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Thursday, 14 June 1984
Page: 2994

Senator PETER RAE(11.04) —Of the two Bills with which we are dealing, the Australian National Airlines Amendment Bill seeks to make a number of amendments to the Australian National Airlines Act, many of which are drawn from a Bill which was introduced originally in 1980 by the honourable member for Gwydir, the Hon. Ralph Hunt, when he was Minister for Transport. The Opposition supports in every way the general intent of this legislation, without supporting its detail, the general intent being to improve the efficiency of the operations of Trans Australia Airlines. When we were in government we introduced a number of these measures.

The Australian National Airlines Commission Retention Bill 1984 is an expression of the present socialist Government's absolute opposition to the sale of Trans Australia Airlines. The Opposition will oppose the Bill. It repeals the legislation introduced by the former Government's National Party Minister for Transport, Mr Hunt. In 1981 the former Liberal-National Party Government introduced legislation which was designed to enable the consideration of the privatisation-to use the 'in' word-of TAA. That matter has quite a long history. I start by talking briefly about the two-airlines policy. After the Second World War the then socialist Government introduced legislation to establish what has become one of the world's greatest airlines- TAA. TAA has played a very important part in the development of Australia. Australian National Airways developed along with TAA and later merged with a small operator, Ansett, and became Ansett Airlines of Australia. Finally, a two-airline policy was developed . It was designed to give benefits and protection to each of the airlines-the government owned and operated airline, TAA, and the privately owned and operated airline, ANA, which became Ansett.

I believe that the two-airline policy served Australia well. It served the development of Australia. Our very large distances and our need for speedy travel and the consequent need for the development of efficient and safe airline services were such that a form of government assistance and protection was justified at that stage. I do not have any quarrel with the existence for many years of the two-airlines agreement. However, I believe that when it was recently renewed there was room for very considerable debate as to whether it ought to be renewed at all and, if it was to be renewed, the length of time for which it was to be renewed. I believe that the reason a majority of the then Government members supported the extension of the two-airlines agreement was that they were led to believe that both airlines had made very major investment undertakings which would update their aircraft and airline operations, one with the introduction of the Airbus and the renovation of the DC9s, and the other with the introduction of new Boeing aircraft, the latest model 737s, the new 727s and the 767s. I was eventually led to believe that those investment decisions-I forget the exact figure involved, but it was something approaching $ 1 billion-had been made upon some undertaking given by the Government of the day that there would be a continuation of a form of protection for the airlines to enable them to recover the investment which they were encouraged to make. That, I suppose, could be regarded as a legitimate government decision to encourage the further upgrading and modernisation of Australia's domestic airlines and to give some quid pro quo for that purpose.

The day is rapidly approaching when the justification for the two-airlines agreement and for the continued operation of a government airline will become thin if not untenable. By the end of this decade I do not think any government would be able to withstand the public criticism which would result if it were to continue the two-airlines agreement and the protection which the two-airlines agreement gives. The agreement has become almost a licence for inefficiency on the one hand and a licence for profitability on the other hand.

What has happened with regard to TAA has been extremely unfortunate. In many ways TAA has been operated as if it were a sector of the Public Service. It has been operated in a bureaucratic way to the detriment of the performance of its function and the performance of the very large number of dedicated and competent people who serve it. I am in no way criticising the operational activities of Trans Australia Airlines, and I want to make that quite clear. I emphasise to the Minister at the table, the Minister for Veterans' Affairs (Senator Gietzelt) , to all honourable senators in the chamber and to people elsewhere that I am not criticising the operational efficiency and safety record of TAA. But I do criticise the restraints put on it and the manner in which the business of the airline has to be carried out because it is operated as a statutory authority, a quango.

