Speaker 1: I'm Daniel James, and you're listening to seven AM. This week,
Speaker 1: seven Am spoke with former Corners chief executive Alan Joyce
Speaker 1: as a return to public life with a memoir defending
Speaker 1: many of the decisions he made during his final years
Speaker 1: at the airline. Joyce said the company was fighting for
Speaker 1: survival during the pandemic and that while mistakes were made,
Speaker 1: the difficult decisions taken under his leadership were necessary to
Speaker 1: keep Quanters from going under. Today we revisit our conversation
Speaker 1: with journalists and author Joe Aston, recorded after Connas was
Speaker 1: handed a record ninety million dollar penalty for illegally outsourcing
Speaker 1: eighteen hundred workers. It asked what those decisions cost, if
Speaker 1: they were really necessary, and whether the airline has actually
Speaker 1: changed since Joyce's departure. It's Sunday, August two. This episode
Speaker 1: was originally published in August twenty twenty five.
Speaker 2: So Joe, thank you for joining me on zevn Am
Speaker 2: My Pleasure. On Monday, Contus was ordered to pay a
Speaker 2: ninety million dollar fine for illegally sacking eighteen hundred workers
Speaker 2: back during the pandemic, and in delivering his judgment, Justice
Speaker 2: Mike Auley called Contus the wrong kind of sorry, So
Speaker 2: tell me what you made of his comments and of
Speaker 2: the decision more broadly.
Speaker 3: Well, I mean, I've been watching this case for a
Speaker 3: long time. It's been a marathon. The first try, the
Speaker 3: actual original liability trial, was in twenty twenty one, in
Speaker 3: the middle of lockdowns.
Speaker 2: Federal Court will decide whether Quantus acted illegally when it
Speaker 2: sacked hundreds of Melbourne ground crew and.
Speaker 3: Gave their jobs to a cheaper contractor the unionit You know,
Speaker 3: then Quantus had lost that case and then appealed straight
Speaker 3: to the Full Court.
Speaker 2: The Federal Court found the decision to outsource about two
Speaker 2: thousand groundworkers was in breach of the Fair Worked Act Towns.
Speaker 3: They lost that case in twenty twenty two, and then
Speaker 3: they appealed straight to the High Court and they lost
Speaker 3: 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 3: History, who were sent back to the Federal Court to
Speaker 3: decide on the compensation that they should pay to those workers,
Speaker 3: and that was decided in twenty twenty four that they
Speaker 3: should pay one hundred and twenty million dollars. Quantus has
Speaker 3: been forced to pay more than one hundred and twenty
Speaker 3: million dollars in compensation to workers whose jobs were legally
Speaker 3: outsourced during the pandemic about eighteen Only now in twenty
Speaker 3: twenty five have they been hit with their penalties. Quantas
Speaker 3: has just been fined ninety million dollars for illegally sacking
Speaker 3: eighteen hundred groundstaf five years ago. It's just been sort
Speaker 3: of this incremental debacle unfolding, which Quantus until the very
Speaker 3: last minute was fighting. Even when they lost in the
Speaker 3: High Court, that then chairman of Quantus, Richard Gouter, was
Speaker 3: dismissing the ruling of the court and saying, well, look,
Speaker 3: we had sound commercial reasons for that decision. Justice Lee
Speaker 3: was quite brilliant in pointing out how completely silly that
Speaker 3: argument is. Of course they had sound commercial reasons. I mean,
Speaker 3: what kind of an outsourcing would it have been if
Speaker 3: they didn't have sound commercial reasons. It was just a
Speaker 3: bizarre reasoning that they were offering. You know, we engaged
Speaker 3: in illegal behavior because it made us money. Now that
Speaker 3: doesn't make it okay, So it wasn't just the illegal outsourcing.
Speaker 3: It was the way they conducted themselves even when they
Speaker 3: were found to have done the wrong thing by a
Speaker 3: court afterwards. And Justice Lee also this is one of
Speaker 3: the big reasons why he didn't believe that they were
Speaker 3: really sorry. Only last year in twenty twenty four, Quantus
Speaker 3: was arguing in the compensation hearings that the workers should
Speaker 3: get zero dollars of compensation. That was actually the argument
Speaker 3: being put to the court by Quantus, that the workers
Speaker 3: should not get any compensation at all. That's obviously not
Speaker 3: an argument that it suggests a company that is feeling
Speaker 3: contrite about its wrongdoing.
