Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

The Qantas Sale Amendment (Still Call Australia Home) Bill 2011 is in a sense parallel to the bill that we have just been discussing. I should acknowledge that it is a bill introduced with Senator Bob Brown of the Australian Greens. I would also like to thank Senator John Madigan for his support of this bill, and I understand he will be making a contribution on this. If I have to introduce a similar bill down the track I am very confident that Senator Madigan will be a close sponsor of any future legislation.

On 29 October last year Qantas CEO Alan Joyce took the unprecedented step of grounding the entire airline in response to so-called 'damaging industrial action', to quote him. Across the world 108 aircraft were stranded at 22 airports, over 70,000 passengers were affected and the whole exercise cost countless millions of dollars—estimated at well over $200 million—with an even greater cost to Qantas's image. It was an extraordinary decision for one man to make. It was a decision that affected the nation's economy. It was a decision that seemingly grounded Australia and brought Australia to its knees because of the impact that it had on the tourism sector and the disruption to business and to passengers around the country and around the world.

By this time the lockout was only one link in a chain of extraordinary incidents for a company that was once a byword for Australian values. What was crystal clear was that the current management of Qantas were prepared to alienate their loyal passengers in a similar way to how they alienated their loyal workforce. Furthermore, they did so against a self-portrait of an international operation already bleeding losses everywhere, an operation that they seemed happy to sacrifice to feed the offshore hunger of the Jetstar franchise. So what will be left behind?

This bill aims to amend the Qantas Sale Act to require that Qantas and its subsidiaries and associated entities that exercise Australian rights remain predominantly Australian based. The bill is a response to the very real fears about the future direction of Qantas and whether Australia will be left with nothing more than a shell company bearing the famous flying kangaroo brand.

Alan Joyce joined Qantas in 2000 after a stint at Ansett. He became CEO of Jetstar in 2003 and CEO of Qantas in 2008. He is clearly a very intelligent man, clearly very capable. His background in mathematics probably stands him in good stead for running an international airline. But his time at Qantas has been marked by major changes in direction for the airline and I think they are major changes that have been thoroughly endorsed by the board. Those changes concern me and they concern many Australians. What was once a leading premium airline in Australia is now at risk of being cannibalised by its own subsidiary, Jetstar. That is the problem.

I note that it was the Keating government that privatised Qantas, and I read the Hansard debates for when then Prime Minister Keating gave the reasons for that. It was about having a competitive airline; it was about ensuring that the Qantas brand could grow. But at no time during that whole debate was it anticipated by anyone, if you read the Hansard debates, that a subsidiary of Qantas could end up cannibalising the parent. At no time was it considered that a subsidiary would grow so big that it could be flogged off, perhaps in a private equity deal, and challenge the viability of the parent company. Right now there is nothing to stop Jetstar being sold off, perhaps in a private equity deal, so that it competes directly with Qantas.

When I have spoken privately to the management of Qantas they have said, 'Look, we would never do that. Why would we do that? Why would we damage our brand in that way?' My retort to that is: if that is the case, you would not oppose any legislation that would restrict your ability to sell off a subsidiary, because that is what is at risk here. I will talk shortly about how big Jetstar has grown compared to Qantas, how Qantas is shrinking in relative terms to Jetstar and the implications that has for our national carrier.

In 2005, in an interview with Alan Kohler on Inside Business, then Qantas CEO Geoff Dixon said he did not think that Jetstar would ever be more than 20 per cent of the size of Qantas. He was wrong. With 86 aircraft to Qantas's 198, Jetstar is now over 40 per cent of Qantas's size. Given that Jetstar has announced plans to grow its fleet to 131 aircraft by 2014, the budget airline is not done yet. If this increase is achieved, Jetstar will be over 60 per cent of the size of its parent. It really seems that for Jetstar the sky is the limit, whereas Qantas is in a completely different category. If Jetstar can achieve this rate of growth, there is a very real possibility that Qantas will be stymied because of competition from its own subsidiary. It is a case of its own brand being cannibalised, but there is nothing in the Qantas Sale Act that prevents that.

Of course, there is no guarantee that Jetstar will be able to meet those targets. But Bruce Buchanan, the CEO of Jetstar, in the Sydney Morning Herald in July last year, reported that Jetstar was planning to increase its fleet in the Asia-Pacific to over 400 aircraft by 2020. That would require a compound annual growth rate of something like 40 per cent. Unless I misunderstood what Mr Buchanan said, that is a lot higher than the compound annual growth rates estimated by the International Air Transport Association, which suggests 5.9 per cent growth in international passengers and 5.7 per cent in domestic. This is not a comforting thought for the future of Jetstar in this area, particularly given the performance of Jetstar Pacific and Jetstar Asia. And let's put this in context. A thousand Australians were made redundant at Qantas as a result of a strategy announced last year by Mr Joyce, saying that Qantas International was losing money—that Qantas International was struggling and that in order to survive it had to pare back and trim its international operations because they were not viable. He said that was why Qantas had to have a premium airline brand based in Asia, firstly in Singapore, then in Malaysia and most recently in Hong Kong. It is worth mentioning that, when Singapore fell through, off Qantas management went to Malaysia—to Kuala Lumpur—but that fell through as well. Announcements were made that that was not going to be viable. More recently, Qantas has announced that it is going to set up a hub, or an offshoot subsidiary, in Hong Kong. Well, the last time I checked, Qantas had not even secured rights to fly out of Hong Kong. I do not think they have checked the agreements that go back to the time of British colonial rule. They have not checked to see what Cathay Pacific will be doing. Cathay will be resisting that ferociously. So here we have a plan announced to the world when there are no actual rights to fly out of Hong Kong at this stage.

