Government acts on Qantas

The government has announced that it will seek to have Part 3 of the Qantas Sale Act rescinded.  This makes complete sense – no restrictions on foreign ownership, although the normal FIRB processes would be invoked in the event of a substantial investment/takeover.

And the crazy limitation on having work undertaken overseas would also go.

Any debt guarantee has been ruled out for the time being.

Over to Labor and the Greens.

Here are the most important parts of Part 3.

7  Qantas’ articles of association to include certain provisions

(1)  The articles of association of Qantas must, on and from the day on which Qantas first becomes aware that a person, other than the Commonwealth or a nominee of the Commonwealth, has acquired voting shares in Qantas:

(a)  impose restrictions on the issue and ownership (including joint ownership) of shares in Qantas so as to prevent foreign persons having relevant interests in shares in Qantas that represent, in total, more than 49% of the total value of the issued share capital of Qantas; and

(aa)  impose restrictions on the issue and ownership (including joint ownership) of shares in Qantas so as to prevent foreign airlines having relevant interests in shares in Qantas that represent, in total, more than 35% of the total value of the issued share capital of Qantas; and

(b)  impose restrictions on the issue and ownership (including joint ownership) of shares in Qantas so as to prevent any one foreign person having relevant interests in shares in Qantas that represent more than 25% of the total value of the issued share capital of Qantas;…

(g)  require that the head office of Qantas always be located in Australia; and

(h)  require that of the facilities, taken in aggregate, which are used by Qantas in the provision of scheduled international air transport services (for example, facilities for the maintenance and housing of aircraft, catering, flight operations, training and administration), the facilities located in Australia, when compared with those located in any other country, must represent the principal operational centre for Qantas; and

(i)  require that, at all times, at least two‑thirds of the directors of Qantas are to be Australian citizens; and

(j)  require that, at a meeting of the board of directors of Qantas, the director presiding at the meeting (however described) must be an Australian citizen; and

(k)  prohibit Qantas, at all times, from taking any action to become incorporated outside Australia.

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55 Responses to Government acts on Qantas

  1. Lem

    The government can do whatever they like, I’m still never going to fly with them again.

  2. Tel

    This makes complete sense – no restrictions on foreign ownership, although the normal FIRB processes would be invoked in the event of a substantial investment/takeover.

    It doesn’t even address the problem, it makes no sense whatsoever other than as a political showdown.

    (h)  require that of the facilities, taken in aggregate, which are used by Qantas in the provision of scheduled international air transport services (for example, facilities for the maintenance and housing of aircraft, catering, flight operations, training and administration), the facilities located in Australia, when compared with those located in any other country, must represent the principal operational centre for Qantas; and

    OK, that bit might make a difference, which is irrelevant to ownership. Since clause (h) is unrelated to the rest of the law it could easily have been removed on its own.

  3. A H

    The more laws taken off the books, the better :)

  4. GC

    Bills Shorten gets worse by the day ….. Anyone would think he moonlights as Albo’s dentist

  5. candy

    Ms Sloan, may I ask your opinion what will happen anyway, as this won’t get through the Senate now or the new Senate, because Clive Palmer is against it. All over red rover for Qantas anyway?

  6. Norma

    The story about this at the Oz is “enlightening”. It seems Joyce doesn’t care about the carbon tax. And he doesn’t sound fussed about the changes Abbott is proposing. All he seems to want is a loan guarantee. Abbott is sounding a bit pissed off with him methinks.

  7. 2dogs

    the crazy limitation on having work undertaken overseas would also go

    This is the more important change if Qantas is to survive. Even if the forces of jingoism keep it Australian owned, 7 (h) must go.

  8. Jeremy

    Some questions: If Qantas is foreign owned will that ownership keep it’s planes in Australia in the event of hostilities in the region? If Qantas decides to move it’s planes overseas for safety, in the aforementioned event, what will the Australian government use for air transport? (these are the reasons Qantas was nationalised during World War 2) If there are hostilities in the region, who will repair planes in Australia? (this is the reason for requiring maintenance be done in Australia) None of these questions relate to economics, but they strongly relate to the strategic defense of Australia. For those of you who imagine that Humanity has emerged on the bright sunlit uplands, and there will be no more war and we don’t need to worry about strategic defence, I give you Russia. (the peace loving denizens of Afghanistan and Iraq having lulled you into a false sense of security)

  9. A H

    Jeremy, in the event of war, we will have been better of having saved our resources while we had the chance.

  10. Infidel Tiger

    I’m not sure I want to be on a Qantas Jet if we are at war. Last time I checked they barely had functioning inflight entertainment systems, let alone missile defence.

