Qantas: A Case for Public Ownership
There is now only one way of ensuring Qantas continues as an Australian airline: returning it to public (the Australian Government’s) ownership as existed before Keating’s 1993 privatisation. Qantas is an integral part of the Australian economy employing 32,000 and indirectly responsible for the employment of many thousands more servicing its operations. Qantas has been part of the Australian ethos for generations and an Australian icon throughout the world. Its current and previous board and CEOs have driven the company into its present quagmire through outsourcing much critical maintenance, abandoning key overseas destinations thus narrowing its clientele, diverting international passengers flying to a European destination other than London to a foreign airline in Dubai, closing down the airline in 2011 “to stand up to the unions” and stranding scores of thousands of passengers, establishing several Asian Jetstar airlines which have incurred substantial losses, loading Qantas with much of the cost of servicing Jetstar, and entering into cut-throat competition with Virgin causing substantial excess capacity on competing routes.
Should the Government stand aside while Qantas now sacks 5,000 workers? To return it to public ownership, as in many developed economies, would be at no cost to taxpayers if it returned to its previous profitable trading. By contrast, if Qantas continues on its current path the taxpayer cost of merely downsizing, let alone its possible demise, is likely to cost taxpayers over $1 billion through inevitable unemployment and social service payments. The Government could readily borrow to purchase Qantas’ $2 billion share capital now at its lowest ever cost. With interest rates also at an all-time low the annual interest cost would be under $80 million and become part of Qantas’ cost structure. A new competent Board and CEO, combined with less accommodating government policy to foreign subsidised airlines, should soon return Qantas to profitability. This occurred in New Zealand after their national carrier was renationalised. It would then be appropriate to spell out the important role of our national airline.
It’s difficult to understand how a Government prepared to spend many billions of dollars of taxpayers money on building new submarines (for what purpose) is unprepared to borrow a small part of the community’s savings to buy a long established enterprise iconic in Australia and throughout the world and at no cost to the budget because it operates in the market. The current priority of a privately owned Qantas is to make profits for shareholders. Under Government ownership the priority was, and should be, to run a quality , safe airline. Even if it were only to “break even” it could once again become an airline of which all Australians could be proud and which would serve as a symbol to the world of Australia as a modern, well-run nation. Simply in expanded trade and tourism this should be worth billions to the economy.
About the Author
Immediately after graduating in economics in the 1950s, Harold founded and edited VOICE, The Australian Independent Monthly. It lasted for five years. As a journal of comment its contributors included many of the most respected authorities on economic and political issues of the time. He wrote Vietnam, Myth and Reality in 1967. It went into several printings. Harold has written many articles which have appeared in the Herald, Bulletin, Quadrant, National Times, Australian Options, the Journal of Australian Political Economy and others. Before retiring he taught economics for 27 years.
Disclaimer: Harold Levien did not receive any funding from institutions, public or private, in the preparation of this post, and the views expressed are their own and do not necessarily reflect those of the Journal of Australian Political Economy or the University of Sydney.