But let us look at what has happened with Jetstar Asia and Jetstar Pacific. In December last year the head of corporate communications at Qantas, Olivia Wirth, said, in an interview on the PM program with the ABC's Matt Peacock, that Jetstar Pacific was 'very close to break even'. That was in response to a report in Viet Nam Newsthat quoted the deputy head of the Civil Aviation Administration of Vietnam, Dinh Viet Thang, as saying during a briefing at the Ministry of Transport that Jetstar Pacific would merge with the national flag carrier, Vietnam Airlines, in a move that was considered the most feasible plan to save the airline from bankruptcy. On the other hand, according to a report in the Sydney Morning Herald, Jetstar Asia's profits have relied on aircraft it has been leasing back to Jetstar Australia. I have seen the books. It seems that but for those leasing arrangements Jetstar Asia, based in Singapore, would not be making any money; it would actually be losing money. So if the future of Qantas involves expanding through Jetstar to offshoots in Asia then I cannot see where the business plan is, given how they have been struggling.

Labyrinthine leasing agreements within the Qantas Group seem to be the way to do business. During a Senate committee inquiry into this bill, I asked Mr Alan Joyce about Qantas's leasing arrangement with New Zealand subsidiary Jetconnect. As a director of Jetconnect, Mr Joyce is required to sign off on the company's accounts. Despite this, he was unable—initially—to clarify a line in the accounts entitled 'aircraft operating variable', with an expenditure of $23.9 million. Often in the aviation industry that line refers to fuel costs. At first Mr Joyce thought this item would include fuel costs. However, he later corrected himself, after obtaining advice—and he should be given credit for that—stating that in Jetconnect's case this item did not include fuel but did include aircraft ownership costs and the lease of those aircraft.

He went on to clarify:

The Qantas group purchases aircraft and allocates them to Jetconnect business, and the Jetconnect business operates those aircraft and charges them back.

It should be pointed out that, as a result of a Fair Work Australia hearing into this, some very critical comments have been made about the nature of that arrangement and how little the CEO of Jetconnect knew about that arrangement at the time. Some say this is a sham arrangement, and I think there is some truth to that.

So it appears Qantas runs an international leasing business, purportedly at market rates, whereby it has significant control over one of the biggest items in Jetconnect's profit and loss account while at the same time keeping the balance sheet free of capital assets. But it gets even more confusing. Because Jetconnect is a wholly owned subsidiary, all this information is put back into Qantas's mainline books. To a financial layperson like me, Qantas seems to be charging itself to lease planes it already owns.

So what is the purpose of Jetconnect, other than the provision of a New Zealand entity—which can therefore employ New Zealand staff at a much lower pay rate than in Australia? I have spoken in this place before about my concern relating to the Qantas Group's allocations of costs versus profits, whereby Qantas seems to carry many of Jetstar's costs while most of the profits appear to be shifted the other way. Qantas and Jetstar management deny that. They say that is not the case. But it is very concerning that in February 2011 the Qantas Group was able to announce an underlying profit of $417 million for the half year ending 31 December 2010. However, on 24 August 2011—six months later—there was a drastic turnaround, with Qantas International reporting a loss of over $200 million and making comments that a continuation of this would be unsustainable.

But Mr Alan Joyce confirmed, in the context of the Senate inquiry that took place in November last year, that the accounting standards that apply to other parts of the Qantas Group's operations, such as the frequent flyer program and freight—Australian Accounting Standard 8, as I remember it—do not apply to Qantas International. So basically there is a lot of discretion in terms of what Qantas can say in respect of that. During the committee inquiry for this bill Mr Joyce indicated that this result was due to Qantas Domestic making enough profit to cover the international operation's losses. He also stated that releasing this information earlier, during the February announcement, did not fall under the disclosure requirements in the Corporations Act.

I think it is worth reflecting on what some commentators have said about Qantas's strategy. I think a very good summary was made by Ian Verrender in the business section of the Fairfax papers. In an article headed 'Joyce's Qantas is off course', dated 13 March 2012, Mr Verrender says that the Qantas Group claims its decision to establish a new premium airline in Asia was based on Qantas's financial state. In reality, as Mr Verrender wrote in the Fairfax media:

… it was first and foremost a threat—a hollow one—to its workforce rather than a legitimate blueprint to turn around the company's fortunes.

What has happened since then has confirmed that, given that there has been a flame-out of the Malaysian solution for Qantas. Now they have gone off to Hong Kong, and I think that will fall the same way.

Verrender goes on:

It would be unfair to label the abandoned Asian plan as half-baked for it never reached that stage.

You don't need to be an aviation expert to realise the problem facing the industry is overcapacity. So how on earth does establishing a new airline solve that? And wouldn't it merely cannibalise your existing business?

The concern then becomes: what was the intention of the Asia plan?

Qantas is currently bound by the 49 per cent rule in the Qantas Sale Act, which means essentially that no more than 49 per cent of the airline can be foreign owned, leaving the majority as Australian owned. But just because Qantas has to keep operating to satisfy the Qantas Sale Act does not mean that its assets cannot be shifted to another airline, one that is not bound by the act. It would seem, based on the fact that the Department of Infrastructure and Transport, with the imprimatur of successive governments, has turned a blind eye to the spawning of various subsidiaries, that any airline could fit that description—an airline, for example, operating as a budget airline in Australia or as a premium service in Asia. Correspondingly, there is nothing to stop those subsidiaries being sold off for a tidy profit, with no compulsion to reinvest in the original business. It would put serious pressures on Qantas if that occurred. Qantas say they will not do it. If they will not do it, what is wrong with having legislation in place to apply those rules to subsidiaries? I challenge the government and the opposition to deny that, under the current terms of the Qantas Sale Act, there is nothing to stop Jetstar being sold off to a private equity firm, a private equity firm that could then compete head-to-head with Qantas on the same routes that Qantas flies, in a way that would compromise the long-term viability of Qantas.

