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STANDING COMMITTEE ON ECONOMICS
13/03/2007
Qantas Sale (Keep Jetstar Australian) Amendment Bill 2007

CHAIR —Welcome to you all. Would someone like to make an opening statement on behalf of everyone, or do you want to do it individually?

Ms Justo —Individually, please.

CHAIR —Ms Justo, you are the first one to stand up, so I will let you start.

Ms Justo —We thank the committee for the opportunity to speak to you today. You have received the Australian Services Union’s submission, which was drafted by the Assistant National Secretary of the ASU, Ms Linda White. I commend the materials in the submission, particularly the relevant facts as to how and why the industry has changed since the Qantas Sale Act was originally written and the matters it was intended to protect. The amendments being discussed by the committee today have great relevance in addressing some of the changes that have occurred.

In effect, the Australian Services Union has put to this committee in our submission that there are two things that we believe need to be addressed. We endorse the comments made by other unions which have appeared here today—the ACTU in particular; that is, whilst the amendment bill goes some way to affording protection for the maintenance of the headquarters or a principal place of work in Australia, it does not go far enough to protect the jobs that need to remain in Australia. The Australian Licenced Aircraft Engineers Association has put to the committee that it will go some way to providing those protections.

A further issue that the Australian Services Union have raised in our submission to the committee is the consequences for the Australian public, and indeed the Australian government, of a sale in terms of airline employee entitlements—and it does not take much reminding in terms of the Ansett debacle. The government, on behalf of the Australian public, had to protect and take care of the entitlements of that airline’s employees, many of whom still have not received their final payments.

CHAIR —That is not a matter we are considering today.

Ms Justo —It is not a matter for today, but that very clear experience demonstrates why the protections being put forward need to reflect history for the benefit of all parties in this matter with Qantas. And the subsidiary, Jetstar, also needs to have those protections in place. We cannot emphasise too strongly how important it is that those protections are in place.

There is the question of headquartering. If I may seek your indulgence, Chair, I am going to refer to Ansett again because the Australian Services Union’s experience in that matter is very clear. Our membership covers a wide range of employee classes and types at Qantas—from standard, typical administrative and clerical jobs to check-in, load control, call centres, finance and IT. Any protections in place under the amendment bill as it stands currently will provide some small protection for a small number of jobs. The senior levels will remain here but the workers could be sent anywhere. The Ansett experience shows us very clearly that the key jobs—finance, administration, IT, human resources et cetera—will be moved. The decision makers in those positions ultimately determined the national interest, and the concerns of Australians were not foremost at the time of the collapse. The cost of the Ansett experience was subsequently borne by the Australian people. Our submission goes to the fact that we hope that those experiences and history will be taken into account in moving the bill forward and that the protections will be as strong as possible.

Secondly, our submission also addresses the fact that employee entitlements need some form of protection. We understand that there is no magic wand. We also understand that there is a deed in place and it is that very deed and the conditions it contains which can be converted into legislation. It is those protections that we encourage this committee to investigate and put into place. It is the clear view of the Australian Services Union—and that of the public from a variety of surveys and polls that have been undertaken recently—that Qantas and its subsidiaries are not just icons; they are a firm part of the Australian economy and its future. We support all the recommendations that have been put to you today in terms of changes to the amendments in order to pursue those protections further. I would like to introduce Ms Baines to make some comments.

CHAIR —I am sorry, but you will need to make it quick.

Ms Baines —I will make it quick. As Ms Justo said, we are asking you to protect our entitlements and keep our jobs in Australia. Passengers want us here, not offshore. We hope that we do not go down the same path as the Ansett employees.

Mr Connolly —The TWU represent approximately 15,000 members in the Qantas group across all sections. Obviously our interest in this bill is in regard to the fractured nature of our membership in this group of companies. The revelations in relation to Jetstar and other 100 per cent wholly owned Qantas subsidiaries present this committee and the parliament with an ideal opportunity, in our view, to clarify this loophole. Clearly, the intent of the sale act when it was introduced was that it apply to the Qantas group of companies. There was nothing contrary, as our submission clarifies, in the debates at that time or in the preceding parliamentary debates to indicate that that was not the intent of the parliament. Obviously the sector has moved on substantially since then.

