WEBVTT - Is Qantas sorry – or just sorry it got caught?

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<v Speaker 1>Hi, I'm Ruby Jones and you're listening to seven Am.

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<v Speaker 1>Quantus has been told it's the wrong kind of sorry.

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<v Speaker 1>Five years after illegally outsourcing eighteen hundred ground staff, the

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<v Speaker 1>airline has been hit with a record ninety million dollar

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<v Speaker 1>penalty on top of compensation for workers. The court's judgment

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<v Speaker 1>also questions whether Quantus's remorse is real or just for

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<v Speaker 1>show at a time when the company is promising cultural

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<v Speaker 1>change under a new chief executive and a new chair

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<v Speaker 1>Today Rampart founder and author of the Chairman's Lounge, The

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<v Speaker 1>Inside Story of How Quantus sold us out. Joe Aston

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<v Speaker 1>on what this ruling means for the airline and whether

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<v Speaker 1>anything has changed since Alan Joyce's departure. It's Thursday, August

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<v Speaker 1>twenty one, So Joe, thank you for joining me on

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<v Speaker 1>zevn am my pleasure. On Monday, Contus was ordered to

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<v Speaker 1>pay a ninety million dollar fine for illegally sacking eighteen

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<v Speaker 1>hundred workers back during the pandemic, and in delivering his judgment,

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<v Speaker 1>Justice Mike Ouley called Contus the wrong kind of sorry.

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<v Speaker 1>So tell me what you made of his comments and

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<v Speaker 1>of the decision more broadly.

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<v Speaker 2>Well, I mean I've been watching this case for a

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<v Speaker 2>long time. It's been a marathon. The first try, the

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<v Speaker 2>actual original liability trial, was in twenty twenty one, in

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<v Speaker 2>the middle of lockdowns.

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<v Speaker 3>Federal Court will decide whether Quantus acted illegally when it

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<v Speaker 3>sacked hundreds of Melbourne ground crew and gave their jobs

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<v Speaker 3>to a cheaper contractor the unionit You know, then Quantus

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<v Speaker 3>had lost that case and then appealed straight to the

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<v Speaker 3>Full Court.

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<v Speaker 1>The Federal Court found the decision to outsource about two

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<v Speaker 1>thousand groundworkers was in breach of the Fair Worked Act.

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<v Speaker 2>Town and then they lost that case in twenty twenty two,

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<v Speaker 2>and then they appealed straight to the High Court and

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<v Speaker 2>they lost that case in twenty twenty three.

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<v Speaker 4>The Court has dismissed unanimously Quantus's appeal. It now stands

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<v Speaker 4>their actions against these Quantus families as the largest sacking

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<v Speaker 4>in Australian corporate.

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<v Speaker 2>History, who were sent back to the Federal Court to

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<v Speaker 2>decide on the compensation that they should pay to those workers,

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<v Speaker 2>and that was decided.

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<v Speaker 5>In twenty twenty four that they should pay one hundred

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<v Speaker 5>and twenty million dollars.

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<v Speaker 2>Quantus has been forced to pay more than one hundred

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<v Speaker 2>and twenty million dollars in compensation to workers whose jobs

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<v Speaker 2>were legally outsourced during the pandemic about eighteen and only

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<v Speaker 2>now in twenty twenty five have they been hit with

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<v Speaker 2>their penalties.

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<v Speaker 1>Quantas has just been fined ninety million dollars for illegally

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<v Speaker 1>sacking eighteen hundred ground Star five years ago.

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<v Speaker 2>Has just been sort of this incremental debacle unfolding which

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<v Speaker 2>Quantus until the very last minute was fighting. Even when

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<v Speaker 2>they lost in the High Court, the then chairman of Quantus,

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<v Speaker 2>Richard Gouiter, was dismissing the ruling of the court and saying, well, look,

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<v Speaker 2>we had sound commercial reasons for that decision. Justice Lee

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<v Speaker 2>was quite brilliant in pointing out how completely silly that

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<v Speaker 2>argument is. Of course they had sound commercial reasons. I mean,

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<v Speaker 2>what kind of an outsourcing would it have been if

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<v Speaker 2>they didn't have sound commercial reasons. It was just a

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<v Speaker 2>bizarre reasoning that they were offering. You know, we engaged

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<v Speaker 2>in illegal behavior because it made us money.