Speaker 2: Okay, so we had the company at least initially arguing
Speaker 2: that there should be no compensation for workers. They have
Speaker 2: now been ordered to pay a ninety million dollar fine.
Speaker 2: So let's talk about that for a moment. How does
Speaker 2: that amount compare with what Quantus wanted versus what the
Speaker 2: union wanted.
Speaker 3: Well, yeah, I mean the fine itself is staggering, by far,
Speaker 3: the biggest fine ever imposed on a company for a
Speaker 3: breach of general protections under the Act. The last highest
Speaker 3: ever was ten million dollars against the Commonwealth Bank for
Speaker 3: an underpayment issue that went over a decade. The fine
Speaker 3: is generally paid to the party that is bringing the case,
Speaker 3: and usually that party is a fair work combodsman who
Speaker 3: prosecutes breaches of the Act by employers. But of course
Speaker 3: in this case, the ombodsman was fast asleep and the
Speaker 3: union decided to take the action itself. And that's why
Speaker 3: it's really unusual about this. That's such a huge amount
Speaker 3: of money is being paid to the union.
Speaker 2: Right and so so does that money then go from
Speaker 2: the union to the workers? Have they said how to
Speaker 2: be divvied up?
Speaker 3: So the penalties, ninety fifty of that goes to the
Speaker 3: union and then the other forty will go to the
Speaker 3: workers on top of one hundred and twenty million that
Speaker 3: they were already getting in compensation. But you know, if
Speaker 3: you look at how many workers were illegally sacked, there's
Speaker 3: eighteen hundred. It Actually, you know, this is not sort
Speaker 3: of life changing money for people who've lost their livelihoods.
Speaker 3: The forty million dollars split eighteen hundred ways, that's only
Speaker 3: twenty two thousand dollars per person. So for someone who's
Speaker 3: lost a long term, a good paying blue collar job,
Speaker 3: that's not going to get them over line.
Speaker 2: And it's been a year now since Quantus announced that
Speaker 2: it was slashing Allan Joyce's payout by almost ten million,
Speaker 2: and that was partly because of his handling of this.
Speaker 2: And at the time, Quantus knowledge the harm that had
Speaker 2: been done to their reputation, particularly with their customers, and
Speaker 2: they commissioned a review to tell them how to fix it.
Speaker 2: So what did that review end up saying and has
Speaker 2: the company implemented any changes?
Speaker 3: Well, yeah, well the review was damning and the review
Speaker 3: found that Quantus had a terrible culture and it had
Speaker 3: a board that was too weak to challenge the CEO,
Speaker 3: Alan Joyce, And this case the legal sackings was one
Speaker 3: part of it. But you know, you remember there was
Speaker 3: also the ghost flights, the issue of COVID credits and
Speaker 3: the way customers were really poorly treated by those There
Speaker 3: was a huge amount of price gouging. There's a massive
Speaker 3: suite of issues that were affecting quantus reputation. Now, what
Speaker 3: has actually changed a lot of that is sort of
Speaker 3: at the surface level. I think it's fair to say
Speaker 3: that Quantus under Vanessa Hudson is a company more focused
Speaker 3: on its customers and on its staff than it had
Speaker 3: been previously. But you know, does it still the highest
Speaker 3: possible faares that it can on routes where there's not
Speaker 3: very much competition? Absolutely? Does it still invest insufficiently in
Speaker 3: new aircraft to improve the experience and reliability for its customers. Absolutely,
Speaker 3: you know, and also, by the way, to reduce the
Speaker 3: impact on the environment. So Quantus has changed its bedside manner.
Speaker 3: I think that's fair to say, and that's not nothing.
Speaker 3: That's an important thing. But if you look deeply, Quantus
Speaker 3: is still a very aggressive company.
Speaker 2: Right, so the underlying strategy might not have changed even
Speaker 2: though Joyce is out of the picture. So what ongoing
Speaker 2: benefits does Joyce get as a result of the time
Speaker 2: that he spent there.
Speaker 3: Well, I mean, you know, he made one hundred and
Speaker 3: thirty million dollars a CEO of Quantus. That's pretty good
Speaker 3: coin if you can get it. And he's got a
Speaker 3: golden ticket. It's like the one they give you in
Speaker 3: Charlie and the Chocolate Factory, except instead of instead of
Speaker 3: unlimited chocolate, it's unlimited first class flights for life.
