Issue 102: November 1994

Let’s look at the basics. The Government owns the Fac which in turn owns the airports. The Fac is very, very profitable, particularly as it services so eagerly its massive (and make-believe) government debt for originally acquiring the airports that we had already paid for long before its inception, though of course that’s another story! The Government needs extra funds to pay for its welfare and social obligations through the recession that it created (in its own words) that put more than a million people out of work. One way of raising this extra revenue is to sell off the farm. One of the first things to go are the airports. No big deal from where we stand as both the Fac and Qantas will perform better as privatised corporations free of the shackles of Government interference in their day to day commercial affairs.

However, instead of going to the market with a very strong and highly profitable Fac as a going concern, the Cabinet decides that it would be better served by selling off the airports individually or in small regional clusters. This way the profitable primary airport is swamped by its lesser viable neighbours and the sum is worth significantly less – but try telling that to a Finance Dept economist who doesn’t even understand where the Real World is, let alone what it is. Okay, that’s bad enough but then to appease the numerous factions within his party the Minister then comes up with a solution that sees the Government retaining title for the airports via leasing them for 50 years rather than selling them outright. Everybody’s kinda sorta happy and off we go to market.

However, the Minister, his Cabinet and the entire Alp has missed one subtle point. Who is going to be stupid enough to pay anything like the realistic value for a group of facilities with (a) marginal economic return (due to having to take the bad with the good) and (b) the spectre of a 50-year lease hanging over their corporate heads. Getting a tourist to buy the Sydney Harbour Bridge could well be easier!

For instance, if you buy Sydney’s profitable Mascot airport you also have to take in the fiscal cripples of Bankstown, Hoxton and Camden whilst Badgerys will be operated separately and as a competitor eating into your expected revenue from after the year 1998 and with Government blessing as it begins to price airline operations out of Sydney via its passenger noise levy which could add between $25 million and $35 million per annum to the cost of airlines operating from Australia’s premier airport (refer Airline Affairs). If you buy Tullamarine it looks like you also get saddled with all of Tasmania, Moorabbin and Essendon and likewise throughout the nation though fortunately the problem is not so bad in some of the smaller cities.

However, the real problem for aviation is that with a 50-year lease no operator is going to be very interested in investing in their airports towards the final third of the lease period. After all, why should they invest hundreds of millions of after-tax dollars on runway, taxiway and terminal upgrades when they may lose control of the airport a decade down the track. This move won’t be good for aviation, it won’t be good for Australia and it is the absolute least financially viable of a range of options open to the Government in making money from its disposal of the Fac. On the open market, privatised, without the Government’s make-believe debt, the Fac as we know it today would have brought in between $2 billion and $2.5 billion with generally nothing but good coming from the deal. This way, the Government will probably be lucky to raise a third of this figure and over a two or more year period as it attempts to find bidders silly enough to want to pay a king’s ransom for nothing more than a temporary lease.

Yes Minister Was Never This Far Fetched!

Don’t Hold Your Breath Dept

Remember our April issue Recce where we revealed that the Minister for Defence, Robert Ray, was planning to establish a proper infrastructure within Dod to be able to directly liaise with the various State’s emergency service organisations in the event of a national emergency such as flood or fire? It all looked like go with the crucial meetings logically set to take place well before the bushfires became an issue again and Australia faced a repeat of the tragedy of last summer.

During the last fire emergency, despite a fantastic effort by everybody concerned within Defence and the Ems community, there were dozens of examples where the lack of a central interface at the command and control level between the Dod and those at the front resulted in a less than satisfactory result of using the considerable assets available from Defence. In light of the ongoing drought and the long term predictions of a horrid summer, the establishment of this interface apparatus was considered a national priority by all involved.

And so, what has happened since our April Recce? Almost as ludicrous as the Yes Minister farce from our previous item, you will be inspired to learn that the Minister is to eventually meet with his State cohorts sometime in December. As these words are written, more than 100 fires are raging on a 2000 km front extending from north of Rockhampton to south of Nowra. Yet those concerned with doing something positive to make this summer survivable are to meet sometime in December, probably just as the Adf closes shop for the holidays and doesn’t return till the end of January. Fantastic effort Minister, we will all remember this as the inevitable occurs.

Additionally, to the best of our knowledge nothing has occurred on the concept of using high capacity buckets in the 3000 litre range (refer page 90 June 94 Aa) with the four dozen plus S-70s that the Adf operates while Newsdesk reports this issue that the plan to bring in several Canadair fire bombers for demonstrations this summer is also being delayed, if not stymied, by a seemingly endless web of bureaucratic indifference and buck passing.

The real tragedy is that the bushfires don’t move at the same glacial speed as our politicians and their assembled entourage of well-paid bureaucrats.