To give you a bit of an overview of our representation across this very diverse company, we have members at Australian Air Express, Star Track Express, Express Ground Handling, Caterair, Qantas Flight Catering and obviously QantasLink, which many of you would fly. As I have said, Qantas have made it very clear, and the revelations in relation to Jetstar clarify their views about core businesses and non-core businesses; that is contrary, in our view, to the intent of the sale act and it needs to be clarified. These groups, particularly the catering arms of the business, are the most vulnerable. Qantas have made it clear over numerous years that it is their intent, should the market dictate, that they would sell their catering businesses—either of them—and we believe that would be contrary to the national interest but ultimately contrary to the Qantas Sale Act. Qantas Catering, as it was then called, was part of that process back in 1992 when the act was passed.

Senator JOYCE —How did they make it clear?

Mr Connolly —In discussions with us. They have also made it clear to the market and in public comments that would be available in their board papers from numerous meetings. I might leave my comments there and ask Jim to say a few words to clarify from his perspective that his arm of the Qantas business is wholly owned and controlled by Qantas.

Mr Dionysopoulos —I work with Qantas Flight Catering. It used to be Qantas Catering when the government still owned Qantas. I have a Qantas ID card. The Qantas shared services payroll controls our pay. We do not have our own payroll department; we used to have our own payroll department. We are in the same superannuation fund. Any new positions that are created or additional positions within our own company have to go through Qantas for approval. The industrial relations department of Qantas is our industrial relations department; we do not have our own. Our senior management are directly employed by Qantas Airways, not by Qantas Flight Catering. For all intents and purposes, I am a Qantas employee and have been for almost 20 years. As far as what Mr Connolly has said regarding the sale, Qantas have tried to sell the catering businesses in the past and they have announced that to us so that—

CHAIR —We are getting off the track a bit. I appreciate what you are saying. I do not think Senator Fielding agrees with you, because he says that Jetstar is not part of it and that is why there needs to be this bill.

Mr Dionysopoulos —The reason I made that comment is that some of the parties that were interested in purchasing were completely overseas-owned companies, so a whole chunk of Qantas will then be foreign owned.

Mr Swan —I will be very brief. I know there has been a lot said about various aspects of the bill. In terms of the Australian Workers Union’s submission, I take the committee members to pages 5 and 6 where we talk about group apprenticeships and Australia’s defence capabilities. There are some references in that component of the submission that we have drawn the committee’s attention to. In particular, I refer to the Sydney Morning Herald report in July 2005 where the head of Defence industry department, Peter Croser, was quoted as acknowledging that there will be significant shortages in the defence industry per se, including engineers and licensed engineers within the aviation sector, particularly the military aerospace aviation sector.

I wish to draw to the attention of the committee members a report in this morning’s Financial Review—it is on the front page and at page 4. There are two distinct areas to which I draw your attention: the first is—and the article says:

Defence has estimated that the industry workforce will have to be boosted from 3000 to 4700 between 2007 and 2012. Shortages are most acute among design, platform and systems engineers and metal machinists, sheetmetal workers and electricians.

Poaching in the maritime and aerospace industries is rife and contractors have to match mining industry rates to attract qualified people.

I will not elaborate on the substantive submissions that we have already made to the committee. What I do wish to say is that in the reports that you see in papers like the Fin Review, the contemporary reports, the situation has not changed since July 2005. In fact it may well be, depending on how the resources boom pans out, exacerbated at some point in the future. This just underscores the fundamental importance of ensuring that group operations with regard to maintenance and engineering are retained in Australia because they feed directly into the defence capabilities of this country. It is acknowledged that there is that clear link. I do not see or hear anyone disputing that connection.

