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QANTAS Flop makes budget blow-out certain

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Senator Jim Short Deputy Leader o f the Opposition in the Senate Shadow Minister for Finance ^ MEDIA ^

8l < R E L E A SE .

Assisting the Leader on Commonwealth/State Relations

SMF 115/92


Reports that the Qantas privatisation float is now unlikely to go ahead this financial year mean that a further Budget blow-out is even more certain.

The Minister for Finance, Mr Willis, has been warned by his own advisers to avoid a clash between the Qantas sale and the coming Federal Election.

As the Qantas float was expected to raise some $1.2 billion this financial year, the consequences for the final Budget outcome are obvious.

Mr Willis's quandary is entirely of his Prime Minister's own making.

As a direct result of Mr Keating's weak and confused leadership, the Government has performed a series of major policy backflips in the aviation area.

This has made it virtually impossible until recently for potential buyers of Qantas to have a clear understanding of the ground rules for the sale.

The Qantas Sale Bill, introduced into the Parliament a month ago, now limits overall foreign equity in the international carrier to 35%, with any single foreign investment to be no more than 25%.

The Bill precludes a 100% trade sale of Qantas to a foreign investor, like British Airways, with the condition that the equity is then sold down to the permitted 35% within a stipulated timeframe.


In February, the Government claimed that the Budget deficit for this financial year would be an estimated $8 billion. This was then revised in May to $10.5 bilhon and in the August Budget to $13.4 bilhon. The recent Government Financial Estimates from the Australian Bureau of

Statistics now suggest a 1992-93 deficit of $14.5 billion.

There is every prospect that the final deficit will be even larger.

A trade sale of even as much as, say, 40% of Qantas this financial year would still leave the Government at least $700 million short on its asset sales revenue as estimated in the Budget.

This alone would push the deficit to well over $15 billion.

The progressive blow-out in the Budget deficit is unsettling money markets and will soon put upward pressure on interest rates, if it is not doing so already.

The Government must as a matter of urgency come clean with the Australian public, and the financial markets, and issue a revised set of Budget estimates for 1992-93.

Canberra 30 November 1992

Contact: Rod Woolley (06)277 3119 (w), 288 9355 (h)