Recent announcements have seen the shedding of hundreds of Qantas jobs around Australia. So far the airline have promised that none of these jobs will go overseas. But these job losses do not take into account the critical mass needed for maintenance. I acknowledge the work that Senator Madigan has done on issues of Australian manufacturing, the importance of having maintenance in Australia. Qantas say that its A380 fleet is not big enough to have the maintenance done in Australia. With its Dreamliners, the Boeing 787s, I hope that Qantas will make a decision to locate in Australia for all its maintenance, including its heavy maintenance. If Qantas moves other maintenance offshore while phasing out its 747s, its maintenance activities here could become totally unviable. I hope we never get to that stage.

We have already seen the start of the end of some of Qantas's more significant maintenance facilities. In his book The Men who Killed Qantas, Matthew Benns writes:

Qantas built its enviable jet safety record on a superb, well-trained and well-funded engineering department that maintained planes to an impeccable standard.

Qantas is full of staff who reminisce about the good old days because the future does not look so bright. They are worried about what will happen tomorrow—not just to their jobs, but to the people who have trusted them with their lives.

There has been discussion about the intention of the Qantas Sale Act, about whether it should still be abided by or whether it is simply an extra burden for an airline to carry on in a difficult market. Most of the recent discussion has been centred around Virgin Australia's plans to drastically reshape its ownership structure to allow more foreign investment. Essentially, current laws limit Australian international flag carriers to a maximum of 49 per cent foreign ownership but allow domestic airlines to be fully foreign owned. The only way to maximise foreign investment is to separate the domestic and international operations into independently managed and controlled entities. That is why I asked a question in the Senate not so long ago about Virgin Australia's plans. This is an issue that affects not just Qantas but also other Australian based carriers that fly overseas.

In short, Virgin Australia could well become a domestic airline that owns an independently run international business. Something of a burning question for me is: who establishes that legal and practical independence and by what means? Importantly, is the decision transparent; moreover, is it reviewable? In the broad context of the intent of the Air Navigation Act, should the foreign ownership limitations be so easily avoided by a corporate restructuring as is proposed? And, in the narrower context of the Qantas Sale Act, should Qantas be free to do the same?

This bill is about not just the future direction of Qantas but the future direction of Australian aviation. We saw what the lockdown meant to the Australian economy and to the Australian people just a few short months ago. The Qantas Sale Act has loopholes that this bill is intending to rectify. My challenge to my colleagues in the opposition and in the government is to say that the act in its current form which has been endorsed by successive governments will not prevent Jetstar being sold off to a private equity company. When I sum up in relation to this bill, it will be worth reflecting on what would have happened to Qantas, one of the great Australian companies, one of the most recognisable Australian companies in the world, if that private equity deal that was mooted back in 2007 had actually gone ahead? If it had, I do not think we would have a Qantas today. That is why I urge my colleagues to support this bill.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

I rise to contribute to the Qantas Sale Amendment (Still Call Australia Home) Bill 2011. But, firstly, I want to acknowledge the hard work and commitment from Senator Xenophon. I also want to acknowledge my fellow RAT committee member and friend Senator Gallacher—for those who do not know what RAT is, it is the Rural and Regional Affairs and Transport Committee. We saw a few cameo appearances on the way, including from Senator Edwards, who was at each and every hearing, and from Senator Ludlam, who made a very good contribution early in the piece.

Before I go further, I really need to clarify one very, very important issue. The beauty of being able to contribute to Senate debates and to parliamentary debates is that our second-reading contributions can be far-reaching, as they involve every topic that may be around on the day. Senator Edwards made a statement that desperately needs to be corrected. Senator Edwards, dutifully reading from the notes from the shadow minister for transport's office—Mr Truss, I think—actually had a little crack at us because the modus operandi of the opposition seems to be, 'We have to turn everything around to the carbon tax.' I heard a contribution that had nothing to do with the bill—and that is fine. Senator Edwards chastised the Gillard government for increasing the passenger movement charges by some 17 per cent—which is correct. The reasons for these passenger movement charges are many. As you would know Mr Acting Deputy President Marshall, with your vast experience in the aviation industry, they cover things like airport security, biosecurity and the like. We also know after that very tragic incident at Sydney airport in 2009 or 2010, when the bikies were warring each other, we should put taxpayer funds into increasing not only biosecurity but also aviation security.

But it is rather hypocritical for someone on the other side to make this an issue when back in 2001, with the support of the Labor opposition, the then minister—I believe it was Warren Truss but if I am mistaken I will correct that—raised the PMC charges by some 26 per cent. I am led to believe that back in 2001 we had some very serious issues with foot and mouth disease. If the opposition wants to have a go at us for putting Australia's aviation security and biosecurity security at the forefront of protecting our great country then I suggest that, rather than suffering from foot and mouth disease, Senator Edwards, through no fault of his own but with the help of Mr Truss, has just suffered foot in mouth.

Moving to the bill: as I said, it was referred to the Rural Affairs and Transport Legislation Committee. We held three public meetings, the first here in Canberra on 4 November 2011. The only unfortunate part of that was it was very hard to get into the nuts and bolts of the bill, because, as we would be well aware, the previous week saw the unprecedented decision to shut down our national carrier. Quite rightly, senators were not only aghast but also quite cranky. The majority of the committee directed questioning around the reasons for not only jeopardising the travel plans of some 80,000 passengers—not only in Australia but also throughout the world—but also causing the immense damage it did to our economy. The committee asked how we could ever have got to the stage where one person—that is what Mr Joyce is—could make the decision to ground the national carrier?

