Australian Greens dissenting report

Lack of transparency in decision making

1.1The Greens share the significant concerns raised in the Committee's inquiry about the process leading to the Qatar Airways decision. The reasons for the decision by Minister King to refuse Qatar Airways additional air rights are still not clear. Multiple reasons have been given by government Ministers, including the vague 'national interest', the 2020 incident where five Australian women were invasively searched, and comments from the Assistant Treasurer that it was made explicitly to protect Qantas.

1.2It is clear that Qantas enjoys a special relationship with the Australian government, more so than should be typical for a private corporation. This inquiry heard evidence from the Virgin Australia CEO that the Prime Minister and other officials were hosted at Qantas HQ several months ago, and in her view, that is when the tide turned on Qatar's request being refused. In this context, the Australian people are right to question the nature of the decision and why, apparently, a private corporation has such a level of access to senior government decision makers, and why the decision making process falls so far short of transparency and accountability standards.

How corporations with market power treat their workers and customers

1.3According to economist John Quiggin, Qantas and its subsidiaries enjoy 60percent market share in the Australian airline market. Others have put the figure as high as 66percent.[1] Quiggin has referred to this as 'the closest thing we have to a privately owned monopoly';[2] a position echoed by ProfessorAlanFels, former ACCC chair, when he told the inquiry that this market share makes Qantas the 'dominant firm' which is very close to a monopoly and makes it likely they will set prices for the relevant industry.[3]

1.4Professor Fels also gave evidence that government policies had ensured that the market would not become too competitive and remove Qantas' 'dominant firm' status.

1.5Customers and Qantas' own employees have been paying the price for Qantas' 'dominant firm' status, through a series of outcomes Australian consumers are all too familiar with:

Qantas sacked thousands of workers during the pandemic, despite receiving $2.7 billion in government assistance. The High Court has found that 1,700 of those workers were illegally sacked and their jobs outsourced.

The ACCC is taking legal action against Qantas for selling tickets on flights that had already been cancelled.

Qantas was the ACCC's most complained about company two years in a row.[4]

1.6Despite this, Qantas posted a record $2.4 billion profit last year, and their former CEO Alan Joyce's final paycheque was $21.4 million. In this period Qantas' domestic fares increased by over 20% on pre-pandemic prices and international fares increased by over 50%.[5]

1.7The new CEO and continued board chair gave evidence to this inquiry that showed no indication these practices would not continue. The new CEO defended the size of the former CEO's pay, and the board chair defended the illegal outsourcing of workers, with no indications of remorse or a desire to change the approach Qantas has taken to date.

1.8The Greens support recommendations 5 and 6 of the committee for ACCC investigation into potential anti-competitive behaviour by Qantas, and consumer protection reforms. However these and the other recommendations of the committee will not address the fundamental problems in the Australian airline industry.

More competition alone will not reform Qantas

1.9Recommendations and discussion that focus on marginal changes to market share fail to address the fundamental concerns about privatising an effective natural monopoly - especially in a country like Australia with so many isolated and remote communities that rely on air services as an essential service.

1.10During the COVID pandemic, the Australian Government provided support worth hundreds of millions, if not billions, to the major airlines, ensuring their survival through an unprecedented period of turmoil and disruption. Despite this there has been no clear action from the major parties to address the mistake of privatising an effective natural monopoly, and the way in which government support translated into increased corporate profits for wealthy shareholders.

1.11The government should strongly consider taking a full or in part ownership stake in Qantas, so that the onus is on Qantas to be a model employer and promote good consumer practices. This would not just ensure better outcomes for Qantas workers and customers, but put significant pressure on other airlines to match this standard, and as such would represent the most effective means of mandating better practices in the aviation industry.

1.12That the Government work to ensure Australians are not disadvantaged by Qantas' dominant position in a natural monopoly, including exploring options such as taking an ownership stake in Qantas.

Sydney Airport slots

1.13The Greens note related matters raised in the inquiry such as the management of Sydney Airport's slot system.

1.14Professor Rod Sims, also a former ACCC chair, gave evidence to the inquiry about the power that Qantas, and to some extent Virgin, have over the slots system at our major airports via Airport Coordination Australia (ACA), a private company majority owned by Qantas and Virgin. This incentivises them to keep slot prices high to keep out competition from new entries to the airline market, like Rex and Bonza. The airlines are then able to cancel flights to maintain high profits, while still maintaining a dominant market position.

1.15Even more so than the case of Qantas, the management of the slots for major Australian airports is a natural monopoly. 'Competition' cannot meaningfully be introduced into its function, and private ownership will lead to worse, not better, outcomes.

1.16At a minimum, airlines should not be permitted to hold a stake in a company that sells slots, effectively selling to themselves. Professor Sims called it 'extraordinary public policy' that this was permitted.[6] The government should also consider taking an ownership stake in ACA to ensure fair distribution of slots and to stamp out the possibility of anti-competitive manipulation of the slots system.

1.17That the Government urgently prohibit airlines and their subsidiary companies from holding a stake in slot management corporations, and that they consider taking Airport Coordination Australia into public ownership.

