Tuesday, December 10, 2013

Buck has to stop on saving icons

Paul Sheehan

On February 6 last year, I wrote a column which began: "No Aussie brands are more ingrained in the national consciousness than Qantas or Holden but the flying kangaroo is facing extinction as a long-haul, full-service carrier within 10 years and GM Holden may not even last that long."

What an optimist I turned out to be. Twenty months on, what Qantas and Holden now have in common, apart from being cultural icons, is that neither of them is worth saving.

Why should taxpayers foot the bill when these companies' own staff don't commit to their company's long-term viability?

Qantas has just predicted a half-yearly loss of $300 million, foreshadowed major job cuts, had its debt rating reduced, and warned that its long-haul international operation is at risk.

General Motors has decided to shut down its Holden operation in Adelaide as part of a global consolidation. The operation has been living on the bubble for years after management and unions agreed to unsustainable enterprise bargaining agreements. The announcement of the closure is pending.

At Qantas, two years ago, several unions led staff through months of rolling industrial action, guerilla tactics and disruptions of service, accompanied by vituperative class warfare by union officials. It was designed to bring management to its knees unless unions got the pay rises and job security they were demanding.

The most conspicuous of the class warriors was Tony Sheldon, the national secretary of the Transport Workers Union.

Throughout this guerilla campaign there was zero restraint placed on the unions by the Labor government. It was not until management shut down the airline that Prime Minister Julia Gillard emerged from her union-addled inertia and the government moved to force a resolution of the dispute in the public interest. Not long after this campaign, which had a disastrous impact on Qantas, Sheldon was made national vice-president of the ALP.

Qantas bought short-term peace but the price was long-term decline. It has an unsustainable cost base. Now shadow treasurer Chris Bowen has declared that Qantas is too important to fail and urged the government to consider making a direct equity injection. This is classic Labor: subsidise the unions, rather than restructure the company, and pass on the cost to taxpayers.

Lest I lay the blame on only one side, Qantas' troubles have been unwittingly bipartisan: management has done its share via a grandiose expansion into Asia. It has deployed precious capital on a profitless push into Singapore, Vietnam, Hong Kong and Japan that has drained the group.

On Sunday, federal independent senator Nick Xenophon weighed in with a thrashing of management: "Under CEO Alan Joyce and chairman Leigh Clifford, Qantas has lurched from one failed strategy to the next … Joyce seems increasingly like a desperate gambler chasing his Jetstar Asian losses."

Holden management also warrants a bucketing. As noted in February last year: "Over the past seven years [the GM Holden collective bargaining agreement] has delivered a cumulative wage increase of 29 per cent, an average of more than 4 per cent per year - a real increase over inflation.

"The agreement also obliges GM Holden to pay generous redundancy benefits … It raises the question: why are Australian taxpayers being asked to make sacrifices, via subsidising higher costs, that the local auto-makers and their staff have not themselves been willing to make?"

Australian consumers are not interested in overpaying for transport. Government subsidies, without end, to companies with unsustainable collective wage agreements has been death by a thousand cuts, given Australia's car manufacturing base is too small to survive the enormous economies of scale and structural overcapacity of the global car industry.

Grace Collier, who has spent years in the industrial relations trenches working on both sides, first as a union official then as a consultant to management, has been warning for years that the management and unions at Holden have been signing suicidal enterprise bargaining agreements.

In The Weekend Australian she offered this broader advice to the Abbott government, which I pass on and endorse:

"Australia is at a crossroads. For 20 years, regardless of the legislation, about half of our companies have been incrementally enterprise bargaining themselves into bankruptcy, while the other half have not. Increasingly, many of those that have bargained are on the verge of ruin. A growing number will be seeking government subsidies during the next few years.

"Government policy on industry assistance should be this: if a company is paying its workforce more than the award wage, then it must not receive taxpayer assistance under any circumstances.

