Qantas could become foreign-owned airline, says Federal Treasurer Joe Hockey

FEDERAL Treasurer Joe Hockey has raised the prospect of allowing Qantas to become a foreign-owned airline.

Foreign push for flying kangaroo

FEDERAL Treasurer Joe Hockey has raised the prospect of allowing Qantas to become a foreign-owned airline.

Mr Hockey admitted this could mean Australia might no longer have "a national carrier".

But he said removing restrictions to "let it fly" could help the airline better compete and survive.

When Qantas was sold by the Keating government, foreign ownership was limited to 49 per cent with foreign airlines restricted to 35 per cent. No single foreigner can own more than 25 per cent.

Qantas says this makes it harder to compete with Virgin Australia, which is majority owned by Air New Zealand, Singapore Airlines and Etihad and can be 100 per cent foreign owned.

Mr Hockey said the rules for Qantas were inflexible in the challenging airline industry.

"We should have a national conversation on the Qantas Sale Act," Mr Hockey said.

His surprise comments on Qantas at a business lunch in Sydney came after an earlier meeting in Canberra where state governments lobbied for a change to GST for online sales from overseas.

Shoppers will escape paying GST this Christmas on items they buy online from overseas worth up to $1000 but state governments are vowing to close this loophole next year.

Federal Treasury yesterday showed four possible changes to lower the tax-free threshold to $20, $200, $600 and $800. A range of scenarios about how to collect the tax were also considered. Some were far more expensive than others.

No decisions were made and another meeting will be held in March.

It is understood the Treasury modelling shows in the first few years, the upgraded processing of packages from overseas might cost more than the tax raised.

But over time, it would deliver billions of dollars in extra tax which would flow to the states.

Australian retailers say they are losing sales and jobs are at risk. They want the threshold cut to $20. Some state governments believe $200 might be easier to process.

NSW Treasurer Mike Baird led the push for change, saying there was a strong desire by the states for this to happen.

While the federal Coalition promised no changes to the GST, it is arguing the reform would be one of the regular "administrative" changes to the tax.

Consumer group Choice warned the cost of buying a $20 item could blow out to $35 if a UK-style collection fee was adopted.

South Australian Premier Jay Weatherill and Tasmanian Premier Lara Giddings - both Labor leaders - warned they were the last line of defence against a rise in the GST rate and extending it to health and education.

Both leaders face an election in March and claimed if they lost, Liberal leaders across the nation would increase the reach of the GST.

Mr Hockey has offered the states "incentive payments" and tax breaks if they privatise assets like ports and electricity to raise money to build new infrastructure to create economic activity and jobs.

Assistant Treasurer Gordon Rich-Phillips, who represented the Victorian Government, said he was encouraged by the strong focus on infrastructure that led to productivity gains.

The Victorian Opposition has pledged to sell the Port of Melbourne if it wins government next year, using the money to fix rail level-crossings.