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<v Speaker 5>Now that doesn't make it okay. So it wasn't just

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<v Speaker 5>the illegal outsourcing.

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<v Speaker 2>It was the way they conducted themselves, even when they

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<v Speaker 2>were found to have done the wrong thing by a

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<v Speaker 2>court afterwards, and Justice Lee also this is one of

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<v Speaker 2>the big reasons why he didn't believe that they were

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<v Speaker 2>really sorry. Only last year in twenty twenty four, Quantus

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<v Speaker 2>was arguing in the compensation hearings that the workers should

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<v Speaker 2>get zero dollars of compensation. That was actually the argument

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<v Speaker 2>being put to the court by Quantus that the workers

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<v Speaker 2>should not get any compensation at all. That's obviously not

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<v Speaker 2>an argument that it suggests a company that is feeling

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<v Speaker 2>contrite about its wrongdoing.

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<v Speaker 1>Okay, so we had the company at least initially arguing

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<v Speaker 1>that there should be no compensation for workers. They have

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<v Speaker 1>now been ordered to pay a ninety million dollar fine.

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<v Speaker 1>So let's talk about that for a moment. How does

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<v Speaker 1>that amount compare with what Quantus wanted versus what the

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<v Speaker 1>union wanted.

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<v Speaker 2>Well, yeah, I mean the fine itself is staggering, by

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<v Speaker 2>far the biggest fine ever imposed on a company for

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<v Speaker 2>a breach of general protections under the Act.

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<v Speaker 5>The last highest ever was ten.

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<v Speaker 2>Million dollars against the Commonwealth Bank for an underpayment issue

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<v Speaker 2>that went over a decade. The fine is generally paid

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<v Speaker 2>to the party that is bringing the case, and usually

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<v Speaker 2>that party is a fair work gombodsman who prosecutes breaches

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<v Speaker 2>of the Act by employers. But of course in this case,

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<v Speaker 2>the ombudsman was fast asleep and the union decided to

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<v Speaker 2>take the action itself. And that's what's really unusual about this.

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<v Speaker 2>That's such a huge amount of money is being paid

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<v Speaker 2>to the union.

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<v Speaker 1>Right and so so does that money then go from

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<v Speaker 1>the union to the workers? Have they said how to

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<v Speaker 1>be divvied up?

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<v Speaker 2>So the penalties, ninety fifty of that goes to the

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<v Speaker 2>union and then the other forty will go to the

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<v Speaker 2>workers on top of the one hundred and twenty million

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<v Speaker 2>that they were already getting in compensation. But you know,

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<v Speaker 2>if you look at how many workers were illegally sacked,

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<v Speaker 2>there's eighteen hundred it Actually, you know, this is not

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<v Speaker 2>sort of life changing money for people who've lost their livelihoods.

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<v Speaker 2>The forty million dollars split eighteen hundred ways, that's only

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<v Speaker 2>twenty two thousand dollars per person. So for someone who's

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<v Speaker 2>lost a long term, a good paying blue collar job,

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<v Speaker 2>that's not going to get them over the line.

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<v Speaker 1>And it's been a year now since Quantus announced that

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<v Speaker 1>it was slashing Alan Joyce's payout by almost ten million,

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<v Speaker 1>and that was partly because of his handling of this.

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<v Speaker 1>And at the time, Quantus acknowledged the harm that had

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<v Speaker 1>been done to their reputation, particularly with their customers, and

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<v Speaker 1>they commissioned a review to tell them how to fix it.

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<v Speaker 1>So what did that review end up saying? And has

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<v Speaker 1>the company implemented any changes?

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<v Speaker 2>Yeah, well, the review was damning and the review found

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<v Speaker 2>that Quantus had a terrible culture and it had a

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<v Speaker 2>board that was too weak to challenge the CEO, Alan Joyce,

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<v Speaker 2>and this case the legal sackings was one part of it.

