Former Prime Minister Scott Morrison and then-treasurer Josh Frydenberg, no doubt with the counsel of Qantas chief executive Alan Joyce, repelled calls for a Qantas “bail-out” in early April 2020.
Yet, just as the pandemic gripped, they promptly began bailing it out. Virgin too, an airline 90% owned by foreign airlines and tax refugee Sir Richard Branson, a resident not only of the notorious tax haven, British Virgin Islands, but with his very own British Virgin island.
Although some $5 billion in public money has been lavished on the aviation sector, of which Qantas accounts for 70% in domestic terms, they never once called it a bail-out.
As Qantas shares plummeted to $2.36 in March 2020 — way off their highs of $7.34 three months earlier — Frydenberg opted for what the Coalition called their “market-led solution”.
The biggest beneficiaries of this $5 billion “market-led solution” were Qantas and Virgin shareholders. A good deal of it was via JobKeeper (for Qantas — as Virgin went into administration), a program which gave money straight to corporations, not to the employees themselves.
Big pay, big say
Since then, Qantas itself has wolfed down more than $2 billion in public money and shed 9400 staff. Some 2000 were axed unlawfully, according to the recent Federal Court decision. And now Joyce is back making acquisitions again, using the public rescue to buy other companies and a bunch of new planes. And his pay, along with other executives, is once again on the rise.
Joyce topped Australia’s pay leagues in 2018 with a thumping $24 million and has been one of Australia’s best paid executives over the years, if not the best, taking this mantle from the infamous Macquarie bankers, also ironically the winners from another government bail-out during the global financial crisis.
But what has the public got in return for its Morrison government largesse? Look no further than the MacBank logo for this answer … a slick donut.
Well, actually, we did get airport queues and chaos, a deluge of customer complaints, rising acrimony, falling service standards and another company simply too big to fail.
In effect, Joyce has been rewarded for breaking the law (he is appealing the Federal Court’s decision on unlawfully sacking 2000 Qantas staff, using Qantas subsidised shareholders’ funds, to the High Court). It has raked in more subsidies than any other company and the government has sponsored Joyce’s restructure of the airline and its new fleet, enhancing the value of Joyce’s own stock in the process.
As the pandemic hit and finance press dutifully toed the Qantas PR line, MichaelWest Media was arguing that the government should buy the business, not the company, wave goodbye to the shareholders, then refloat Qantas and Virgin for a profit when the pandemic was over and things returned to normal.
Nationalisation, in other words. That is, if Australia’s professed “superior economic managers” were to throw billions at these corporations in bail-out packages, surely they ought to get something in return for the people they were meant to represent — the Australian public.
Alas nationalism is a dirty word at the big end of town. There’s no money in it.
Did Morrison and co demand job guarantees from Qantas, service guarantees, tax reform to stave off another decade of Qantas paying little tax? None of that. They let their mollycoddled “free marketeers” skin them alive for public funding.
Just $5 billion in public money, a bail-out dressed up as “not a bail-out”. Typical of governments these days there was not even a skerrick of reform, not even the faintest debate about how these might be made better for the future.
How does Qantas get away with it?
Apart from pushing its faux neoliberal creed of free markets, Qantas has always been a sacred cow. Politicians and business leaders recline in comfort in their Qantas lounges, with Rupert Murdoch’s Sky News on their TV screens, enjoying their frequent fliers.
Yet the Spirit of Australia has vanished, replaced by an avaricious corporate monster preying on taxpayers at every turn.
'Free' market solutions?
Old codgers, such as this writer, will recall better times. Once, the staff were proud to work there. There were smiles from the check-in crew. Travellers would be met with a welcome, albeit slightly jarring Aussie accent when getting on a Qantas flight after time abroad. In 2010, even as the customer service was already in decline, there were 37,500 people working at Qantas. Now there are 22,000.
The result of this non-bail-out bail-out, this “market-led solution”, is that Qantas now enjoys an even larger slice of the domestic aviation market, the “golden triangle” or Melbourne to Sydney return route which is one of the world’s most profitable.
So the “free market” is more of a monopoly than ever, or at least since the collapse of Ansett, the decade prior.
Joyce totally outfoxed the Morrison government, even emerging from one negotiation with a subsidy of $1000 a flight, often more than the cost of the ticket itself, and on top of relief on landing fees, fuel excise and security charges. The $715 million regional assistance package which Joyce negotiated was even backdated by six weeks.
In Joyce’s defence, and as we have noted many times, Qantas is one of the toughest businesses to run. The size, logistics and myriad stakeholders make it the trickiest of corporate juggling acts.
And he has done it well, for shareholders. Oh that the government might display even a fraction of Joyce’s competence on behalf of taxpayers who they are supposed to represent. The pandemic too was a mighty juggle, a politician’s nightmare.
Even with the rush, the uncertainty and the tumult of the pandemic however, there has been not even the slightest evaluation of how these things might be handled in the next disaster. They could have ensured some quid pro quo or debated some serious issues for reform such as addressing the endless banking of tax losses.
But no, they have preferred to claim that markets know best while spraying those very markets with other peoples’ money.
The sharemarket value of Qantas was $3.3 billion when the Morrison government slotted them $2 billion in corporate welfare.
It’s now almost $10 billion. The way executives and boards tend to award remuneration is to strike options or share deals when share prices are low so the profits are maximised when the share prices rise again. We have not checked the complex Qantas remuneration structures, but Joyce himself has around 670,000 shares awarded to him. As the stock has recovered, he should be heading towards double-digit pay in the millions again.
He picked up $24 million in pay in 2019. It sank sharply and rose again last year by 19% to $2 million. If not for the war in Ukraine which sent oil prices soaring, Qantas shares would be well above $10 now. And had, theoretically, the government bought and refloated Virgin and Qantas it might have looked for $20 billion in IPO (initial public offering) proceeds for the public chit.
With customer dissatisfaction also soaring — particularly in the wake of recent airport chaos when Joyce slipped up and blamed travellers for not being “match fit” — this is a debate, corporate welfare that is, or Qantas’s self-interested “socialism”, will soon reach record altitudes.
You might not notice it in the mainstream media much though as Qantas, and we can report this from personal experience, is one of the country’s biggest advertisers and has a track record of being heavy-handed on the corporate media PR front.
[Published with permission from MichaelWest Media, where it first appeared on June 13.]