Speaker 1: Hi, I'm Ruby Jones and you're listening to seven Am.
Speaker 1: Quantus has been told it's the wrong kind of sorry.
Speaker 1: Five years after illegally outsourcing eighteen hundred ground staff, the
Speaker 1: airline has been hit with a record ninety million dollar
Speaker 1: penalty on top of compensation for workers. The court's judgment
Speaker 1: also questions whether Quantus's remorse is real or just for
Speaker 1: show at a time when the company is promising cultural
Speaker 1: change under a new chief executive and a new chair
Speaker 1: Today Rampart founder and author of the Chairman's Lounge, The
Speaker 1: Inside Story of How Quantus sold us out. Joe Aston
Speaker 1: on what this ruling means for the airline and whether
Speaker 1: anything has changed since Alan Joyce's departure. It's Thursday, August
Speaker 1: twenty one, So Joe, thank you for joining me on
Speaker 1: zevn am my pleasure. On Monday, Contus was ordered to
Speaker 1: pay a ninety million dollar fine for illegally sacking eighteen
Speaker 1: hundred workers back during the pandemic, and in delivering his judgment,
Speaker 1: Justice Mike Ouley called Contus the wrong kind of sorry.
Speaker 1: So tell me what you made of his comments and
Speaker 1: of the decision more broadly.
Speaker 2: Well, I mean I've been watching this case for a
Speaker 2: long time. It's been a marathon. The first try, the
Speaker 2: actual original liability trial, was in twenty twenty one, in
Speaker 2: the middle of lockdowns.
Speaker 3: Federal Court will decide whether Quantus acted illegally when it
Speaker 3: sacked hundreds of Melbourne ground crew and gave their jobs
Speaker 3: to a cheaper contractor the unionit You know, then Quantus
Speaker 3: had lost that case and then appealed straight to the
Speaker 3: Full Court.
Speaker 1: The Federal Court found the decision to outsource about two
Speaker 1: thousand groundworkers was in breach of the Fair Worked Act.
Speaker 2: Town and then they lost that case in twenty twenty two,
Speaker 2: and then they appealed straight to the High Court and
Speaker 2: they lost that case in twenty twenty three.
Speaker 4: The Court has dismissed unanimously Quantus's appeal. It now stands
Speaker 4: their actions against these Quantus families as the largest sacking
Speaker 4: in Australian corporate.
Speaker 2: History, who were sent back to the Federal Court to
Speaker 2: decide on the compensation that they should pay to those workers,
Speaker 2: and that was decided.
Speaker 5: In twenty twenty four that they should pay one hundred
Speaker 5: and twenty million dollars.
Speaker 2: Quantus has been forced to pay more than one hundred
Speaker 2: and twenty million dollars in compensation to workers whose jobs
Speaker 2: were legally outsourced during the pandemic about eighteen and only
Speaker 2: now in twenty twenty five have they been hit with
Speaker 2: their penalties.
Speaker 1: Quantas has just been fined ninety million dollars for illegally
Speaker 1: sacking eighteen hundred ground Star five years ago.
Speaker 2: Has just been sort of this incremental debacle unfolding which
Speaker 2: Quantus until the very last minute was fighting. Even when
Speaker 2: they lost in the High Court, the then chairman of Quantus,
Speaker 2: Richard Gouiter, was dismissing the ruling of the court and saying, well, look,
Speaker 2: we had sound commercial reasons for that decision. Justice Lee
Speaker 2: was quite brilliant in pointing out how completely silly that
Speaker 2: argument is. Of course they had sound commercial reasons. I mean,
Speaker 2: what kind of an outsourcing would it have been if
Speaker 2: they didn't have sound commercial reasons. It was just a
Speaker 2: bizarre reasoning that they were offering. You know, we engaged
Speaker 2: in illegal behavior because it made us money.
Speaker 5: Now that doesn't make it okay. So it wasn't just
Speaker 5: the illegal outsourcing.
Speaker 2: It was the way they conducted themselves, even when they
Speaker 2: were found to have done the wrong thing by a
Speaker 2: court afterwards, and Justice Lee also this is one of
Speaker 2: the big reasons why he didn't believe that they were
Speaker 2: really sorry. Only last year in twenty twenty four, Quantus
Speaker 2: was arguing in the compensation hearings that the workers should
Speaker 2: get zero dollars of compensation. That was actually the argument
Speaker 2: being put to the court by Quantus that the workers
Speaker 2: should not get any compensation at all. That's obviously not
Speaker 2: an argument that it suggests a company that is feeling
Speaker 2: contrite about its wrongdoing.
