Qantas' plight means hard choices for PM

By Greg Ansley

The disastrous results and huge job-shedding announced by Qantas yesterday is battering at the door of Australian Prime Minister Tony Abbott.

Photo / Marty Melville
Photo / Marty Melville

The disastrous results and huge job-shedding announced by Qantas yesterday is battering at the door of Australian Prime Minister Tony Abbott, who must decide what the Government will do for the ailing national airline.

The decision will test his resolve and the Government's mantra that "the age of entitlement is over" as he comes under furious fire from Labor, the Greens and unions, which have accused him of plans to tie federal assistance to an attack on wages and awards.

Opponents launched a bitter attack on the Government in an unruly session of Parliament yesterday afternoon, using Qantas to spearhead their growing campaign against what they portray as warfare on workers.

There is also opposition within Abbott's own party to proposals to open Qantas to majority foreign ownership amid fears of losing access to international landing rights and a wholesale shifting of Australian jobs overseas.

Abbott is further facing demands that the Government scrutinise the airline's books to check its claims of the damage it says has been inflicted by laws requiring a majority Australian shareholding, and to examine the management of Irish-born chief executive Alan Joyce.

The airline's A$252 million ($270.5 million) pre-tax half-year loss, and its plans to shed the equivalent of 5000 jobs - meaning the final tally of sacked employees will be even higher - add to the series of Australian corporate icons hammered since Abbott won power in September last year.

These include the end of the local automotive industry with the loss of Holden, Ford and Toyota. The Government has repeatedly said companies must stand or fall on their own.

Abbott has two main options. The first, dumping the Qantas Sale Act limiting foreign ownership, is opposed by the Greens and Labor - although shadow transport minister Anthony Albanese indicated yesterday that there could be room for some compromise provided Australians still held 51 per cent of the airline.

The Government is nonetheless drawing up new legislation despite the certainty of defeat in the present Senate and serious doubts that it will be able to gain sufficient crossbench support in the new Senate that begins in July.

The second option is a short-term loan guarantee, needed to help Qantas overcome its present junk bond rating. Labor has some sympathy with this, but it will be fiercely opposed by rivals such as regional carrier Rex unless the guarantee is extended to all other airlines.

Other troubled industries would demand similar assistance - the major banks already have taxpayer protection - creating further political headaches.

Abbott is under fire for refusing help to canner SPC Ardmore while handing A$16 million to Cadburys in Tasmania, and for giving farmers A$320 million in drought aid but not considering aid for other struggling sectors such as tourism.

But given the political, strategic and economic importance of Qantas, Abbott and his Cabinet will work out some kind of package. He remains in favour of changing the Qantas Sale Act - which he described as a "government-imposed ball and chain around (Qantas') ankle" - but said there would be no conditions such as a commitment to keeping jobs in Australia.

"We're determined to help Qantas," Abbott told Parliament. "We'll help Qantas by guaranteeing a level playing field [and] by saving Qantas some A$270 million in carbon tax costs over two years ... This is a Government which is determined to keep faith with businesses which have made investment decisions honestly and fairly on the basis of government policy. Second, this is a Government which will do its best to ensure, as far as is humanly possible, a level playing field between the domestically produced and the imported product."

Transport Minister Warren Truss blamed much of the airline's problems on the carbon and mining taxes, high wages and award conditions, and said fewer jobs were needed with new technology.

Opposition leader Bill Shorten said the Government would inevitably blame workers, the carbon tax and the previous Labor Administration. "They are like pets returning to their dinner. They just can't help themselves ... The Government has run out of excuses. It is now time for [it] to make a decision - do they want to save Qantas or do they just want to play politics?"

MPs, analysts and unions also turned the heat on Joyce and demanded his role be examined before any aid was extended. They pointed to management decisions including Qantas' Asian Jetstar operations, the retention of ageing jets and poor choices of new aircraft. Key independent Senator Nick Xenophon has said he would not consider changing the Qantas Sale Act unless Joyce and other senior executives were sacked. Joyce said: "I'm absolutely committed to Qantas."

The Australian and International Pilots Association said the Government must demand a "coherent plan for growth" from Qantas management in exchange for taxpayer support. "Put aside fringe issues and focus on the key reasons the company has been going backward rapidly and you will find it has been due to misguided management decisions - poor aircraft choices, distracting investment in risky offshore ventures, bad strategic choices, and terrible brand management," association president Nathan Safe said. "If the Australian Government wants Qantas to turn all this around then it has to force management to confront the misguided approach taken in recent years."

Abbott has rejected intervention.

Unions are muscling up for a fight with both Abbott and Joyce. "Qantas workers are paying the price for poor management decisions and a federal Government that is out to cut jobs and wages," said Australian Council of Trade unions secretary Save Oliver, who will meet Qantas management today. "Make no mistake, this is a Government that is boldly and unashamedly going after workers in this country."

The Electrical Trades Union, which represents hundreds of Qantas maintenance workers around the country, said a federal aid package would mark the first time a company was rewarded for slashing thousands of Australian jobs. National industrial officer Matthew Murphy said the real motivation for seeking changes to the Qantas Sale Act was to allow thousands more jobs to be sent overseas.

- NZ Herald

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