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Meet The Press -

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MEET THE PRESS

INTERVIEWS WITH ACTU SECRETARY GREG COMBET AND AVIATION ANALYST PETER HARBISON

March 11th 2006

DISCUSSIONS ABOUT WORKPLACE LAWS, LABOR'S ELECTORAL PROSPECTS, GARUDA'S SAFETY RECORD, IMPLICATIONS
OF POSSIBLE QANTAS TAKEOVER

MEET THE PRESS PRESENTER DEBORAH KNIGHT: Good morning and welcome to Meet the Press. It's up, up
and away for the sale of Qantas, which raises serious questions about the future of our national
airline. The flying kangaroo might be staying on the tail, but what does the $11 billion
transaction mean for air passengers and the Qantas workforce?

PM JOHN HOWARD (Wednesday): No Government can guarantee and no company can guarantee forever the
same workforce. That is just unrealistic.

DEBORAH KNIGHT: For the union view of the Qantas deal and progress on the WorkChoices battlefield,
we'll speak with ACTU secretary Greg Combet. And later this morning aviation industry expert Peter
Harbison on the impact of Wednesday's tragic Garuda disaster in Indonesia. But first let's take a
look at what's making news in the nation's papers this Sunday March 11 - Melbourne's 'Herald Sun'
is leading with "Taliban threatens to kill journalist." A Taliban commander has threatened to kill
a kidnapped Italian journalist unless a member of the terrorist group is freed and Italian troops
are withdrawn from Afghanistan. The 'Sunday Times' in Perth has "North-west braces for new cyclone
threat." Emergency crews are racing to prepare battered communities in WA's north for a second
powerful cyclone. Jacob is bearing down but has been downgraded to a Category 2. Sydney's 'Sunday
Telegraph' says "Garuda crash plane had faulty brakes." The braking system of the doomed Garuda
airliner malfunctioned the day before it crash-landed in Yogyakarta killing 21 people including
five Australians. Brisbane's 'Sunday Mail' has an update on the condition of crash survivor Cynthia
Banham. She faced further surgery yesterday to treat burns to 60% of her body. And the 'Sunday Age'
refers to our guest this morning with the headline "Labor MP to keep seat." Opposition MP Kelvin
Thompson appears likely to retain preselection despite calls from party insiders to dump him in
favour of ACTU secretary Greg Combet. The sale of Qantas has been cleared for take-off subject to
approval by the airline's shareholders. The Federal Government is satisfied with assurances it's
received but not so the union movement. ACTU Secretary Greg Combet is our guest this morning. Greg,
welcome to the program.

ACTU SECRETARY GREG COMBET: Thank you very much.

DEBORAH KNIGHT: We'll get to the issue of Qantas in a moment, but first off there has been
speculation for some time that you would be a starter for the federal election. Let's clear this up
this morning. There has been speculation in the papers again today. Will you or won't you?

GREG COMBET: That piece that you just read out is the first I've heard of it. No-one's approached
me about it. But there has been a lot of speculation and my answer's been no. I've got one thing
that I'm focusing on at the moment and that is to get rid of the Government's workplace laws and
that's what I'll continue to focus on.

DEBORAH KNIGHT: The Labor Party though needs as many high-profile candidates as it can. Maxine
McKew has gone into the fold. You wouldn't consider following her lead?

GREG COMBET: No, look, I really do want to get rid of the workplace laws. I've been working hard on
that for a long time and, yes, I've had some approaches about the issue, but my answer has been no
and that's still what my answer is.

DEBORAH KNIGHT: Pretty unequivocal. OK. We'll move on to the issue of Qantas. Now the requirements
imposed on the buyers of Qantas are described as the most extensive ever seen. Why are you still
opposed to the sale?