Speaker 1: Okay, so we had the company at least initially arguing
Speaker 1: that there should be no compensation for workers. They have
Speaker 1: now been ordered to pay a ninety million dollar fine.
Speaker 1: So let's talk about that for a moment. How does
Speaker 1: that amount compare with what Quantus wanted versus what the
Speaker 1: union wanted.
Speaker 2: Well, yeah, I mean the fine itself is staggering, by
Speaker 2: far the biggest fine ever imposed on a company for
Speaker 2: a breach of general protections under the Act.
Speaker 5: The last highest ever was ten.
Speaker 2: Million dollars against the Commonwealth Bank for an underpayment issue
Speaker 2: that went over a decade. The fine is generally paid
Speaker 2: to the party that is bringing the case, and usually
Speaker 2: that party is a fair work gombodsman who prosecutes breaches
Speaker 2: of the Act by employers. But of course in this case,
Speaker 2: the ombudsman was fast asleep and the union decided to
Speaker 2: take the action itself. And that's what's really unusual about this.
Speaker 2: That's such a huge amount of money is being paid
Speaker 2: to the union.
Speaker 1: Right and so so does that money then go from
Speaker 1: the union to the workers? Have they said how to
Speaker 1: be divvied up?
Speaker 2: So the penalties, ninety fifty of that goes to the
Speaker 2: union and then the other forty will go to the
Speaker 2: workers on top of the one hundred and twenty million
Speaker 2: that they were already getting in compensation. But you know,
Speaker 2: if you look at how many workers were illegally sacked,
Speaker 2: there's eighteen hundred it Actually, you know, this is not
Speaker 2: sort of life changing money for people who've lost their livelihoods.
Speaker 2: The forty million dollars split eighteen hundred ways, that's only
Speaker 2: twenty two thousand dollars per person. So for someone who's
Speaker 2: lost a long term, a good paying blue collar job,
Speaker 2: that's not going to get them over the line.
Speaker 1: And it's been a year now since Quantus announced that
Speaker 1: it was slashing Alan Joyce's payout by almost ten million,
Speaker 1: and that was partly because of his handling of this.
Speaker 1: And at the time, Quantus acknowledged the harm that had
Speaker 1: been done to their reputation, particularly with their customers, and
Speaker 1: they commissioned a review to tell them how to fix it.
Speaker 1: So what did that review end up saying? And has
Speaker 1: the company implemented any changes?
Speaker 2: Yeah, well, the review was damning and the review found
Speaker 2: that Quantus had a terrible culture and it had a
Speaker 2: board that was too weak to challenge the CEO, Alan Joyce,
Speaker 2: and this case the legal sackings was one part of it.
Speaker 2: But you know, you remember there was also the ghost flights,
Speaker 2: the issue of COVID credits and the way customers were
Speaker 2: really poorly treated by those. There was a huge amount
Speaker 2: of price gouging. There's a massive suite of issues that
Speaker 2: were affecting Quantus's reputation. Now, what has actually changed a
Speaker 2: lot of that is sort of at the surface level.
Speaker 2: I think it's fair to say that Quantus under Vanessa
Speaker 2: Hudson is a company more focused on its customers and
Speaker 2: on its staff than it had been previously. But you know,
Speaker 2: does it still charge the highest possible fares that it
Speaker 2: can on routes where there's not very much competition. Absolutely,
Speaker 2: does it still invest insufficiently in new aircraft to improve
Speaker 2: the experience and reliability for its customers, Absolutely, you know,
Speaker 2: and also, by the way, to reduce the impact on
Speaker 2: the environment. So Quantus has changed its bedside manner. I
Speaker 2: think that's fair to say, and that's not nothing. That's
Speaker 2: an important thing. But if you look deeply, Quantus.
Speaker 1: Is still a very aggressive company, right, So the underlying
Speaker 1: strategy might not have changed even though Joyce is out
Speaker 1: of the picture. So what ongoing benefits does Joyce get
Speaker 1: as a result of the time that he spent there.
Speaker 2: Well, I mean, you know, he made one hundred and
Speaker 2: thirty million dollars a CEO of Quantus. That's pretty good
Speaker 2: coin if you can get it. And he's got a
Speaker 2: golden ticket. It's like the one they give you in
Speaker 2: Charlie and the Chocolate Factory, except instead of unlimited chocolate,
Speaker 2: it's unlimited first class flights for life.