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<v Speaker 2>But you know, you remember there was also the ghost flights,

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<v Speaker 2>the issue of COVID credits and the way customers were

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<v Speaker 2>really poorly treated by those. There was a huge amount

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<v Speaker 2>of price gouging. There's a massive suite of issues that

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<v Speaker 2>were affecting Quantus's reputation. Now, what has actually changed a

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<v Speaker 2>lot of that is sort of at the surface level.

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<v Speaker 2>I think it's fair to say that Quantus under Vanessa

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<v Speaker 2>Hudson is a company more focused on its customers and

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<v Speaker 2>on its staff than it had been previously. But you know,

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<v Speaker 2>does it still charge the highest possible fares that it

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<v Speaker 2>can on routes where there's not very much competition. Absolutely,

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<v Speaker 2>does it still invest insufficiently in new aircraft to improve

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<v Speaker 2>the experience and reliability for its customers, Absolutely, you know,

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<v Speaker 2>and also, by the way, to reduce the impact on

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<v Speaker 2>the environment. So Quantus has changed its bedside manner. I

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<v Speaker 2>think that's fair to say, and that's not nothing. That's

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<v Speaker 2>an important thing. But if you look deeply, Quantus.

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<v Speaker 1>Is still a very aggressive company, right, So the underlying

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<v Speaker 1>strategy might not have changed even though Joyce is out

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<v Speaker 1>of the picture. So what ongoing benefits does Joyce get

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<v Speaker 1>as a result of the time that he spent there.

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<v Speaker 2>Well, I mean, you know, he made one hundred and

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<v Speaker 2>thirty million dollars a CEO of Quantus. That's pretty good

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<v Speaker 2>coin if you can get it. And he's got a

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<v Speaker 2>golden ticket. It's like the one they give you in

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<v Speaker 2>Charlie and the Chocolate Factory, except instead of unlimited chocolate,

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<v Speaker 2>it's unlimited first class flights for life.

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<v Speaker 1>After the break. What Quantus says it's learned and what

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<v Speaker 1>its profits really show Joe Quantus for the past year

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<v Speaker 1>has been run by Vanessa Hudson, So tell me a

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<v Speaker 1>bit more about her and how she's approached her role

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<v Speaker 1>so far.

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<v Speaker 2>Yeah, well, Vanessa Hudson's even more of a Quantus lifer

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<v Speaker 2>than Alan Joyce in that she started at the company.

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<v Speaker 2>I think it was almost her second job in the

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<v Speaker 2>audit department, which is a very exciting place, as you

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<v Speaker 2>can imagine, in nineteen ninety four, in her twenties, and

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<v Speaker 2>has worked right across the company. When I worked at

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<v Speaker 2>Quantas in the late two thousands, she was running customer

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<v Speaker 2>product and service inflight product and service when the airline

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<v Speaker 2>received its first day three eighties, and then she's gone

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<v Speaker 2>and run the American division of Quantus. She came back

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<v Speaker 2>and was chief customer officer briefly and then became the

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<v Speaker 2>chief financial officer. So she's really worked right across the company,

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<v Speaker 2>and she became the twenty twenty three. Her pitch to

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<v Speaker 2>the board of Quantas for the job is, I'm not

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<v Speaker 2>going to change anything. I'm going to be just like

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<v Speaker 2>Alan Joyce. Now, as Alan Joyce became absolutely toxic in

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<v Speaker 2>the dying months of his reign, she had to very

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<v Speaker 2>quickly change that plan and try to distinguish herself from

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<v Speaker 2>Joyce and be someone different.

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<v Speaker 1>We want to get back to the national carrier that

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<v Speaker 1>Australians can be proud of that's known for going above

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<v Speaker 1>and beyond. We understand we need to earn your trust back,

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<v Speaker 1>not with what we say, but what we do and

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<v Speaker 1>how we behave.