GREG COMBET: Well, I think that might be the Treasurer's descriptions and that's a bit of political
positioning. What we're concerned about - we're not opposed to sales per se - but what we're
concerned about is the responsibility we have and that is to represent the employees of Qantas and
the deed or the conditions that were announced during the week - yes, they go towards retaining the
Australian character, if you like, of Qantas which is a good thing, but there's nothing there that
satisfies us that Qantas jobs are protected and in particular we're concerned about the capacity to
outsource maintenance and engineering jobs to overseas. A lot of airlines internationally have done
that these days, to cheaper labour-cost countries like China. And also we've seen in other
industries the outsourcing of call centre and customer service work, and there's a potential
clearly for that to happen in Qantas on a larger scale too, and when you consider that a private
equity consortium is coming in here and if it is successful it will be a very highly leveraged
company, Qantas will have a lot of debt, those private equity owners are going to want to see
return and performance and the question has to be asked - what are they going to do? What is the
management team going to do to earn massive incentive payments and bonuses that deliver an outcome
for the private equity consortium? It changes the dynamics of the company.

DEBORAH KNIGHT: The conditions though of the sale which are legally enforceable are much more
extensive than Qantas workers enjoy at the moment. The new buyers are being forced, aren't they, to
ensure job guarantees for local jobs?

GREG COMBET: But the difference is this - that Qantas is a publicly listed Australian company at
the moment. There are various reporting and regulatory requirements, the executives are subject to
scrutiny that's appropriate to a public company. The directors are Australians, it's not a highly
leveraged company at the moment. With this takeover, if it proceeds, it's the boardrooms of London
and Texas, the providers of the debt, who will have a large say in what happens with Qantas in the
future. The whole focus of the company will shift overseas despite the continuation of Australian
character. And different commercial dynamics will operate, and that means there will be a push to
cut costs in a very significant way, a push for quick returns to these private equity investors and
to get out there, big incentives for the executives to deliver on that, because they're facing tens
of millions of dollars of bonus payments to deliver in quick order for the equity holders.

DEBORAH KNIGHT: Well, the Treasurer...

GREG COMBET: I'm sorry, the dynamics change and I think in that circumstance the great risk to
Qantas jobs in the future.

DEBORAH KNIGHT: The Treasurer Peter Costello and Bob Mansfield, spokesman for the buyer, Airline
Partners Australia, are much more optimistic than you are about the jobs outlook. Let's take a look
at what they've had to say.

TREASURER PETER COSTELLO: (Tuesday): The jobs growth for Qantas employees in this country has been
quite considerable and what the deed says is that that track record will continue. That is, that
there will be increased opportunities for people to work for Qantas in this country.

BOB MANSFIELD (Tuesday): If we grow the airline according to the vision and the plans we have, jobs
will grow.

DEBORAH KNIGHT: It's a reasonable assumption to make, isn't it?

GREG COMBET: Well, that would be great. However, the dynamics of the company will change. These are
motherhood expressions that are being put forward, including by the Treasurer there. Let's just see
what happens when there is greater debt on the company, when the decisions will be increasingly
taken from overseas, when there's going to be greater pressure to cut costs and perform in a
different way than there has been, and there's no doubt that the deed or the conditions that were
announced during the week do not in any point of that document explicitly say "We're not going to
have maintenance jobs go overseas or we're not going to have other parts of Qantas outsourced to a
country overseas."

DEBORAH KNIGHT: Still on the jobs front, Greg Combet, and Holden this week slashed 600 jobs from
its Elizabeth car plant in South Australia. The workers are being offered redundancy packages, some
would say good redundancy packages, and the PM says the current labour market means they'll have no
problems in finding other jobs.