The second thing I wish to say goes to the intended purpose of the bill and its related purposes and the juxtaposition of that with the APA deed of undertaking that was signed or executed with the Commonwealth. In the view of the Australian Workers Union, the APA deed is manifestly inadequate. It is so because it is largely a recitation of undertakings or obligations that are mandated by the Qantas Sale Act, but there are some troubling caveats that are included in the APA deed. In particular, if you look at the commitments that are made with regard to continuing apprenticeships programs, providing career opportunities and so forth, by the consortium in the future, they are hinged on and qualified by market conditions. That is not a term of art. It is certainly not a legal term that one can readily point to precedence on. It is wide enough to drive the proverbial jumbo through if one wanted to. There are no indications of what factors would go into constituting market conditions. There is no indication as to who actually decides what those market conditions are and whether they vary from time to time, whether the criteria for them vary. And there is no question of how assertions that market conditions have changed could be reviewed or challenged.

Certainly, with the privative nature of the deed of undertaking between the Commonwealth and the APA consortium, it demonstrably locks out any challenge on the part of employees in the industry. So those are fundamental concerns. Beyond that, I do not wish to elaborate any further on the submissions that we have made. I simply sit here in support of the general thrust of the submissions that you have received from each of the preceding unions.

Senator FIELDING —Thanks for each of the submissions. Family First note there are recommended improvements to the bill and we will take those on board as we go forward with the legislation. How do you react to Qantas’s statement earlier this morning that Qantas workers’ jobs are ‘all under review’? Are your members concerned that their jobs are threatened?

Mr Swan —Perhaps if I can answer that—

CHAIR —Before you answer that: I think that is not a literal interpretation of the comments that were made by Qantas. There was discussion about the maintenance aspect this morning, Senator Fielding, but I do not think it is fair to put that in the context of an overall description of what is happening with jobs. I think that is pretty unreasonable.

Mr Swan —Senator, if I can: you only need to refer to the APA deed of undertaking to appreciate the fact that there are references to ongoing reviews. I am to happy to answer the question on that basis and—

CHAIR —There is an ongoing review at the moment, isn’t there?

Mr Swan —Absolutely.

CHAIR —Pre sale.

Mr Swan —Yes, there is and, yes, it is of concern to our members in maintenance and engineering in particular. There are a lot of sensitivities around the issues of safety and so forth. I will not go into those issues; I think we have heard enough about those today. What I do wish to say is that since 2000 our members in maintenance and engineering have been plagued by crisis after crisis, whether they have been in the control of the company or not. You only have to take a look at the SARS crisis, fuel prices, terrorist attacks and so forth. What those have meant is that increasingly our members have been placed under the pump. Increasingly they have been expected to make sacrifices, which they have done. They have risen to the challenge time and time again. That refers to restricting wage outcomes and that refers even to wage pauses.

We sit here—this is in answer to the question about the review—prepared to deal with the company, and we are working with the company to try to bridge that gap with regard to the review. But what I am saying is that that link between job security and external events needs to be removed and that it can appropriately be addressed through legislation and through the measures that Senator Fielding is trying to introduce through this bill by having appropriate undertakings or obligations that are placed on the company in the national interest. That is the focus for us. Once you remove any of those external factors, the people that I represent can start to get into what they do best, and that is fixing and repairing the iconic national carrier’s fleet of aircraft at world’s best standards.

Senator FIELDING —By the way, Chair, that was an accurate quote from this morning. I see in the AMWU submission that there is this comment:

A failure to make the proposed amendments simply renders the—

Qantas sale—

Act impotent. To deny passage of this bill is to deny the effect of the Act against simple corporate restructuring.

Would you like to make a comment on that?

Ms Justo —Yes, I would, Senator, and I am not in any way authorised to respond on behalf of the AMWU. I said earlier today in my verbal submission to the committee that we support all of the submissions that have been put forward by the unions. There is a great concern that if these amendments—hopefully with the further suggestions that we have made to you—do not get progressed then, yes, that is exactly what will occur: the jobs in Australia and any corporate protection will be gone and the icon that Mr Swan refers to will have no status here in Australia.

We can have no anticipation that foreign ownership will have the same sense of concern or care as the Australian response will be to that. Australia, from an airline’s perspective, is a spoke in the hub. Through all other centres of airline importance or busyness at this point in time—for example, Brussels or Singapore—its planes are travelling constantly, so there is always going to be a great level of work, a great level of coming and going and much variety. Australia is not a hub; Australia is a spoke. As long as we are at the end of the journey, we are not going to matter to people who are back there in the hub, where it is very busy. That is why it is absolutely vital that we lock up our end of the spoke.