We also took evidence in that inquiry of aircraft not only being grounded once they had landed but also actually being pushed off. The evidence is in Hansard, in the public arena, from one of the pilots through the Australian and International Pilots Association, that the aircraft was boarded, the doors had been shut, and the push-off, I think they call it, was made from the airbridge at Los Angeles airport. I believe the aircraft was an A380. It was pushed back some 10, 15 or 20 metres and then the call came through, 'Bring it back; put it back on the airbridge.' There was absolutely no explanation to the crew, no explanation to the passengers on the plane: 'There you go, tough, we're grounding it.' All because, I am led to believe, at some stage pilots had the audacity to wear red ties. If I can bring down an airline with this red tie then I will go down in folklore. The pilots also made some announcements saying, 'If you're going to fly, can you please support Australian pilots on Qantas aeroplanes.' I still shake my head.

On 24 November there were also some 13 submissions, which were well read by the committee. Then we had Qantas come back on 6 February to endeavour to clear up a few concerns that we had. As I said, the assistance that I received from my fellow committee members was very much appreciated. There were a number of recommendations that came from that inquiry. One related to the Qantas Sale Act—I think it was recommendation No. 4 or 5—and it encouraged the government to look into it a bit deeper. Maybe we might have to strengthen the Qantas Sale Act so that Senator Xenophon's fears are not realised.

The bill would require Qantas, its subsidiaries and any associated entities to have their principal operations centre located in Australia. It requires the majority of heavy maintenance and flight operations conducted by Qantas, its subsidiaries and any associated entities to be undertaken in Australia. In addition, it requires that the Qantas board includes directors with flight operations experience and aircraft engineering experience and enables shareholders to seek injunctions to enforce certain provisions in Qantas's articles of association—that is, its constitution—that are mandated by the Qantas Sale Act 1992.

While we talk about that, it must be made very clear that the government does not support this bill. As I said, the Senate Standing Committee on Rural Affairs and Transport examined it. We did that thoroughly. I will say, as a fellow who has been threatened with law suits by Qantas on a number of occasions in the good old days when I was a TWU organiser—let us get that on the record—that I love Qantas; make no mistake. I love the red-tailed kangaroo on the back of that aeroplane. As Senator Xenophon or Senator Madigan said, there is nothing more heart warming, when you are overseas and in an airport lounge, than seeing all of a sudden that white kangaroo on a red tail go by. It really does make you feel that you are nearly home.

I am fully supportive of Qantas as a company. It employs just under 38,000 employees. I also want to let you know, Mr Acting Deputy President, that for years I was part of enterprise bargaining negotiations with Qantas under a previous regime, under a previous board. Qantas at the time was a very decent employer. Qantas, at the time that I was a union organiser and threatened with suits by Qantas for misdemeanours that I still say I am innocent of, was at the end of the day a group of decent people who wanted the best for their employees. They wanted the best for their shareholders and they wanted the best for their country. Lots has been said over the last year about the way things have been happening, but I just want to touch on some other misnomers that need to be corrected for the record, not only in relation to the threat to bring down an airline because the pilots wore red ties. There are a lot of innuendo and a lot of accusations swirling around about members of the Transport Workers Union—yes, I am a member of the Transport Workers Union, and am very proud to say they have not thrown me out yet; nor will they, I hope! There were some 200 meetings to renegotiate the enterprise bargaining agreement. In case you did not quite hear that: there were 200 meetings. I am told very clearly—and I was kept informed all the way through—that, in those 200 meetings, Qantas did not want to talk.

There is some mischievous media out there, but we all know that you do not believe everything you read. If you actually believed everything you read you would think there were greedy ground-handlers, which Senator Gallacher, who is in the chamber, used to be; not greedy, but a ground-handler. He knows the industry backwards; better than I or these greedy baggage-handlers or these greedy catering staff who wanted only to send the airline broke by demanding ridiculous pay rises. No-one gave a fat rat's backside about the point that baggage-handlers and catering staff work around a 24-hour shift cycle. They do not have the luxury of the majority of Australian employees, who can have a good night's sleep, get up in the morning, go to work and do their eight or 10 hours or whatever it may be; they have rotating shifts. I remember walking into Qantas flight catering back in 1997. It had 260 employees. I could not believe it was the norm to accept that your shift for the week might be two afternoons and three nights, then you would have a weekend off and come back and do five nights. I am sure Senator Gallacher would be able not only to quantify that but talk about it in a lot more depth.

So these are not radical maddies who want to bring down an airline. In fact, when you walk into Qantas, whether it be in baggage handling, the freight centre or the catering centre, you get this strange feeling that they are family, that they do not see Qantas as a rogue employer. It is their family and if you dare speak ill of Qantas, don't they give it back to you! So it was incredible to sit watch the nonsense that some carried on with, that the TWU were going to bring the airline down. They were not asking for massive pay rises. The quantum when I was organising—when Senator Gallacher was the National President of the TWU, and the hardworking South Australian Branch Secretary—was normally around three per cent a year. That was about it; there were a couple of times where it might have been five per cent. But these negotiations were actually what I said they were: negotiations. No-one had a gun to anyone's head. They were negotiated in good faith, ratified by the Australian Industrial Relations Commission and signed off, and everyone got on with the job.

