In the wake of further Covid angst in Australia, the airlines are once again laying off thousands of workers. One of the airlines, Qantas, formerly the publicly-owned national carrier announced last week major job cuts soon after it secured a rather substantial rescue package from the Federal government. Qantas makes a habit of crying poor despite paying its executives slavishly large salaries and aggressively using its market power to undermine smaller regional airlines that have served Australia for years. Mainstream economists, who were cheer boys for the privatisation in the first place, continue to extol the virtues of selling off the airline at bargain prices to private interests. The reality is however different. The airline provides an overpriced service and can no longer be considered the ‘national carrier’, even though it continues to trade on that reputation. So, today, Scott from Griffith University, who has been one of my regular research colleagues over a long period of time, reexamines the case in the light of recent evidence to bring the airline back into public ownership. Over to Scott …
With all the celebrating coming out of the Tokyo Olympic Games these past few weeks, we Australians have once again seen our unofficial sporting mascot, the boxing kangaroo, out and about in the media.
At the same time, there has also been another iconic kangaroo getting its fair share of media attention.
Amongst all the daily news about the Olympics, Covid-19 counts and lockdowns, the flying kangaroo (aka Qantas), our so-called national carrier, was in the news across several stories.
The ‘successful’ privatisation of Qantas?
First, we had an Sydney Morning Herald article (August 2, 2021) – Why government reforms often do more harm than good – by Ross Gittens the economics editor.
On face value, we can certainly resonate with that title.
But, in the same article, he argued that the privatisation of Qantas was a successful example of the government’s program of asset sell-offs.
For context, you can read about the history of Qantas and its privatisation in this blog post – Qantas should be nationalised (again) (November 3, 2011).
That blog post, documents Bill Mitchell’s experience in the 1980s researching and writing out the case to retain Qantas in public ownership – there was never a convincing case made by the Federal government – their case was all about not having enough money to recapitalise the airline that required some new planes.
Anyway, back to the story.
I am not sure what Ross Gittens’ definition of success is.
If it includes lining the pockets of senior executives, radically reducing the level of service, undermining the employment conditions of thousands of workers and removing services from regional communities, then yes, the Qantas privatisation has been a huge success.
If not, then it has been a huge failure!
You don’t need to look too far to see the damage that has been done as a result of Qantas’ journey into the private sphere.
The blog cited above tells us that the damage was there from day 1 in the 1980s when the Labor Government (acting as modern labour governments do – that is, against the interests of workers) privatised the national airline and transferred massive public assets to the private sector for hardly any return.
Fast forward to 2021 and things aren’t looking much better.
The corporate greed of highly paid senior executives continues (albeit at a much-reduced level thanks to Covid), the neo-liberal mantra of cost-cutting in the name of efficiency reigns supreme and the very same executives that complain about government interference in big business, beg the government to regulate landing rights in order to give them an edge over foreign government owned airlines.
Moreover, in times of national emergencies such as the Covid-19 pandemic, Qantas has reduced services to communities, often cutting flights at short notice, and placing more stress on local regional communities already reeling from the negative economic and health outcomes.
Help for the struggling airline industry
The second mention related to airlines more generally and came when our Deputy Prime Minister, Barnaby Joyce, announced on August 2, 2021 that a domestic airlines would get a significant boost from the federal government as a consequence of the on-going lockdowns that have grounded planes.
The UK Guardian article (August 2, 2021) – Morrison government unveils another airline lifeline as Queensland’s Covid outbreak worsens – reported that:
The Morrison government has unveiled a $100m program to help domestic airlines retain their staff through lockdowns and border closures …
… domestic airlines would be able to access a $750-a-week payment for 50% of their workforce if they could show a 30% downturn in their business since Sydney was declared a Covid-19 hotspot.
Two key pieces of Barnaby Joyce’s statement were that:
… the government had chosen to top up existing support for the sector to avert significant layoffs … [and] … This is a crucial sector of the economy, and it is crucial to keep a sovereign airline capacity.
So, the government is providing extra payments to the airline industry because it is an important industry for the economy and they want to avoid layoffs.
This is a nice sentiment from the government.
Pity it isn’t more widespread.
What about other ‘crucial’ sectors of the economy such as tertiary education and research (aka the university sector).
Here the government has refused to step in and help despite the fact that some of the very same reasons the airline industry has faltered (lack of international visitors) has also impacted on the university sector (lack of international students).
But I digress, the lack of support for other industries is a story for another day.
The airlines in Australia have already received significant government support.
During the height of the first wave of the COVID-19 pandemic the federal government announced a number of support packages including its ‘Job Keeper’ wage subsidy program as well as airline specific payments.
The Sydney Morning Herald article (September 18, 2020) – Alan Joyce’s pay falls to $1.7 million as pandemic clips Qantas’ wings notes that Qantas:
… collected $267 million in payments through the Job Keeper scheme last financial year, with most of that going to employees who were stood down from work, and the company receiving a $15 million net benefit from the wage subsidy and other government support packages.