Speaker 1: After the break. What Quantus says it's learned and what
Speaker 1: its profits really show Joe Quantus for the past year
Speaker 1: has been run by Vanessa Hudson, So tell me a
Speaker 1: bit more about her and how she's approached her role
Speaker 1: so far.
Speaker 2: Yeah, well, Vanessa Hudson's even more of a Quantus lifer
Speaker 2: than Alan Joyce in that she started at the company.
Speaker 2: I think it was almost her second job in the
Speaker 2: audit department, which is a very exciting place, as you
Speaker 2: can imagine, in nineteen ninety four, in her twenties, and
Speaker 2: has worked right across the company. When I worked at
Speaker 2: Quantas in the late two thousands, she was running customer
Speaker 2: product and service inflight product and service when the airline
Speaker 2: received its first day three eighties, and then she's gone
Speaker 2: and run the American division of Quantus. She came back
Speaker 2: and was chief customer officer briefly and then became the
Speaker 2: chief financial officer. So she's really worked right across the company,
Speaker 2: and she became the twenty twenty three. Her pitch to
Speaker 2: the board of Quantas for the job is, I'm not
Speaker 2: going to change anything. I'm going to be just like
Speaker 2: Alan Joyce. Now, as Alan Joyce became absolutely toxic in
Speaker 2: the dying months of his reign, she had to very
Speaker 2: quickly change that plan and try to distinguish herself from
Speaker 2: Joyce and be someone different.
Speaker 1: We want to get back to the national carrier that
Speaker 1: Australians can be proud of that's known for going above
Speaker 1: and beyond. We understand we need to earn your trust back,
Speaker 1: not with what we say, but what we do and
Speaker 1: how we behave.
Speaker 2: And she has to keep the shareholders happy, she has
Speaker 2: to make up with customers, and she has to make
Speaker 2: staff feel like it's worth going out there and putting
Speaker 2: themselves on the line every day. For those customers, she's
Speaker 2: sort of done pretty well. For the shareholders, they're very happy.
Speaker 2: The share prices more than doubled since she's been in charge.
Speaker 2: And in terms of making up with the customers, the
Speaker 2: right noises are made, but they will never admit. But
Speaker 2: every senior executive at Quantus knows that they only have
Speaker 2: to be so nice to their customers, but really they'll
Speaker 2: keep coming back for more punishment because the customers just
Speaker 2: don't have other options.
Speaker 1: And it's not just the chief executive who has changed.
Speaker 1: Last year, John Mullen became chair. So what impact has
Speaker 1: he had so far?
Speaker 3: Ah?
Speaker 2: Well, Look, I think John Mullen's someone who has a
Speaker 2: really good sense of you know, what the average person
Speaker 2: on the street thinks and feels. You know, He's somebody
Speaker 2: who's really quite in touch. And that's a good thing
Speaker 2: for Quantas because that's how this happened in the first place.
Speaker 2: Alan Joyce was living in his own world and his
Speaker 2: board was subservient to him. So even though they might
Speaker 2: have had doubts about how angry Australia was at Quantus,
Speaker 2: they weren't prepared to challenge Alan Joyce to do anything
Speaker 2: about it. Put it this way, there's no way in
Speaker 2: the world that Vanessa Hudson is going to be telling
Speaker 2: John Mullen what to do. And there's no way in
Speaker 2: the world that John Mullen's going to be too afraid
Speaker 2: to pull Vanessa Hudson into line. And that's the way
Speaker 2: companies are supposed to be rung.
Speaker 1: Okay, And so have we heard from John Mullen since
Speaker 1: this ruling came down on Monday.
Speaker 2: No, we haven't, and it's probably not for him to
Speaker 2: comment at this stage. But you know, look, there's no
Speaker 2: doubt that John Mullen has got Vanessa and her team
Speaker 2: really focused on cultural change. But I just find it
Speaker 2: really disappointing that, given the opportunity and everyone was pointing
Speaker 2: this out to them at the time in twenty twenty four,
Speaker 2: that they continued to argue that the workers should get
Speaker 2: zero compensation because that's a really hard thing for them
Speaker 2: to defend, and it just opens them up to the
Speaker 2: absolutely legitimate criticism that they're all taught that the cultural
Speaker 2: change is about a surface appearance and not actually about.
Speaker 5: Root and branch.
