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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.

Join the conversation

26 Comments sorted by

  1. David Stein

    Businessman

    Hockey's four-question checklist could only really relate to Qantas and it was obviously purpose built. Qantas had already ticked the first three boxes, then yesterday announced its plan to tick the last question on the checklist.
    I'm inclined to think their turnaround plan was designed with the government in mind - to ensure it met the 'fix the business' criteria Hockey had laid out. Not only are 5,000 jobs to go, but there is to be a 'wage freeze' - wages and supposedly generous union agreements…

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    1. Michael Bartlett

      PhD Candidate at ANU

      In reply to David Stein

      If you ask me, Abbott and Hockey were putting on an obvious 'good cop bad cop' routine which Joyce fell for hook, line and sinker.

      It would be nice if someone in the mainstream media would call them out for playing chicken with Australian jobs, but they continue to treat them with kid gloves.

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    2. Ronald Ostrowski

      logged in via Facebook

      In reply to Michael Bartlett

      I suspect that Joyce and his Board will be asked by the unions, investors and a range of expert independent commentators questions in respect to previous poor fuel guzzling aircraft investments and strategic decisions such as the failed Jetsar entry into the Asian market. The unions wish to have hear justication for why 5000 jobs need to go in terms of workforce analytics and planning, and for specifics about Joyce's business plan.

      It seems that Joyce, much to Virgin's chagrin, was really after…

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    3. Garry Baker

      researcher

      In reply to David Stein

      Alan Joyce at Qantas is just one of the foot soldiers for the new paradigm Mr Abbott's team have in mind

      “We will create a million new jobs within five years,” he said. “We will create two million new jobs within a decade.”

      Sure, we can readily believe this declaration when the mass sackings and unemployment queues have ultimately racked up the playing field with enough folk who are willing to work for $3 an hour. Under these circumstances, yes a million or two jobs, could come to life…

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    4. John West

      logged in via email @outlook.com

      In reply to Garry Baker

      I have to disagree with the underlying sentiment expressed!
      If Abbott and Co are predicting a Martian invasion on the 7th of July this year, I believe them. Wouldn't you?
      What a horrible bunch of misfits we elected!
      Now we suffer the consequences - serves us right!

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    5. David Stein

      Businessman

      In reply to Michael Bartlett

      Michael, the evidence now seems to point to the fact that the entire restructuring plan was crafted purely to get the government debt guarantee. Meetings with union leaders reveal Qantas management can't identify the 5,000 positions which were announced to be cut. In other words, the strong evidence is the Qantas turnaround plan was simply designed to give political cover to a potential government debt guarantee.
      The Australian also has an article explaining a meeting which took place in the Qantas…

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    6. David Stein

      Businessman

      In reply to Garry Baker

      Garry - it seems almost unreal that an Australian Prime Minister would be running around telling workers they get paid too much, and that what business needs to do is go about slashing the pay and conditions of their workforce. As if that's going to save the Australian economy. Have we stepped through the looking glass?
      It obviously hasn't occurred to any of these supposed economic geniuses in the government that lower incomes lead to lower spending, and lower growth. They are not only trying to cut government spending in a misguided 'growth through austerity' policy, they are trying to get the private economy to shrink as well.
      Unbelievable! Total incompetence.

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    7. Garry Baker

      researcher

      In reply to David Stein

      Right now Qantas are stuck with engineering payrolls of $95k - whereas the very same engineers for Singapore take home $47k - and the middle east airlines, quite a bit less.

      This is one of the competition dilemmas Alan Joyce faces, and as far as Mr Abbott and Hockey are concerned, it's an across the board problem for most industries in Australia. Thus their front line attack on unions (bring them to their knees) - ie: Pull their work condition demands back to manageable levels, and award them…

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  2. Murray Barnard

    logged in via Facebook

    Abbott's dishonesty knows no bounds and Labor opposition is not hard nosed enough to outwit him. Psychopaths can be out-maneouvered, often by just saying no, is there no-one on the Opposition benches with the guts to really take this buffoon on! Labor needs to take it eyes off popularity contests long enough to confront these destructive looneys. Stopping their path of destruction is more important. Abbott is the master of wedge politics. One has to wonder how his mind works, why for instance, especially in this self proclaimed world of budget emergency, Abbott is the only one who sees the parental scheme as a good thing? Could it become a tipping point for Abbott? One hopes so.

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    1. David Lees

      Consultant & Coffee Drinker

      In reply to Murray Barnard

      Good points Murray. But what Labor really needs is a leader with a bit of mongrel in them. i.e. Someone that really dislikes the conservatives and what they stand for and there is plenty to dislike.

      Whilst he has many flaws, I was dissapointed that 'Albo' (even though he was overwhelmingly supported by the 'rank & file' did not get the gig ....

      problem is when your party on so many levels has moved closer to the government its hard to put up the good fight.

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  3. Pat Moore

    gardener

    Senator Nick Xenephon called for a judicial enquiry yesterday concerning the way the books have been presented to apparently shift profit and loss, saying that there are over 129 entities in Qantas, that Qantas International was made to look sicker and Jetstar made to look healthier and why was it that Jetstar's profit fell from $128m to a loss of $16m in 6 months. A case of creative accounting. Who's been doing the books and for what purpose?

    This is a process of running an entity down into the ground to facilitate capital acquisition/asset stripping.

    Just another item on the IPA shopping list.

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    1. David Lees

      Consultant & Coffee Drinker

      In reply to Pat Moore

      Nick Xenephon has been on QANTAS's case for quite some time and rightfully so .... there has definitely has been some 'creative accounting' from one entity to the other ....

