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The announcement that legislative changes will be sought to allow foreign investment in Qantas’s domestic operations, but that no government assistance will be provided, has exposed more extensive political differences within the Government and problems with Qantas’s own handling of the situation.

Qantas’s “explanation” in its initial statement that the carbon tax is not a concern (reversed a couple of days later) was made by a “low-level” officer suggests an attempt to manipulate the political situation with PR. Of some interest is the report suggesting that the previous Qantas PR chief was David Epstein, who is  closely connected with Labor and was Rudd’s initial PR chief, and that he retained a close relationship with Joyce after he left Q.

More importantly, Shanahan suggests that the decision not to provide Q with assistance reflects a toughening in Abbott’s approach to handling requests for government assistance and that he is taking a stronger line than Howard would have done in similar circumstances. Let us hope Shanahan is correct: given the state of the budget (including  the defence problems revealed by the audit report on AWDs) there is a long way to go. For the present it may also stop or reduce the confused attempts by Hockey to play the PR game of “what might be a reasonable approach” in response to business requests for assistance. Hockey’s PR games have created uncertainty and may have contributed to the relatively poor polling of the government.  

It will be important that Q maintains its initial refusal to supply Fair Work Australia with financial details of its decision to reduce its work force by 5,000. Way back, Charles Copeman acted in a similar fashion in resisting the Industrial Relations Commission’s edicts on the Robe River dispute on the ground that it is the responsibility of “managers to manage”. Let us hope that the (leaked) draft of the government’s workplace relations inquiry by the Productivity Cn adopts that principle: it does not seem to be the case.



Qantas 'pressured on carbon tax'

Article by Mark Kenny - Chief political correspondent, published in The Age, March 7, 2014

Qantas felt it was urged to complain more loudly about the carbon tax to rebuild its damaged relationship with the Abbott government, according to a Qantas source.

That feeling appears to have prompted a Qantas media release on Wednesday revealing for the first time a half-year carbon tax bill of $59 million. It came soon after a telephone conversation between Treasurer Joe Hockey and airline chief executive Alan Joyce. A

source claims Qantas felt it was urged to complain more loudly about the carbon tax to rebuild its relationship with the Abbott government.

Confirming the talks on Thursday, just minutes before legislation was introduced to repeal the foreign ownership restrictions in the Qantas Sale Act, Mr Hockey denied he had applied pressure on the airline to clarify the tax's impact on its balance sheet.

''No, not at all, we haven't leaned on the carrier,'' Mr Hockey said.

Yet Fairfax Media has learnt senior management at the Flying Kangaroo felt, through general public statements and private communications, that the government wanted it to make more of the carbon tax's part in its $252 million half-year loss announced last week.

Strained relations between the national carrier and the Abbott government had turned sharply south on Monday when, as cabinet was discussing a request for a debt guarantee, the airline issued a statement seen as contradicting the Treasurer.

The Qantas statement, which came after Mr Hockey had said that Mr Joyce had blamed the carbon tax for a significant part of the company's loss, said: ''The major issues faces [sic] Qantas are not related to the carbon tax.''

The government viewed the statement as deliberately unhelpful, and as evidence Qantas was not as financially stressed as claimed.

Mr Hockey said on Thursday that Mr Joyce had since dismissed Monday's statement as an ''entirely incorrect'' interpretation of the tax's impact and one wrongly issued by a ''low-level person''.

The opposition, however, dismisses the suggestion that a multibillion-dollar listed company had made unscripted public comments, with one insider describing the claim as ''complete bullshit''.

The suggestion of government pressure comes as the Senate prepares to launch two separate inquiries into the airline looking at the impact on jobs arising from the repeal of foreign ownership limits.

A bill lifting the 49 per cent foreign ownership restriction in the Qantas Sale Act cleared the House of Representatives on Thursday with 83 votes to 53 after a rancorous debate in which Labor leader Bill Shorten branded Coalition MPs ''the cheese-eating surrender monkeys of Australian jobs''.