Speaker 2: You know, should we do the right thing even when
Speaker 2: it's expensive. Should we do the right thing even it's
Speaker 2: when it's painful. I think that's really regrettable. And this
Speaker 2: is the thing about company culture. Everyone thinks that company
Speaker 2: culture is something that everyone is part of, and in
Speaker 2: some ways that's true, but the real truth of it
Speaker 2: is that company culture is really set by very few
Speaker 2: people at the top, and it is the values of
Speaker 2: the boss that emanates through the organization. And Alan Joyce
Speaker 2: had some executives around him whose judgment was very poor
Speaker 2: when it came to ethical decision making, and the court
Speaker 2: has ultimately found that Joe.
Speaker 1: There is this line in Justice Lee's ruling where he
Speaker 1: says that Quantus is pleading virtue only when cornered and
Speaker 1: feigning contrition while harboring it no genuine regret. And I
Speaker 1: think that really goes to everything that he kind of
Speaker 1: said when handing down this decision. So how does that
Speaker 1: square with the culture that you have observed at Quantus
Speaker 1: over y'all many many years of reporting on the company.
Speaker 2: Well, it's confirmatory of what I was just saying about,
Speaker 2: you know, being very sorry, as saying that you're very sorry,
Speaker 2: but then saying to the court, well, please, we don't
Speaker 2: really want to pay these people any money for what
Speaker 2: we did to them. It's very hard to argue that
Speaker 2: that is actual, deep and profound cultural change and not
Speaker 2: just a sort of air brushing of the ugly things
Speaker 2: from view. Bear in mind, Quantus has a lot of
Speaker 2: reasons not to be sorry for doing this. Look at
Speaker 2: the numbers, right, So they've spent almost a quarter of
Speaker 2: a billion dollars on this case, one hundred and twenty
Speaker 2: million dollars in compensation, ninety million dollar fine, at least
Speaker 2: twenty or twenty five million dollars in legal fees, and
Speaker 2: even then there's still ahead financially because although they've been
Speaker 2: publicly shamed and humiliated, and the chairman had to resign
Speaker 2: and the CEO had to resign and all of these
Speaker 2: sort of all these executives had to resign.
Speaker 5: And all sorts of calamity befell them.
Speaker 2: What actually happened is by sacking these people illegally, they
Speaker 2: saved one hundred and twenty five million dollars every year
Speaker 2: on wages, and they avoided eighty million dollars of.
Speaker 5: Equipment costs that they were going to have to invest in.
Speaker 2: So it's been five years now, but that's almost seven
Speaker 2: hundred million dollars they've already saved by doing what they did,
Speaker 2: versus the two hundred and something million dollars that they've
Speaker 2: had to pay for the infringement.
Speaker 5: So like, yeah, they have.
Speaker 2: To look like they're sorry, but I bet there's plenty
Speaker 2: of people in the company who just very quietly say
Speaker 2: that was a ripper decision. We've made more money for
Speaker 2: our shareholders, and so you know, we all have to
Speaker 2: send the right signals, but we do it again ten.
Speaker 5: Times out of ten.
Speaker 2: That's something the government needs to think really deeply about,
Speaker 2: because there's something wrong with a country where breaking the
Speaker 2: law is cheaper than complying with the law. We're breaking
Speaker 2: the law is so financially rewarding that, to me, signals
Speaker 2: are problem with the law.
Speaker 1: Well, Joe, thank you so much for your time today.
Speaker 5: My pleasure. Thanks Reuby.
Speaker 1: You can read Joe Aston's work at rampart dot News.
Speaker 1: Also in the news today, the Victorian government has responded
Speaker 1: to a rapid review of the childcare sector, commissioned in
Speaker 1: the wake of several reports of sexual assault of children
Speaker 1: in childcare centers across the state. The review found the
Speaker 1: Victoria's childcare watchdogs are failing to keep kids safe due
Speaker 1: to chronic underfunding and a system that places the privacy
Speaker 1: of educators and the pursuit of profits over child safety.
Speaker 1: The Victorian government has committed to adopting twenty two recommendations
Speaker 1: made in the report, including a strengthening of safety checks
Speaker 1: and mediators. Are awaiting an official Israeli response to a
Speaker 1: ceasefire plan with musk after Hamas signaled its readiness for
Speaker 1: a fresh round of talks. Egypt and Qatar, who have
Speaker 1: mediated frequent rounds of negotiations, say a new ceasefire proposal
Speaker 1: has been sent to Israel and Israel's response is the
Speaker 1: next step towards an agreement. I'm Ruby Jones. This is
Speaker 1: seven am. Thanks for listening.
Speaker 2: U