      Just what is the 'real' financial situation of QANTAS .... hell if we are having royal commissions into the unions why not QANTAS?

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  4. Greg Young

    Program Director

    "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.”

    Tony Abbott, 27 Feb

    ----------------------------------

    “There have been economic shocks and there will be more to come,’’ he was quoted as saying.

    But he added “we can’t abandon the truth that governments don’t create jobs, businesses do’’.

    - Tony Abbott, reported in the SMH, 11 Feb.

    So which is it?

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  5. Geoff Anderson

    Brain Surgeon

    I wonder if their arrogant disregard for the impacts of the decisions made by Abbott Cabinet’s is due to the eltist make up of the Cabinet itself.
    It’s hard to find a ‘worker” in Cabinet. Most are private school educated university graduates, with many in highly paid careers like law and the corporate world. Most slotted in to highly paid jobs after their taxpayer funded university courses, and lived a comfortable life before making the transition to Canberra. And of course only one Cabinet member…

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  6. Lincoln Fung

    Economist

    I think the PM has shown inconsistency in his approaches to different businesses, such as to the chocolate maker and another food processor business.
    Fundamentally, his approach to the very generous paid maternity leave in the context of serious budget deficits and his attack on government debts before he was elected the PM is another example of fundamental inconsistency.
    He seems still playing the same hard politics as an opposition leader even now he is the PM. This was display when he spoke in parliament on the Qantas guarantee issue, though it was likely that he was trying to force the oppositions to support for a legislative change.
    He should be positive and constructive as the PM to leader the government and the country.
    I think he is likely to turn to being pragmatic when he sees it is impossible for the senate to support a change to the Qantas sales act in terms of foreign ownership. It will be interesting to see how he backs down on this.

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  7. Tony Bryer
    Tony Bryer is a Friend of The Conversation.

    Software developer

    Cheap point scoring from Tony Abbott as usual. Rex and Virgin pay Carbon Tax too, so when it comes to internal flights removing it won't improve Qantas's competitive position ... OK it might if their fleet is thirstier and older than their competitors, but giving an advantage to those who invest in the most efficient aircraft would seem to be a positive argument for the tax. And given the need for deficit reduction, whatever replaces the CT may impact airlines just as much or more.

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  8. Lee Emmett

    Guest House Manager

    Given that the LNP 'Real Solutions' document was constantly using figures and arguments from the World Economic Forum, perhaps it's time for journalists to probe deeper and discover the 'Real Agenda' of this current government.

    Membership of the WEF mainly represents the interests of multinational corporations with billions of dollars of turnover, and their Mission statement is to encourage 'communities' to adopt political and social agendas in the globalised economy.

    Given the level of integration…

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  9. Natasha turnbull

    Student

    Abbott government is trying to win IR war against Labor and unions in a smarter way.

    They have learnt from the WorkChoice lesson in 2007 election in that businesses and employers were silent and not putting their share of effort. In the end, coalition got defeat badly.

    Now Abbott government basically is telling business/employers that you need to take tough measures to get your house in order first before getting government's handouts.

    SPC and Qantas are the two examples of the government's new approach. Ant it is winning without giving Labor a chance to say WorkChoice scare.

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    1. David Stein

      Businessman

      In reply to Natasha turnbull

      Oh, so Qantas got a government handout after 'getting its house in order'?
      You seem to have exclusive inside information that's not even available to Qantas. I look forward to your next scoop...
      And I agree the ants are winning - in my house anyways...

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  10. John West

    logged in via email @outlook.com

    I am sorry, but I don't give a damn about Abbott's weird thought bubbles; and
    do I really care what he fervently (sic) thinks about Quantas today?

    Remember, tomorrow is another day, and the opposite view, "in his jaundiced eyes", might be true. Must be good for a columnist to have a direct access to the inner sanctum of the party and to dear Tony and his mates.

    What are this dangerous government's policies and the dire consequences for our nation, if implemented?

    I'd like to know! Anyone interested? Nah, maybe not; much more fun reporting on what he had for breakfast, isn't it?

    Have a great weekend everyone!

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  11. Barry White

    Retired

    The whole premiss of this article and the comments that followed are based on business as usual. For the airline industry it just isn't so. Any government support should be for all airlines an increase in the skills of winding down the industry as a whole.
    That is the future of the airline industry world wide. Sure, it is something that is unthinkable for people in the industry but it is the bitter face of reality. The government's duty is to face reality because otherwise they will waste more of OUR money. The oil majors are experiencing declining production despite increasing by around 50% their capex expenditure on exploration and development of fields. There is only one possibility and an increasing cost of fuel by quite large amounts.
    A new airport is definitely not needed.

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  12. wilma western

    logged in via email @bigpond.com

    This account of differing statements by Mr Abbott and Mr Hockey is strangely lacking in any political speculation. How different from previous articles about Labor. especially the Gillard government.

    Has there been an about- turn on Qantas thanks to debate among the different groups and individuals in the Coalition or has it been a deliberate tactic to get hard decisions from Qantas without committing to anything serious? Changes to the division of foreign ownership are not all that significant…

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  13. wilma western

    logged in via email @bigpond.com

    I thought there was no carbon tax on transport fuels including aviation? Am I wrong?

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    1. Barry White

      Retired

      In reply to wilma western

      It may not be on fuel but other areas such as electricity. It will apply on diesel fuel from 1st of July' The truckies are quiet unhappy about that.

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  14. Chris Doonan

    logged in via email @me.com

    Abbott and Hockey are doing as much as they can to undermine the interests of Australians but pretending they are not

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