In question time Labor continued its attack, insinuating that Qantas' safety record would be compromised if a foreign takeover meant more of the airline's maintenance was done overseas.

That brought an angry response from Prime Minister Tony Abbott who said instead of taking part in a debate the opposition should take part in a rescue.

''The Leader of the Opposition is trying to suggest that without the restrictions that exist under the Qantas Sale Act an airline can't be safe,'' Mr Abbott said.

The bill faces certain defeat in the Senate by a Labor-Greens alliance, although Labor has signalled it is prepared to discuss limits on individual airline holdings and a cap on individual equity.

The bill coincides with the first murmurs of disquiet within Labor. A senior Labor figure expressed dismay that the party that had shown the vision and courage to sell the once government-owned airline was now standing in the way of its profitability and capacity to compete internationally for foreign investment.

Defining moment for Abbott’s regime

Article by Dennis Shanahan - Political Editor, published in The Australian, March 7, 2014

JOE Hockey got rolled this week. It was a gentle and respectful setback for the Treasurer and there will be no dire consequences as a result of him entertaining the view that Qantas could satisfy the criteria he publicly set out to get a taxpayer-funded debt guarantee.

There certainly won’t be any expectations that Hockey will have to resign as Labor’s Gary Punch did when his opposition to a third runway at Sydney Airport was overridden by the Hawke cabinet. Nor will there be any of the ritual humiliation Peter Costello suffered over John Howard’s decision to block the then treasurer’s moves on sales tax exemptions for state government cars.

But there is a lesson for Hockey, who has been on a roll and maintains his momentum into the May budget, and that is that Tony Abbott is the Prime Minister, that he has particular views on economic management and that the easy assumption that Abbott is just a lesser version of Howard is yet another underestimation of Abbott’s character and political intent.

While the dramatic late-night announcement by Abbott and Transport Minister Warren Truss of the plans to effectively split Qantas and change the Qantas Sale Act without providing an interim debt guarantee was the final sign that Hockey’s preparedness to remain open to debt help for Qantas was not prevailing, the real moment of fundamental change within the new Coalition government and Abbott’s economic leadership came at the cabinet meeting on January 30.

A similar pattern of kite-flying and public positioning on SPC Ardmona’s request for a taxpayer-funded $25 million bailout occurred before the decisive cabinet meeting with Abbott signalling a hard line on “corporate welfare” and demanding the management fix costly labour agreements.

At that time the Coalition was reeling from a series of corporate closures with the impending loss of thousands of manufacturing jobs. There was deep concern within the Liberal Party and the cabinet that the government did not appear to have empathy and was seen as ideologically rigid and uncaring.

In the lead-up to that meeting Ian Macfarlane was the frontline advocate for SPC and copped plenty from Labor over being an Industry Minister who couldn’t deliver for industry. But Macfarlane recognised what had happened at that meeting and described it as a defining moment for the Coalition government.

Abbott said it was a line in the sand and “set down a marker”. What had happened at that meeting was the emergence of Abbott as the leader on the government’s economic philosophy and a philosophy that was running counter to the image of Abbott as a shadow of Howard.

As one cabinet minister told The Australian: “If John Howard had been in that meeting, SPC would have got the $25m.”

Labor has used this hard-line approach to describe Abbott as doctrinaire, hating workers, exporting jobs and being uncaring. Yet on the Holden decision not to offer further assistance using “borrowed money” for the automotive industry Abbott’s apparently doctrinaire philosophy is overwhelmingly endorsed by the public.

It may well be that with an increasingly economically literate electorate there is not just the impression of a doctrinaire economic directive coming from Abbott but also an appeal to a commonsense attitude where his apparent “simplicity” is actually a plus and Labor’s push for spending more of taxpayer funds for corporate bailouts is not resonating.

Hockey, who has been one of the government’s star performers and personally feels the burden of lifting economic growth to create jobs, has perhaps missed the significance of Abbott’s positioning and has definitely conducted too much of the Qantas debate in public for some of his colleagues’ comfort.

