Treasurer Joe Hockey has signaled the federal government is ready to throw a lifeline to Qantas:
Qantas has sought a government-backed debt guarantee as it battles Virgin Blue for market share, and in an exclusive interview with Fairfax Media, Mr Hockey said in his view, the airline’s request for assistance met four essential pre-conditions.
Mr Hockey said the Australian airline now faced a “2000 pound gorilla” in the form of Virgin, which is largely foreign-owned.
While his instinct was for government to not support individual businesses, Mr Hockey said the struggling airline had a “ball and chain” around its leg in the form of the Qantas Sale Act.
…“Number one is existing restrictions on the business imposed by the parliament. Number two is if it’s an essential national service, and number three is if it is in an environment where other sovereigns are engaging in direct competition to the massive disadvantage of an Australian business, then you need to take that into account,’’ he said.“And the fourth thing is the business has to do its own heavy lifting on its own reform. We are not going to run the business or tell them how to reform.”
Some Liberal economic dries told Fairfax Media they were grudgingly “coming around” to the idea of giving Qantas a government-backed debt guarantee.
I have four objections:
- number one: the parliament can lift the restriction;
- number two: it is not an essential national service. It will be fulfilled by other operators at the loss of few jobs;
- number three: Qantas has 65% market share in domestic, a virtual monopoly, it is the 2000 pound gorilla not Virgin, and
- number four: it’s not reforming on its own, the taxpayer is taking all of the risk.
But OK, if you think it can’t be done any other way, then fire the management and take a board seat to frighten the bejesus out of any other potential rent seeker.
