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BTCE Information Paper 35The transport and communications GBEs also provide significant a proportion ofAustralia’s infrastructure requirements, particularly in the area ofcommunications. As the quality and efficiency of this infrastructure is importantto our quality of life and economic well-being, the overall performance of theseGBEs in particular is significant for Australia as a whole.The following discussion of the transport and communications GBEs is notintended to be comprehensive. It concentrates on areas relevant to any analysisof their financial performance or efficiency or to a consideration of public: sectorinvolvement. The GBEs are discussed briefly in terms of function, marketstructure, origin, history, size and profitability, and the extent of Commonwealthequity. The size of the GBEs is discussed only in terms of the value of assetsand number of employees. Some mention is also made of the performancestandards which have been required of them. Profitability receives only broadcomment, as this area is covered in detail in chapter 3, and financial statisticscan be found in appendix II.QANTASQantas operates an international airline service under the government’ssingle-designation policy. This establishes Qantas as the sole carrier to exerciseAustralia’s international entitlements. It operates on a commercial basis in amarket subject to considerable competition.Qantas was not established under any formal legislation. However it is subjectto the Companies (Queensland) Code, and in addition operates under a set ofguidelines which the Commonwealth initially issued to the airline’s directors in1984, and which have recently been revised following the May 1988 GBE reformpackage.Qantas was originally formed in 1920 with the initial aim of establishing airtransport services linking rail depots in Queensland with Darwin. Its internationaloperations began in 1934 when Qantas Empire Airways Ltd (QEA) was formedwith Qantas and the British international carrier Imperial Airways each owning 50per cent.In 1946, the Australian government acquired the British share of QEA to reducethe unequal share of joint capacity on the Australia-United Kingdom route heldby the British. In 1947, the’ Government acquired the remaining 50 per cent ofshares in QEA, which were held by Australian private interests, thus establishingQEA as a fully government-owned airline. The company was renamed QantasAirways Ltd in 1967.Qantas was initially drawn into the public sector for a variety of reasons. In thelate 1930s and early war years, many countries moved to nationalise airtransportation and remove the monopoly control of the shipping companies overairlines, which it was thought could restrict development of international airservices. In the case of Qantas, there was also felt to be a need for control over4
Chapter 2a service seen as crucial to Australia’s national development, which involved thegeneration of national benefits not taken into account by private firms, particularlydefence benefits. There was concern over the ability of the previous owners tofinance development, and at the former exploitation of concessions by privateairline operators (Caucus 1988; Evatt 1988).Some of these reasons are no longer relevant. Those which tend to be advancedat present for retaining Qantas in public ownership include: the importance ofQantas as a national symbol, contributing to a positive perception of Australiaoverseas; contributions to the balance of payments; tourism promotion;involvement with high technology engineering and communication; andresponsiveness to Government policies in areas such as foreign affairs (Caucus1988; Evatt 1988).In terms of size, Qantas would rank amongst Australia’s top listed companies.The book value of its total assets in 1989 was $4570 million. It ranked 68th interms of assets among Australia’s largest enterprises (public and private) in theBusiness Review Weekly 1989 list ‘The Top 1000’. This list used Qantas’s assetsas at March .l 988: if Qantas assets as at June 1989 had been used, the rankingwould have been 38th in the same listing. In terms of turnover Qantas ranked22nd. In 1989 it employed an Australian-based staff of 15 400.Commonwealth equity at June 1989 amounted to $916.5 million, with $149.4million of this being provided by the Commonwealth as share capital. Details ofequity injections in Qantas are shown in table 2.1. Up to April 1989, theCommonwealth provided Qantas with explicit government guarantees on itsaircraft loans through specific legislation. Since 1984 Qantas has been requiredto seek Loan Council approval for its borrowings. The possibility of exemptionfrom the global limits is, however, being considered in the context of the GBEreforms. Qantas is fully liable for all relevant business taxes.Prior to the recent reform package, Qantas’s financial target, prescribed byMinisterial directive, was ‘to make a profit sufficient to pay a prescribed dividend’.The reform package required that a financial target for Qantas be agreed inadvance by the Minister with the Qantas board. It is likely to be expressed as anafter-tax profit level. The board is required to recommend a dividend, and consultwith the Minister. This dividend may be accepted or lowered by ageneral meetingof shareholders. Corporate plans are to be provided annually and are requiredto cover a period of three to five years. Assets are to be revalued at least onceevery five years. In addition, annual reports are to report on performance againsttargets.The historical cost data indicate that Qantas incurred losses in four of the 12 yearsto 1989, in terms of earnings before tax. Profitability in terms of returns to totalassets has generally been low compared with average Australian private sectorperformance (as measured by the Reserve Bank ‘all industries’ average or theStock Exchange ’all companies’ average: see appendix II for details). The lossesincurred by Qantas were associated with a downturn in the international aviation5
Page 1 and 2: BTE Publication SummaryFinancial Pe
Page 3 and 4: 0- Commonwealth of Australia 1990IS
Page 5 and 6: CONTENTSFOREWORDABSTRACTSUMMARYCHAP
Page 7 and 8: TABLES2.12.22.32.42.52.62.72.83.13.
