Foreign investment rejected at the behest of the Nationals, talk of a partial renationalisation of Qantas being entertained by both sides of politics — what on earth is going on?
Economist Saul Eslake nailed it back in March when he worried that an Abbott government would resemble the Fraser government:
“Like the Fraser government, an Abbott government may be divided between a leader who distrusts markets, has little interest in economics and is actually contemptuous of economists, a National Party that has reverted to its traditional agrarian socialism, and reformist liberals like Hockey, Robb, Turnbull and Sinodinos.”
The GrainCorp decision reflects just how right Eslake was in his concerns: this is an immense victory for the Nationals, who despise foreign investment in agricultural businesses despite the immense growth in our production and exports over recent decades.
But few could have anticipated that we’re now seriously discussing the absurd proposition that the government should take a stake in Qantas, less than 20 years after the Keating government disposed of its remaining stake in the airline, because Qantas can’t handle competition.
Qantas, run abysmally by its former and current management, overseen by chairman, free marketeer and union basher Leigh Clifford, has been haunting the corridors of Canberra both before and after the election looking to stitch up a deal to address its increasingly dire financial position — either to get a handout from the government via a debt guarantee or an equity stake, or to lift the foreign investment restrictions of the Qantas Sale Act, or to somehow restrict its competitors’ access to capital.
Treasurer Joe Hockey says he prefers to remove the foreign investment restrictions, which would be entirely sensible and painfully ironic. But there is no earthly, or even airborne, reason why this company should be barred from accessing whatever capital it needs. But all agree that would take too long and in any event Labor and, quite possibly, Tony Abbott himself, would prefer to keep the foreign investment prohibitions in place because, you know, “national carrier” — a term that apparently is self-explanatory and needs no further elaboration or justification.
Labor, in an act that would trash a key legacy of the Keating era, would prefer to take a stake in the failing airline. Worse, Hockey appears to be happy to contemplate that as well if other options are not available.
“Australia is open for business — if you’ve got a dodgy deal to offer the new crowd in Canberra.”
Both Hockey and Abbott have spoken about wanting to know what Australians think about the future of Qantas — as if they’re not Treasurer and Prime Minister, elected to lead the country, rather than mere bystanders waiting for the real bosses to make their call. Fortunately we can help the government out with that: voters would love the government to buy back all of Qantas, since they hate the fact that it was privatised in the first place — by a government that knew how to lead even in the face of voter opposition.
Qantas in its media briefings has been pushing a comparison with the financial crisis, when the government guaranteed banks. But there is a big difference. A healthy, solvent Australian banking system is vital to the Australian economy, and society. Qantas isn’t essential to the Australian economy. We can get aviation services from other airlines, if we want to travel. Qantas can’t lend us money for a small business, home loan, or finance a power station, or our credit cards, or anything else the banking system does, and needs to do.
This isn’t the only failing asset the government is considering buying. As part of Communication Minister Malcolm Turnbull’s bizarre Copper Magic NBN plan, the government is contemplating buying or leasing Telstra’s decaying copper network, which the Howard government only finished off selling in 2003. The network costs well over $1 billion a year just to keep going in its current, dilapidated state.
The taxpayer, it seems, may be on the hook for all manner of dud assets owned by one-time public entities if they can convince a credulous government of the need for it.
The common theme running through all this is, as Eslake suggests, an ideologically and politically confused government. A free-market government dumping market mechanism for climate action in favour of handouts and considering reacquiring old governments assets. A government that talks of being “open for business” that slams the door on foreign investors. A government that complains of the fiscal indiscipline of its predecessors and then demands a whopping increase in the debt ceiling so it can continue to borrow. The only consistency is in the cheapjack populism on display from Tony Abbott. Maybe it’s the ghost of Bob Santamaria, scourge of ALP, friend of agrarian socialists and a key influence on Abbott — and maybe Joe Hockey now as well.
And that’s before you get to unsavoury decisions like restoring the Fringe Benefit Tax rort for the novated lease industry. The parasites of that industry are now using the election result in their advertising material to encourage more people to rip off the tax system.
Australia is open for business — if you’ve got a dodgy deal to offer the new crowd in Canberra.