All the while the Qantas CEO pocketed a mere 1.7 million dollars in salary (poor bloke he took a ‘pay ‘cut’) and:
… could still collect another $1.3 million worth of Qantas shares after the company decided to award executives half of their long-term equity bonuses, despite it falling to a $1.9 billion annual loss, standing down 20,000 staff, announcing almost 8000 redundancies and collecting Job Keeper payments.
Our former national carrier is another typical neo-liberal case of the senior executives doing really well while thousands of workers get shafted.
Qantas lays off workers
The third mention for our ‘national carrier’ was when Qantas announced on August 3, 2021 that in response to the prolonged COVID-19 lock-down of Sydney (due to the bumbling of the NSW state government and the inability of the federal government to administer quarantine and the vaccination program) it would be standing down 2500 employees for at least 2 months (source).
Didn’t Barnaby Joyce just announce (as above) a support package so airlines wouldn’t have to stand down staff?
Apparently, he did.
Perhaps the airline’s senior executives missed that memo.
From the sparse details it is not clear if the 2500 stood down workers will be eligible for the government payment, but it does appear that many will be ineligible.
The ABC Report (August 3, 2021) – Qantas stands down 2,500 staff due to Sydney lockdown – pointed out that:
There is also uncertainty as to which workers will be eligible for government COVID support payments, with only air crew and cabin crew eligible for the latest aviation-specific payment, and only ground crew living or working in COVID hotspots, such as Greater Sydney, eligible for the government’s general COVID relief.
One thing is for sure, the senior executives will still be sitting pretty and rewarded for doing such a great job presiding over a significantly reduced venture.
Only one solution for privatisation craziness
These 3 media spots all lead us to a common conclusion.
The privatisation of Qantas all those years ago has, like other privatisation examples, been less than a success.
If we really want sovereign airline capacity, as our nation’s leaders have suggested, then the answer is straight forward.
The government should immediately re-nationalise Qantas.
Just do it!
(Bill butts in: And sack Joyce and create a sensible pay structure)
A re-nationalised Qantas would support Barnaby Joyce’s call for a “sovereign airline”, one that worked for the benefit of the nation.
At the same time, it would provide improved service for the traveling public, increased routes and wouldn’t involve the government pumping money into the bank accounts of CEO’s and the like.
There would of course be the usual handwringing about the government bankrupting our grandchildren and how the government run airline will be oh so inefficient.
Wrong on both counts.
The federal government could easily buy out the equity in Qantas and return it to public hands.
Some legislation would be required and some logistical matters dealt with, but then it is a matter of typing numbers into a computer and voilà job done.
There would never be any question about bankrupting our grandchildren, in fact our grandchildren would be better off as they would be well served by a truly national airline.
On the efficiency front, this is just the old neo-liberal smokescreen used to justify the sell-off in the first place.
The truth is, there are plenty of government owned airlines that are constantly ranked above the flying Kangaroo in terms of performance.
In this blog post (also cited above) – Qantas should be nationalised (again) (November 3, 2011) – attention is drawn to the SkyTrax World Airline Awards.
For those that think that publicly-owned corporations are inherently inefficient then it is worth considering the 2011 SkyTrax World Airline Awards … Qantas ranked number 8 in 2011. Seven of the top 10 were either wholly or partly government-owned.
The most recent – SkyTrax World Airline Awards 2021 – deliver a similar result.
Even Qantas boss, Alan Joyce (no relation to Barnaby, our deputy PM) appears to recognise the efficiencies of government owned airlines.
When there was talk about the Australian government taking a major stake in Virgin Australia (our other major carrier) Joyce (March 20, 2020) was quoted as saying (Source):
It would be completely unfair to our sector. We’d be competing against the Australian government. Qantas couldn’t do that …
Mmmm. But I thought that the private sector was more efficient than the government?
Perhaps Alan Joyce actually knows the truth and is just playing along with the neo-liberal mantra so he gets to keep his well remunerated job?
Then there are those that argue (erroneously) that the government, facing inevitable fiscal constraints, would be (Source):
… reluctant to provide the extra capital needed to keep up with innovation and changing consumer needs.
Again, typical rubbish.
Any decisions like these would be based on political point scoring not fiscal pressures.
An airline owned by the federal government would be able to provide whatever upgrades and innovations needed to remain competitive in the global airline industry (hint: look at Singapore Airlines and Emirates for examples).
Two of Australia’s marsupial ‘icons’ the boxing kangaroo and the flying kangaroo made appearances in the media this past week or so.
For the boxing one, the news was associated with cheering and (false) nationalism surrounding the Olympics. The news about the flying one was a little more sobering.
The privatisation of Qantas back in the 1990s was a recipe for disaster and should be reversed.
A re-nationalised Qantas would ensure we actually had a ‘national airline’ not one that just pretends to be so.
It would bring life back to struggling communities and open up opportunities in tourism and other sectors.
A re-nationalised Qantas, together with other entities that were once government owned (banks, electricity generation etc), should be part of a blueprint to ensure that Australia develops into a just and sustainable society and economy that we all collectively need and deserve.
We could all then begin cheering for the flying one and the boxing one.
That is enough for today!
(c) Copyright 2021 William Mitchell. All Rights Reserved.