Mr Connolly —If I may add to that, Senator. I think our view is most clearly that if this bill does not apply to Jetstar—so if the Qantas Sale Act does not apply to Jetstar—you are waving the white flag as to restructuring of the Qantas group of companies, so they can abrogate their responsibilities under that act, ones that were clearly intended by parliament. From our perspective, take the catering arms of the business. Our understanding would have always been that the act applies to those. I think that was quite clearly the intent of parliament at the time. Consider if that does not apply to Jetstar. Qantas has already commenced due diligence on some parts of their catering businesses. They have done that up till November last year. That was most certainly conducted, in our view, under the understanding that the sale act would apply to that due diligence. We do not object to Qantas setting up these structures, although we might have personal views about how they are structuring and running their business. One of the very real reasons they do that is to allow competition in their internal markets between various parts of their business. Obviously, that is their prerogative, but when it comes to using those structures to avoid their responsibilities under this act I think it is clearly the responsibility of parliament to intervene.

Senator JOYCE —Reflecting on this bill in its current form, are there things that we need to do to tighten it up to make it clearer in its purpose? I pose that question to you as the legal brain of the outfit. Does it work in its current form or do we need to do something further to it?

Mr Swan —Thank you for the question. I note the submissions that have been made by the TWU, the AMWU and the ALAEA with regard to proposed amendments. We certainly support those. If the bill requires changes in order to tighten up the obligations that are to be placed on any owners of the group in its entirety then we need to make those changes. I do not have any further suggestions with regard to that at this juncture.

Senator JOYCE —In reference to something I heard on television from Doug Cameron, and noting your lobbying around Parliament House, have you found the support you have been offered by the Australian Labor Party underwhelming?

Ms Justo —At this point in time the lobbying that some members present here today have participated in has not been direct lobbying of the ALP. We have been here lobbying other persons with probably slightly more marginal seats.

Mr Connolly —I might add that we are confident of the ALP’s position on this bill but, as Jo has just indicated, the government is ultimately responsible and has the power to take measures certainly to protect our members but also to act in the national interest. We have been focusing our attention on those members and, as we have made public, to date the level of support we have received from those members has been quite encouraging.

Senator JOYCE —We did not get much support in trying to get a wider inquiry, did we? You could say that yourself; I am asking a question. When we were trying to get a wider inquiry into the whole sale, did you get any support from the Labor Party saying they would agree to it?

Senator O’BRIEN —I think we actually voted for it.

Senator JOYCE —Not for the wider inquiry in the last week.

Senator WEBBER —Yes.

CHAIR —Anyway, back to the bill.

Senator BERNARDI —I will address my question to you, Ms Justo, but I am not sure whether you are the best person to answer it. Given the evidence we have heard today that there are 100 engineers servicing Jetstar domestic, there are four aircraft that fly their international routes which are already being sent for servicing and maintenance overseas, and there are new long-haul aircraft coming on which will require less ongoing maintenance—and I presume that would affect the international ones—and given the fact that there are protections under the Foreign Acquisitions and Takeovers Act and it is uneconomical to send domestic aircraft offshore, what are your real concerns with regard to Jetstar, which is what this is about? This is not with regard to Qantas; it is with regard to Jetstar. What are your concerns, given that all of these things have already been put on the table?

Ms Justo —Your question is focused on engineering and maintenance. As I described in the beginning, that is not our area of coverage. We certainly have people who work in the administrative sections of engineering and maintenance and have extremely responsible and important tasks in record keeping, librarianship et cetera, but I am not able to respond to you directly about maintenance offshoring, aircraft et cetera. I can respond to you on our concerns about Jetstar specifically. As a subsidiary, it is not currently protected under the Qantas Sale Act. It needs to be protected. As the TWU has presented, the company’s moves over a number of years in preparing for a moment such as this by separating the company into various segments allows for a variety of actions to take place.