    I love the idea we need a car industry and a nationalised airline for defence. What a joke.

  11. brc

    Jeremy, that would have to be one of the lamest comments I have read. The only reason you’d move planes for safety is because Australia is being attacked. If the country is being attacked and planes needed to be moved, as if Qantas would keep them in harms way out of national pride. As for where the maintenance would be done – well, wherever it needed to be. Planes are pretty mobile, you can shift them around.

    Wars might get destructive but they usually play out over very long timeframes. WW2 was pretty short compared to modern conflicts, but there was still plenty of time to build entirely new factories and train workers. It all gets much easier when you don’t need a union ticket and a cert 3 in OH&S.

  12. Yohan

    Who would have thought before this government came to power, that is would be Tony Abbott the economic DRY, and Joey Hockey the WET?

    Uusually its the hard nosed treasurers, Paul Keating, Peter Costello who keep the prime minister in line on economic matters.

  13. Splatacrobat

    I don’t remember the same hue and cry when ANL was sold to the frogs?
    or when BHP was merged with Billiton
    or when Arnotts was sold to Campbells
    or when Aeroplane Jelly was sold to McCormack’s foods
    All icons on the bones of their arse until they were bailed out by a foreign sugar daddy.

    We are good at only three things
    digging
    sport
    and buying shiny things

  14. Tel

    Splat, Australia has a decent software industry too, but for God’s sake don’t tell anyone about it, or some government dingbat will step in and try to “help it along”.

  15. Combine_Dave

    Tel, there are quite a few gov bodies that supposedly do this…

    Although in Qld Can Do peeled back their funding due to them not adding value (or really doing much of anything).

    http://www.zdnet.com/qld-govt-terminates-ict-industry-workgroup-funding-7000001183/

  16. Grigory M

    Government acts on Qantas

    Judith’s post seems incorrectly named. The Government has really just had a Cabinet Meeting and confirmed its already apparent strategy. Perhaps it could instead read “Government Ups the Qantas Ante on ALP”.

    In any event Emma Griffiths has a useful summary up on the ABC’s News website. The part

    What does the Federal Government want to do?
    Amend the Qantas Sale Act to remove foreign ownership restrictions, stipulations that it keeps the name “Qantas” and that its planes and key services are based in Australia.
    What impact could that have on jobs?
    The Government wants to strip away legislation that force Qantas to house and maintain its planes in Australia and keep catering, flight operations, training and administration facilities based here, too. That would allow Qantas to move facilities – and jobs – offshore where costs and wages are cheaper. It currently employs about 32,000 people.
    What does Qantas say?
    Show me the money. It has welcomed the move to “level the playing field” in a legislative sense, but it says it needs “immediate action” and still wants a Government debt guarantee. That would allow it to borrow funds at a much lower interest rate. But the Prime Minister has canned the idea, saying if the Government did it for one business, it would have to do it for all.

    Qantas Ownership

    Given Australia’s isolated geographical location, together with the potential for foreign shareholders (in particular, foreign airlines) to act in ways that may be wholly in their own interests but detrimental to Australia and the Australian flying public, I think it would be a mistake to remove or reduce the restriction of 49% on total foreign ownership of Qantas issued share capital. Instead, within that 49% limit, there is scope to ease foreign ownership restrictions by changing the current other restrictions of 35% on foreign airlines Qantas issued share capital ownership and 25% on any one foreign person’s Qantas issued share capital ownership.

    Qantas Name

    Others have already pointed to the value of the Qantas brand name, which is held in high regard world-wide, not the least because of the “Rain Man” (no crashes) effect. The name is strongly associated with Australia as both a business and tourist destination and has significant relative value. It would therefore seem foolhardy to simply allow an unrestricted change to something else at the whim of alternative owners.

    Qantas Base

    Again, given its geographical location, Australia should be the base for Qantas planes and services, both long-haul and domestic. This, to me, is no different to American Airlines being based in the USA or Emirates being based in Dubai or Singapore Airlines being based in Singapore. It is where the airline’s core business is.

    Maintenance, Catering, Flight operations, Training and Administration Facilities

    On both geographical and core business grounds it is essential that sufficient of all these facilities be located in Australia to meet local exigencies. Attempting to keep planes in the air on domestic flights and departing international flights would simply not work without enough of these facilities being retained in Australia. That does not prevent a shift, even a major shift, to overseas servicing and maintenance arrangements, either dedicated or contracted, for international flights at specified stop-over and/or departure locations.

