Star Entertainment bets on JobKeeper to line its staff’s pockets

John O’Neill is hoping that most of the 8000 employees Star has stood down will qualify for the JobKeeper program.

The Star casino at Pyrmont, Sydney

Star Entertainment chairman John O’Neill is hoping that most of the 8000 employees the company stood down last week will be able to qualify for the federal government’s JobKeeper program.

Now overseeing the NSW and Queensland gaming, hotel and entertainment group from his home in Sydney’s northern beaches, Mr O’Neill said Star registered with the Australian Taxation Office for the program following Scott Morrison’s announcement on Monday.

Under the scheme, up to six million workers will receive $1500 a fortnight for the next six months as part of an unprecedented $130bn wage subsidy deal designed to “keep the engine” of the economy running.

“The Star has registered for the JobKeeper program and we now await further advice from the ATO,” Mr O’Neill said in an interview with The Australian.

Monday’s announcement came after Star took the decision to close its properties in Sydney, Brisbane and the Gold Coast last week, standing down most of its 9000-strong staff in the wake of strict new rules on social distancing and gatherings.

“It was heart-wrenching,” Mr O’Neill said. “We had to shut down our three properties with only 12 hours’ notice.

“The consequences for our dedicated people have been extraordinarily painful.”

Star is hoping that as many of its employees as possible will qualify for the JobKeeper scheme.

“The devil lies in the detail. But at first blush this is a game-changing initiative designed for ­exceptional times,” Mr O’Neill said.

“Government and business are in this together, cheek by jowl, with the mutual twin objectives of keeping the economy as productive as it can possibly be and winning the war against COVID-19.”

Mr O’Neill, who is also chair of Queensland Airports, said the Prime Minister and Josh Frydenberg “deserved to be applauded” for the JobKeeper scheme and their handling of the crisis.

Like many business leaders, Mr O’Neill and Star chief executive Matt Bekier spent Tuesday trying to ascertain the details of the scheme and how it could benefit its workforce.

Star had already announced last week it would be giving two weeks’ “pandemic leave” to staff stood down and would cut the salaries of executives and directors’ fees. Star also said it would be deferring the payment of the interim dividend from April 1 to July 2.

The company said it would revoke its policy of paying out a minimum of 70 per cent of profits in dividends “until further notice”.

The move was part of the company’s commitment to “maintaining a balance sheet that positions the company for a post COVID-19 recovery”.

This followed its announcements last week that it would be cutting operating costs and reducing capital expenditure to preserve cash.

As of March 24, the company had available cash and undrawn committed debt facilities of $480m.

While some other businesses may not be able to make it through the crisis, no matter how much government assistance they get, Mr O’Neill was confident that Star would reopen its doors and resume a healthy business once the crisis passed.

“Star is big enough to come out of the other side of this,” he said.

“But my heart goes out to many of the small and medium-sized businesses which have had to close their doors. The impact on them is devastating.”

Mr O’Neill recalled happier times of only a few weeks ago, early last month, when he was at the opening of the new Queens Wharf visitor centre and display apartments in Brisbane.

The $3.6bn project, which is being built by Multiplex and involves a total of 2000 apartments, is due for completion at the end of 2022.

“We have sold about 80 per cent of the apartments in the first tower,” he said.

“I remember saying at the time that people who were not able to travel overseas on holidays should come to the Gold Coast.”

Since that day, Queensland has closed its borders to outsiders and federal and state governments have imposed stricter restraints on personal movement.

While Star has cut all capital expenditure not contractually committed, the Queens Wharf project is continuing, with the construction industry so far continuing as normal.

“It’s the one bright spot at the moment,” Mr O’Neill said.

“It is on time and on budget.”

Mr O’Neill said business leaders had to cope with continual changes, including government measures to cope with the virus.

“Everything has been coming at such a rapid speed,” he said.

“We have seen governments having to take stricter and stricter measures and they may have to take more.”

John O’Neill works from his Sydney home

For Mr O’Neill, running a business that is now largely on care and maintenance, life is about staying at home most of the time and having a constant stream of phone and video meetings.

He makes the trip to Star’s headquarters in Pyrmont once a week to check in with Mr Bekier, while regular board meetings are held by phone hook-ups.

Mr O’Neill, whose career has included stints running the State Bank of NSW, Australian Rugby Union and Football Federation of Australia, said there was “no playbook” for political or business leaders to get through the current crisis.

“We are in uncharted waters,” he said. “Talk about hardship. The crisis has not come about through the incompetence or neglect or ­irrational behaviour of anyone.

“It has come about through circumstances beyond our control.”

Mr O’Neill said the crisis showed the importance of having a strong banking system.

“We had the sharemarket crash of 1987, then the economy came crashing down in the early nineties,” he said. “The bubble burst in the banking sector. There was red ink everywhere.

“Running a bank during those times was white-knuckle territory.”

Mr O’Neill remembers the banking crisis of the time, which resulted in the state banks of Victoria and South Australia having to be taken over, and even Westpac’s future was in doubt.

“The State Bank of NSW was the last state bank standing,” he said.

“Governments and regulators were wise enough to avoid a systematic problem in the banking system and life got back to normal pretty quickly.

“If ever there was a time we needed to have a strong banking system, it is now.”

Mr O’Neill said the crisis also showed the importance of not relying too heavily on the Chinese market.

He said Star had moved some time ago to diversify its market to other Asian countries and was moving away from the reliance on highrollers towards the “mass premium” market.

“Some people have been saying since the onset of the crisis that people should not have all their eggs in one basket,” he said.

“We heeded that messaging some years ago.

“I am optimistic the global tourism market will come back again, but the advice which should be etched in all of our minds is ‘don’t put all your eggs in one basket with China and have a diversified portfolio’.”

Mr O’Neill said the challenge for companies was to be able to respond quickly to the constantly changing environment.

“You have to be able to move exceedingly fast to cut your cloth according to changing circumstances,” he said.

He said recent history had shown that economies could rebound quite quickly once a crisis was over.

“You also have to be planning for the recovery,” he said.