If those protections are not put in place then the places to which you make your call to book your flights, the computer that you put your credit card and personal details into—those websites and the information technology sectors that will engage in all of the protections of those areas—will all be offshore. It is about cutting costs. There have been discussions here already today about the debt factor that is being carried or going to be carried by APA in terms of the sale. We have heard that that is not an appropriate response. However, in response to the question, from our membership’s perspective, they are the things that those people will be directly dealing with. It does become a directly relevant concern from our perspective.

Senator BERNARDI —Yes, but in regard to this bill, though, there are four parts to it. Australian citizens preside over meetings of the board of directors. Two-thirds of the boards of Qantas and associated entities are Australian citizens. They continue to locate head offices and facilities such as catering and maintenance in Australia. We have dealt with maintenance. On the question of catering, I have to ask you: shouldn’t Jetstar be able to source their catering from wherever they want?

Ms Justo —I believe it has been clearly put before and it has certainly been addressed in some submissions that the list of entities there is an example only. There is also a much broader range of entities in terms of the company and its operations that are not necessarily specifically listed there. They are examples only. We certainly also have members in catering who for some considerable time have been a part of the push and shove—the separation of the company. We certainly have great concern about how those jobs are going to be maintained in Australia—absolutely.

Mr Swan —Because I represent the maintenance and engineering employees in the group, out of the three unions here, I might be in a position to answer some of your questions. The first point is that I think the reference to 100 technicians in Jetstar needs to be clarified. There are 100 licensed aircraft maintenance engineers that are members of the ALAEA. There are far more employees who work in Jetstar operations in maintenance and engineering. So it is not just a figure of 100. It could be a lot higher, because it will include aircraft maintenance engineers, aircraft mechanics and aircraft workers. So it is a bigger pool that we are talking about here.

The second thing is that, following the closure of the Sydney heavy maintenance facilities or the announcement in March last year, we undertook extensive negotiations with Qantas at a very senior level for a period of some three months. Through an order of the Australian Industrial Relations Commission we were given access to a range of materials—nine folders in two boxes. I cannot divulge the details of that because the commission order prevents me from doing that and prevents me from providing the detail.

From subsequent discussions that I and our delegates have been directly involved in with regard to the ongoing review of maintenance and engineering in the Qantas group, I can say categorically—and the Seabury consultants that were engaged by Qantas have said so quite bluntly—that their recommendation to the Qantas board is to offshore the whole lot. We are struggling to save Australian jobs in maintenance and engineering. The consultants are aviation—

CHAIR —That is not a view shared by Qantas management.

Mr Swan —It is not—not presently.

Senator BERNARDI —I just want to come back to a point here. We have heard from the Australian Licensed Aircraft Engineers Association that it is uneconomical to send domestic Jetstar planes overseas for maintenance and servicing. That is what he told us.

Mr Swan —I do not agree with that. I have seen—

Senator BERNARDI —No, he said—

Senator O’BRIEN —He was talking about the checks—

Mr Swan —He was talking about A checks, which are very short-term checks. I do not want people on the committee to be confused. The evidence that I heard Mr Purvinas give was that it was uneconomical to outsource overseas 12-hour A checks. It is a fundamentally different economic argument when you are looking at C and D checks, even on domestic aircraft. Let me tell you this. I have seen—

CHAIR —We have got the point.

Mr Swan —I have seen the material that refers to outsourcing domestic narrow body aircraft. It is not beyond the reach or the scope of what Qantas can do.

Senator BERNARDI —So what you are telling us is something different to what I think we were told earlier.

Mr Swan —No, I think you have taken the wrong inflection from Mr Purvinas’s answer.

Senator BERNARDI —That may be the case, but equally we were advised that there was a far lesser requirement because of the newness of the planes.

Mr Swan —That is not in dispute. That is a lag effect. There are two things that dovetail into that. Firstly, with new generation aircraft you do not undertake C and D checks for some period of time. Secondly, when you acquire new aircraft, usually they are covered by warranties of anywhere from three to five years duration. So there is a lag effect; there is no doubt about it. But we are saying that you cannot just pick the lag effect and then try to structure everything around that. Once you fall into the trap of doing that, you sacrifice the long-term interests that this country deserves and that the travelling public deserve and expect with regard to maintenance and engineering functions.

Senator BERNARDI —Can you just confirm for me that Virgin Blue are not subject to the same conditions as those proposed in this bill?

