The consequences intended or otherwise of a partial renationalisation of Qantas to save the current management of the airline group from its own mismanagement of the ‘national icon’ seem likely to be a major talking point in the Qantas versus Virgins story today.
However those considerations may also have to share the spotlight with some evident ‘lines in the sand’ being drawn by those in the Abbott Government cabinet holding strongly differing views.
This morning’s lead report in the AFR is the only one to identify a partial renationalisation of the carrier through a stake of up to 10% of its equity as a preferred option, while this report in The Telegraph brings out the distinct differences of opinion held among the Coalition partners.
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Deputy PM and National Party Leader Warren Truss is opposed to Qantas setting up airlines overseas when it should be focussed on its Australian business in its investment strategies, and very emphatic that his side of the Cabinet room likes the current arrangements by which the Qantas Group and Virgin Australia deliver highly competitive outcomes for the economy and consumers.
Treasurer Joe Hockey is depicted in the AFR report as, by inference, not levelling with the public yesterday when he said he was opposed to government money propping up Qantas by having already firmed on a position that it should seek to prop it up with an injection of around $260 million of fresh capital for a 10% stake in the ‘icon’.
If the AFR report is correct, Hockey is already a compromised figure in business and economic circles when it comes to being a market oriented ‘adult’ treasurer to use a term popular with the Coalition during the election campaign.
Imagine a government participating in the ownership of one of two Australian flag carriers in a highly competitive market, or even in its management through board representation? Then again, ask whether or not a government that put taxpayer money into a Qantas determined to throttle a more agile competitor could justify to voters not taking board representation.
If the AFR report is right in making its call, the Abbott government could end up creating for the public a wide range of minority micro nationalisations of enterprises it deemed ‘iconic’ winners or some such. Hello Gerry Harvey, Rupert Murdoch, as well as car makers, miners, and construction and engineering firms!
Qantas has made its mess a policy mess for the Coalition government already.
Yet no one in the government, apart from Truss, has made even an indirect call on the competency of the Qantas management that so reduced the business it is running that it can’t even raise capital. In recent times pre the Joyce/Clifford disaster, Qantas only had to raise its little finger to get a capital raising oversubscribed, despite the limitations of the Qantas Sale Act of 1992. (But which does need at the very least, substantial amendments.)
If this pain in the Qantas is to continue for the government it might be prudent to look very dispassionately at the follies that are going on in the company today, as well as the catastrophic misjudgements involved in its handling of offshore Jetstar franchises, and the abandonment of much of the Australian market for kangaroo route flights to Emirates, the world largest government owned carrier, and for free.
Any forensic accountancy study of Qantas like that yesterday called for by independent SA Senator Nick Xenophon will find that imprudent resource management and asset transfers inside the company have contributed to the company’s woes, compounding the often recited mantas about end-of-the-line-this and unfair-better-located-wicked-government-owned-airlines-that that are used to mask truly dumb and destructive decisions within the enterprise.
How good is this Qantas? Why should this government save the bacon of this management, which has trashed it?