Qantas claims it ‘likely wouldn’t be here’ if it had paid subsidiaries’ staff same as direct employees

Qantas has warned it could have gone bust if hadn’t been able to offer new staff of its subsidiaries lower pay than the “legacy” conditions of the main airline.

Nathan Safe, the acting executive manager of industrial relations at Qantas, gave that evidence to a Senate inquiry on Tuesday, defending the airline’s “complex” structure as one that had “evolved legally”.

At the Senate employment committee’s hearings into Labor’s closing loopholes industrial relations bill, Qantas has been under scrutiny for hiring new staff through labour companies on lower pay.

The workplace relations minister, Tony Burke, has cited Qantas as “one of the companies that’s used labour hire loopholes” the bill aims to close. The bill’s “same job, same pay” provisions would require that companies with a workplace pay deal pay labour hire workers at the same rate.

On Tuesday Safe said Qantas was a “legacy business” that had shifted from government ownership to private ownership, and thanks to deregulation now operated in a “highly competitive global market with low barriers to entry for new competitors”.

“For most legacy carriers, failing to adapt to this reality has not ended well. That’s why we have evolved our labour model over several decades,” he told the inquiry.

“Our legacy terms and conditions are by far the highest in Australia, and they remain high when compared to virtually every other international carrier flying here.

“But if we kept hiring on those same terms and conditions especially when our domestic competitors are paying at or slightly above award, Qantas would likely not be here.”

Qantas was criticised in the hearing by the chair, Labor senator Tony Sheldon, and outside it by the Australian Council of Trade Unions secretary Sally McManus for using 17 internal or external labour hire entities.

Safe argued that Qantas’s evolution had delivered “huge benefits” including growth in jobs, lower airfares and opening up new routes.

“Yes, our structure is complex,” he said. “But it evolved legally, and it is based on the enterprise bargaining system.”

Safe characterised Qantas’s structure as “grandfathering” and “protecting” legacy conditions while new entities directly employ their workers on “more modern and market relevant conditions”.

The more competitive rates of pay had been negotiated with unions, voted up by employees approved by the Fair Work Commission, Safe said.

“In the last two and a half years we have negotiated 43 enterprise agreements. We don’t always agree [with unions], negotiations are not always easy but we do negotiate … in good faith to arrive at mutually beneficial outcomes for our people and Qantas.”

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Turning to the implications if the bill were passed, Safe said it would “significantly increase costs” which, absent improvements in productivity, could “compromise the viability of services, particularly regional ones”.

At an inquiry hearing on 11 October, the Flight Attendants Association of Australia’s federal secretary Teri O’Toole and vice president Angela McManus criticised Qantas’s labour practices, revealing that “no cabin crew” had been hired by the main company since 2008.

They said when Qantas split international crew into a new subsidiary in 2008, flight attendants of Qantas Airways were paid $44.84 an hour, while those of the new Qantas Cabin Crew subsidiary got $21.46 an hour, about 52% less.

Crew of a new Qantas Domestic subsidiary were paid about 28%, they said, with a “significant reduction” in other conditions.

Jetstar International “have Thai and Indonesian workers that are paid $2.16 and $2.93 per hour, flying on Australian aircraft”, they said.

The Flight Attendants Association officials described the bill as “important to stop the continued erosion of conditions in agreements”.

Safe defended the practices as “necessary” for the airline to grow and survive.

Safe said Qantas is still paying “more than our competitors”, none of who “are coming in and paying legacy rates”.

Safe said Qantas – unlike Virgin and Rex – operated in different markets such as freight, premium, and had a low cost carrier (Jetstar), all of which “need to have an appropriate, calibrated cost base”.