So, on 200 occasions, all the TWU wanted, on behalf of their members—and they made this very clear—was job security. Before I get howled down by the captains of free enterprise over there, I see absolutely nothing wrong with a worker in Australia wanting job security and wanting job security not only for themselves but for the next generation of Australians. What is wrong with that? As long as their employer is buoyant and is making money, there is nothing wrong with that. As any decent parent in Australia would, we should put foremost in our minds job security not only for us to be able to provide for our children but so our kids can get a damn job too. They should be able to get a good paying job. They should not have to fight for the ridiculous, disgraceful rates of pay, such as those in China, that I hear thrown around the country as those we have to compete with. I do not want to compete with China. I do not want my kids to compete with China. I want my kids to be employed under Australian wages and conditions, and I am quite prepared to fight till my last breath on that. So when I hear the nonsense that 'Mr Joyce and the board of Qantas had to act, and had to act straight away because the TWU were damaging our major brand', I think, 'You want to talk about damaging a major brand?'

I look through the members of the board of Qantas, and I see there some interesting people who have wide-ranging life skills and business skills. There are probably some very decent human beings who would be fantastic employers. Then there are a few other characters who—well, I do not have the ability to say much about them, but I do have to raise certain questions. I look at the chairman and independent non-executive director, Mr Leigh Clifford AO. I do not know Mr Leigh Clifford from a bar of soap. What I do know is that Mr Leigh Clifford was appointed to the Qantas board in August 2007 and chairman of Qantas in November 2007. Fantastic. I also see there are a couple of other board members who have been around for a little while: General Peter Cosgrove, the darling of the Howard era. Okay, he was probably a fantastic soldier, but he has been on the board only since 2005. What experience he has in aviation, I don't know and it is not for me to say. But another one, Patricia Cross, has been an independent non-executive director since January 2004. I flick through and I come to Dr John Schubert, from October 2000—he is no newbie; he's been around a while and seen a bit of it. And of course there is Mr James Strong. He has been back on the board since July 2006 but let us not forget that Mr Strong, as Senator Gallacher would remember, was the Chief Executive Officer and Managing Director of Qantas between 1993 and 2001. If I remember rightly, at the time we were negotiating enterprise bargaining agreements with Qantas, Senator Gallacher, he was the boss and it was all signed off; no-one was forced, dragged in kicking and screaming with baseball bats held over their heads. That is great—tremendous.

Now I want to go back to when Mr Clifford was appointed the chairman of the board. Bear in mind that the unions are supposedly going to destroy this great icon, this great business, and that it employees are out to knock it off. I will give Mr Clifford the benefit of the doubt. I do not know whether he was employed on 1 November 2007, when the shares opened at $6 and they closed at $6.05. I do not know whether he was appointed on 30 November 2007, when the shares opened at $5.75 and closed at $5.85. What I do know, though, very clearly, is that while the board of Qantas is trashing its own employees and bemoaning how they would risk the airline and how they just want to kill the Qantas brand, I can confirm, and I want to share with the Senate, that the opening share for Qantas on 8 May, which, correct me if I am wrong, was the day before yesterday. I should know; it was my dear mum's birthday: Happy Birthday Mum! Oops-a-daisy, I will cop it when I get home!

On 8 May, the opening share price for Qantas, the Spirit of Australia, under Mr Lee Clifford's chairmanship was $1.55. And under the astute leadership of Mr Leigh Clifford AO, the shares closed at $1.53.

Before I get screamed at from those opposite, there is absolutely no argument that there are numerous global challenges for Qantas. I fully and wholly understand that as much as anyone in this building. When you are a global business you are subjected to global challenges. I also know the volatility of rising fuel costs. I also remember back in 2000 laughing to myself and thinking: '$1 a litre fuel? It is never going to happen.' I know: I get it.

But it is very disconcerting to see what happened at the Qantas AGM, just 24 hours before the board of Qantas, that great Australian company, the Spirit of Australia, made one of the greatest decisions to have jeopardised the travelling public and a national icon. I was at the AGM, proudly representing Qantas workers and proudly in the company of the national secretary of the TWU, Mr Tony Sheldon. At the meeting I witnessed the reappointment of some of the people I have named here. Not only did they get another term but also another pay rise. And good luck to them. I have no problem with pay rises as I have spent my working life fighting for them. I also spent my working life—sadly not a lot of it—putting my hand out and taking pay rises for myself. But I was there when the board, in its wisdom, 24 hours before grounding our national carrier, proudly announced a 71 per cent increase for their CEO, Mr Joyce. I did not make that up. I thought to myself, 'Nice gig if you can get it. I would love a 71 per cent pay rise.' I do not give a fat rat's backside if any employer gets a pay rise. If the board deemed that Mr Joyce was worth a 71 per cent increase, that is fair enough—no problem. But what I do struggle with is when a CEO of a company gets a 71 per cent pay rise and condemns his employees for wanting a three per cent pay rise. If Mr Joyce had said, 'I cannot take a 71 per cent pay rise because I am bagging the living daylights out of my employees,' that would make him a greater Australian. So, we just need to get balance. I support pay rises, I support Qantas, but we do not support the bill.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Quite obviously we still want Qantas to call Australia home and we want the airline to remain an Australian entity, and it will. But we cannot take the position where we start telling organisations how they must operate overseas. If Woolworths go overseas and open up a shop in Ho Chi Minh city, we cannot start insisting that the people at the checkout get paid Australian wages, otherwise it is not going to stay in business for very long. The reality is that we want Qantas to succeed, and to succeed it has to operate under the terms and conditions that keep the dignity of what it is to be Australian but deal with the commercial realities of exactly where they are. If you impose all these conditions on Qantas the result will be to put it out of business, not keep it in business.