    Government Debt Guarantee

    There should be no government debt guarantee. To provide one would open a Pandora’s box for other airlines (and other businesses) to seek the same. Instead, I am drawn to Judith Sloan’s suggestion – that the government might offer to invest in a cheap rights issue to allow Qantas to raise capital. As Judith said, I would rather the taxpayer actually be given some legal ownership of the company and, all going well, the shares can be divested in due course. Would other airlines seek the same? Probably not, as their current owners would not be keen to dilute their ownership. One proviso – like Lyndon Johnson, who famously said that funds for NASA’s Mission Control would be guaranteed no matter where it was located, provided it was located in Houston – I think that any rights issue or other debt arrangement for Qantas should specify that its base (or hub) remains in Australia and that specified levels of maintenance, catering, flight operations, training and administration facilities be provided at Australian locations.

  17. A H

    Gregory, on all your points, except the guarantee, let the Qantas management decide on those. If, for example, Qantas changes their name on a whim, as you say, and suffers negative branding consequences for it, then that’s bad for them. No need for government intervention at all. Allowing them to incur the consequences of their actions will be all the regulatory force needed.

    As for government buying part of Qantas, so that the taxpayer can have a stake — the taxpayer, if he chooses to, can already have a stake, all he need do is buy shares on the open market. Why should government rob me through tax to buy something for me that I wanted to buy for myself anyway? Either I want to buy it, so I buy it myself, or I don’t want to buy it, so I don’t. Is there anyone out there saying “I’d like to buy some Qantas shares, the government should take my money under threat of violence and buy them. Oh and I insist on the threat of violence part, I do not want to buy the shares voluntarily, please put a gun to my head so that I may be coerced towards what is in my best interest.”

  18. Grigory M

    Is there anyone out there saying “I’d like to buy some Qantas shares, the government should take my money under threat of violence and buy them. Oh and I insist on the threat of violence part, I do not want to buy the shares voluntarily, please put a gun to my head so that I may be coerced towards what is in my best interest.”

    ??? Huh?

    A H – I am drawn to a cheap rights issue in the same way as it was put forward by Judith Sloan ie. as a preferable alternative to a government debt guarantee, if some such assistance is in contemplation and is considered appropriate by the government.

  19. johanna

    Grigory M is running his “Qantas as part of our strategic defence portfolio” argument again. It is a load of cobblers.

    World War II was a long time ago, Grigory, and the world has changed quite a bit since then. The prospect of being abruptly cut off from the rest of the world is remote, except the event of something so catastrophic that a few civilian aircraft aren’t going to matter. And don’t forget, at any moment a lot of Qantas’ big planes are overseas, and a lot of overseas aircraft are here.

    It’s not like the days when naval blockades that went for months or years could potentially starve populations, you know – even if it was applicable to Australia, which it isn’t.

  20. Gab

    He sure writes volumes of nothingness.

  21. Grigory M

    “Barrister Brain” – how are you? :)

    Eh? What was the question? It’s slipped your mind already?

  22. stackja

    johanna
    #1212195, posted on March 4, 2014 at 3:03 pm
    Grigory M is running his “Qantas as part of our strategic defence portfolio” argument again. It is a load of cobblers.
    World War II was a long time ago, Grigory, and the world has changed quite a bit since then. The prospect of being abruptly cut off from the rest of the world is remote, except the event of something so catastrophic that a few civilian aircraft aren’t going to matter. And don’t forget, at any moment a lot of Qantas’ big planes are overseas, and a lot of overseas aircraft are here.
    It’s not like the days when naval blockades that went for months or years could potentially starve populations, you know – even if it was applicable to Australia, which it isn’t.

    Australia came close in World War II with blockades but we had farms we owned then. And factories to make vehicles. Would China like to take over the farms they own? Who would stop them? This is becoming like the Europe Putin fred.

  23. Rococo Liberal

    It all comes down to the irrational fear of ‘jobs’ being lost. Australians have become such weak-kneed niinies that they think that basically they are owed a job that must be somehow underwritten by the government. The fact that businesses have too be run at a profit doesn’t mater to them, it’s all about ‘jobs.’ This is almost as annoying as the cry “it’s about the children, ” another plaint of the ill-informed sentamentalists that our education sytem seems to haveturned out in such profusion since the 60s.

    Why can’t these idiots see that saving jobs by government intervention in individual enterprises is only a temporary fix that leads to inefficieis in the economy?

    I blame the politicians who pander to this sentimantal revereance for ‘jobs’ rather than for wealth.

  24. johanna

    China is going to invade Australia just to reclaim a few farms because they own them? LOL.