GREG COMBET: Gee, it's all really rosy isn't it? 600 people lose their jobs on the back of a couple
of thousand not that long ago in the automotive industry. What we're actually seeing is a continual
shrinking of jobs in the automotive manufacturing industry and we have a Government that still does
not clearly say "We are concerned about it and we would like to maintain a motor vehicle
manufacturing capacity in this country with the technical and skills requirements that that demands
and we're going to sit down with people who have an interest and role in it and develop a plan to
make sure we keep it here." All we have is platitudes like that, that it's OK for people to get a
redundancy pay, they'll find something else, maybe with Jim's Mower Service, because that's what
happens to a lot of people who are made redundant from those higher-paid manufacturing areas, they
go into lower-paid casual work, so they do get some employment but it's of a diminished financial
standard. We need a plan for Australian manufacturing and particularly in the automotive
manufacturing area and it's got to be about skills, education, research development, technology. We
need to sit down together as a community and try and put together a position that will sustain
manufacturing jobs in this country.

DEBORAH KNIGHT: OK. When we return with the panel this morning, the ACTU's latest television
commercial featuring some good old class warfare. And how's this for our touche of the week?

FORMER PM PAUL KEATING (Monday): Look it's just Howard being Howard isn't it, you know? The little
desiccated coconut's under pressure and he's attacking anything he can get his hands on. PM JOHN
HOWARD (Wednesday): I hope that 11 years after I've ceased being PM of Australia I'm doing
something else.

DEBORAH KNIGHT: You're on Meet the Press with our guest this morning, Greg Combet, ACTU Secretary
and we're joined by our panel, Philip Clark from Radio 2GB and Matthew Franklin from the
'Australian'. The ACTU this week will launch another TV commercial in their campaign against the
new workplace laws, and it features a very uncharitable view of Australian corporate boardrooms.
Here's a sneak preview.

MAN 1: Using individual contracts, we can scrap penalty rates, overtime pay, shift allowances, even
public holiday rates.

MAN 2: But is that fair?

MAN 3: It's beside the point. It's the law and we look after our shareholders first.

MAN 3: OK, next item. Executive bonuses.

VOICE-OVER: Authorised Greg Combet, ACTU Melbourne.

PHILIP CLARK, 2GB: Well, Mr Combet, amusing advertisements aside, what actual hard evidence is
there that the WorkChoices legislation is actually having any of these effects?

GREG COMBET: I'm glad you've found some amusement in it. (ALL LAUGH) Look there's plenty of hard
evidence but I need go no further than the Government's own statistics and those are that of a
survey of the individual contracts made under the new laws that the Government did, 63% abolish
penalty rates, 64% abolish annual leave loading, 51% abolish overtime pay, I think 40% abolish rest
breaks, and the list goes on. These individual contracts or AWAs under the Government's new IR laws
are demonstrably abolishing people's employment rights of that nature and affecting their take-home
pay as a result and we've got a couple of disputes on at the moment. One in Sydney at my sort of
foe, James Hardie's premises, where they've locked out a group of workers in order to try and force
them to sign individual contracts that will cut their take home-pay by about $50 a week. And there
are countless examples of this.

PHILIP CLARK: But they're buoyant times for workers at the moment, you know that. It's a good time
particularly if you're a skilled worker in the economy, your skills are in demand. There's no hard
evidence, is there, that the WorkChoices legislation is producing different outcomes, grant you
that, but are the outcomes worse for workers?

GREG COMBET: Well, when you look at the overall figures, the real value of people's take-home pay
or their earnings have in fact declined at an aggregate level across the economy over the last
couple of quarters. Those are the official ABS statistic and in fact women are falling along way
behind a long way. They're about $100 a week difference again, the same levels as in 1978 between
female and male earnings and that's because under the WorkChoices laws a lot of women of course in
the labour market are in lesser skilled, more vulnerable positions, less bargaining power,
therefore falling further behind. There are aggregate statistics showing that there is something
going on here as a result of these laws. That is helping to suppress wages growth.

MATTHEW FRANKLIN: OK, Greg Combet, on the issue of small business and the Labor Party seems to be
toing-and-froing a little on whether they should abolish the exemption from small business on the
unfair dismissal laws. Is this something that is a non-negotiable issue for the union movement?