Speaker 2: After the break. What Quantus says it's learned and what
Speaker 2: its profits really show Joe Quantus for the past year
Speaker 2: has been run by Vanessa Hudson. So tell me a
Speaker 2: bit more about her and how she's approached her role.
Speaker 1: SOFA.
Speaker 3: Yeah, Well, Vanessa Hudson's even more of a Quantus lifer
Speaker 3: than Alan Joyce in that she started at the company.
Speaker 3: I think it was almost her second job in the
Speaker 3: audit department, which is a very exciting place as you
Speaker 3: can imagine, in nineteen ninety four, in her twenties, and
Speaker 3: has worked right across the company. When I worked at
Speaker 3: Quantas in the late two thousands, she was running customer
Speaker 3: product and service inflight product and service when the airline
Speaker 3: received its first day three eighties, and then she's gone
Speaker 3: and run the American division of Quantus. She came back
Speaker 3: and was chief Customer Officer briefly and then became the
Speaker 3: chief financial officer. So she's really worked right across the company,
Speaker 3: and she became CEO in twenty twenty three. Her pitch
Speaker 3: to the board of Quantas for the job is I'm
Speaker 3: not going to change anything. I'm going to be just
Speaker 3: like Alan Joyce. Now, as Alan Joyce became absolutely toxic
Speaker 3: in the dying months of his reign, she had to
Speaker 3: very quickly change that plan and try to distinguish herself
Speaker 3: from Joyce and be someone different.
Speaker 5: We want to get back to the national carrier that
Speaker 5: Australians can be proud of, that's known for going above
Speaker 5: and beyond. We understand we need to earn your trust back,
Speaker 5: not with what we say, but what we do and
Speaker 5: how we behave.
Speaker 3: And she has to keep the shareholders happy, She has
Speaker 3: to make up with customers, and she has to make
Speaker 3: staff feel like it's worth going out there and putting
Speaker 3: themselves on the line every day. For those customers. She's
Speaker 3: sort of done pretty well. For the shareholders, they're very happy.
Speaker 3: The share prices more than double since she's been in charge.
Speaker 3: And in terms of making up with the customers, noises
Speaker 3: are made. But they'll never admit this. But every senior
Speaker 3: executive at Quantus knows that they only have to be
Speaker 3: so nice to their customers. But really they'll keep coming
Speaker 3: back from more punishment because the customers just don't have
Speaker 3: other options.
Speaker 2: And it's not just the chief executive who has changed.
Speaker 2: Last year, John Mullen became chair. So what impact has
Speaker 2: he had so far?
Speaker 6: Ah?
Speaker 3: Well, look, I think John Mullen is someone who has
Speaker 3: a really good sense of what the average person on
Speaker 3: the street thinks and feels. You know, he's somebody who's
Speaker 3: really quite in touch. And that's a good thing for
Speaker 3: Quantas because that's how this happened in the first place.
Speaker 3: Alan Joyce was living in his own world and his
Speaker 3: board was subservient to him. So even though they might
Speaker 3: have had doubts about how angry Australia was at Quantas,
Speaker 3: they weren't prepared to challenge Alan Joyce to do anything
Speaker 3: about it. Put it this way, there's no way in
Speaker 3: the world that Vanessa Hudson is going to be telling
Speaker 3: John Mullen what to do. And there's no way in
Speaker 3: the world that John Mullen's going to be too afraid
Speaker 3: to pull Vanessa Hudson into line. And that's the way
Speaker 3: companies are supposed to be wrong.
Speaker 2: Okay, And so have we heard from John Mullen since
Speaker 2: this ruling came down on Monday.
Speaker 3: No, we haven't, and it's probably not for him to
Speaker 3: comment at this stage. But you know, look, there's no
Speaker 3: doubt that John Mullen has got Vanessa and her team
Speaker 3: really focused on cultural change. But I just find it
Speaker 3: really disappointing that given the opportunity, and everyone was pointing
Speaker 3: this out to them at the time in twenty twenty
Speaker 3: four that they continue to argue that the workers should
Speaker 3: get zero compensation because that's a really hard thing for
Speaker 3: them to defend, and it just opens them up to
Speaker 3: the absolutely legitimate criticism that they're all taught that the
Speaker 3: cultural change is about a surface appearance and not actually
Speaker 3: about root and branch. You know, should we do the
Speaker 3: right thing even when it's expensive. Should we do the
Speaker 3: right thing even when it's painful. I think that's really agredible.
