analysisThe Qantas flame-out is a symptom of something much more serious [Ian Verrender](https://www.abc.net.au/news/ian-verrender/5261264) The sudden and savage outburst of community disdain for Qantas and its senior executives may have taken the suddenly departed Alan Joyce by surprise.But it was a long time coming.After a decade and a half of disregard for its once loyal customer base, a bitter war with its own workforce and a poor financial performance — all while delivering fabulous riches to senior executives — it appears the Qantas hierarchy had been lulled into believing its own spin.The breaking point was the looming deadline over refunds, and its forced admission that it was attempting to thwart customers from retrieving half a billion dollars of their own cash.
When the competition regulator launched legal action, accusing the airline of deliberately selling tickets on flights that had already been cancelled (and under-reporting cancellations), it was game over.Joyce [was forced to quit just months out from retirement](/news/2023-09-05/alan-joyce-standing-down-from-qantas-early/102814516), and instead of the glorious ending he’d envisaged — showered in riches and hailed by an adoring coterie of business and political leaders — the once feted Qantas boss was left to skulk off into the void.He did, however, still manage to exit showered in riches.Qantas may well be an extreme example of the greed and hubris that is endemic in the corporate world, but it is far from alone.
There’s a word for taking something that doesn’t belong to you.It’s called theft.The mistake Qantas made, from a tactical perspective, was to attempt a heist on its customers, to take cash for services it knew it would not deliver and then construct a refund process so convoluted and complex that few had any chance of making a successful claim.Most of its corporate peers instead took aim at their employees, with underpayment scandal after underpayment scandal ricocheting across the economy from the country’s largest corporations down, including at publicly funded organisations like the ABC and the Reserve Bank of Australia.Loading…Wage theft made easy The irony couldn’t have been more pronounced.Back in May, mining giant BHP went on the offensive against proposed federal government industrial relations laws aimed at securing equal pay for those doing the same job.The new laws, it argued, would cost the company more than $1.3 billion annually, a claim dismissed by the government.A week later, it [admitted it had underpaid 30,000 of its employees around $430 million](/news/2023-06-01/bhp-wages-underpaid-28500-workers/102419890) after incorrectly deducting leave on public holidays and, in another instance, as the result of an employment contract error.
Almost every underpayment case over the past five years, from retailers and the financial sector through to industrial firms and miners, has been the result of either “complex industrial relations laws” or simple errors.Oddly, there have been precious few instances, if any at all, where these complexities resulted in overpayment.
The extent of the scandal remains a mystery.According to accounting firm PwC – which has had its own share of scandals in recent times – wage theft has cost Australians roughly $1.35 billion per year, although that figure has been disputed by the Fair Work Ombudsman as “misleading and inaccurate”.What is known is that, despite the extent of the scandal, there has been precious little legal action.Victoria, which introduced legislation in 2021 to outlaw the practice, launched its first case in November last year against a Macedon restaurant owner.Smaller fish to fry, as they say.That may be about to change.
Last month, Workplace Relations Minister Tony Burke [introduced legislation outlawing the practice](/news/2023-09-03/labor-wage-theft-jail-fine-employers-industrial-relations-change/102808596), with penalties of up to 10 years in jail as well as substantial fines.Over Joyce Not one to be left out, Qantas too has been involved in the underpayment scam.Back in 2020, it was forced to repay around $7 million to 638 workers, and later that year was [accused by a judge of misusing Jobkeeper payments to staff](https://www.afr.com/work-and-careers/workplace/qantas-underpaid-workers-through-jobkeeper-misuse-20200924-p55ypd).Then there is the case of the illegal sacking of its baggage handlers, a case it lost in court, on appeal and then in the High Court.And almost from the day he was anointed chief executive, Joyce went to war with Qantas pilots and cabin crew.It was an extraordinary and almost unprecedented attack.Where previous Qantas bosses had attempted to settle industrial disputes behind closed doors, the former Jetstar head went public against his own workers.It all culminated in the dramatic shutdown of the airline on the weekend before Melbourne Cup day in 2011, leaving 98,000 passengers stranded on tarmacs across the globe.
In one fell swoop he alienated his customers, his staff and shareholders who had to bear the brunt of the costs.That action, spun as an industrial relations triumph by the airline’s management, plunged Qantas into its first ever loss since its stock exchange listing two decades earlier.Worse was still to come.
In 2014, Joyce went begging to Canberra for a government bailout after his disastrous attempt to put Virgin out of business.Incredibly, he also attempted to launch new Jetstar operations in Vietnam, Hong Kong and Japan without seeking proper approvals.Each ended up a costly failure.After announcing a $2.8 billion loss, the company was forced to sack thousands of workers, but pitched the strategy as a “Transformation Program”.In the following years, each time the airline lifted earnings, the then-CEO proudly took the credit, boasting about the effectiveness of his program.
Profit downturns were always blamed on external factors such as higher fuel prices.The extent of the ineptitude and the spin was brilliantly portrayed by your correspondent’s former Fairfax Media colleague, Matt O’Sullivan, in his book Mayday.Any media criticism of the airline, and particularly of Joyce, was met with a hailstorm of threats and complaints, and demands for apologies from its aggressive legal department and spin doctors.Not that it was often required.Just as Qantas had bought off most Canberra politicians with membership of its Chairman’s Lounge, it had almost the entire Australian press in its pocket, flying reporters around the globe on junkets — with a select few flying gratis on holidays or with generous upgrades.
When too much is barely enough Despite the airline’s poor financial performance even before the pandemic hit, Joyce managed to secure himself eye-watering salaries.During his 15-year reign, he earned somewhere north of $125 million.That’s where board responsibility kicks in.
Richard Goyder, as Qantas chairman, would be on first-name terms with every politician in the land (especially if they are members of the Chairman’s Lounge).Politicians, of course, are subject to the Westminster system of parliamentary responsibility, which dictates that you assume the blame for anything that goes wrong, whether you are at fault or not.By refusing to accept responsibility, and having been awarded a significant pay lift himself, he’s guaranteed a fiery reception at next month’s annual general meeting.Loading…Again, that is not a situation unique to Qantas.
Despite the incredible array of underpayment scandals, our business leaders have spent the past 18 months desperately trying to thwart pay rises for their workers battling soaring costs of living and mortgage bills.They’ve been incredibly successful.Annual wage rises have been well below 4 per cent, significantly less than inflation.The justification is that productivity growth has stalled.
That is true.One of the major factors for low productivity, however, is that [business investment across the developed world has stagnated](https://www.rba.gov.au/publications/bulletin/2023/sep/recent-trends-in-australian-productivity.html).That’s a decision made by chief executives.Nevertheless, it hasn’t slowed the growth of executive salaries.
According to one study, [Australian chief executive salaries this year have risen 15 per cent](/news/2023-06-14/wage-inflation-hits-double-digits-for-ceos/102474474), well above the rate of inflation.At least the Qantas flame-out is keeping everyone else off the front page..