GREG COMBET: Well we're very committed to the principle that a person, an employee, should not be
treated unfairly at work and in particular your employment is very important. If you're sacked
unfairly for no reason or for demonstrably unfair reasons we believe there must be a remedy and
that the remedy should principally be a right to be reinstated to your job. That's our belief.

MATTHEW FRANKLIN: No matter how small... no matter how many employees the company has?

GREG COMBET: That's the principle that we hold and that we adhere to and, yes, the unions will
continue to adhere to it because I don't think there are grounds to depart from that approach. If
someone is sacked in a demonstrably unfair way for unfair reasons they should have the entitlement
to have their job back. It's something that we worked hard to achieve for good reason. I understand
that in the circumstances of small business that can often be a difficult thing, but the most
difficult thing or problematic thing under the previous unfair dismissal laws was the processes
that were involved in resolving circumstances where there was an alleged unfair dismissal and we
are completely open, particularly with respect to small business, of trying to work out how the
remedy for an unfair dismissal can be made much more simple and straight forward.

MATTHEW FRANKLIN: But for Kevin Rudd surely the issue if he wants to be elected is not to alienate
business and the small business, and the so-called aspirational class. To win power, does Kevin
Rudd have to move too far away from the union position to appeal to the broader community in the
whole electorate?

GREG COMBET: Well, that's a question of course, for Kevin Rudd at the end of the day but I'd say
this too - sometimes in this argument or this debate about unfair dismissal laws people have cited
the fact there are a lot more employees than there are small business operators. You know,
employees in small businesses vote too. And one thing that's become very clear out of the IR laws
is that people do not support the abolition of the unfair dismissal laws because it has led to
demonstrably unfair treatment and I think Kevin Rudd will be mindful of that as well.

PHILIP CLARK: Mr Combet, how do you think Mr Rudd is travelling? This week's surely taken some of
the gloss off hasn't it? I mean, just for the record - we ought to get this down - have you ever
met with Brian Burke or given a reference for Tony Mokbel? (ALL LAUGH)

GREG COMBET: No, on both counts. I don't mind offering...

DEBORAH KNIGHT: Check the paperwork.

PHILIP CLARK: Look, it's an interesting political gambit though isn't it, the high moral political
platform and the high moral platform? Mr Rudd seems to determined to drive that down as boldly as
we can. But if we go down this path there will be very few people left in parliament at the end of
it?

GREG COMBET: Yeah well, it's bit like a silly season at the moment. Which is not to diminish the
importance of some of the issues that have been raised, but this tit-for-tat high moral ground
fight, it will peter out in time, I think, but I think Kevin Rudd when you stand back from it - and
I think this was reflected in the Newspoll published this week, people aren't going to be deflected
too much by some of the insiders' political debate in Canberra about who met with Brian Burke and
when and how and why.

PHILIP CLARK: It's a bit silly, isn't it?

GREG COMBET: I think so. I think the Government massively overplayed its hand. They're in a bit of
state of panic.

DEBORAH KNIGHT: But has the golden boy lost some of his shine, though?

GREG COMBET: Well, not according to the Newspoll - and we'll see as time goes on. But Kevin Rudd
has continued to focus on the key issues - education, research development, manufacturing, jobs and
industrial relations laws. And provided he's stays on the issues that are concerning people I'm
sure he'll continue to travel well.

MATTHEW FRANKLIN: Do you think that this scramble for the higher ground is an indication that John
Howard is scared of Kevin Rudd?

GREG COMBET: Well, I think there's no doubt that the Government has been rattled. Kevin Rudd and
Julia Gillard have had the leadership of the ALP for I think over three months now and they've
performed very strongly. There's clearly a mood for change in the electorate and we're possibly
only five, six, seven months away from an election and I don't think there's any doubt that the
Government's a bit tired. People are looking for a bit of a change and they're having a very close
look at the new Labor leadership team.