Speaker 3: And this is the thing about company culture. Everyone thinks
Speaker 3: that company culture is something that everyone is part of,
Speaker 3: and in some ways that's true, but the real truth
Speaker 3: of it is that company culture is really set by
Speaker 3: very few people at the top, and it is the
Speaker 3: values of the boss that emanates through the organization. And
Speaker 3: Alan Joyce had some executives around him whose judgment was
Speaker 3: very poor when it came to ethical decision making, and
Speaker 3: the court has ultimately found that Joe.
Speaker 2: There is this line in Justice Lee's ruling where he
Speaker 2: says that quantus is pleading virtue only when cornered and
Speaker 2: feigning contrition while harboring it. No genuine regret, and I
Speaker 2: think that really goes to everything that he kind of
Speaker 2: said when handing down this decision. So how does that
Speaker 2: square with the culture that you have observed at Quantus
Speaker 2: over y'all many many years of reporting on the company.
Speaker 3: Well, it's confirmatory of what I was just saying about,
Speaker 3: you know, being very sorry, as saying that you're very sorry,
Speaker 3: but then saying to the court, well, please, we don't
Speaker 3: really want to pay these people any money for what
Speaker 3: we did to them. It's very hard to argue that
Speaker 3: that is actual, deep and profound cultural change and not
Speaker 3: just a sort of air brushing of the ugly things
Speaker 3: from view. Bear in mind, Quantus has a lot of
Speaker 3: reasons not to be sorry for doing this. Look at
Speaker 3: the numbers, right, So they've spent almost a quarter of
Speaker 3: a billion dollars on this case, one hundred and twenty
Speaker 3: million dollars in compensation, ninety million dollar fine, at least
Speaker 3: twenty or twenty five million dollars in legal fees, and
Speaker 3: even then they're still ahead financially because although they've been
Speaker 3: publicly shamed and humiliated and the chairman had to resign
Speaker 3: and the CEO had to resign and all these all
Speaker 3: these executives had to resign and all sorts of calamity
Speaker 3: befell them. What actually happened is by sacking these people illegally,
Speaker 3: they saved one hundred and twenty five million dollars every
Speaker 3: year on wages, and they avoided eight million dollars of
Speaker 3: equipment costs that they were going to have to invest in.
Speaker 3: So it's been five years now, but that's almost seven
Speaker 3: hundred million dollars they've already saved by doing what they did,
Speaker 3: versus the two hundred and something million dollars that they've
Speaker 3: had to pay for the infringement. So like, yeah, they
Speaker 3: have to look like they're sorry, but I bet there's
Speaker 3: plenty of people in the company who just very quietly
Speaker 3: say that was a ripper decision. We've made more money
Speaker 3: for our shareholders, and so you know, we all have
Speaker 3: to send the right signals, but we do it again
Speaker 3: ten times out of ten. That's something the government needs
Speaker 3: to think really deeply about, because there's something wrong with
Speaker 3: a country where breaking the law is cheaper than complying
Speaker 3: with the law. We're breaking the law is so financially
Speaker 3: rewarding that, to me, signals are problem with the law.
Speaker 2: Well, Joe, thank you so much for your time today.
Speaker 3: My pleasure. Thanks Realby.
Speaker 1: You can listen back to Our You with Alan Joyce
Speaker 1: titled Alan Joyce on Quantus Reputational Collapse at his Legacy.
Speaker 1: You'll find it in your podcast for published Monday, July
Speaker 1: twenty seven.
Speaker 3: Seven.
Speaker 1: I Am will be back tomorrow with an interview with
Speaker 1: journalists and filmmaker Abby Martin. Over five years, she's been
Speaker 1: investigating the hidden environmental footprint of the largest military in
Speaker 1: the world for a new documentary, Earth's Greatest Enemy, traveling
Speaker 1: from international wargames and military conferences to communities living with
Speaker 1: the toxic legacy of the US military's global presence.
Speaker 6: I mean, the US military has air forces that are
Speaker 6: five times bigger than the next five biggest air powers combined.
Speaker 6: The amount of waste and emissions that are just being
Speaker 6: used just to fly around in pointless patrols and just
Speaker 6: to maintain mission readiness. I mean, just to wrap your
Speaker 6: mind around that. Compared to the average Australian driver road,
Speaker 6: it would be comparable to like twenty years driving straight
Speaker 6: to one flight mission of a Boing Pioces.
Speaker 1: That'll be in your faet tomorrow I'm Daniel James. Thanks
Speaker 1: for listening to seven.
Speaker 3: I am