Senate debates

Wednesday, 7 February 2007


Economics Committee; Reference

6:10 pm

Photo of Kerry O'BrienKerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Hansard source

From Labor’s point of view, Qantas is a crucial economic asset as well as a national icon. So we do believe that these financial arrangements, this takeover, warrant extremely close scrutiny. The best way to do this is, without a doubt, through the tried-and-true regulatory processes of the Foreign Investment Review Board and the Australian Competition and Consumer Commission, and we do welcome scrutiny of the Qantas deal by these bodies.

That process should create an opportunity for those who would acquire Qantas to give adequate assurances to, and satisfy the concerns of, Qantas’s staff and the Australian flying public. But we believe that we should look at the principles upon which we should consider this motion in these terms: if a Senate inquiry helps to scrutinise the deal and assist the regulatory process, then we will support it.

Since Airline Partners Australia have notified the Foreign Investment Review Board and supplied it with details of its bid for Qantas, I can see no reason why they would not be prepared to be open and transparent with a Senate inquiry. A Senate inquiry would give Airline Partners and Qantas the opportunity to make their case convincingly and, in this case, in a public forum. It is noteworthy that the Airline Partners bid for Qantas includes commitments to: remain Australia’s national flag carrier, with no intention to break up the airline; continue to employ and train thousands of Australians, with no intention to change Qantas’s existing strategy of continuing maintenance operations in Australia and creating globally competitive maintenance operations; continue its commitment to regional Australia, with no intention to reduce regional services; continue to operate under the same laws and regulations that apply today, including those restricting foreign ownership; continue to provide practical assistance to Australians in times of emergency; and retain Qantas’s highly recognised and regarded brand and logo. If we can rely on all of that, the buyers should probably have nothing to fear and everything to gain by opening the bid to scrutiny and demonstrating to the Australian people that they are serious about their commitments.

There is a matter which, I must say, gnaws at me. I have had occasion to look at matters such as the Qantas Sale Act and the processes that apply in relation to the operations of Qantas, and I had a look at the Qantas press releases about the creation of Jetstar international. Qantas were announcing that that was their new low-cost international operation. There was a problem with that, and the problem was that the Qantas Sale Act and their own memorandum of association, as I understand it, require that any international operations of Qantas be conducted under the Qantas brand. But this is an operation that is operating as Jetstar international.

How is that done without breaking the act? I am not a legal expert, but probably because Qantas have made arrangements with two citizens of another country to have them own 51 per cent, with Qantas to provide all of the aircraft, services and staff, as I understand it, for Jetstar international. What that tells me is that we need to be particularly cautious about legal arrangements that are in place and commitments that are given, and to understand them fully.

I think the Australian public would like to be assured that, if commitments are given, they are watertight commitments. I think they would like the Senate to look at arrangements which are put in place and make a judgement as to whether they can be circumvented, perhaps in the way that Qantas has found to be able to get out of the obligation to operate Jetstar international as a Qantas brand. That probably is being done for good commercial reasons but, without that arrangement as to ownership, it would breach the Qantas Sale Act. The intent of the Qantas Sale Act was that Qantas operating internationally would be the national flag carrier—it would have that kangaroo on the tail and it would retain that very distinctly Australian flavour.

Having said that, we were of the view—and we are very pleased that Senator Brown has agreed to amend his motion—that this matter pertained more to the Senate Standing Committee on Economics than to the Senate Standing Committee on Rural and Regional Affairs and Transport, which I might say performs very well. Qantas is a key part of our national economic infrastructure and therefore the appropriate forum for the inquiry is the Senate economics committee. We believe that, in relation to the regulatory environment in which this takeover is occurring, this inquiry could help to clarify the regulation of takeovers and foreign acquisitions and to improve public confidence in the regulatory process. For those reasons, the opposition will be supporting this proposed reference. It certainly is not one that could do any harm and it has the potential to do a great deal of good.


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