DEBORAH KNIGHT: An interesting election it will be. Greg Combet, thanks for being with us this
morning.

GREG COMBET: Thank you very much for having me on.

DEBORAH KNIGHT: After the break, airline analyst Peter Harbison on what's been a tumultuous time
for the industry including the repercussions from the Garuda disaster and Nicholson has been at it
with again with his animated cartoon on the 'Australian's' website lampooning Paul Keating's cameo
return to the political stage.

PAUL KEATING CHARACTER: Look, let me say this, just this, about Brian Burke. You can't go to WA
without tripping over him. He's all over the place. Like Junus on a sandwich. You know, even when
he was Premier he'd lobbied himself to do favours for the mining industry and as for Howard, that
little desiccated coconut, he wouldn't know what ministerial misconduct was if it bit him on the
arse, and Costello, what sort of a lather, what sort of a lather, has he got himself into? His
trouble is, his trouble, you know what his trouble is. He's all tip and no iceberg, all stick and
no icypole, all hot air, no balloon, and Alexander Downer, goes to the Solomon Islands but he still
thinks he's ordering a gin and tonic at the Adelaide Club with his big boofy head and face like a
spanked bottom. Don't get me started. I'll see you next week.

DEBORAH KNIGHT: You're on Meet the Press. Welcome back. The grieving continues for those killed in
Wednesday's shocking crash of Garuda flight 200 in Yogyakarta. An investigation is under way into
why the Boeing jet was travelling way too fast as it landed, bursting into flames and trapping and
killing 21 people including five Australians.

FOREIGN MINISTER ALEXANDER DOWNER: (Monday): Our experience has been that Garuda has been quite a
reliable airline, some of the other airlines of course there have been concerns about, but there
have been three air crashes in Indonesia this year. When it comes to internal travel in Asia, you
just don't have any options.

DEBORAH KNIGHT: Peter Harbison joins us now from the Centre for Asia Pacific Aviation. Welcome to
the program.

AVIATION ANALYST PETER HARBISON: Thank you.

DEBORAH KNIGHT: This accident has obviously tarnished Garuda's reputation further, it wasn't great
to begin with, especially among Australians. Is that reputation deserved?

PETER HARBISON: From a safety point of view it statistically is not a bad airline. Over the last 30
years, its record is probably equivalent to any other's in the whole region, Qantas excepted, of
course, which has a remarkable record.

MATTHEW FRANKLIN: Peter, is the problem that Asian airlines in general, with the big growth in
their markets, are just not spending enough money on training and safety?

PETER HARBISON: That is a potential issue, and because it's grown so fast as you point out, there
are stresses in part of the industry. Indonesia domestically has grown enormously fast over the
last five years, to a factor of about 500% domestically. That does create stresses, yes.

PHILIP CLARK: Just moving to the sale of Qantas, Peter, and Greg Combet made the point earlier in
the program, that the private equity partners are going to be seeking to get value out of Qantas,
they're not running the airline because they like running airlines, they see value there, that
means they can see areas where they can see savings to increase profits and therefore returns to
them. Typically, there's not going to be enough to fund services because they know they'll want to
keep Qantas looking like it is. It will be in backroom functions, and that goes straight to
training and maintenance which are high-ticket items for Qantas. Isn't there a danger down the
track, not tomorrow, down the track, that Qantas's safety record, unblemished as it is, is going to
be tarnished. I mean, passengers will be at risk down the track, don't you think?

PETER HARBISON: There are some pretty big logical leaps in that, Philip. First of all, there is an
inevitable trend as Greg pointed out towards offshoring some of these activities, and that's partly
because a country like Australia just isn't big enough to support the sort of economies of scale of
servicing these very large aircraft, so it's an inevitable trend in a lot of ways. Obviously you
want to try and stem that flow. But in terms of the new owners of Qantas, the savings they can make
and the track that Qantas has already been going down are not sufficient to get them the returns
that they need to make this whole exercise worthwhile. The real - and I see this as quite a
positive trend in fact - the real outcome here has got to be a lot of growth.

