Forget management decisions and the bitter turf war with Virgin – it seems Labor’s refusal to repeal the tax is to blame

Tony Abbott singles out carbon tax as the main cause of Qantas woes

Tony Abbott – who is considering removing legislated foreign ownership restrictions on Qantas – claims Labor is threatening the airline’s ability to “still call Australia home” because it won’t repeal the carbon tax.

Yep, according to the Abbott government’s political argument on Monday, it’s the carbon tax that is the main cause of Qantas’s woes.

Not the bitter turf war between Qantas and Virgin, not the foreign-airline investments in rival Virgin, not the general pressures on international aviation, not the decisions and actions of Qantas management but the impost of the carbon pricing scheme on aviation fuel.

Of course, airline chief executives would rather not pay the carbon tax. Most chief executives would rather not pay most taxes.

The prime minister actually chided journalists for not giving greater airplay to a statement by Virgin chief executive John Borghetti on Friday that “the best assistance the government and the opposition can provide is the removal of the carbon tax, which is costing the industry hundreds of millions of dollars”.

That statement handily backed the government’s talking point – to get through the day until a cabinet decision on the Qantas Sale Act on Monday night – that Labor could fix Qantas’s troubles by passing the customs tariff amendment (carbon tax repeal) bill 2013 – the carbon tax repeal bill sitting in the Senate that pertains to aviation fuel.

“I do want Qantas to call Australia home,” Abbott said in response to a question from the opposition leader, Bill Shorten, referencing the airline’s old patriotic advertising campaign using the Peter Allen song sung by Aussie youth choirs.

“The best thing we can do if we want Qantas to call Australia home now and forever is to remove the shackles that are holding Qantas back … by this very day repealing the carbon tax.”

As the government has repeatedly reminded us, Qantas paid $106m in carbon tax and Virgin $27m.

But Qantas’s argument for government assistance is based on the idea that it is not competing on a level playing field, something that would not change if the carbon tax was repealed for all players.

And both Qantas and Virgin attempted to pass on the additional costs to customers with a ticket surcharge based on the distance flown – between $1.50 and $7.25 depending on the carrier and route.

‘‘In the context of the significant challenges facing the global aviation industry, the Qantas Group will be unable to absorb the additional costs associated with the carbon price,’’ the airline said in a statement at the time the carbon tax came in. ‘‘There will be a full pass-through to customers.’’

If Qantas ends up not “calling Australia home” it won’t be because of the carbon tax, but because of a deliberate decision of government to remove a legislative requirement that requires it to be majority Australian-owned.

There are arguments for and against that proposition, but the carbon tax argument is a political red herring.

Indeed Qantas later exposed it as such, with a spokesman saying: “Qantas’s current issues are not related to carbon pricing.

“We have been clear that levelling the playing field is the most important policy measure that needs to be fixed and with some urgency.”