Mr Swan —Correct.

Senator BERNARDI —So why should Jetstar be treated differently?

Mr Swan —Virgin Blue does not have the reach or the influence in the Australian domestic aviation market that Qantas and Jetstar do.

Senator BERNARDI —We are talking specifically about Jetstar, not Qantas. They are different entities.

Mr Swan —As part of the Qantas group of companies—that is the argument that we are having with regard to the intended purpose of the bill: to reflect the fact that it is part of the group in appropriate legislation. I know the point that you are trying to make. I disagree with the point, and my reasons for disagreeing with it are that Virgin Blue, when you look at its position in the Australian aviation industry compared with the Qantas group of companies, it does not have the reach or significance, nor does it provide the services or have the historical background and the cultural identity that Qantas has. It is like chalk and cheese.

Senator BERNARDI —But Jetstar does not have either.

Mr Swan —No, Jetstar is part of the Qantas group of companies, and it does.

Senator BERNARDI —It started in 2004, so I guess it does not have the same history.

Mr Swan —But it imports a lot of the cultural and historical identity that all other components of the group have.

Senator BERNARDI —Even though it has different requirements for its pilots, it has a different training regime for its pilots, and its staffing—all of those things indicate that it has a completely different cultural perspective.

Mr Swan —No, it does not. That is not a reflection of the culture at all. It is a regulatory reflection.

CHAIR —On the one hand we have got people saying they are all together, and the next bit of evidence is that they are miles apart.

Senator BERNARDI —People are cherry-picking things and saying, ‘This is what justifies it being part of the group or out of the group. I am just trying to get to the nub of it.

Mr Swan —From our perspective, it is part of the group and it needs to be appropriately reflected in legislation.

CHAIR —On what basis do you say that part 3 of the Qantas Sale Act relates to subsidiaries?

Mr Swan —I have not made any submission with regard to that.

CHAIR —So you accept the fact that part 3 does not—

Mr Swan —I make no concessions at all.

CHAIR —You have had a view on everything else today, Mr Swan.

Mr Swan —I am entitled to have views on matters which are put to me. With respect, I have not had legal advice on it, so I cannot comment.

CHAIR —I meant that—

Senator WEBBER —That was a cheap shot.

CHAIR —It was not meant to be a cheap shot, but Mr Swan has gone across a broad range of activities. If it sounded that way, I apologise. You have expressed a lot of views in relation to a lot of matters today. Part 3: does it or does it not relate to subsidiaries?

Mr Swan —I am not in a position to answer that. The first thing is: we have not had legal advice with regard to that aspect. We have not made submissions with regard to that. I do note that other organisations have. I cannot elaborate on that.

CHAIR —With the greatest respect, you have said today that the Qantas Sale Act and the relevant parts we are discussing today relate to Jetstar.

Mr Swan —Sorry, can you just direct me to—

CHAIR —You have said today—

Mr Swan —I said that the QSA provisions may not presently apply to the operations of Jetstar in particular—‘may not’.

CHAIR —With the greatest respect, you said that Jetstar is subject to the Qantas Sale Act.

Mr Swan —No, I did not say that. I have not said that. Where have I said that, Senator? I am quoting from the submission that I wrote:

… insofar as the conditions of the QSA—

the Qantas Sale Act—

may not presently apply to the operations of Jetstar …

I cannot be any clearer. I do not have advice on it. But I am leaving the question open. I do not know. Assuming that it does not, the submissions that I have made on behalf of the AWU stand and everything that I have said in answer to questions from committee members stands.

CHAIR —My interpretation of what you said this morning—verbally, not in your submission—was that Jetstar is part of the Qantas Sale Act as a subsidiary. Am I wrong?

Mr Swan —No. Jetstar is obviously a part of the Qantas group of companies—

CHAIR —Are they a subsidiary?

Mr Swan —It is a wholly owned subsidiary.

CHAIR —They are a subsidiary.

Mr Swan —It is acknowledged that it is.

CHAIR —I will again ask you the question: does part 3 of the Qantas Sale Act relate to subsidiaries?

Mr Swan —I do not know; I do not have advice on it. That is why I have used the words ‘may not presently apply’.

