National Party MP Andrew Broad supports helping Qantas, but warns against across-the-board privatisation of government-owned assets.PT11M54S http://www.canberratimes.com.au/action/externalEmbeddedPlayer?id=d-32mx1 620 349 February 13, 2014
Bad luck might come in threes but for the federal government wounded by the SPC-Ardmona debacle, and claims of policy indolence over the car industry’s demise, troubles at Qantas threaten the biggest danger of all.
On SPC-Ardmona, the Victorian government went a long way to vindicating Canberra’s intransigence on Thursday by forking out a handy $22 million of taxpayer dough to keep it going.
Treasurer Joe Hockey signalled on Thursday he will put in place a debt guarantee for Qantas. Photo: Andrew Meares
Joe Hockey had opposed a requested $25 million on principle, but such purity was absent from the Victorian consideration. Guess which of the two governments is facing voters this year?
Making the Victorian government pay was not in Hockey’s game plan but at least, the commonwealth retained its honour.
But if Hockey’s ‘‘end-of-entitlement’’ principle seemed immutable, it wilted against the exceptional case of Qantas.
The company’s chief executive Alan Joyce had been warning of a storm lining up on the business for years.
And now that storm has arrived, prompting the flying kangaroo, and the Abbott government to consider the previously unthinkable.
There are two hemispheres of Qantas’s dilemma, one of which it wants sorted by Canberra, and the other, which it will largely have to do itself.
On the government side, Hockey's intention to provide a sovereign debt facility, is a significant win for Joyce. Just as Virgin, which is now livid.
The backing will allow the stricken airline to rebuild its credit rating after plunging from investment grade to junk status last year. And it will save it money too through cheaper finance, even though it will no doubt be expected to pay for back-stop, as the banks did during the GFC.
Nonetheless, it is beyond obvious that Hockey’s intervention contradicts the tough signals he’s been sending out about ending corporate welfare, and he knows it.
His justification is four-fold: the straight-jacket of the Qantas Sale Act; the effective sovereign backing of its chief competitor Virgin; Qantas’s unique status and responsibility as the national carrier; and the airline’s energetic efforts to repair its own balance sheet - something Canberra said was missing from SPC-Ardmona for example.
Even so, the Treasurer admits he has had to be dragged ‘‘kicking and screaming’’ to the affirmative assistance camp.
For the airline’s part, Qantas has flagged a sharp financial consolidation preparing to slash costs $2 billion.
Inevitably this will be painful, causing job losses, and presumably forcing changes to work practices long resisted by unions.
As Joyce showed by grounding the airline for three days in 2011, he is not averse to radical action to drive change and to focus the minds of policy makers and employees.
While a repeat of that is unlikely, nobody should be under any illusion that change will be easy.
In a fortnight, Qantas will release its half year results showing the depths of the airline’s bind.
And it will also lay out what it plans to do about it. Hockey will be demanding it see these things through, as a quid pro quo for government backing.
All in all, it is not going to be pleasant for anyone, not for Hockey, not for unions, and least of all, for Qantas employees.
It seems though that the age of entitlement has a way to go yet.