Economy key to avoiding a hard political landing

As thousands of businesses teeter on JobKeeper cliff, half-price airfares a test of consumer confidence.

Prime Minister Scott Morrison and Qantas pilot captain Debbie Slade in the cockpit of an Airbus A330 at Qantas Hangar 96 at Sydney Airport on Thursday. Picture: NCA NewsWire/Pool/Dylan Coker

Picking winners and pouring taxpayer money into 800,000 half-priced airfares is a gamble the government argues it must take, with thousands of businesses facing the edge of the JobKeeper cliff.

Selecting 13 tourism-dependent destinations in marginal and Coalition seats has sparked internal and external debate over the effectiveness of the government’s $1.2bn aviation and tourism ­package. Some say it doesn’t go far enough, others believe it’s time to stop splashing cash to prop-up businesses that won’t survive post-JobKeeper.

The government is also providing unspecified monthly retention payments to Qantas and Virgin, which will effectively subsidise the wages of up to 8600 international aviation workers through to ­October 31.

With other regions and CBDs crippled by the pandemic and draconian COVID-19 restrictions and border closures imposed by the states, the tourism, hospitality and accommodation sectors believe the stimulus package favours the airlines. They want wage subsidies to continue for the worst-affected businesses.

The half-price discount airfares, facilitated by the major airlines, will be a test of consumer confidence. Australians have been spooked by snap border closures and being forced into hotel quarantine.

Tourism 1 graphic for Analysis piece

Tourism 2 graphic for Analysis piece

Scott Morrison’s recovery package, taking the federal government’s spend on tourism and aviation to almost $5bn, was never going to be the panacea that saved every business ravaged by COVID-19 international border closures and restrictions.

Despite millions of Australians moving back into jobs, and companies coming back online, the harsh reality is many businesses will collapse and jobs will not return when the $90bn wage subsidy scheme ends on March 28. The government wants to turn off the tap on taxpayer-funded supports but won’t abandon jobs and businesses that can be protected.

State governments complaining about the size and scope of the stimulus need to pull their heads in and stop hiding behind JobKeeper. Their funding commitments in support of tourism, hospitality and accommodation providers have been paltry and largely ineffective.

The criteria to select the 13 destinations was based on those ­regions being reliant on tourism for GDP and dependence on “aviation tourism during April to July”. The vacuum of international tourists was also factored into the tourism stimulus package.

With marginal electorates ­including Bass, Braddon, Mayo, Leichhardt, Corangamite, Eden-Monaro and Dawson benefiting from discounted airfares, the perception is the package was designed with an eye on the election.

The Prime Minister on Thursday described claims the stimulus package was a pork-barrelling ­exercise as “absurd”. Coalition MPs and state governments are ­already drawing up demands the program be expanded to capture other regions, with Northern Territory Nationals senator Sam McMahon successfully adding Darwin to the list. Australia’s economic recovery, guided by the May 11 budget, successful vaccination rollout by October and reopening of international borders, is tracking well, but faces many unknowns. It will not be consistent across all regions and industries.

Since January, Morrison and Anthony Albanese have crisscrossed the country selling their political agendas in 20 battleground seats in NSW, Queensland, Western Australia and Victoria. A year out from the election, both sides know that creating jobs, protecting businesses, reopening the country and keeping Australians safe will decide the political contest.