National carrier is another failure on the wrecked road of privatisation — and its daily ‘fails’ hurt everyone

By Bernard Keane

June 23, 2022

What does Qantas have in common with Telstra and the Commonwealth Bank? All were privatised in the 1990s, and all have delivered poorer services and slashed jobs. (Private Media)

With Qantas, an increasingly failed airline incapable of aviation basics like running on time or keeping people’s baggage, the nation’s travellers are facing the reality that long-distance travel is no longer reliable.

Those flying interstate for a business meeting now must factor in that their flight will be at best delayed, or possibly cancelled altogether — and if they’re foolish enough to check-in their luggage, the chance it may also be delayed or lost altogether. Lost time, lost productivity, lost possessions — and on a national scale. All the price of Qantas being run into the ground by its management and the man with a million excuses, Alan Joyce.

It’s suggestive of a developing-country airline, or Aeroflot in the Soviet Union. At least we can use online meetings, though — best stick to Zoom from now on, folks.

As the country’s major airline, any significant failings by Qantas flow directly into the economy and disrupt the lives and plans of millions of Australians. Qantas is systemically important, one of the sinews of the economy for both the conduct of business and tourism; its failures thus hurt Australia, not just the increasingly discredited airline.

Qantas has followed the same pattern of privatisation of large instrumentalities: since its sale, service levels have significantly deteriorated, the brand has become tarnished and its workforce has been repeatedly slashed. The same processes took place at two other entities sold during the 1990s: the Commonwealth Bank and Telstra. Around the world, corporatisation and privatisation have been the tools of choice for governments to deal with overstaffing of government organisations, often with highly unionised workers. But in the case of Qantas, management continues to attack its own workforce decades after the point where any ‘featherbedding’ has been consigned to the history books.

That inevitably flows through to the experience of customers. Qantas’ inability to get bags on the right flights, or even simply avoid losing luggage, is a direct result of Alan Joyce’s illegal sacking of baggage handlers during the pandemic, and the outsourcing of baggage handling to tax haven-based Swissport, which has long relied on casualisation and precarious work practices like shift splitting to keep costs down, and which now complains it can’t attract workers.

While Qantas has followed a very traditional trajectory of privatisation that has led to tens of thousands of sackings and declining services, Telstra and Qantas also delivered systemic failure as a result of privatisation. In selling Telstra, the Howard government sold its capacity to build major communications infrastructure. When Telstra refused to deliver even the most basic communications infrastructure required by Australians for internet services, Labor had to rebuild its capacity to design and deliver major infrastructure from the ground up via NBN Co, leading to extensive delays in the rollout of the NBN even without the Coalition wrecking it. Two decades of inadequate, developing-country standards of internet speed were the result.

The Commonwealth Bank’s failure was less sins of omission than commission. It turned on its own customers, seeing them not as clients with needs to be served or fellow Australians, but as easy marks to be gouged, exploited, ripped off and immiserated in the name of parting them from their money. Even now CBA, like other banks, is still paying out compensations to tens of thousands of people whose lives it damaged or in many cases wrecked across its now-abandoned wealth management and insurance arms. Even after the Hayne royal commission, CBA and other banks continue to exercise a massive influence of policymaking courtesy of big political donations.

For advocates of privatisation — such as myself — the outcomes are salutary, if not deeply alarming. Privatisation, done well, is supposed to deliver ongoing economic benefits, not just a sugar hit to government coffers when entities are sold, by replacing bureaucratic management with commercial-minded management that leads to quality services being delivered at a lower overall cost. Inevitably, however, privatisation was not done in a way intended to provide ongoing benefits but to maximise sale value, which meant selling entities with minimal competition or regulatory requirements for service delivery.

In the case of electricity privatisation, some of those benefits have been realised — price rises in states with privatised power generation have consistently been lower over the past decade than in states with government-owned generators. But the electricity market is very tightly regulated, and even that hasn’t stopped gouging by privatised and government-owned participants. The failure to regulate Telstra, the banks and Qantas as the core utilities they are, like electricity, has led to massive economic damage.

The billions earned from the sale of these enterprises have long since vanished into fiscal history, buried in the budget papers of decades past, but the damage from their privatisation persists to this very day.

This article is reproduced from our sister article Crikey.


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