Page 9 and 10: FIGURES3.1Gearing ratio -totaltrans
Page 11 and 12: ABSTRACTThis paper examines the fin
Page 13 and 14: CHAPTER 1 INTRODUCTIONIn October 19
Page 15: CHAPTER 2 GOVERNMENT BUSINESS ENTER
Page 19 and 20: Chapter 2shipping companies, Austra
Page 21 and 22: Chapter 2CIVIL AVIATION AUTHORITYTh
Page 23 and 24: Chapter 2It has been argued that th
Page 25 and 26: Chapter 2‘flhile ANL’s profit p
Page 27 and 28: Chapter 2AN’S financial objective
Page 29 and 30: Chapter 2Telecom ranked 1il th amon
Page 31 and 32: Chapter 2As in the case of Telecom,
Page 33 and 34: Chapter 2autonomy considerations du
Page 35 and 36: Chapter 2TABLE 2.8 COMMONWEALTH EQU
Page 37 and 38: BTCE Information Paper 35gauge, fro
Page 39 and 40: BTCE Information Paper 35Brambles,
Page 41 and 42: ~~BTCE Information Paper 35TABLE 3.
Page 43 and 44: BTCE Information Paper 35i20 7100 -
Page 45 and 46: BTCE Information Paper 35- Qantas"_
Page 47 and 48: BTCE Information Paper 35which they
Page 49 and 50: BTCE Information Paper 35Profitabil
Page 51 and 52: BTCE Information Paper 35per cent (
Page 53 and 54: BTCE Information Paper 3525 -/-x,,
Page 55 and 56: BTCE Information Paper 3560I4020& 6
Page 57 and 58: BTCE Information Paper 35TABLE 3.5
Page 59 and 60: BTCE Information Paper 352o 120 - ,
Page 61 and 62: + QantasBTCE Information Paper 3540
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BTCE Information Paper 35TABLE 4.1
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~~~ ~~~BTCE Information Paper 35TAB
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BTCE hformation Paper 35estimates t
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BTCE Information Paper 351 7LmL0//+
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BTCE Information Paper 35between -8
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BTCE Information Paper 35those of t
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BTCE Information Paper 35Estimates
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APPENDIX II FINANCIAL DATAThis appe
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Appendix l173
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~TABLE 11.1 (Cont.) QANTAS (CONSOLI
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TABLE 1.2 (Cont.) AUSTRALIAN AIRLIN
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Appendix IITABLE 11.4 FEDERAL AIRPO
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TABLE 11.5 (Cont.) AUSTRALIAN NATIO
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TABLE 11.6 (Cont.) AUSTRALIAN NATIO
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~.I .TABLE 11.7 (Cont.) TELECOM (CO
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TABLE 11.8 (Cont.) AUSTRALIA POST (
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TABLE 11.9 (Cont.) OTC LIMITED (FOR
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~~~~~TABLE 11.10 (Cont.) AUSSAT FIN
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Appendix I1TABLE 11.12Year ending30
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BTCE Information Paper 35In calcula
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BTCE Information Paper 35However, t
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APPENDIX IV LIABILITY FOR TAXATIONT
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Appendix /VTABLE IV.5 LIABILITY FOR
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REFERENCESAbbreviationsAASAGSMANCAA
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ReferencesHicks, J (1 939), Value a
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ABBREVIATIONSAAACLSAGSMAMSAANAANACA
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