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Grattan on Friday: Qantas not such a special case in Abbott’s eyes

Hardly a week goes by, it seems, when there is not some fresh announcement of job shedding. Qantas’s loss of 5000 is the latest blow. But amid the gloom on Thursday, Tony Abbott optimistically reaffirmed…

Tony Abbott is trying to switch the focus from a Qantas debt guarantee to the repeal of the carbon tax. AAP/Alan Porritt

Hardly a week goes by, it seems, when there is not some fresh announcement of job shedding. Qantas’s loss of 5000 is the latest blow. But amid the gloom on Thursday, Tony Abbott optimistically reaffirmed the Coalition’s election promise. “We will create a million new jobs within five years,” he said. “We will create two million new jobs within a decade.”

In the face of the much-anticipated Qantas report, Abbott sought to take a glass-half-full approach - the prospect of employment opening up for displaced workers. More concretely and surprisingly, he flagged a tougher-than-anticipated position on help for the ever-begging airline.

It has been expected that the government would - albeit reluctantly, dragged “kicking and screaming”, as Treasurer Joe Hockey earlier put it - give Qantas a debt guarantee once it had issued its results and its restructuring plans.

Hockey had mounted the argument that Qantas is a special case. A fortnight ago he set down several criteria for government involvement in a business enterprise.

Had the parliament imposed special restrictions on the business that competitors did not face? Was the business fundamental for the economy, providing an essential service? Were other governments actively supporting competing players in the industry (a reference to Virgin Australia’s ownership structure)? Was the business trying to fix up its own balance sheet?

Hockey said that in Qantas’s case, the answer to all four questions was yes. The prospect of a guarantee - which Qantas wants to improve its credit rating and thus lower its borrowing costs - came to be assumed.

But Abbott was decidedly cool on the idea on Thursday. He told Parliament the government would help Qantas by seeking to create a level playing field, but “why should the government do for one what it’s not prepared to do for all?”

The signal was clear, and confirmed by government sources. Abbott is not in favour of extending a debt facility any time soon.

There had been a sign when the PM told his party room on Tuesday that “we’ve had a difficult situation with certain iconic businesses coming to us as an ATM of last resort. It takes courage to say no but once you say yes, there’s a queue a mile long.”

It had been assumed that Qantas was the exception. But noises from Virgin and Regional Express (Rex) made it obvious that helping Qantas would open new demands, even if the assistance was sold on the lines that the Flying Kangaroo is a special case.

What the government does plan is legislation to relax the ownership restrictions on Qantas. Currently, foreign investment is limited to 49%, while there is a 35% limit on the combined stake foreign airlines can have and a 25% maximum for an individual foreign entity.

Labor – which believes the debt guarantee should be given - is opposed to letting Qantas go out of Australian hands. Even in the post-July 1 Senate the numbers are not there on the crossbench.

Clive Palmer, who will control at least three Senate votes in the new upper house, on Thursday reiterated his opposition to lifting the foreign ownership restriction. “We think it should stay in Australian hands,” he said. “It’s got to stay the national carrier.” If necessary, the government should buy equity in the airline, Palmer said (something that won’t be happening under any circumstances).

But there may be some room for negotiations with the opposition on changing the Qantas sale legislation. Labor is indicating the ALP would be willing to look at the supplementary limits. Asked whether the opposition would consider altering the 25% cap on individual foreign owners, Bill Shorten said: “If the government says that’s the issue that they need support on we would be happy to listen to it.”

The government-Qantas story still has a way to run, with cabinet expected to discuss the situation next week.

As Abbott increased the pressure over the Qantas sale legislation, he also (of course) grabbed the opportunity to focus on the carbon tax repeal. “We’ll help Qantas by saving it some $270 million in carbon tax costs over two years.”

The carbon tax message more generally will be ramped up in the next few weeks for the Western Australian Senate election, the April date of which Abbott is about to announce.

Qantas wasn’t the only issue on which Abbott was assertive in Thursday’s question time. When he was asked whether he would abandon his costly paid parental leave scheme, after a report in the Australian Financial Review that the Commission of Audit had found it too generous given the state of the budget, he replied bluntly: “No, I will not,” adding he was “very happy to elaborate” on why.

“This is a policy that I deeply believe in… This is a policy whose time has come,” he said. “It will be good for everyone. I absolutely stand by this policy.”

The strength of the Abbott message was directed less at those such as the couple of backbenchers from the Nationals who are out muttering about the scheme (John Williams from NSW and Queenslander George Christensen) than at any senior colleagues who might have their eye on it for savings.

Don’t try to mess with this, he was saying, even if you think it doesn’t fit the “post-entitlement” age.

Listen to the new Politics with Michelle Grattan podcast with Palmer United Party leader Clive Palmer here.