There were clearly mixed messages coming from the government on whether Qantas would get a debt guarantee after it was clear there would be no direct bailout. Hockey, as he should, kept talking to Qantas and was leaving as many options as possible on the table for cabinet, including a debt guarantee.

Bill Shorten was able to use the confusion to his political advantage saying: “For three months they have been adopting multiple positions. You know, the debt guarantee, on again, off again. Now we’re seeing the government trying to bomb the airline management and attack them. We see more conflicting positions out of the government. We’ve seen Joe Hockey I think clearly indicating to journalists and to others that the debt guarantee is a live option.”

But Qantas - and Hockey - seemed to miss the singular and consistent message from Abbott that the airline had to get its own house in order and what the government did for one corporation it had to do for others.

Abbott was clear and concise while the impression from Qantas and Hockey was conflicting and confused. Abbott’s concentration on the carbon tax was a sign his political campaign of the past five years had not changed, yet Qantas seemed not to appreciate the politics of at least giving comfort to the government on this point and garnering some confidence-boosting publicity about the decision instead somersaulting on the value of the carbon tax removal and the debt guarantee.

Other cabinet ministers could see Abbott’s resolve - alarmed as they might be about a lack of empathy in the longer term - and wondered at Hockey’s continuing campaign to keep the options alive.

There was also resentment that, like the lead-up to the SPC decision, there was a full debate on the Qantas debt guarantee being conducted in the media and much agreement with the Opposition Leader that Hockey was behind the briefings. For Hockey there is the added problem that some of his colleagues feel he’s getting too far ahead of himself and assuming responsibility that belongs to the Prime Minister.

There is general agreement that in the cabinet discussions there is an excellent and open debate. Both the SPC and Qantas issues were the only items on the cabinet agenda and were discussed for hours.

On SPC there were ministers, such as Scott Morrison, Greg Hunt and Christopher Pyne arguing for a bit of Howard-like pragmatism.

Abbott didn’t buy it then and he didn’t buy it on Monday night when he took the extra step to appear immediately after the meeting with Truss to make it clear where the government stood.

The Prime Minister is absolutely supportive of the Treasurer and there is no malice in the decision-making but there is a message: Abbott’s in charge, he’s not Howard, and he has his own long-held and consistent views.

Qantas keeps books from union

Article by Ewin Hannan and Ean Higgins published in The Australian, 7 March, 2014

The Fair Work Commission has asked Qantas to respond to the unions’ request to delay job cuts at Sydney airport.

The Fair Work Commission has asked Qantas to respond to the unions’ request to delay job cuts at Sydney airport.
Picture: Craig Greenhill Source: News Corp Australia

UNIONS have urged the workplace umpire to force Qantas to open its books and delay jobs cuts at Sydney airport, as the airline wrote to 5000 employees seeking their interest in taking voluntary redundancies.

The Fair Work Commission asked Qantas yesterday to respond to the union proposal by Monday, but Qantas indicated last night it would not concede to the plan and intended to push ahead with its proposed job cuts.

The Australian Services Union said last night that Qantas had written to 5000 employees across the country, including 2000 customer-service staff, asking them if they wanted to take a redundancy.

Linda White, the union’s assistant national secretary, said that customer-service employees at Melbourne airport were told yesterday that any worker who put in for a redundancy package would get it.

“It’s a debacle,” she said. “Qantas is getting rid of the cattle and then trying to figure out how to run the ranch.”

Qantas is seeking to cut about 90 of 300 customer-service staff at Sydney’s international airport. The ASU, which represents about 4000 administrative and customer-service workers at the airline, sought the intervention of the commission yesterday to delay the redundancy program.

Qantas also wants to cut 1500 positions from its business-support area, drawing from 3000 staff covered by enterprise agreements and 1500 senior managers not covered by union agreements. It had refused to state how many of the 1500 workers would come from the union workforce and how many from management.

In addition, it is also seeking an undisclosed number of workers from its 2000-strong customer-service ranks.

