14:31): I thank the honourable member for her important questions. In terms of the funding, the honourable member has been in this place long enough to know and to understand that these matters involve commercially confidential information that, if divulged, could significantly disadvantage this state and end up costing this state significantly more funds in the future. So, obviously I am not prepared to disadvantage our taxpayers further by divulging commercially confidential information.

In terms of the sort of protections we have put in place, I would say that, in relation to Tiger, the Tiger situation related to an agreement to provide support to Tiger for an aircraft base over a term of several years. When Tiger closed that base after three years, clawback was then required, and this arrangement was, as I said yesterday, negotiated by the department of trade and economic development. That arrangement was completely unrelated to the Tiger support package for flights to Adelaide for which there was no dispute at all. I just wanted to set the record straight in relation to that.

Emirates is not a low-cost carrier, and it is structured in a very different way. It has a proven track record, and it is conservative in its analysis as to whether routes are viable. It has a massive capitalisation and growth strategy, and it is many, many times larger than Tiger. It is an international airline that operates in every major market in the world, and you cannot compare that with Tiger.

However, a number of conditions have been put in place to ensure that, if Emirates does not make good the terms of its contract, certain provisions will apply and certain moneys will need to be returned. So, very specific conditions are outlined in the contract to ensure that protections will occur. The protection for the state is twofold. The first is that clawback provisions will be automatic should Emirates not fulfil its obligations, and the second element of the protections that are in place is that benefits to the state from Emirates will be immediate and that any risk is limited to future loss rather than the present.

So, that is obviously in pure economic terms. Obviously, Emirates pay their way for as long as they operate in Adelaide and, if that doesn't work out, the loss is in terms of loss of economic benefits that we would suffer. As you can see, the scenario is completely different and we have put in place a number of protections to ensure that the conditions will be upheld.