CHAIR —Ms Justo, you said in part 18 of your submission:

... the industry has ... undergone significant structural change. The industry is extremely susceptible to factors that influence consumer confidence and as a result significant ‘shocks’ have shaped the industry ... Gulf wars, SARS—

et cetera. Given that there is protection provided under the deed, why would you want to impose on the company a set of conditions that would be so stringent as to effectively reduce their ability to respond to these ‘shocks’ that you have quite rightly referred to and, as such, potentially impact on the financial viability of the company and therefore very much impact on your own members? Doesn’t your reference to the structural change and the susceptibility mean there has to be some flexibility there rather than a hard and fast set of rules that may potentially impact on your members?

Ms Justo —To clarify, I am not the author of the Australian Services Union’s submission; I am responding in a representative way. In the first instance, yes, there has been significant structural change to the industry and some, if not most, of those structural changes have been brought about by two factors: firstly, the invention of the very low-cost airlines and their growth across the Northern Hemisphere and, secondly, the vast range of significant events that have occurred, whether they be war, disease or acts of terrorism. I do not believe those ‘shocks’, as we have referred to them, are in any way impeded by the amendments that we are seeking. The amendments that we are seeking are simply to ensure that Australia maintains a very strong decision-making hold and that the key elements of those organisations are kept within Australia in order to protect and ensure both jobs and, I believe, the financial capabilities of the company as it will go forward.

I cannot see in the submissions that we have put forward how those are going to be in any way constrictive when it comes to, for example, the SARS threat. It was the ability of all of our members collectively—but, in speaking on behalf of the Australian Services Union, specifically our members—to deliver the requirements on the ground that ensured both throughout SARS and immediately after September 11 that planes continued to fly in and out of and remove people from places of danger, as Qantas has done on any number of occasions. This will directly flow on to Jetstar. I can see in no way that the requirements that we are asking for are going to have any effect on how any of those incidents are going to be dealt with afterwards, nor that they will have a flow-on financial impact on the organisation.

CHAIR —Mr Connolly, Mr Swan was not able to make a comment on relation to this, but on what basis do you say—and I refer you to paragraphs 5 and 6 of your submission in particular, and indeed paragraphs 10 and 14—that part 3 relates to subsidiaries?

Mr Connolly —Our concern obviously is that there is uncertainty—

CHAIR —That is not what you said. You said:

… in interpreting section 7, after referring to the second reading debates, it is clear that Parliament intended for the obligation of section 7 to apply universally throughout the Qantas group of companies—particularly to bodies corporate which transport persons by air.

In the acts second reading debate, no participant of the House or Senate distinguished between the bodies corporate in the Qantas group of companies in the application of section 7.

That is not correct. We have heard evidence today that Senator MacGibbon, for example, made quite specific reference to that and that he had sought advice from ministerial advisers in relation to that matter, which clarified his concerns in relation to East Asia.

Senator FIELDING —Chair, I would like to make a comment before they respond. That was someone else’s opinion on someone else’s opinion. I think it is drawing a long bow to say that that was the view of the government of the day.

CHAIR —With the greatest respect, it was not clarified at all by the minister when he was summing up. There was no attempt to clarify the situation. The only commentary was from Senator MacGibbon and it was not challenged at all. I am sure that if he had stated to the Senate that he had received advice from ministerial advisers—presumably, Senator Collins’s ministerial advisers—then it would have been clarified by the minister in the summing up of the bill. Mr Connolly, you have made a categorical comment about the interpretation of part 3 in relation to section 7. Where is the evidence for that?

Mr Connolly —We state quite clearly in our submission that it is the view of our organisation that the provision should apply to all subsidiaries. Obviously, I am not aware of the to-ing and fro-ing at the time and the debate outside the Senate, but from our review of the Hansard there was no comment on the record contrary to that. If there had been discussions beyond that, obviously we were not privy to them.

