November 12th 2011

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Articles from this issue:

CANBERRA OBSERVED: What really lies behind the Qantas dispute

EDITORIAL: The carbon tax: Gillard's last stand?

THE ECONOMY: Australia must change to maintain its prosperity

MURRAY-DARLING BASIN: Next Basin plan faces further community rebuff

COVER STORY: Why families struggle to afford a home

ABORTION: Global initiative to protect the unborn

FOREIGN AFFAIRS: Russia enacts new law to restrict abortion

MIDDLE EAST: How the West misreads Middle East dictatorships

MEDICAL SCIENCE: Deaths from AIDS omitted from inquiry

OPINION: Housing regulations killing the Australian dream


BOOK REVIEW Visionary premier who transformed a state

BOOK REVIEW The history we neglect at our peril

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What really lies behind the Qantas dispute

by national correspondent

News Weekly, November 12, 2011

It says a good deal about the near triumph of the global free trade philosophy in Australia that the Foster’s group was passed into foreign hands with barely a whimper of protest among the political class.

Yet the Qantas war is a symptom of the same disease and there remains a distinct possibility that Australia’s national airline could go the same way.

When the Qantas Sale Act of 1992 was passed by the federal Parliament, it included laws that the airline must remain in Australian majority hands and that its headquarters remain in Australia.

These stipulations have always rankled with the privatised Qantas, and it has been assiduously seeking ways to get around it.

In the short-term, the Gillard Government is dealing with the fallout from the dramatic lockout of its workers deliberately planned and executed by the Qantas board.

This involves the blame game of whether the Government was warned, whether it should have stopped Qantas and whether Julia Gillard’s own Fair Work Act is equipped to deal with such situations, or whether the system is now biased toward unions.

There has also been claim and counter-claim about the intransigence of the unions representing pilots, engineers and baggage and ground staff involved in the dispute and the management style of the company.

In the long-term, however, the Australian Government (and this includes a possible Abbott Government) must deal with the prospect of other service companies, such as Qantas, shifting their workforces to Asian countries where labour is cheaper.

Foster’s, the iconic beer company, which brews Victorian Bitter and Carlton beers, is to be sold to South African international conglomerate SABMiller for $12.3 billion.

Although small investors put up a brave stand at the Foster’s (last) annual general meeting, there was minimal political outcry and no calls for the Foreign Investment Review Tribunal to intervene.

Practically alone, Nationals Senator Barnaby Joyce described the outcome as a “very sad deal”, while admitting the brewing group had no strategic significance.

At the same time, the Qantas board and management are telling Australians that the national airline is also at risk of disappearing or being swallowed up by an overseas airline unless it is able to proceed with plans to move a large proportion of its operations into Asia.

Grappling with the complexities of international competition while dealing with a strongly unionised workforce that has generally succeeded in extracting wages and conditions it demanded in the past, the board of Qantas has embarked on a strategy of relocating much of its future operations offshore.

Qantas has little competition in the domestic market, but is facing strong competition from airlines from the Middle East — such as Gulf Air and Emirates — for the once lucrative international market.

Shareholders were warned at the annual shareholders meeting, before the recent dramatic lockout, that if Qantas did not proceed with its shift to Asia, the airline could eventually fold.

While a beer company is in the end only a beer company, the disappearance of a national airline (which was indeed once owned by all Australians and in which all Australians still believe they have a stake) is an altogether different situation.

Qantas obviously is vital to the Australian economy and is indeed a strategic asset. Were it taken over by a larger airline, its loss would diminish the country considerably.

There has been considerable political heat about whether Prime Minister Julia Gillard should or should not have “returned the Qantas CEO’s phone call” and intervened in the dramatic shutdown of the airline around the globe.

Now the debate has shifted to Fair Work Australia, which will presumably find a workable solution acceptable to either the unions or the airline, or hopefully to both.

While the Government could have done more to intervene, the truth appears to be that Qantas was planning the lockout all along as a means of bringing its battle with the unions to a head in its pursuit of an Asian Qantas.

This is the real issue the Government must grapple with — not only our dwindling manufacturing industry, which is being exported overseas, but the service industry as well. 

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