Let's set Qantas free, say Coalition MPs
QANTAS is gaining ground in its quest for government help to fend off its rivals as Coalition MPs speak up for reforms to foreign ownership laws that keep the airline in Australian hands.
Blasting the "regulatory straitjacket" on the airline, the head of the Coalition's tourism group is calling publicly for changes to the foreign ownership caps while other MPs warn of the threats to the company.
The comments build the case within the government for legislation to free Qantas of the 49 per cent cap on foreign ownership, clearing the way for a restructure to deal with its mounting losses.
Government MPs fear the company's financial woes will lead to cuts to regional air routes, damaging a tourism industry already reeling from the high Australian dollar.
Writing in The Australian today, Liberal MP Dan Tehan warns that skilled workers will lose their jobs unless there are changes to the 1992 ownership law, freeing up the airline.
"In this new world, the Qantas Sale Act is working against the interests of the very company it was legislated to protect. It needs to be changed," he writes.
Mr Tehan, who leads the "friends of tourism" group within the Coalition party room, is calling for reforms that go beyond comments from Tony Abbott and Joe Hockey in recent weeks about the challenges facing the airline.
While the Prime Minister said last month it was "not unreasonable" for the company to seek changes to regulations, he and his cabinet colleagues are being careful to avoid explicit support for change until Qantas spells out what it seeks.
Mr Tehan's argument appears set to escalate the political debate - and possibly draw out support for reform - despite Labor's objections to any change to the foreign ownership cap.
The Coalition "friends of tourism" group has played a key role in decisions about Qantas in the past, including when the group's leader Bruce Baird led the objections to a private equity bid for the airline during the last term of the Howard government.
Mr Tehan writes that Qantas is struggling to raise funds because of the limits placed on it.
"The time has come to ask ourselves, do we want to ground the kangaroo or let it fly?" he writes.
"Inaction on this decision will likely see the airline go the way of other heavily subsidised industries in Australia, leaving many skilled workers unemployed and potentially another significant dent in an already battered budget.
"We have the opportunity to frame a new way of handling our national carrier - as a fully privatised and prosperous enterprise rather than a parochial anachronism of a bygone era.
"As a nation we must review the idea that national prestige is subsidised by the continuation of a protected national airline."
Mr Abbott said in December it was "not unreasonable" for Qantas to want a "level playing field" but he stopped short of supporting a specific change to the Sale Act.
Treasurer Hockey called at the same time for a "proper national debate" over the rules but did not say how they should be changed.
Within the government, some believe the best reform would be the removal of the foreign ownership cap so that Qantas could strike an alliance with an overseas investor, and split the domestic and international operations.
Liberal MP Karen Andrews backed a review of the rules, telling The
Australian yesterday that there was a case for change.
"We should certainly be open to considering changes to the Qantas Sale Act but Qantas would need to demonstrate that changes to the level of foreign ownership would lead to an improvement in its ability to compete with other carriers," she said.
"Qantas needs to come up with a compelling proposal to demonstrate how each of the individual components of the package would lead to an improvement."
While the airline wants the Qantas Sale Act repealed, it has avoided any public statement on other forms of help such as a government investment or a commonwealth guarantee over its debt so it could cut the cost of borrowing. This has frustrated the government and prompted Mr Abbott to say that Qantas had to "fight for" the changes it wanted and get its "house in order" before seeking taxpayer help.
Qantas is believed to see the debt guarantee as a more urgent requirement than the repeal of the Sale Act, calculating that it would take months to get the legislation changed in the Senate given objections from Labor and the Greens.
"We're in ongoing dialogue with the government about specific measures to level the playing field, but as we have said all along we're not providing a running commentary of those discussions," said a company spokesman last night.
"We are getting on with the work of transforming our business in the face of broader pressures in the domestic and international aviation markets."
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