Obviously issues will come to light—I think Senator Xenophon may have mentioned this before—and there are issues aplenty in aviation. I think the next one will be Etihad's involvement in trying to grab hold of Virgin and shell it out and turn it into basically an overseas airline. These questions are afoot all the time and we are going to have to try to work out how we deal with them. You cannot manipulate by legislation the actions of a company that is dealing in an extremely tough commercial environment.

It was great listening to Senator Sterle—he seems to have left the chamber now. In the rambling diatribe that we will call a speech, he did go to one interesting area: job security.

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

Job security and profitability.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Yes, job security and profitability. Correct me if I am wrong, but this is the same party that is going to bring in the carbon tax. Is that correct? You may ask how this is relevant to the airline industry. I will tell you exactly how it is relevant. The carbon tax is going to go on airlines that operate domestically but not on the ones coming into Australia. So, they are creating a tariff against their own workers. They are part of a process to drive their own workers out of a job. Why would they do that?

It seems the Labor Party thinks there are two types of planes. There are evil, nasty, naughty Australian planes with evil, nasty, naughty Australian workers in them. Then there are righteous planes, the ones that come in from overseas. They become righteous as they pass over water towards us. But they are evil if they are owned in Australia and go in the other direction.

We now have a situation where if you go to Fiji you will not pay the carbon tax, but God help you if you go to Cairns. It is completely immoral to go to Cairns, so you must pay the carbon tax. If you go to Fiji or go surfing in Bali it is okay. But if you go to Margaret River in Senator Sterle's state to go surfing you pay the carbon tax. And they talk about job security!

At one stage Paul Howes of the AWU told us that if the carbon tax cost one job he would stand up against it. Brave Paul Howes! Anyway, brave Paul Howes is nowhere to be seen these days. We have not heard much lately from brave Paul Howes about the carbon tax. Brave Paul Howes has become invisible Paul Howes. He is probably writing another book. He is the only man I now who has written more books than he has read. He will be out there writing a book about how influential he is. It will be great bedtime reading. Circulation might not be so good, but he will be out there writing. I would love to see him stand up and do something for the workers he represents.

David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

Senator Joyce, I draw your attention to the requirement to be relevant to the bill.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

But it is a good speech, don't you think? This bill has 'call Australia home' in its title, and we want to make sure that we maintain Qantas in Australia. We all have similar beliefs. But to keep Qantas here we have to make sure we give it the capacity to compete. If you are going to jam a tax on the fuel, it will not be able to compete. If you are going to jam a tax on basically everything it does—a new carbon tax on every bit of power that it consumes—then Australia will not be home for Qantas. Nowhere will be home for Qantas, because it will go broke. This is a mad, manic economic policy from the Australian Labor Party. That is basically what is going to happen.

Senator Sterle talked about us competing with China. He does not want Australia to be like China, and neither do I. I want the Chinese to be like the Chinese and I want Australians to be like Australians. We are all very happy with our identity, but the Labor Party will take us down to the lowest common denominator if it continues to put on excessive overheads so business cannot compete. The most obvious overhead at the moment is the carbon tax. If we really wanted to keep Australia home to Qantas, we would be making sure that we removed unnecessary overheads and did not impinge on the business's capacity to compete in overseas environments. Where do we stop? If we start with Qantas, the next time BHP opens a mine in Africa or Indonesia are we going to insist that the workers at the mine get paid Australian wages? It would be a very noble gesture, but it would not work. It would be impossible. So how can we do it to Qantas or Jetstar? It is just not going to work. Yes, there are rights and obligations but we do have protections via access arrangements for major routes in Australia, and this is a mechanism by which we can support Australian jobs and conditions of employment in Australia.

We do want to make sure we do whatever is in our power to not put a burden on the company and send it out the back door. Rather than prosecute the company, we want to encourage it to, of its own volition, make sure it stays a vibrant Australian organisation. It is doing that the moment because it is still making a profit, which is good to see, while other airlines are going broke. Other airlines are heading out the back door, and we want to make sure that that does not happen to our airline so in the future we can still turn up at the airport and see the big red-tailed plane with the white kangaroo on it and say it is a representation of our nation—and long may that be the case. We have shown in the past a capacity to ensure Qantas remains an Australian company. That was part of the Qantas Sale Act, and it remains the case. But you either grow or disappear. If Qantas is growing in other markets, ultimately that is good for us—it is good for the bottom line of the company and it ultimately keeps the company on the books and in the air. It is obvious that to do that it has to deal with the commercial realities of the places it operates in.

The bill proposed by Senator Xenophon seeks to amend the Qantas Sale Act 1992 and impose tougher requirements on Qantas and Jetstar operations. The bill would change the make-up of the Qantas board and give minority shareholders greater rights, and require Qantas to undertake the majority of its heavy maintenance and flight operations and training in Australia. I just do not think you can do that to an organisation. It is for the stewardship of the organisation to try as best as it can to make sure it stays profitable. We have seen an incredible deterioration in the relationship between the management of Qantas and the workers, and we are happy to see that that situation now seems to be resolving itself. We want to make sure that continues. It is not in any person's interests to have planes parked at the airport with no-one flying in them—it is not in the interests of the airline, because of course if it is not flying it is going broke, and it is not in the interests of the workers, because if they are not working they are going broke.