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<v Speaker 2>And she has to keep the shareholders happy, she has

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<v Speaker 2>to make up with customers, and she has to make

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<v Speaker 2>staff feel like it's worth going out there and putting

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<v Speaker 2>themselves on the line every day. For those customers, she's

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<v Speaker 2>sort of done pretty well. For the shareholders, they're very happy.

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<v Speaker 2>The share prices more than doubled since she's been in charge.

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<v Speaker 2>And in terms of making up with the customers, the

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<v Speaker 2>right noises are made, but they will never admit. But

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<v Speaker 2>every senior executive at Quantus knows that they only have

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<v Speaker 2>to be so nice to their customers, but really they'll

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<v Speaker 2>keep coming back for more punishment because the customers just

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<v Speaker 2>don't have other options.

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<v Speaker 1>And it's not just the chief executive who has changed.

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<v Speaker 1>Last year, John Mullen became chair. So what impact has

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<v Speaker 1>he had so far?

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<v Speaker 3>Ah?

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<v Speaker 2>Well, Look, I think John Mullen's someone who has a

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<v Speaker 2>really good sense of you know, what the average person

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<v Speaker 2>on the street thinks and feels. You know, He's somebody

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<v Speaker 2>who's really quite in touch. And that's a good thing

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<v Speaker 2>for Quantas because that's how this happened in the first place.

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<v Speaker 2>Alan Joyce was living in his own world and his

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<v Speaker 2>board was subservient to him. So even though they might

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<v Speaker 2>have had doubts about how angry Australia was at Quantus,

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<v Speaker 2>they weren't prepared to challenge Alan Joyce to do anything

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<v Speaker 2>about it. Put it this way, there's no way in

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<v Speaker 2>the world that Vanessa Hudson is going to be telling

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<v Speaker 2>John Mullen what to do. And there's no way in

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<v Speaker 2>the world that John Mullen's going to be too afraid

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<v Speaker 2>to pull Vanessa Hudson into line. And that's the way

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<v Speaker 2>companies are supposed to be rung.

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<v Speaker 1>Okay, And so have we heard from John Mullen since

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<v Speaker 1>this ruling came down on Monday.

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<v Speaker 2>No, we haven't, and it's probably not for him to

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<v Speaker 2>comment at this stage. But you know, look, there's no

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<v Speaker 2>doubt that John Mullen has got Vanessa and her team

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<v Speaker 2>really focused on cultural change. But I just find it

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<v Speaker 2>really disappointing that, given the opportunity and everyone was pointing

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<v Speaker 2>this out to them at the time in twenty twenty four,

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<v Speaker 2>that they continued to argue that the workers should get

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<v Speaker 2>zero compensation because that's a really hard thing for them

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<v Speaker 2>to defend, and it just opens them up to the

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<v Speaker 2>absolutely legitimate criticism that they're all taught that the cultural

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<v Speaker 2>change is about a surface appearance and not actually about.

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<v Speaker 5>Root and branch.

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<v Speaker 2>You know, should we do the right thing even when

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<v Speaker 2>it's expensive. Should we do the right thing even it's

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<v Speaker 2>when it's painful. I think that's really regrettable. And this

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<v Speaker 2>is the thing about company culture. Everyone thinks that company

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<v Speaker 2>culture is something that everyone is part of, and in

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<v Speaker 2>some ways that's true, but the real truth of it

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<v Speaker 2>is that company culture is really set by very few

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<v Speaker 2>people at the top, and it is the values of

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<v Speaker 2>the boss that emanates through the organization. And Alan Joyce

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<v Speaker 2>had some executives around him whose judgment was very poor

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<v Speaker 2>when it came to ethical decision making, and the court

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<v Speaker 2>has ultimately found that Joe.

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<v Speaker 1>There is this line in Justice Lee's ruling where he

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<v Speaker 1>says that Quantus is pleading virtue only when cornered and

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<v Speaker 1>feigning contrition while harboring it no genuine regret. And I

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<v Speaker 1>think that really goes to everything that he kind of

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<v Speaker 1>said when handing down this decision. So how does that

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<v Speaker 1>square with the culture that you have observed at Quantus

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<v Speaker 1>over y'all many many years of reporting on the company.

