Prime Minister Tony Abbott has agreed to a push from Qantas to change the Qantas Sale Act, which prevents more than 49% of foreign investment in the loss-making airline, but it hasn’t given CEO Alan Joyce everything on his wish list.
The Government will repeal part 3 of the Act to allow an increase in foreign investment for the domestic side of the business, where Qantas has been in a torrid battle with Virgin Australia for market share. The majority Australian-owned rules will stay in place for the international side of the business.
But the Prime Minister has ruled out the debt guarantee the airline was seeking. The Qantas boss has previously said that changes to the Sale Act were not enough to guarantee the airline’s future and probably not achievable in the current parliament.
Speaking at a press conference this evening, with Treasure Joe Hockey and Minister Warren Truss by his side, Mr Abbott said the changes would deliver the “level playing field” the airline had been seeking, but conceded that it may result in jobs going offshore.
“It may be regrettable, but nevertheless it is the best way to guarantee Australian jobs for the long term,” Mr Abbott said.
The Prime Minister challenged the ALP to back the changes to Qantas Sale Act, which opposition leader Bill Shorten has indicated his party opposes, along with the Greens, giving them the ability to block the legislation in the Senate, forcing the Government and the airline to wait until the makeup of the upper house changes on July 1, in the wake of last year’s federal election.
Mr Abbott said the decision was meant to give the rival airlines an equal opportunity in the domestic market.
“We don’t play favourites. We want to give everyone a fair go,” he said.
Late last week Abbott signalled his opposition to a debt guarantee, saying that a level playing field meant the same rules needed to apply to all competitors in a sector.
Tonight he said: “I think what Qantas would like most of all would be for the government to play favourites.
“That’s not how this government operates. We don’t play favourites.”
Treasurer Joe Hockey explained a debt guarantee for Qantas could have “up to six or seven billion dollars” of taxpayers’ money on the line if the airline defaulted.
In response, Qantas issued a statement saying:
We have consistently said that removal of foreign ownership provisions that apply uniquely to Qantas is an important longer term objective to create a fair and free aviation market in Australia. However, it is clear that such a move would have limited chance of passing through the Senate.
We need immediate action to address the imbalance that has been allowed to persist for almost two years – namely Virgin’s unlimited ability to access foreign capital from government-owned airlines to fund a loss-making strategy against Qantas.
If this proposal by the government to change the Qantas Sale Act is not passed, we would expect the Government and the Parliament to consider alternative measures to balance the unlevel playing field in Australian aviation.
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