The restructure was strongly opposed by the Transport Workers Union and the Australian and International Pilots Association. It was also opposed by the Australian Licensed Aircraft Engineers Association, the Australian Council of Trade Unions, Senator Xenophon, the Greens, the Australian Labor Party—particularly Senator Glenn Sterle—and Bob Katter. All of these parties claimed that the restructure breached the intent of the Qantas Sale Act but acknowledged that the restructure most likely did not breach the legislation in its present form. That is basically the issue before us at the moment. The Qantas Sale Act, which is what this legislation goes to, was introduced when Qantas was privatised to ensure that Qantas remained in Australian hands. It required that no more than 49 per cent of the issued share capital of Qantas Airways may be owned by foreign persons. That remains the case. It also said that Qantas must maintain its principal centre of operations and its headquarters in Australia. I am not suggesting for one moment that we have not had people who have pursued us to change that, but we have not changed it. We have made sure that Qantas is maintained as an Australian organisation. It also said that the name 'Qantas' must be preserved for the company's schedule of international passenger services.

We will not be supporting Senator Xenophon's bill because it would require the majority of Qantas's heavy maintenance, flight operations and training facilities to be located in Australia, and additionally these requirements would be extended to Qantas subsidiaries and associated entities. Once more, if it is all right to do it to Qantas, why not do it to Woolworths, why not do it to BHP, why not do it to any other organisation—why not do it to private organisations when they decide to go overseas?

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

This is our national carrier.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

Senator Xenophon is telling me that Qantas is the national carrier. I agree with him—it is. It is definitely the national carrier. I never thought it was not.

The bill also requires that two people, one with at least five years of professional flight operations experience and one with at least five years of aircraft engineering experience, be appointed as members of the Qantas board of directors. Once more, you are going into a company and starting to nominate whom you want on their board. Where do we stop? Do we start doing that for every company? Do we have a roam through companies on the stock exchange and then through private organisations and start telling them what qualifications they need on their boards? Do we now know better than they do what qualifications they need on their board? That judgment is made by a group of people called the shareholders. If they do not like who is on your board, they stop buying your shares and your share price will tank. The competencies required to run a company are best assessed by the people who own it—and the people who own it are the shareholders.

Presently, the Qantas Sale Act 1992 provides that a court may, on the application of the minister, restrain Qantas from engaging in particular conduct. The amendments would extend this power to any group of 100 shareholders who, collectively, own at least five per cent of the shares in Qantas. Once more, we are getting into a very interesting place—a place where five per cent can act as a majority. If five per cent can act as a majority, you have some serious issues. I do not know how democracy would work if we applied that concept here, but it would be an interesting chamber if five per cent could start forcing us to legislate a particular way. I suppose the Greens do have a crack at doing that, but it does not stand logical scrutiny for five per cent to be able to determine the actions of a company. For the sake of the five per cent, you neglect the rights of 95 per cent. That just does not pass muster.

This bill unfortunately, I think, has more problems with it than the last one. Why? Because it starts grabbing hold of concepts which, if you extend them logically, do not make sense. Once you have said this is right for one company, you cannot argue the case that it is not right for others. Qantas might be the national carrier, but what do we say about the national retailer or the national miner? Do we go to Ramsay Health Care and start talking about them as the national private healthcare provider? Where does it stop?

This idea sounds good until you read the bill. Once you read it, you realise that it is going to cause more problems than it is going to solve—vastly more. Ultimately, the consequence will be that you will put a company that you want to remain as the national carrier in a position where it is at a financial disadvantage. If that financial disadvantage remains over a period of time, Qantas might decide to remove itself from markets. By so doing, it would become a weaker organisation overall. That would reduce its capacity to finance its fixed capital, fixed capital which is locked in, which was present prior to this bill going through. After this bill goes through, the cash flow which underpins that fixed capital will be inherently different. That has the potential to end up causing major problems throughout the organisation. The result would be that Qantas would either have to retire capital—capital assets which would have been pushed past the tipping point of economic viability—remove itself from routes or start going backwards, making a loss. None of those alternatives are good for Qantas. None of them support Qantas remaining as the national carrier.

Unfortunately we see this sort of thing in other places—a typical one being water policy, where you are going into areas and removing productive capital in such a way that it no longer supports the existing local economy. If you go to a town and buy the water back, meaning the rice mill no longer gets sufficient throughput, it is not just the farmer that leaves; ultimately, the rice mill closes down and the structure of the town falls apart. If, after the construction of capital, you start to damage the cash flow which underpinned that capital investment, the capital will stop contributing to the business—it actually starts leaching from the business and starts being an encumbrance on the future viability of the company. It is clumsy and inefficient and ultimately it costs everybody. The coalition will not be supporting this.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

The only thing I would like to say in response to Senator Joyce's speech is to thank him for at least not using his full 20 minutes. I acknowledge the work that Senator Xenophon has put into this bill, the Qantas Sale Amendment (Still Call Australia Home) Bill 2011, and the one we were debating previously, the Air Navigation and Civil Aviation Amendment (Aircraft Crew) Bill 2011. I will add my comments to those of Senator Xenophon, who has followed this issue closely. I also point out that this second bill is co-sponsored by Senator Bob Brown.

Having sat through the debates on the previous bill, I suspect that the government had made their minds up before they had even bothered to read the amendments Senator Xenophon had taken the time to put forward in response to the work the committee did on the first bill. It is therefore a bit hard to take at face value the comments of senators such as Senator Sterle, who stood up and basically acknowledged the merit of the work but then suggested, as so frequently happens, that, although this bill is well-meant, there will be no government support for it.

Probably the less said about Senator Edwards's contribution the better. It was quite an extraordinary spray about the evils of unions. That you could come out of the experience of the grounding, with zero notice, of a national airline that stranded tens of thousands of people around the world—with air crews being told, while their aircraft were in midair, that their airline was no longer functioning—and make that the fault of the people wearing the red ties and making announcements over PAs shows an extraordinary ability to miss the point. Nonetheless—and recognising that we do not have a huge amount of time left in the debate—we certainly support this bill.