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<v Speaker 2>Well, it's confirmatory of what I was just saying about,

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<v Speaker 2>you know, being very sorry, as saying that you're very sorry,

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<v Speaker 2>but then saying to the court, well, please, we don't

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<v Speaker 2>really want to pay these people any money for what

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<v Speaker 2>we did to them. It's very hard to argue that

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<v Speaker 2>that is actual, deep and profound cultural change and not

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<v Speaker 2>just a sort of air brushing of the ugly things

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<v Speaker 2>from view. Bear in mind, Quantus has a lot of

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<v Speaker 2>reasons not to be sorry for doing this. Look at

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<v Speaker 2>the numbers, right, So they've spent almost a quarter of

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<v Speaker 2>a billion dollars on this case, one hundred and twenty

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<v Speaker 2>million dollars in compensation, ninety million dollar fine, at least

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<v Speaker 2>twenty or twenty five million dollars in legal fees, and

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<v Speaker 2>even then there's still ahead financially because although they've been

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<v Speaker 2>publicly shamed and humiliated, and the chairman had to resign

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<v Speaker 2>and the CEO had to resign and all of these

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<v Speaker 2>sort of all these executives had to resign.

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<v Speaker 5>And all sorts of calamity befell them.

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<v Speaker 2>What actually happened is by sacking these people illegally, they

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<v Speaker 2>saved one hundred and twenty five million dollars every year

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<v Speaker 2>on wages, and they avoided eighty million dollars of.

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<v Speaker 5>Equipment costs that they were going to have to invest in.

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<v Speaker 2>So it's been five years now, but that's almost seven

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<v Speaker 2>hundred million dollars they've already saved by doing what they did,

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<v Speaker 2>versus the two hundred and something million dollars that they've

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<v Speaker 2>had to pay for the infringement.

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<v Speaker 5>So like, yeah, they have.

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<v Speaker 2>To look like they're sorry, but I bet there's plenty

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<v Speaker 2>of people in the company who just very quietly say

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<v Speaker 2>that was a ripper decision. We've made more money for

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<v Speaker 2>our shareholders, and so you know, we all have to

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<v Speaker 2>send the right signals, but we do it again ten.

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<v Speaker 5>Times out of ten.

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<v Speaker 2>That's something the government needs to think really deeply about,

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<v Speaker 2>because there's something wrong with a country where breaking the

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<v Speaker 2>law is cheaper than complying with the law. We're breaking

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<v Speaker 2>the law is so financially rewarding that, to me, signals

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<v Speaker 2>are problem with the law.

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<v Speaker 1>Well, Joe, thank you so much for your time today.

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<v Speaker 5>My pleasure. Thanks Reuby.

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<v Speaker 1>You can read Joe Aston's work at rampart dot News.

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<v Speaker 1>Also in the news today, the Victorian government has responded

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<v Speaker 1>to a rapid review of the childcare sector, commissioned in

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<v Speaker 1>the wake of several reports of sexual assault of children

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<v Speaker 1>in childcare centers across the state. The review found the

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<v Speaker 1>Victoria's childcare watchdogs are failing to keep kids safe due

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<v Speaker 1>to chronic underfunding and a system that places the privacy

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<v Speaker 1>of educators and the pursuit of profits over child safety.

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<v Speaker 1>The Victorian government has committed to adopting twenty two recommendations

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<v Speaker 1>made in the report, including a strengthening of safety checks

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<v Speaker 1>and mediators. Are awaiting an official Israeli response to a

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<v Speaker 1>ceasefire plan with musk after Hamas signaled its readiness for

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<v Speaker 1>a fresh round of talks. Egypt and Qatar, who have

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<v Speaker 1>mediated frequent rounds of negotiations, say a new ceasefire proposal

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<v Speaker 1>has been sent to Israel and Israel's response is the

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<v Speaker 1>next step towards an agreement. I'm Ruby Jones. This is

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<v Speaker 1>seven am. Thanks for listening.

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<v Speaker 2>U