The federal government has refused to provide a debt guarantee or a line of credit for Qantas but says it will relax ownership restrictions by repealing Part 3 of the Qantas Sale Act.
Amongst other provisions, Part 3 restricts foreign ownership of the airline to 49%. It restricts foreign airlines from owning more than 35% of Qantas. It stipulates that maintenance jobs are based in Australia. The full text of Part 3 is available here in a popup window.
The decision was announced by Prime Minister Tony Abbott, Deputy Prime Minister Warren Truss and Treasurer Joe Hockey at a press conference in Canberra tonight. Abbott said there was a two hour discussion of Qantas at today’s Cabinet meeting.
The Prime Minister said repeal of Section 3 did not mean Qantas would become foreign owned because it would still be subject to the 49% limit imposed by the Air Navigation Act. He said the existing Qantas Sale Act 1992 places restrictions on Qantas that advantage its competitors.
Abbott said it was time Qantas was freed from the shackles of the Sale Act so that it can compete internationally. He said the government would not play favourites and that the decision was about “giving everyone a fair go”. He said Virgin was an Australian company because it employed Australians.
Treasurer Joe Hockey said repeal of the Sale Act would provide a “level playing field”. Abbott said he had “faith” in Qantas. “If Australians are allowed to have a go there is nothing we can’t do,” he said.
Legislation to repeal Part 3 may be introduced this week.
- Listen to Abbott, Truss and Hockey (25m)
Joint press release from Prime Minister Tony Abbott, Deputy Prime Minister Warren Truss and Treasurer Joe Hockey.
LEVELLING THE AVIATION PLAYING FIELD
The Government will move to a single regulatory framework for all Australian international airlines.
As soon as possible, legislation will be introduced to remove the foreign ownership restrictions and conditions that apply to Qantas’ business operations contained in Part 3 of the Qantas Sale Act 1992.
Removing these conditions is the best way to ensure Qantas can secure Australian jobs now and into the future.
Australians want a strong and competitive Qantas. The existing Qantas Sale Act 1992 places restrictions on Qantas that advantage its competitors.
Like all other Australian international airlines, Qantas will continue to be subject to the Air Navigation Act 1920 (ANA). The ANA applies to both Virgin Australia and Jetstar.
The ANA effectively limits total foreign ownership of Australian international airlines to 49 per cent, but does not impose the additional restrictions on business operations that apply to Qantas under the Qantas Sale Act 1992.
These changes will provide business flexibility for Qantas consistent with other airlines based in Australia.
Foreign investment will continue to be subject to consideration and approval by the Foreign Investment Review Board.
This is the best policy response to the difficulties currently being faced by Qantas.
Legislation will be finalised and introduced as soon as practicable. Any changes to Qantas’ operations as a result of these changes are a matter for the Qantas board and management.