Bogan-baiting is Australian leaders favourite sport. What’s remarkable, though, is how easy it is to do. Just frame whatever entity it is that you wish to favour as a “battler” and all sorts of rules can be bent, broken or shoved permanently aside.
Take the Qantas debate today, from the AFR:
The federal government is leaning towards a two-pronged response to Qantas Airways of a debt guarantee to provide short-term relief and pushing Parliament over the longer term to repeal the Qantas Sale Act that keeps the company Australian controlled.
But the government is determined to wait until after February 27 when Qantas is scheduled to release its half-year results, in the expectation those results will be so poor they will generate support for action.
Providing a debt guarantee is now viewed within government as inevitable, even though there remains a deep reluctance to expose taxpayers to any liability.
…It is prepared to pay for that guarantee in the same manner as Australia’s banks paid for a guarantee during the global financial crisis.
Sigh. So what? If the guarantee delivered no out-of-market better outcome then why have it? Paying a nominal fee is a fig leaf to cover moral hazard not prevent it. If you’re going to bail out the airline, and the Senate may give the Government no choice, then fire the management, take a discounted equity stake and board seat, then privatise the stake later when you can lift the foreign ownership restriction. Either that or buy back the airline now. It’s only worth a lousy $2.75 billion.
That is what would happen if the Government really cared about reigning in corporate welfare, which is another way of saying it believes in preserving market discipline and structure.
But there is an inconvenient truth here and it is that the Government doesn’t want to benchmark its principles too high lest it compromise its inherited legacy of other dodgy deals with Australian plutocrats.
Imagine, for example, that the Government did the right thing with Qantas and then China ran into a debt reckoning later this year. The freeze in Australian bank liquidity would quickly necessitate a renewal of the bank guarantee. S&P made absolutely plain yesterday that the bank’s high credit ratings still rely on such an outcome. With a correctly handled Qantas deal fresh in everyone’s heads the Government is going to look pretty stupid coughing up bank guarantees on much friendlier terms.
None of this is about markets or the national interest. It’s about how two vested interests can concoct a plan to kick the can without anyone taking responsibility for their actions and it can be hidden under an avalanche of bogan-baiting about “battler” corporations.
Chalk up another win for the Australian plutocracy!