Brisbane Aircraft Noise Comments

1.18This Committee failed to closely examine the evidence on Brisbane aircraft noise, instead making comments based on evidence from stakeholders who have a clear vested interest in increasing the number of flights passing through Brisbane Airport, and therefore making aircraft noise worse. The committee made these comments despite not hearing evidence from affected residents about the devastating effects of aircraft noise on their lives.

1.19Regarding the capacity of Brisbane Airport to deliver flights to regional Queensland while delivering meaningful action on flight noise, this only highlights the problem with a wholly privatised and poorly regulated industry, with significant monopoly players. In essence, the only reason flights to and from regional airports would be a problem is if private corporations are willing to sacrifice regional Queenslanders when it means making a bigger profit. An aviation sector with a robust publicly owned component, for instance a whole or part ownership of Qantas and the slot system, and proper regulation, could ensure that these essential services are available for all Australians, regardless of their postcode, while ensuring that people are not unreasonably affected by aircraft noise.

1.20The Australian Greens therefore explicitly reject this Committee view in the majority report in paragraph 4.73.

1.21That the Parliament support passage of the Brisbane Airport Curfew and Demand Management Bill 2023.

1.22The Greens note the related comments about capacity constraints at Brisbane and Sydney airport. Alternative methods of transport between cities such as High Speed Rail were not considered by the committee, despite the need to urgently decarbonise the transport sector and protect communities against increasing aircraft noise. The Greens also note that under the current government's plan, it is unlikely for High Speed Rail connecting Brisbane to Melbourne via Sydney and Canberra to be completed before the mid-2060s; this is despite a comprehensive report written by research institute Beyond Zero Emissions in 2014 that shows that such a route could be built in 10 years.[7]

1.23The additional benefit of High Speed Rail providing competition to the domestic airline market was also not considered by the committee.

1.24That the Government urgently accelerate the development of a Brisbane to Melbourne, via Sydney and Canberra, east coast High Speed Rail line to reduce aircraft emissions and noise, and provide competition to the domestic aviation market.

Proposal to extend the inquiry

1.25The Greens note that a number of witnesses were requested to provide evidence to the Committee, but did not provide evidence. These included the ex-CEO of Qantas Alan Joyce, and the current Federal Transport Minister Catherine King. The Australian Greens have been consistent and long-standing advocates for the vital role of the Senate in holding the government of the day to account, and of the importance of increasing transparency and accountability around government decision making processes.

1.26In close to a decade in government the Liberal-National Party consistently resisted accountability measures on all fronts, including under-resourcing the Freedom of Information system, refusing to respond to Senate orders for the production of documents, delays in responding to questions on notice, and resisting appearing before Senate committees. The Liberal-National Party also failed to address Qantas' dominant position in a natural monopoly market during their time in power, instead providing significant government funding to airlines during COVID without any oversight or accountability. In fact, many of the significant abuses by Qantas listed above occurred while the LNP were in government, and there was a notable failure to respond by the LNP to protect workers or consumers.

1.27This inquiry failed to address this fact, including failing to even mention the illegal sacking of 1,700 Qantas workers during the pandemic, as found by the High Court just last month.

1.28While the Greens will take recommendation 9 and 10 of the report into consideration, one shortcoming of this Select Committee was that the terms of reference failed to sufficiently cover key issues including competition in Australia's domestic air transport market, the protections provided to consumers and workers, and the role of Government in regulating and overseeing natural monopoly markets, including through ownership stakes.

Senator Penny Allman-Payne

Greens Senator for Queensland

Footnotes

[1]Elias Visontay, 'Qantas and Virgin duopoly dwarfs the Australian banking and supermarket industries, airport peak body says’, The Guardian, 15 July 2023, https://www.theguardian.com/business/2023/jul/15/qantas-and-virgin-duopoly-dwarfs-the-australian-banking-and-supermarket-industries-airport-peak-body-says (accessed 9 October 2023).

[2]John Quiggin, 'Albanese government’s close embrace of Qantas may no longer fly with the times’, TheGuardian, 1September2023, https://www.theguardian.com/commentisfree/2023/sep/01/albanese-governments-close-embrace-of-qantas-may-no-longer-fly-with-the-times (accessed 9 October 2023).

[3]Professor Alan Fels, Proof Committee Hansard, 27 September 2023, p. 30.

[4]Elias Visontay and Jonathan Barrett, 'Qantas record profit: delight for shareholders, distrust and derision from customers’ The Guardian, 24 August 2023, https://www.theguardian.com/business/2023/aug/24/qantas-annual-profit-share-price-rise-record-billions (accessed 9 October 2023).

[5]Tony Webber, 'What will it take to get Australian air fares down?’, The Guardian, 7 September 2023, https://www.theguardian.com/commentisfree/2023/sep/07/what-will-it-take-to-get-australian-air-fares-down (accessed 9 October 2023).

[6]Professor Rod Sims AO, private capacity, Proof Committee Hansard, 27 September 2023, p. 47.

[7]Beyond Zero Emissions, High Speed Rail, April 2014, https://www.bze.org.au/research/report/high-speed-rail (accessed 9 October 2023).