What could happen if Qantas was sold off to foreign buyers

NOW that the government is pushing ahead with trying to repeal the Qantas Sale Act, what would foreign ownership of Qantas really mean?

A Qantas Airways Ltd. aircraft, left, and a Virgin Australia Holdings Ltd. aircraft taxi

THE sell-off of Qantas two decades ago was the second privatisation shock in a year to Australians still dealing with news the Commonwealth Bank was to be put on the market.

It was daunting for many to see so much national silverware being sent to the highest bidder after a generation of major institutions being safe under government control.

That’s why in 1992 Prime Minister Paul Keating’s government attempted to ease concerns over the sale of the national airline by passing the Qantas Sale Act.

The aim was to assure voters the national airline would not be bought by another nation. But it’s those very provisions that the government of Prime Minister Tony Abbott wants to weaken 22 years later.

Prime Minister Tony Abbott said the government wants to repeal sections of the Qantas Sale Act restricting foreign ownership.

What does the Qantas Sale Act do?

It sets out binding provisions for the operation of a privatised airline to keep out foreign domination: Such as a 49 per cent limit on any foreign ownership, a 35 per cent limit on ownership by a foreign airline, a 25 per cent limit on share ownership by a single foreign entity.

These provisions were matched by measures designed to firmly stamp the Australian brand on the airline: Such as protecting the name ‘Qantas’, insisting corporate headquarters stay in Australia, requiring at least two-thirds of the Qantas board be Australian citizens.

What does the government want to do with these laws?

Prime Minister Abbott wants to rewrite Part 3 of the Qantas Sale Act, the ‘Requirements regarding Qantas’ articles of association’ which contains those provisions mentioned above. He wants to remove what he calls the ‘ball and chain’ ownership restrictions on the airline`s capacity to raise finance.

Qantas has been lobbying the government for a debt guarantee, which Tony Abbott has ruled out.

What would be the consequences if successful?

It effectively would split the airline into domestic and international arms. The domestic operations could be up for foreign ownership but the international operations would still have foreign ownership restrictions.

The Prime Minister has acknowledged that changing the Sale Act could see jobs such as maintenance go overseas.

What doesn’t the Government want to do?

The government has rejected a plea from Qantas for the Commonwealth to guarantee loans — for a fee paid by the airline. The guarantee would increase Qantas’ credit rating and make loans cheaper.

The government has rejected this as a ‘subsidy’ unavailable to other corporations, and said the airline had to look after itself.

Treasurer Joe Hockey said today: “We are not writing out blank cheques. There are a lot of companies in Australia that would love to have a multi-billion dollar unsecured loan from the Federal Government.”

Qantas chief executive Alan Joyce announced a $252 million loss last week for the first half year.

What does Labor want?

Opposition Leader Bill Shorten wants the guarantee provided, and no relaxation of the foreign ownership limits, warning that removing that limit would see Australian jobs sent overseas.

“Labor has a message for Tony Abbott tonight: we will fight to keep Qantas Australian. We will fight to keep Qantas jobs in Australia. We will fight to stop skilled jobs going overseas because once these jobs are gone we will never get them back,” said Mr Shorten.

What are the politics of this standoff?

The government is unlikely to get the changes to the Qantas Sale Act through the Senate — either the current one or the new chamber in July. Labor and the Greens oppose changes, and the Palmer United Party, which will have influential senators from July, also would not support the government.

The government has made clear it would blame Labor for any stalemate in responding to Qantas’ requests for help.

“Basically, the Labor Party is reverting to cheque book government and that’s the kind of thing that got us into a lot of trouble over the last six years,” said Prime Minister Abbott.