A Qantas spokesman said workers were being asked if they were interested in taking voluntary redundancy, while others would have the opportunity to go from full-time to part-time employment. The spokesman said these workers would “exit the business over April and early May”.

At the commission hearing yesterday, the union’s barrister, Tony Slevin, claimed Qantas had broken the law in its “undue haste” to cut staff.

Qantas barrister Helen McKenzie rejected the claims and said the ASU was engaged in “trial by media, trial by ambush”.

Commissioner Ian Cambridge asked Qantas to respond by Monday to union proposals for the airline to reveal its business plan to union officials, to consider alternatives to sacking full-time workers and to hold off on redundancies to allow for further negotiations.

Mr Slevin claimed the action by Qantas at its Sydney international terminal was in breach of an enterprise bargaining agreement and the Fair Work Act.

“Qantas is proceeding with alacrity, proceeding with undue haste, indeed, unlawful haste to reduce its workforce,” he told the commission before it went into private session.

The union proposition Mr Cambridge has asked Qantas to respond to includes “full disclosure” of the information the airline has before it which has led to its decision to axe 5000 positions.

“We want the same information that the employer has got,” the ASU’s NSW secretary, Sally McManus, said outside the hearing. Qantas has also been asked to consider a wide range of alternatives to outright sacking of full-time positions, such as having employees take unpaid leave or engage in job-sharing, Ms McManus said.

Qantas was asked whether it would extend by about two weeks the timetable it had set for assessing the voluntary redundancies, which at present calls for expressions of interest by March 21 and for the redundancies to be made effective by March 31.

The union proposes that Qantas agree it will not sack any employees over the period in which these processes happen.

Work laws: nothing is safe

Article by James Massola - Political Correspondent, published in The Age, March 7, 2014

The federal government's sweeping review of Australia's workplace laws will put penalty rates, pay and conditions, union militancy and flexibility under the microscope. The inquiry means that all the elements of WorkChoices that people hated are back on the table, including individual contracts.

A leaked draft of the terms of reference for the Productivity Commission inquiry into the Fair Work Act, obtained by Fairfax Media, reveals the inquiry will examine the act's impact on unemployment and under-employment, productivity, business investment and the ability of the labour market to respond to changing economic conditions.

The number of working days lost to strike action, pressures on small business, employers' flexibility to bargain with their employees on issues such as working hours and the impact of red tape on business will be considered.

The inquiry is framed around the need to maintain ''fair and equitable pay and conditions for employees, including the maintenance of a relevant safety net'', but the broad scope of the inquiry will open the door to warnings from Labor and the union movement that the Abbott government plans to impose a WorkChoices-style system of individual contracts.

The inquiry will be launched amid a growing chorus of criticism from government backbenchers about the impact of penalty rates on business.

On Wednesday, Treasurer Joe Hockey refused to directly address penalty rates but said ''anything we can do to free up the labour market within the framework of what we promised at the last election is going to be a positive step forward''.

The review was a pre-election promise for the Abbott government and was due to be launched by March 7, but was delayed until after the March 15 state elections in Tasmania and South Australia, and possibly until after the WA Senate election on April 5 amid fears in the Abbott government it could be used by Labor and the union movement to mount a scare campaign.

The terms of reference, which are yet to be finalised and have not been signed off by cabinet, are carefully framed to ensure any recommendations ''maximise outcomes for Australian employers, employees and the economy, bearing in mind the need to ensure workers are protected, the need for business to be able to grow, prosper and employ and the need to reduce unnecessary and excessive regulation''.

It comes alongside the government's decision to launch a wide-ranging royal commission into the union movement, re-establish the construction industry watchdog and its attempts to push modest changes to Fair Work laws through the Parliament.

The draft says the commission will be asked to report back to government in April 2015. The next federal election is not due to be held until August 2016.

Senior officers of the federal and state bureaucracies will hold a phone hook-up next week to discuss the draft terms of reference, which was distributed earlier this week to the states by Employment Minister Eric Abetz's office.