"Companies that are financially distressed because of unaffordable enterprise bargaining agreements should be instructed to lodge a form with the Fair Work Commission to have their agreement dissolved, at their own cost. All of their workers and unions should sign the form and be returned to the award wage before any of them even consider putting their hand out for money."

It was of more than passing interest to read on Saturday that China Southern Airlines had been considering a strategic investment in Qantas, as I am a member of the Chinese airline's frequent flyer program because I can fly business class for less than half what Qantas wants to charge, and for not much more than its economy fare.

China Southern has put aside that possible investment, but I have made the shift. Whether Qantas keeps flying internationally has ceased to be of concern to me, because I cannot afford to care.


Healthy food labels blamed for rise in obesity as Queenslanders fall into high sugar and fat trap

"HEALTHIER" foods could be to blame for rising obesity.  New research from Nutrition Australia Queensland found 96 per cent of Queenslanders were unable to tell the difference between unhealthy and healthy food.

Sneaky labelling which touts high-sugar products as low-fat, and vice versa, makes it difficult for consumers to identify healthy choices.

High-sugar breakfast cereals, Caesar salads and frozen yoghurt often marketed as healthy alternatives are the most common culprits. The Nutrition Australia Queensland study found 78 per cent of people over indulged in the high sugar, high fat snacks once or twice a day.

NAQ senior nutritionist Aloysa Hourigan said confusion over what constituted healthy and unhealthy food was driving Queensland's obesity crisis.

"People are choosing foods that are often marketed as healthy but actually contain high amounts of sugar, fat and salt," Ms Hourigan said.

Did you know there are about 10 teaspoons of sugar in a can of regular soft drink?

"A lot of diet fads and marketing messages have added to the confusion. Many people are passing up healthy foods in favour of poor choices."

The survey found almost 80 per cent of people were eating 'extras' foods up to twice a day.

"By not knowing the difference between healthy and unhealthy foods, Queenslanders are placing themselves at a higher risk of developing potentially deadly chronic diseases like heart disease and type two diabetes."

She said the findings were a grim reminder that more education was required to cut through confusing marketing messages.

"There was a widespread unawareness about how often we should be eating 'extras' foods like chocolate bars and potato chips," she said.

This exceeds the Australian Dietary Guidelines which suggest most Australians should eat little or none of these foods as part of a healthy diet.

"With this amount of confusion it is probably not surprising that recent research found Queensland has the highest rate of obesity in Australia."

Stephanie Nievelstein, 22, said she made an effort to choose healthy food options but understood why some people were struggling to tell the difference.

"It can be hard to tell what's healthy when packages market themselves as good for you or 99 per cent fat free," she said. "You need to look at the label on the back to see what's in it but even then it's tempting just to reach for the bikkies and chocolates and tell yourself it's not that bad."

Ms Hourigan recommended cutting back on high-sugar foods and keeping a food diary to track eating habits.

"Research shows recording how much you consume is one way to help reduce consumption," she said. "There are plenty of free apps that can help people record what they eat or alternatively the old-fashioned way of using a pen and paper can be just as effective.

"A single chocolate bar a day might not sound like much but over a year it could lead to weight gain of around 12kg a year. Simply saying no could help people shed up to 12kg a year."


Qld.: Sea levels no longer included in State Government planning

THE State Government has controversially removed sea level rises from planning policy so as not to inhibit development and to allow councils greater independence in deciding development issues.

The move has been dubbed a major legal and insurance nightmare, with the potential to send councils broke because a forecast 0.8m rise by 2100 has the potential to cause billions of dollars in damage.

Although 35,000 Queensland homes are at risk of inundation, Deputy Premier Jeff Seeney said the Government would not apply an arbitrary, blanket ruling on sea levels.

"We believe local governments are the best placed to make planning decisions according to their local circumstances and their communities and we are empowering them to do so," Mr Seeney said.

"Under the State Planning Policy, the State will still require councils to consider coastal storm surges and other natural hazards in preparing their local planning schemes.

"Queensland is not alone in adopting this approach. The NSW Government determined the same policy framework for their planning schemes a year ago."