DEBORAH KNIGHT: Despite Greg Combet's concerns, you're of the view that for the flying kangaroo it
will be business as usual?

PETER HARBISON: Well, from the public's point of view, I don't think you'll see any difference at
all. We went through, interestingly, a lot of this similar sort of debate when Qantas was
privatised 10 or 12 years ago. "We're losing our own Government- owned airline, it's becoming
something which is public, it's all about investors and so forth," British Airways bought a large
share in it, "Don't let it go to the bloody Brits," all that sort of thing. The public won't see
much of a different at all, I don't think.

MATTHEW FRANKLIN: Peter, one of the union leaders said this week you can fly a jumbo jet through
the deed of agreement. Why should we believe Peter Costello's assurances that there'll not be
breaches of this agreement, that jobs won't go overseas?

PETER HARBISON: Yeah, I must say, I don't see a lot of cast-iron promises in that deed of
agreement. But I don't think realistically in today's world with an airline like Qantas which is in
a brutal business - I mean, let's not forget what happened to Ansett, which had all those cast-iron
guarantees by the way - you cannot lock a commercial entity down in a business where everybody else
is doing those other things. All right, you want to increase their basic costs but...

MATTHEW FRANKLIN: But in legal terms do you argue that there is nothing in this agreement that
could prevent Qantas going the way that Ansett went, simply in legal terms, putting aside the
market?

PETER HARBISON: From a legal point of view, that's correct. There's nothing you can do to prevent
an airline going broke.

PHILIP CLARK: It's window dressing, isn't it? Qantas will make changes and they'll be based on
commercial considerations and the Government oughtn't be taking any role in that, should they?

PETER HARBISON: Philip, if it hadn't been an election year we probably wouldn't have seen all of
this.

DEBORAH KNIGHT: Just on the issue of Tiger Air as well which is offering extremely cheap airways,
offering to shake up Australian skies, are single-digit air fares which is what they're promising
between Australian cities sustainable?

PETER HARBISON: Obviously not, if every seat is sold is single-digit airfares - but it has been $10
fares between Darwin and Singapore for example which is a 3 or 4-hour flight. No, Tiger will really
shake up the aviation industry in Australia. If I was a shareholder in Qantas, I'd be wanting to
sell right now, because Qantas makes its money on the domestic market. And Tiger is going to drive
a stagecoach right through that.

PHILIP CLARK: For those of with us long memories, a pocketful of Compass air tickets. ALL LAUGH.

MATTHEW FRANKLIN: Just back on Qantas, a lot of people see it as a national icon. Is it really - is
the way of the future that we're beyond a sort of nationally-based airline, that the future is
conglomerations of large regional airlines?

PETER HARBISON: I'm not sure conglomerations, Matthew, but certainly, the airline industry probably
is unique in having this sort of nationalism involved in every product that it has. There aren't
many Coca-Cola examples where it's actually named after the country, so we are gradually moving
towards a branded company. But the JetStar one probably's a good example. JetStar will start to
establish companies in other countries and expand the brand that way. I don't think we'll see
mergers as such. That's too complicated still for the international regulatory system.

PHILIP CLARK: But down the track, will we still be seeing Qantas as the Australian icon, or will it
simply be just another business?

PETER HARBISON: There's a lot of marketing in that brand. They'd be very, very foolish to lose
that, and I think for that reason Qantas will be very much there and we'll still be calling
Australia home.

DEBORAH KNIGHT: Peter Harbison, thanks for joining us this morning.

PETER HARBISON: My pleasure, thank you.

DEBORAH KNIGHT: That is the program for this morning. Thanks for your company and thank you to our
guest, aviation analyst Peter Harbison and, of course, our panel, Matthew Franklin and Philip
Clark. Until next week, goodbye.