  25. JC

    Qantas doesn’t have to find a foreign player. All Qantas needs is serious labor reform and it’s essentially fixed staying in domestic hands.

    It could actually be a very big player in the region if the union monkey was ripped off its back.

  26. JC

    If you advocate for national security as I do, then push for labor market reform. That will indirectly help us with all the national security you want.

  27. Infidel Tiger

    China is going to invade Australia just to reclaim a few farms because they own them? LOL.

    Don’t worry, we are going to bomb them from Qantas jets and repel them with Holden tanks.

  28. .

    The idea about farms is whacky. How can you stop us nationalising them without having troops here in the first place, which would mean, we’ve already lost.

    A 30 year old cold war fighter with aged missiles could down 6-8 airliners without ever seeing them or being detected.

    Qantas is not relevant to national defence. You need working airstrips for them to have freight and transport capacity. Good luck with 200 Durandals in your airstrip.

  29. politichix

    Rococo Liberal
    #1212215, posted on March 4, 2014 at 3:25 pm

    It all comes down to the irrational fear of ‘jobs’ being lost.

    I touched on this in the Qantas share price post. The annual turnover of jobs in the economy show how insignificant is the loss of 5000 jobs.

    Take 2012 labour statistics for example showing that 2.5 million people left jobs in that year. Of that 390k were retrenchments FFS – 5k is little more than a rounding error! I may have missed it but I don’t remember too many people jumping up and down about the 390k jobs lost that (and every other) year.

    JohnA also made the following great point:

    JohnA
    #1211892, posted on March 4, 2014 at 7:59 am

    …the shedding of the jobs will take three years. 6% of the workforce over three years is barely above natural attrition rates…

    The difference of course is that it is 5000 UNION jobs.

  30. Grigory M

    Qantas as part of our strategic defence portfolio

    Nope, don’t see nuffing about that in wot I wrote.

    ‘jobs’ being lost

    Nope, don’t see nuffing about that either.

    As Glib said, with her usual inimitable lack of eloquence, there’s “volumes of nothingness” about those things.

  31. Leo G

    “Tony Abbott is about to kill off Qantas as our national carrier,” – Adam Bandt.

    Qantas hasn’t been a national carrier since 1992.

  32. A H

    s can buy up all the stock and refuse to sell!

    Come on Grigory, start getting the message out to the masses. Protect our ‘icon’.

    But I think you’ll find, given the choice, people would rather keep their money.

    Or if this is about assistance, have Qantas open a bank account where people can deposit their assistance if they are willing.

  33. Grigory M

    Protect our ‘icon’

    Nah, A H – “volumes of nothingness” about that either in what I wrote. Keep trying though – maybe you’ll find something. ;)

  34. Mike of Marion

    Let Qantas find its own level. National Icon – useless without fuel if there is a national shortage in Reserves

    http://www.themotorreport.com.au/58311/nrma-running-on-empty-australias-worrying-dependence-on-foreign-fuel

  35. Squirrel

    “Qantas’s current issues are not related to carbon pricing. We have been clear that levelling the playing field is the most important policy measure that needs to be fixed and with some urgency,….”

    That comment, from a Qantas spokesperson – if accurately reported – is not exactly the most felicitous handling of a very sensitive issue by a business which is apparently in trouble and looking for support from a Government which has the repeal of the carbon tax as a central plank of its policy agenda. Something a little more nuanced, and less easily put to use by the Opposition, may have been wiser.

  36. johanna

    So Qantas doesn’t have a problem with the carbon tax?

    Well, in that case, if (hopefully when) it is repealed, let’s make a special exception for them, being as how the Budget needs all the help it can get …

    What an extraordinary statement. Yet another reason to throw this duplicitous bunch of rentseekers to the dogs of the marketplace.

  37. Gab

    So Qantas doesn’t have a problem with the carbon tax?

    So it would seem and $106 million is nothing to them – just small change – then no handouts, no guarantees are necessary.

  38. We have been clear that levelling the playing field is the most important policy measure that needs to be fixed and with some urgency,….”

    Trans = get rid of Virgin. Immediately.

  39. Tel

    It’s not like the days when naval blockades that went for months or years could potentially starve populations, you know – even if it was applicable to Australia, which it isn’t.

    Yeah a blockade could starve Australia quite easily, think carefully about where your food comes from.

    Not that Qantas planes would make any difference.

