I never — never — thought I would see the day that I’d advocate government intervention in an industrial dispute. But it’s here; the Gillard government must sort out the mess at Qantas, and quickly. The government needs to sort out the mess its own dumb laws created.
News this afternoon that Qantas is grounding its entire fleet in the face of the industrial action it is confronted with means that one of three things now happens: the unions back down, the government orders them back to work, or Qantas goes out of business.
Qantas management is unlikely to back down, and nor should it; the demands it faces from its unions are ridiculous.
Clearly, the time for screwing around and causing trouble for the sake of it is over.
But a finger needs to be pointed at the ALP and the current federal government which, ultimately, is responsible for the mess by creating the circumstances in which this could occur in the first place.
The Rudd/Gillard government, as we all know, came to power in 2007 with little real mandate (aside from slogans like “Education Revolution”) other than to undo the WorkChoices legislation enacted by the Howard government.
But rather than simply repeal those amendments to the Workplace Relations Act, it went further, and created the most pro-union legislative environment in nearly thirty years.
And that environment has come back to bite — at least insofar as the dispute at Qantas is concerned.
It was only a matter of time before someone in the union movement tried it on, and — a little surprisingly — it’s been the aviation unions.
Between the raft of protected strike action provisions conveniently afforded by the Fair Work Act, and its general allowance of a return to pattern bargaining, unions are holding Qantas to ransom by simply refusing to budge an inch on their stated — and generally unreasonable — demands.
Those demands include pay rises of 15% over three years; well above inflation, and on top of the already-generous pay conditions they enjoy compared to engineering staff at other airlines.
Compared to engineering staff at Virgin Blue for that matter, too, with which the very same unions made a deal that saw their members earn considerably less than their brethren over at Qantas.
Those demands include conditions for contractors being made the same as those of their members who are employees of the airline, and that includes guarantees of job security — something which, by their very nature, a contractor can’t be given.
And those demands include guarantees of job security generally for union members who are employees of Qantas well beyond what is reasonable to expect any employer to provide; not least in light of the restructuring that is to commence at Qantas and the changes to its labour requirements such a restructure will necessitate.
The unions also say their campaign is designed to ensure Qantas remains a fully Australian-based airline and that they will “fight” moves to relocate operations and/or jobs to bases in Asian countries.
Never mind that management runs Qantas — not the unions some of its staff belong to.
Now that Qantas management is parking its planes on tarmacs around the world, let’s look at what is at stake and what the lie of the land really is.
Qantas International is already running at a heavy loss; the figure (depending on the source) is between $150 million and $220 million each year.
Yes, the other arms of the business are holding the overall entity in profit; last financial year the Qantas Group posted nett profit of some $550 million. But any business with a division haemorrhaging $200 million-odd per year has a serious underlying problem that requires urgent redress before it infects and drags down the remainder of the company.
The aviation industry is one of the most sensitive in the world to shocks on the cost side; terrorism, economic downturn, rises in the price of oil, plane crashes, government policies and taxes, and supply issues generally are all items on a much longer list of factors that can destroy airline businesses and send them into history.
Qantas has thus far made one major, major strategic blunder in its fight with its unions: the rather large pay rise its board endorsed yesterday for Chief Executive Officer Alan Joyce.
Not a good look, not smart timing, and damned silly tactically.
Still, the airline has lost $68 million so far from the present protracted industrial dispute, a figure widely accepted by economists, industry analysts, and aviation industry journalists.
It probably wasn’t smart for the unions, yesterday, to assert that this $68 million had been spent “on advertising.”
Indeed, it was probably the final wave of the red flag at the bull.
The 15% pay rise claim over three years mightn’t be so obscene if it weren’t for the fact that many of the engineering staff in question are already paid several times the average weekly wage of about $60,000 per year; factor in that the claim is for double the inflation rate, pressures in the aviation industry generally and problems in segments of the Qantas business specifically, and it’s outrageous.
One of the things Qantas management has said in the course of this dispute is that its engineers want to hold jobs and to be paid for maintenance work that no longer exists.
A process which has already — and belatedly — started is the retirement of Boeing 747-400s, Boeing 767-300s and older Boeing 737-400s from the Qantas fleet.
These planes represent half of the 200-odd units in the Qantas fleet, and those retiring planes have an average age of 20 years.