I will give one very simple example of what has happened. In 1973 TAA was required to provide the opportunity for its employees to come within the Commonwealth employees superannuation scheme. The effect of that requirement was that by 1981 the employer's contribution to the superannuation scheme had amounted to a liability of some $240m, which was more than the total of all of the profit that TAA had made in its 37 years of operation, all of the income tax that it had paid in all of the 37 years of its operation and the market capitalisation of its assets at the time. In a period of eight years, in respect of only a percentage of TAA's employees who were subject to Commonwealth superannuation, liability greater than all of TAA's profits, income tax and assets was run up. To expect that business to be conducted on that basis is just absurd.

The reason TAA had a liability and was not simply declared bankrupt was that statutory authorities do not go bankrupt. The taxpayer is the universal guarantor of statutory authorities. If we have a statutory authority which, for some reason, has to be bailed out-be it that a liability such as this has been imposed on it or, as has been the case with many statutory authorities, that there has been the case with many statutory authorities, that there has been sheer inefficiency-bail it out the taxpayer does. So, in respect of TAA, every person in Australia who pays tax over the next 20 years or so will be paying part of the accrued liability arising from its operation from 1973 onwards.

Whilst socialist idealogues may think that it is highly desirable that we have a continuing government enterprise, I just ask the taxpayers of Australia to remember what that theory, that ideology, will cost them in dollars and cents out of their pockets over the years to come. The Government has had to acknowledge that it will accept the responsibility for what TAA's management said it could not and would not provide, which is the employer's contribution towards Commonwealth superannuation. The Commonwealth superannuation scheme is very different from most private sector schemes. The average employer's contribution to superannuation is from 1 1/2 to a maximum of 2 1/2 times the employee's contribution. Under the Commonwealth superannuation scheme the employer contributes nearly 4 1/4 times the employee's contribution. In other words, the employer's contribution is very high, somewhere between two and three times as high as the contribution which applies in the private scheme.

One may say that perhaps that is necessary when one bears in mind the nature of the permanent Public Service and some of the opportunities which its members are denied and deprived of and which would be available to others, and that therefore they should be entitled to a better superannuation scheme than applies in the private sector. But how on earth that can be said to apply to the operation of an airline, an Australia Post courier service or whatever other business activity the Government decides to get involved with, I simply do not know. I find the story about the problem of superannuation to be the best way to sum up the whole of the problem of TAA's having operated, in financial terms, disastrously. It has cost the taxpayer and will continue to cost the taxpayer a very considerable amount of money. I am not talking about the injections of capital. I believe that the Government did the right thing by injecting a greater amount of capital into the airline so that it could operate at a better gearing ratio and one which would make it possible to compare its financial operational activities with those of its competitor, Ansett, and of some of its international competitors.

The position is that TAA has been run as a semi-government business. It has been neither one thing nor the other. It has not been able to operate with the freedom, efficiency and efficacy of business decision-making and business operation which would apply to any publicly listed company. It has operated with the advantages of such things as government guarantees and special government protection and it has operated with the imposition of bureaucratic rules in relation to the recruitment of staff, the payment of staff, appeals and other provisions which are all regarded as appropriate to the Public Service Act but which are entirely inappropriate to the conduct of a business. To use a colloqualism, I dips my lid to those who have valiantly tried to run TAA on something approaching a business basis. Unfortunately, others have been content simply to continue to accept the benefits of TAA's being a quango. Being a quango has considerable advantages. In fact, if one establishes a committee of inquiry into some problem one will find almost certainly that that committee of inquiry will recommend the creation of a quango, a statutory body to overcome the problem. Strange as it may seem, the specification of those people who are to be appointed to the authority is likely to fall within the specification of the people who make the recommendation. It must be a good life in the quangos, otherwise we would not have so many and we would not have so many recommendations for them.