Senator Abetz said on Friday that review would be thorough and broad but refused to spell out its scope.

''We're not in a position to pre-empt what's going to be in the terms of reference other than to say we did promise a comprehensive, broad review of laws,'' he told ABC radio.

ACTU president Ged Kearney said the government appeared to be ''putting the entire workplace relations system on trial''.

''Everything is up for grabs: awards, penalty rates, enterprise bargaining, protection from unfair dismissal. The inquiry means that all the elements of WorkChoices that people hated are back on the table, including individual contracts,'' she said.

''It confirms that the Abbott government is determined to weaken the industrial relations system that protects Australian workers and is part of their overall plan to undermine their take-home pay and decent standard of living.

''So much for Tony Abbott's pre-election promise not to attack workers' wages and conditions.''

Opposition workplace spokesman Brendan O'Connor accused the government of attempting to ensure ''its attack on workers' pay and conditions is hidden'' until after the state elections. ''Tony Abbott knows workers will lose as a result of his Productivity Commission review, that's why details are being kept secret until those elections are run and won.''

Poor design and build flaws blamed for warship woes

Article by John Kerin published in the Australian Financial Review, March 7, 2014

Defence Minister Senator David Johnston.

Defence Minister Senator David Johnston. Photo: Alex Ellinghausen

A failure to include Spanish shipbuilder Navantia in the alliance building Australia’s new destroyers and the designs it supplied to Australian shipbuilders have been substantially blamed for delays and cost over-runs on the $8.5 billion project.

A 320-page report by the Australian National Audit Office found the seven-year Adelaide-based project to build three 6500-tonne destroyers for the Royal Australian Navy is running two-and-a-half years late and more than $300 million over budget.

It stresses there could be further cost blowouts and delays beyond the revised five-year schedule to complete the three ships.

“Significant immaturity in design documentation, major block construction problems and substantially lower-than-anticipated construction productivity . . . have led to extensive, time consuming and costly rework,’’ the report says.

The Air Warfare Destroyer Alliance involves US systems integrator Raytheon, government-owned shipbuilder ASC and government weapons purchaser the Defence Materiel Organisation.

Spanish based Navantia was the ships’ designer and construction of hull blocks is carried out at BAE’s Williamstown shipyard in Melbourne and Forgacs shipyard in Newcastle along with ASC.

Navantia should have been included – report

The report finds the challenges of re-establishing a shipbuilding capacity in Australia after a hiatus in projects of some years was underestimated and the failure to make Navantia a partner in the alliance was also critical.

“Notwithstanding the risk mitigation strategies applied by the DMO the selected design did not exist in built form . . . defence and its industry advisers underestimated the risks associated with incorporating the design changes to Navantia’s F-104 design, exporting that design to Australia and adapting the designers’ build strategy and accommodating a distributed build at shipyards that lacked experience,’’ the ANAO report says.

Design documentation provided by Navantia at times swamped the Alliance’s engineering and planning departments and revised drawings were still having to be provided as late as 2013.

“This process has led to costly and out-of-sequence rework in cases where construction work already undertaken no longer matched the design.’’

The report says there were “major hull block construction issues’’ at BAE and Forgacs.

In the case of BAE systems this resulted in the rework and reallocation of hull blocks between shipyards and occurred early in the program.

The multiple challenges have led to a continuing decline in construction productivity, the report says singling out ASC.

“By November 2013 the programs earned value management system revealed it was costing ASC, the lead shipbuilder, $1.60 to produce work that was originally estimated to cost $1,’’ it says.

The report singles out the DMO for a lack of leadership.

It says while the DMO had reminded the contractors of their contractual obligations it remains incumbent on the DMO as the owner participant, to make full use of the alliance structure to inform itself of program risks and provide guidance.

“The DMO faces an immediate and continuing challenge in acting to mitigate the risks faced by the AWD program so as to achieve the timely delivery of capability to the RAN and to limit the overall costs to the Commonwealth.’’

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