Local Government Association of Queensland chief executive Greg Hallam said the issue was a legal minefield.

He said it could send councils broke and impact on residents because it might not be possible to insure properties in low-lying areas in future.

If the Government chose not to accept sea level rises, then councils should receive indemnity.

"We've been very clear on this. The Government can't have it both ways," he said. "If they don't think sea level rises will occur, fine, indemnify us."

Opposition environment spokeswoman Jackie Trad said the Government had abandoned any pretence of believing in or planning for the effects of any climate change.

"Because the Newman Government is refusing to act on climate change, future generations will have to pay the cost of coastal rehabilitation and repairing or relocating infrastructure and property damaged as a result of sea level rises," she said.

The Climate Commission has warned that scientific consensus on warming leading to sea level rises, heatwaves, bushfires and drought has strengthened.

Mr Hallam said the LGAQ accepted that sea level rises occurred but no one knew to what level they might go.

Ms Trad said developers would not have to deal with the consequences of bad planning laws, it would be average Queenslanders who would pay higher taxes and struggle to find home insurance.

Mr Hallam said the LGAQ as an organisation also was exposed because it owned Local Government Mutual Liability, the council insurer.

Mr Seeney declined to say whether he believed in sea level rises, if councils would be indemnified or who would pay for development which might be impacted.  "...People should have the right to make up their own minds as to whether or not they'd like to live and work close to the ocean," he said.

A leaked Property and Infrastructure Cabinet Committee paper says: "Any local government that elects to include some allowance for sea level rise in their planning schemes will need to justify that the state interests relating to economic development are not materially affected by this."

The worst hit areas are deemed to be Cairns, Mackay, Hervey Bay and the Gold Coast.

Mr Seeney said the SPP was landmark reform that would revolutionise the way councils, the development and construction industry and the State worked together.


Minimum wage exemptions for long-term unemployed 

The welfare lobby is up in arms over the Abbott government's decision to pause and review Wage Connect, Labor's subsidy scheme designed to help the long-term unemployed get back into work.

Under the scheme, if an employer hires a job seeker who has been unemployed and on income support payments for at least two years, they will receive $5,900 for this employee over six months. This averages to roughly $230 per week, almost as much as Newstart Allowance.

Groups like the National Welfare Rights Network point to Senate Estimates showing 47% of Wage Connect clients (employees) were in paid employment at the end of the six month program. Although this fact is used to try and justify expanding the program, employers could simply be keeping Wage Connect employees on the books for the required six months before moving them on. It is much more telling to know what the status is after 12 or 18 months, when the program has past completion.

The problem with the scheme, despite its reported success, is that it is far too costly, and, according to the new government, not targeted well enough. This is the second time the scheme has been paused because the funding allocated has simply not been enough to meet demand. The previous government committed $86 million over the next four years, yet if all 35,000 subsidies are utilised, the government will be looking at a $206.5 million bill.

A better, and cheaper, alternative is for employers hiring long-term job seekers to be exempt from the minimum wage requirements for six months.

This alternative would improve job prospects for the long-term unemployed and provide employers with an incentive to hire and train new workers. Importantly, it would not blow another hole through the Commonwealth budget.

Take the example of a minimum wage earner. A long-term job seeker hired on the minimum wage ($622.20 per week) under Wage Connect would cost the government $230 per week in wage subsidies.

By contrast, consider the example of a minimum wage exemption where the employee is earning half the minimum wage ($311.10 per week). Unlike the Wage Connect employee, this employee would still receive some of their Newstart Allowance, but the cost to the government would be just $92 per week.

The cost to the government per worker under a minimum wage exemption program would be 60% less over the life of the program - a significant saving for a government looking for cuts.

But an equally important advantage is that there are no limits on the program. Theoretically, all long-term unemployed workers could be hired under the program, moving off welfare, acquiring new skills and achieving a measure of financial independence.

While a review of Wage Connect is a step in the right direction, the government should also consider less orthodox programs, such as minimum wage exemptions.


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