Let me go on to say that any measures which can be taken and which are proposed in the current legislation to make TAA more like a publicly listed company, more like a private sector operation, will be supported by the Opposition. The idea that in no circumstances whatsoever must TAA ever be sold is an ideological position about which the parties are identifiably on absolutely opposite sides. That difference is identified as clearly as it can be identified. I understand that my colleague Senator MacGibbon, amongst others, will be speaking in relation to other aspects of that matter, and I will not spend a great deal of time on it. Let me simply put it this way. If TAA is able to be operated as a business, why should it not be operated subject to the Companies Act? Why does the Government have to have either whole ownership or even a majority ownership? Why, for instance, should not the employees of TAA have an opportunity to have an equity holding in the business in which perhaps they are spending their lifetime giving their service? Why should they not benefit from the efficiency which they are able to contribute towards the operation of that business? Why should TAA not have a public company structure, a structure in which shares are available to employees? Why should shares not be available to other Australian citizens who may wish to invest in one of the very good airlines of the world? Why do the taxpayers as a whole have to own TAA, unless we simply say that we want nationalised, centralised ownership of assets not only of airlines but also of other things such as banks and other institutions?

The difference is between those who believe that the private enterprise system has been extremely efficient in the various parts of the world in which it has been permitted to operate and those who believe that centrally controlled, government owned enterprise is efficient. If we simply look at the Council for Mutual Economic Assistance as opposed to the Organisation for Economic Co- operation and Development, we will find the record of the success or otherwise of those two systems. The members of Comecon, the communist, centralised government countries, have an abysmal record of production, an abysmal record of economic growth, an abysmal record of trading practices, an abysmal record of individual rights and an abysmal record as nations. Member nations of the OECD have over a period, by and large, provided to their citizens the greatest freedoms and the greatest opportunity for the increase of wealth and the free participation of those people who are prepared to work a little harder to get a larger share, those who are a little more competent, those who are prepared to take greater risks to get a slightly greater share. The net result, of course, has been a huge difference in the growth rates of the two areas.

Unfortunately, I have been suffering from a throat infection and my voice is weakening. There are many other matters in regard to these Bills to which I would have liked to refer in more detail. However, let me try to summarise what I have said. The sale of TAA is a commitment of the Opposition. It does not mean that we would sell it without conditions. It does not mean that we would sell it willy-nilly or for some ideological reason, simply saying that we need to sell it because that is our philosophical position. The reason that we would sell it is that we believe the employees of TAA, the owners, the people of Australia, the taxpayers of Australia and all the future air travellers in Australia will all be better off if it is operated as a public listed company in which the shareholding is available to employees and others and there is adequate protection to ensure that no monopoly situation arises.

The scream which is raised regularly when one mentions this question of the sale of TAA is that within a short time we will have a monopoly. Well, we do have trade practices legislation and other forms of legislation which are designed to prevent or to limit monopolies. It would be extremely easy, when forming the public company TAA, to ensure that it could not be taken over by Ansett or by those with a majority holding in Ansett. That is a simple matter, the detail of which one does not need to go into. Anyone who raises that complaint does so only from ignorance of company law and structure, not from any other basis unless it is just simply a scare tactic. From an efficiency point of view I believe, from talks with employees of TAA, members of the Australian National Airlines Commission through to the various sections of staff, hostesses , pilots and others, that most of them would prefer to be free of the semi- Public Service restriction which is imposed on TAA at the moment. Most of them are happy to be free of the Commonwealth superannuation scheme, its huge imposition and its limitation on the way in which they are able to operate that airline.

Again I indicate that the comments I have made are not by way of criticism of the efficiency, operation or competency of the general staff of TAA. I compliment them for running what I believe is one of the world's great airlines. I just wish they could have an opportunity to make it a greater airline. The way in which that could happen is by the privatisation of TAA, by enabling it to be operated as a public company, free from restrictions other than those imposed on all other operators of public companies or all operators in that sector of business activity. The Bill which goes some way towards introducing some of the measures which the former Government had in mind and which gives TAA greater freedom and greater opportunity to operate will be warmly supported by the Opposition. But the Bill which states that under no circumstances whatsoever should TAA ever be able to be sold-in other words, under no circumstances whatsoever should it ever be given a real chance-the Opposition will be opposing and voting against.