They are being replaced with brand new Airbus A380s, Boeing 737-800s, and the soon-to-be-introduced Boeing 787 Dreamliner — all of which will require little heavy maintenance for 6-9 years.
That’s the market law of supply and demand; if Qantas doesn’t need to maintain the workforce it has because fleet renewal makes positions redundant, it has no obligation to keep staff on its books just to be nice.
On the other side of the coin, the skills these engineering people have are not only prized, but sought around the world; indeed, given the exponential growth in the aviation industry expected in the next 20 years — not least in the Asia-Pacific region — those portable skills offer licensed engineers and other engineering professionals the opportunity to work across the world.
Not, perhaps, in Australia, at least not in the immediate future; and not, indeed, in a regime where they can regularly tell their boss — to put it indelicately — to bend over.
They wouldn’t get away with it in Dubai or Singapore, for example.
And any industrial claim to put contractors on the same level of entitlements as permanent, long-term employees is so offensive (and abusive of process) that it doesn’t warrant or merit response.
Any airline business operating today needs to find cost savings; it’s the nature of the industry, the world over.
It’s why half the airlines in the US are in government bankruptcy protection; it’s why, for example, airlines in the UK (one of which Alan Joyce once ran) are looking at things like charging for use of toilets, or silly ideas like flying twice as many people standing up to maximise flight yields.
None of this has even been hinted at in Australia.
But if the price of maintaining Qantas as the Spirit of Australia (or, indeed, the living spirit of anything) involves some operations in Asian countries, then that’s better than the alternative.
Indeed, former CASA head Dick Smith — who ought to know about these things — was broadcast on Melbourne radio today, saying that if the current industrial action against Qantas doesn’t stop, the airline will either go broke or become a purely domestic carrier.
Just think about that…if Qantas goes broke, 40,000 people instantly lose their jobs; and air travel in Australia becomes something you save up for over a period of months or years like it was 15-20 years ago.
I can remember saving for six months for my first airfare from Brisbane to Melbourne as an 18-year-old in 1990…some people couldn’t even afford to do that.
This dispute is already affecting hundreds of thousands of travellers; it is placing tourism-based businesses under great strain; it is diluting what inbound international traffic is still coming here despite the high dollar and economic problems abroad; and it is impacting businesses across the country who require access to reliable air travel at short notice in the daily course of their operations.
And were the end result simply to be that Qantas became a purely domestic operation, every foreign carrier would look at us here, and say to anyone wanting to fly much further than Auckland or Bali — again — to bend over. The price of flights would rocket.
The economic damage to Australia of a partial or full collapse of Qantas would be horrific.
This isn’t Ansett, where a poorly run (and much smaller) parent company presided over a subsidiary in which management standards were abysmal and aircraft maintenance, service bulletins and compulsory fleet inspections were routinely and systematically ignored.
No, this is a business being held to ransom by a militant, unionised minority, endangering the whole business in the process, and potentially inflicting incalculable economic damage on Australia generally if it all goes pear-shaped.
It’s well-known that as a rule I’m generally contemptuous of unions, largely as a result of the type of thuggery and bastardry we’re seeing played out here.
But from a philosophical point of view I think workers are entitled to this type of representation if they want it — provided the organisations offering that representation don’t abuse it.
And they are here.
Completing the circle, Julia Gillard and her government need to intervene in this immediately.
It is ALP-sponsored law that has emboldened the unions down this path, and it is now incumbent on the government to shut this down.
It goes against every fibre of my being to advocate a government intervention, but in this case the government is as much at fault as the unions trying to put Qantas over a barrel are.
Neither side is perfect, but on a “points decision” or balance of probabilities or whatever euphemism you like, Qantas is right and the unions are wrong.
Now it’s grounded.
The longer it stays on the ground, the more it will cost the economy generally; and if this isn’t cleared up quickly — and once and for all — there’s a real danger of vast and permanent damage not just to the Australian economy, but to international confidence in Australia.
And that’s a hell of a price to pay for union thugs trying to hang “the boss” out to dry.
Shut it down, Julia.
This is a chance for the Prime Minister to deliver something other than rhetoric, or policies people despise and never voted for.
It’s time for the Labor Party to put the labour movement in its place. For the national good.
And for God’s sake, be quick about it…