Last night on the 7.30 Report, Joe Hockey argued that:
… businesses could not expect to receive a cheque from the government when they were under financial distress.
“It’s as simple as that,” Mr Hockey said. “One taxpayer’s cheque to another taxpayer detracts from the economy as a starting point. The fact is, we are not going to be writing blank cheques to businesses that are under financial stress because every household is under some form of stress.”
The same approach of “no free lunches” would apply to personal assistance as well, he said.
“The days of just handing out cash, helicoptering money out, is just not possible.”
Aeroplane money is fine, though. From the AFR:
The federal government and Qantas Airways are working together on a final proposal that would assist the airline in levelling the playing field against rival Virgin Australia Holdings without guaranteeing all of its debt.
The proposal is believed to involve the provision of a standby debt facility with a government guarantee that Qantas could access for a fee. It is designed to help bolster the airline’s credit rating and it could lessen the need for the airline to sell key assets such as a stake in its frequent flyer program. But it would not offer a guarantee on Qantas’s existing $6 billion of on-balance sheet debt.
The assistance would be made in the recognition that taking action to truly level the playing field by lifting foreign ownership restrictions on Qantas would take months at best and may not happen due to opposition from Labor and the Greens. Air New Zealand, Singapore Airlines and Etihad Airways own 67 per cent of Virgin.
This has nothing to do with ensuring functional markets that benefit tax-payers. It’s a bailout of failing management that strokes wider Australian sentiment. For businesses it’s another red rag to the rentier bull.
Either Qantas should be cut loose of its foreign ownership rules and allowed to compete properly. Or, it should be guaranteed and the axe taken to management via a discounted equity stake for tax-payers.
