The $90m fine imposed on Qantas for illegally sacking 1,820 workers in 2020 during the start of the pandemic represents one of the largest corporate penalties an Australian court has ever imposed for a non-financial offence. It follows a $100m penalty imposed on Qantas by the Australian Competition and Consumer Commission for selling tickets on flights it had already decided to cancel, and the forced creation of a $120m compensation fund for the workers.
Much larger penalties have been paid by banks and casinos, mostly for money-laundering offences, most notably a $1.3bn fine paid by Westpac. But those appeared to be regarded as costs of doing business, at least when that business involves handling large sums of money and dealing with people who want to move it quickly.
Until recently, non-financial corporations could, and did, take the same attitude. Offences such as wage theft attracted derisory penalties, if they were prosecuted at all. Even negligence leading to workplace deaths and injuries rarely involved substantial fines.
Qantas benefited an estimated $100m a year from outsourcing its baggage handling, though this may have been overoptimistic. Based on past precedent, Qantas managers would have assessed that any penalty could easily be recouped by cost savings. But with penalties of over $200m, as well as very substantial legal costs, it will take years before the airline comes out ahead. It would certainly have been better to engage in good-faith negotiations.
All these developments followed decades of labour market reforms (a term meaning “change” which almost invariably refers to change for the worse). Nearly all of these reforms strengthened the position of employers and weakened that of workers. In particular, the enterprise bargaining system introduced under the Hawke-Keating government made strikes presumptively illegal, outside the limits of “protected industrial action”. The enterprise bargaining framework made it easy for corporations to replace their existing employees with lower-paid workers from labour hire agencies, or to outsource work altogether.
Concerns about reputational damage used to play an important role in discouraging bad corporate behaviour. But Qantas’ 2011 lockout, highly successful in boosting profits, was seen as a lesson by many other employers. It took another decade before the ruthless profiteering of the Alan Joyce era began to erode the idea that the beloved “flying kangaroo” deserved the role of a national flag carrier, even though it had been privatised in the 1990s.
Pushback from workers has been slow, but it has begun to have an effect. In contrast to its glacial pace on most policy issues, the Albanese government has been active in protecting workers’ rights. Deliberate wage theft has finally been criminalised at a national level from 1 January this year. The labour hire loophole has also been addressed, along with attacks on penalty rates.
But the fundamental problems of enterprise bargaining remain. As Shae McCrystal of the University of Sydney has observed, the solution to the outsourcing problem lies in multi-employer and industry-level bargaining. It shouldn’t be significantly cheaper to outsource your workers. If all employers within a sector have to pay the same rates through multi-employer or industry-level agreements, the incentive to outsource falls away.
But employers are pushing back against this. In the lead-up to this week’s economic roundtable, there have been plenty of pronouncements about the need for deregulation and the removal of unspecified “red tape” which is said to be “strangling growth”.
Despite this, it seems the tide has turned in favour of workers. Work from home has changed the culture of office work, much to the dismay of CEOs, with clear net benefits for the economy as a whole arising from reduced commuting and better work-life balance. The push for shorter standard working hours, abandoned after the failure of the 35-hour week campaign in the 1980s, is back on the agenda.
There is much to be done to restore a fair balance of power in the workplace. The hefty penalty imposed on Qantas is one small step in that direction.
John Quiggin is a professor at the University of Queensland’s School of Economics