The idea of amending the Qantas Sale Act to require that the Qantas principal operations centre be located in Australia should be unnecessary. The purpose of this bill is to acknowledge the fact that the spirit, if not the letter, of the Qantas Sale Act is being violated by the way that Mr Joyce is running the carrier. We recognise that this is a difficult business to be in and that, essentially, the three components of expenditure in a business like this are the capital—the aircraft and the maintenance of the aircraft—the fuel, and the staff, particularly the crew. We recognise that there is not a great deal of wriggle room in an industry as competitive as this one and that you would want to think very carefully before you compromised on any of those three components, for the reason that Senator Madigan pointed out quite eloquently.

All of us in this chamber as people who fly an abnormal amount should declare an interest in the integrity of the aircraft, in the qualifications of the maintenance crew, in the airworthiness of the fleet and, in particular, in the skills and talents of the people operating those aircraft on the ground and in the air, especially in the rare event of an emergency or an incident in which the lives of the passengers and crew are suddenly in play. You would need to think very, very carefully before going out and compromising, purely for the sake of competition, any of those three things, particularly in an age of high oil prices.

The Qantas Group today employs more than 30,000 people across a network that spans more than 180 destinations in more than 40 countries. After the decision was made to privatise the national carrier, it was left in this rather odd, hybrid position of being neither a purely private company operating in a private market nor something bound and constrained by an act of parliament; it is an uneasy hybrid of both of those things. But nobody has come into this debate proposing to simply repeal that act. It is at least implied—I think, even in the contributions of those who have quite clearly marked their cards as pro management and against the workforce—that the Qantas Sale Act should remain. There is some public interest in retaining the concept, at least in spirit, of a national carrier, of a national flag.

As the Senate is well aware and as has been discussed, on 16 August the Qantas CEO, Alan Joyce, announced plans to cut 1,000 jobs as part of a restructuring that includes a huge aircraft order and the establishment of two new carriers in Asia which would not necessarily even be branded with the Qantas insignia. You might scratch your head and wonder, 'Well, what's that got to do with being the national carrier of Australia?' I think that is certainly worth pondering, because that decision obviously led to the lockout of the airline's workforce.

Partly in response to that industrial dispute, my House colleague Mr Adam Bandt MP, the Australian Greens member for Melbourne, introduced a private member's bill, the Fair Work (Job Security and Fairer Bargaining) Amendment Bill 2012, which is yet to be debated in this chamber. The bill provides that employers must give the same amount of notice, 72 hours, before a lockout of employees as employees must give of any industrial action, and allow Fair Work Australia, when deciding to terminate protected action as it did in this instance, to have regard to whether it considers that the purpose of a lockout is to make any application more likely to succeed. That was quite clearly the intention and purpose of the lockout that inconvenienced and stranded so many tens of thousands of people last year. This bill seeks to prevent employers in future from using Qantas style lockouts as an industrial tactic—because that is all it was; that is quite clearly all it was. If you balance people making announcements over PAs prior to flights, aircrews and people wearing red ties, using those sorts of tactics to remind paying passengers of the issues—like when they see John Travolta up there on the screen saying, 'I really want to make sure that it's a Qantas pilot on the flight deck'; that video disappeared very quickly, didn't it?—and other kinds of low-key industrial actions against the forced closure of an airline for a couple of days, it absolutely beggars belief.

I wonder whether senators in future contributions to this debate might want to indicate what they think of the proposal by the member for Melbourne to introduce that kind of industrial balance into our system, as his bill also introduces a mechanism for Fair Work Australia to make orders that are proportionate to the industrial action. At present, they can suspend or terminate all industrial action, even if only one party is causing significant damage. Of course, there are elements of the trade union movement who are intimately involved in aviation who took no such industrial action. Their workers were locked out.

The intent of the Qantas sale bill put forward by Senators Xenophon and Brown is to provide some security to the Qantas workforce and to its passengers, and to ensure that Australia's national interest is taken into account by Qantas management. It is our national carrier—nobody has stood up in this debate and proposed that that not be the case—as Senator Joyce agreed in his most recent contribution. It should live up to its marketing slogan of being the spirit of Australia and demonstrate a commitment to Australian jobs and the skills of our workforce.

I look forward to commending these bills to the chamber at a future time and putting them to a vote. I wonder whether some of the Labor senators who have spoken in this debate might care to come over to the crossbenches at that time and vote with us. Certainly, those who have come in here wearing a red tie and assuring us that they support the intentions here, saying that they are good intentions and that Senator Xenophon has done the right thing in bringing these issues to the fore, might actually like to back that up by voting for the legislation—the very simple and sensible legislation that we are commending to the chamber this morning.

Once again I would like to thank Senator Xenophon for the huge amount of work that he has put into prosecuting this case on behalf of the people who keep us, as very frequent users of air travel, in a safe environment, and for looking after the interests of the workers, who deserve nothing less than our support as legislators to make sure they are properly remunerated and that they are awake at work. I commend this bill to the chamber.

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Senator Edwards, you have 42 seconds.

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

I rise to make a few comments on the Qantas Sale Amendment (Still Call Australia Home) Bill 2011. Senator Sterle earlier referred to my words as being ghosted by shadow minister Truss. I can assure Senator Sterle that none of the work here this morning has been presented to or even discussed with the shadow minister. This bill looks to amend the Qantas Sale Act, an act that is 20 years old. I urge this chamber not to support this bill. Twenty years is a long time in the airline industry. (Time expired)

John Hogg (President) Share this | Link to this | Hansard source

Thank you very much for that excellent contribution!