The Bonza arrangement is temporary, and although I am no expert, I would be confident in saying that Transport Canada's "regulatory burden" is as high or higher than Australia's.
Says who?? How do you know that are not just testing the waters see how they like it?
As others have pointed out, seasonal wet-leases are de rigueur overseas
It's a European concept which has a common regulator anyway. It certainly isn't a global phenomenon. I don't think the FAA would take to kindly to you flying Domestic RPT in the USA with wet leased crew in a foreign registered aircraft. And all the best trying it out in Asia. Indonesia even enforce it on foreign international operations let alone domestic ones. Just ask the smartest guys in the room at Tiger how well their wet leased operation to Bali went. The FAA did the same to Norwegian. They are both International examples not domestic ones.
The reason it is a European concept anyway is because of the extremes of their peak/off peak seasons which is unique to cold weather climates.
The last paragraph makes no sense - why would any airline set up an Australian operation just to run at a loss? And what tax rebates? You're presenting a red herring argument.
No it isn't. It has been happening in this country for a long time already. You have your aircraft owned in a tax haven/low tax country, you then over charge yourself the use of the aircraft and run your airline at small loss/profit every year whilst making all your money in the low/no tax jurisdiction.
AFAIK certain airlines started that racket in the 90's. GA operators usually do it as part of other larger business enterprises to similar effect to reduce their tax. Chevron did something similar only a few years ago in the Oil and Gas industry and only got caught because of leaked documents.
However with this new CASA arrangement it takes it all to a another level. The entire operation can now be based overseas in a true flag of convenience operation. Why couldn't a Middle Eastern or Chinese airline who already have global airlines start running domestic operations in Australia and start white anting Australian domestic airlines? The cost base of doing that would be truly phenomenal compared to operating entirely based in Australia. No Australian company could compete against that. The regulatory and tax burden alone would bankrupt you.