  40. Armadillo

    not the least because of the “Rain Man” (no crashes) effect

    True – a good selling point to customers. International investors would automatically see through it though. The reason for Qantas’s impecible record starts with the fact that they fly mainly on Australian routes. Their pilots rarely deal with the vagaries of weather that the Euoropean and North Americans (let alone Russians) deal with. Ice and snow by the buck load – look at the Americans over the last few months. If the Qantas unions had anything to do with, every airplane would be grounded and the pilots refusing to fly anywhere. Add to that the fact that their pilots will fly only a fraction of the hours that other airline pilots do. Add in that their cabin crews are among the best paid in the world. There is the problem.

  41. Armadillo

    There is the problem.

    I really should edit that. A good safety record is excellent however, there come a point where the value of the ‘record’ (even though much has to do with natural factors) does not stack up with the economics of it.

  42. politichix

    Squirrel
    #1212351, posted on March 4, 2014 at 6:22 pm
    Something a little more nuanced, and less easily put to use by the Opposition, may have been wiser.

    Watched David Lickspittle this afternoon give poor old Mathias a hard time about Qantas carbon tax comment. Mathias was trying to be diplomatic but you could tell he was wanting to say how could the idiots not want an extra $100m in the bank? Someone at Qantas is using the old play book and forgotten there’s been a change in govt!

  43. johanna

    Yeah a blockade could starve Australia quite easily, think carefully about where your food comes from.

    Nonsense. True, there would be a shortage of Italian tinned tomatoes and Vietnamese prawns.

    But we are a massive food exporter. A diet of meat, poultry and eggs, dairy products, bread and pasta, and fresh fruit and vegetables is not exactly looking starvation in the eye.

  44. politichix

    Johanna … exactly

  45. Grigory M

    Their pilots rarely deal with the vagaries of weather that the Euoropean and North Americans (let alone Russians) deal with.

    If the Qantas unions had anything to do with, every airplane would be grounded and the pilots refusing to fly anywhere.

    Interesting comment, Armadillo. Don’t know if you’re aware of it but, speaking of North America, if there is a lightning stike anywhere within the perimeter of Dallas Fort Worth the airport is immediately shut down (for 2 hours IIRC – I’ve been on an AA plane diverted to Shreveport, Louisiana, and have also had to wait for late take-off from Fort Lauderdale, because of this and the storms that regularly plague DFW). I don’t know if that has anything to do with the unions there. And at San Francisco airport, if there is heavy rain or storm activity one of the runways must be closed because the two runways there have been built too close together and it is too dangerous to operate them both in those conditions (2 hour delay there also for me). Not sure if that has anything to do with the unions there either.

  46. calli

    I really should edit that. A good safety record is excellent however, there come a point where the value of the ‘record’ (even though much has to do with natural factors) does not stack up with the economics of it.

    Your comment reminded me of Sir Humphrey and the hospital with no patients. No mishaps there either.

  47. H B Bear

    “Tony Abbott is about to kill off Qantas as our national carrier,” – Adam Bandt.

    Business as usual for The Greens. Abbott needs to get all this bill up in the Senate along with the carbon and mining taxes and get plenty of media of the Labor-Green alliance voting them down.

    And just start editing it for 2016. Make sure Tits owns it at the next election.

  48. Armadillo

    Don’t know if you’re aware of it but

    Umm…yes I am aware of it. All of it. Qantas is a ‘closed shop’ and has been for decades. Mrs A’s father flew the Moscow-Tehran-Tokyo-New York route for 19 years. He also piloted the Shah of Iran on a test flight of the Tri Star (just prior to the revolution). He then flew Asia routes (out of Sri Lanka) for another 7. But he would have known fuck all about the industry and union influence. He was young and innocent, so I’m prepared to discount his opinions and recollections of the industry as irrelevant.

    Sorry to hear your flight got delayed.

  49. Grigory M

    Sorry to hear your flight got delayed.

    No fuckin’ worries.

  50. Grigory M

    But he would have known fuck all about the industry and union influence. He was young and innocent, so I’m prepared to discount his opinions and recollections of the industry as irrelevant.

    Yeah – probably a good thing. I’ll take your word for it.

  51. Armadillo

    Yeah – probably a good thing. I’ll take your word for it.

    I too am young and naive, so I believe you.

  52. Grigory M

    I too am young and naive, so I believe you.

    Not very old myself. Thought you might know about the Texas weather affecting DFW, you being an armadillo and all. And I can well imagine that Mohammad Reza Pahlavi would have been more than a little miffed if Mrs A’s dad had bunged on a strike while dropping that TriStar down across the Caspian and into Teheran airport.

  53. Armadillo

    Not very old myself.

    It shows. The ignorance is astounding. The trolling is telling.

  54. Grigory M

    Oh, FFS. Trolling? Huh? WTF is that bullshit about, Armadillo?

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