CHAIR —With the greatest respect, you have said:

… it is clear that Parliament intended for the obligation in section 7 to apply universally throughout the Qantas group of companies …

Mr Connolly —And we certainly maintain that view. We think the whole reason for the bill that Senator Fielding has introduced is to seek to clarify what is obviously some uncertainty in regard to the application of that part to Jetstar as a wholly owned subsidiary of Qantas. We have concerns beyond Jetstar because we have a significant number of members in other wholly owned subsidiaries of the Qantas group of companies. Obviously, this matter is yet to be tested. We have a view about what should apply and what was the intent at the time. We have made that clear in our submission and we reiterate that. Our support of this amendment is very much on the premise that, if the bill does not apply, it needs clarification that the intent was that it should apply to Jetstar and other subsidiaries of the Qantas group of companies.

CHAIR —Where in the Qantas service act is there reference to a requirement for Qantas to service regional destinations?

Mr Connolly —Unfortunately, I do not have that reference.

CHAIR —I do not think it is in there, but I might be wrong.

Mr Connolly —What is the question again?

CHAIR —It is about the provision of regional services by Qantas. I do not think it is in the act.

CHAIR —In paragraph 14—and I appreciate that you did not write this, Mr Connolly—it is alleged that it was parliament’s intent for Qantas to participate in Australian national defence and the interpretation at the moment does not reflect parliament’s intent for Qantas to service regional

destinations. Where is the evidence for that?

Mr Connolly —As I have said, I cannot refer you to the evidence but, quite clearly, it is the view of my organisation that that very much was the intent. You cannot, in our view, separate critical defence services, critical provision of support in times of crisis, from the role of the national carrier. The intent, again in our view, of the sale act was to protect not only services and ownership but also the national interest and the role of our national carrier in private ownership.

CHAIR —I think that is it. We are starting to go round in circles a bit.

Senator FIELDING —Just following on from that question, in the Australian Workers Union submission it has reference to Qantas Defence Services. In light of some of the discussions raised by the chair, would you like to make some comments on that?

Mr Swan —QDS perform—

CHAIR —I will get the right one this time.

Mr Swan —Thank you, Senator; I would appreciate that. It will save us a whole lot of confusion. I thought I was going mad for a minute. With regard to QDS, that is a distinct subsidiary within the broad Qantas group. It performs dedicated maintenance repair and overhaul functions on behalf of the Commonwealth through the RAAF in some quite strategic areas. We have a lot of membership in QDS. There are a lot of substantial contractual arrangements that are entered into between the Commonwealth and QDS for some big conversion projects, particularly the AWACS conversion and the fuel tankers that are coming online and so forth. It really is a crucial element to our defence capabilities.

When you marry that—and this is what we have sought to elaborate on in our submissions—critical aspect of the Qantas group operations with the procurement program that the Commonwealth has announced with regard to the 24 Super Hornets and the Joint Strike Fighter initiatives and you look at the geographical base that a lot of that activity will probably take place in, being the Newcastle-Hunter Region, there is a significant potential for jobs growth. That cuts against a relative skills shortage in the industry. People are competing to try to get as many bodies as we can. There are all sorts of things happening in the industry, which other people have alluded to. But this is why it is important to take a national interest test and approach, particularly in terms of defence capabilities and preparedness, because we have a lot of things that are coming online over the next five to 10 years that are going to require highly trained and skilled maintenance engineers, whether they are licensed or otherwise. That cuts into our functional capacities. We cannot afford to take our eye off the ball with regard to that. I simply refer committee members back to the Financial Review article today. This is a long-term problem; it is not a short-term problem and it will not have short-term fixes, but we need to start putting the foundations in right now to set the platform appropriately. One thing that you do not want to see is jobs going out of the country.

CHAIR —Thank you very much, ladies and gentlemen. You have been very helpful. I remind officers that if a witness objects to answering the question, the witness should state the grounds upon which the objection is taken and the committee will determine whether it will insist on an answer, having regard to the grounds which are claimed. If the committee determines to insist on an answer, a witness may request that the answer be given in camera. Such a request may, of course, also be made at any other time. Any claim that it would be contrary to public interest to answer a question must be made by a minister and should be accompanied by a statement setting out the basis for the claim. The Senate has resolved that an officer of a department of the Commonwealth or of a state should not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits any questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies are adopted. A witness called to answer a question for the first time should state their full name and capacity in which they appear.

[1.10 pm]