The Future of Australia's Aviation Sector, in the Context of COVID-19 And

The Senate

Rural and Regional Affairs and Transport References Committee

Future of Australia’s aviation sector, in the context of COVID-19 and conditions post pandemic

Interim report

March 2021

ISBN 978-1-76093-209-1

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 4.0 International License.

The details of this licence are available on the Creative Commons website: https://creativecommons.org/licenses/by-nc-nd/4.0/.

Printed by the Senate Printing Unit, Department of the Senate, Parliament House, Canberra.

Members

Chair Senator Glenn Sterle ALP, WA

Deputy Chair Senator Susan McDonald NATS, QLD

Members Senator Nita Green ALP, QLD Senator Alex Gallacher ALP, SA Senator Peter Whish-Wilson AG, TAS Senator Gerard Rennick LP, QLD

Participating Members Senator Tony Sheldon ALP, NSW

Secretariat Gerry McInally, Committee Secretary Paula Waring, Principal Research Officer Joshua Wrest, Senior Research Officer Kaitlin Murphy, Senior Research Officer Michael Fisher, Research Officer Jason See, Administrative Officer

PO Box 6100 Telephone: (02) 6277 3511 Parliament House Fax: (02) 6277 5811 CANBERRA ACT 2600 Email: [email protected]

iii

Contents

Members ...... iii List of Recommendations ...... vii

Chapter 1—Background ...... 1

Chapter 2—Government support for aviation during COVID-19 ...... 9

Chapter 3—The impact of the COVID-19 pandemic on the aviation workforce ...... 27

Chapter 4—Initial committee view on the aviation support package ...... 61

Government members - additional comments ...... 65

List of Recommendations

Recommendation 1 3.156 The committee recommends that JobKeeper, or wage subsidies modelled off JobKeeper, be continued by the Australian Government to support aviation workers and organisations at the cessation of the JobKeeper scheme in March 2021. This support should be tailored to the economic conditions and government restrictions, including international border restrictions.

Recommendation 2 3.157 The committee recommends that Australian workers who pay tax and are employed by companies wholly owned by foreign sovereign entities, and Australian local government-owned entities should be eligible to apply for any wage subsidies or other Australian Government support programs for the aviation industry after the cessation of JobKeeper.

Recommendation 3 3.158 The committee recommends that the Australian Government consider making any further support to the aviation sector conditional on companies agreeing to:  not further weaken the job security of employees;  maintain existing regional services; and  implement moratoriums on the payment of dividends, executive bonuses and executive pay increases.

vii

Chapter 1 Background

Referral of inquiry 1.1 On 9 November 2020, the following matters were referred to the Senate Rural and Regional Affairs and Transport References Committee (the committee) for inquiry and report by 31 March 2021: The future of Australia’s aviation sector, in the context of COVID-19 and conditions post-pandemic, having particular regard to: (a) the importance of Australia’s aviation sector in supporting the economic and social wellbeing of all Australians; (b) the immediate and long-term impacts of the COVID-19 pandemic response on all aspects of the Australian aviation sector; (c) the immediate and long-term impacts of the COVID-19 pandemic response on all sectors that rely on aviation (e.g. tourism); (d) the adequacy of government industry support and procurement and programs for the social and economic well-being of workers for all sections of the aviation industry to survive the downturn caused by the pandemic; (e) the immediate and long-term employment landscape within Australia’s aviation sector; (f) what policy and practical measures would be required to assist the industry to recover in the medium term; and (g) any related matters. 1.2 Following a resolution of the committee on 3 February 2021, and in accordance with the motion agreed by the Senate on 18 February 2021,1 the reporting date for the inquiry was extended to 13 May 2021.

Conduct of the inquiry 1.3 The committee advertised the inquiry on its website and invited submissions from a range of relevant stakeholders, including government agencies, industry, community groups and individuals. Details regarding the inquiry and associated documents are available on the committee's webpage. 1.4 To date, the committee has received 32 submissions. This included 31 public and name withheld submissions which are published on the committee's website. 1.5 In addition, the committee held public hearings on:  28 and 29 January 2021 in Brisbane;  10 February 2021 in Sydney; and

1 Journals of the Senate, No. 88, 18 February 2021, p. 3112.

 3 and 4 March 2021 in Canberra.

Purpose of this report 1.6 It should be noted that this interim report is focussed on the immediate impact of COVID-19 on the aviation workforce. It sets out the committee's early findings on the adequacy of government support for aviation workers responsible for maintaining the viability of the aviation sector through the pandemic. 1.7 While this report outlines some of the major issues faced by the aviation sector as a result of COVID-19, it is not intended to provide an exhaustive examination of the many issues raised with the committee in written submissions, correspondence and hearings. The committee will report on these issues in greater detail in its final report.

Acknowledgments 1.8 The committee thanks all organisations and individuals who contributed to the inquiry by preparing written submissions and appearing before the committee at public hearings to give evidence.

References to Hansard 1.9 In this report, references to Committee Hansard are to proof transcripts. Page numbers may vary between proof and official transcripts.

Structure of the report 1.10 This interim report is divided into three chapters. Chapter 1 provides an overview of the committee's conduct as well as a brief background of Australia's aviation sector. 1.11 Chapter 2 outlines the Australian Government's support for aviation during COVID-19. In particular, it examines JobKeeper and relevant issues, such as eligibility criteria and the impact these have had on the aviation workforce. 1.12 Chapter 3 discusses the impact of the COVID-19 pandemic on the aviation and tourism sectors, in terms of job losses, stand downs and the resultant loss of skills. It also outlines the need for ongoing support to sustain Australia's aviation sector and ensure it is ready to lead economic recovery once travel restrictions are lifted.

An overview of Australian aviation 1.13 The following section2 provides an overview of Australia's aviation sector, including the importance of Australian aviation as well as discussing the impacts of COVID-19.

2 The following section is based on information contained in Department of Infrastructure, Transport, Regional Development and Communications, Submission 20; Department of

Importance of Australian aviation 1.14 The aviation sector makes a major contribution to Australia's economy, as well directly and indirectly supporting the employment of thousands of Australians. Submitters emphasised the role of aviation as 'a vital linchpin to the health of the Australian economy'.3 For example, in 2018 the aviation sector directly contributed around $20 billion to the economy, or 1 per cent of gross domestic product (GDP).4 1.15 In particular, the aviation sector is integral to freight supply chains. Air freight comprises a small proportion of Australia’s international freight task by mass (0.1 per cent) but represents around 20 per cent of trade by value. In 2019, the air and space transport industry directly contributed around $10 billion to the economy, or 0.5 per cent of GDP.5 Furthermore, total Australian international air freight recently surpassed 1 million tonnes annually.6 1.16 In its Skills Forecast published in 2019, the Aviation Industry Reference Committee, of the overarching Australian Industry and Skills Committee, revealed prior to COVID-19 Australia's aviation industry employed more than 93 000 people across five main subsectors.7 These are domestic commercial aviation, international commercial aviation, general aviation, air-freight transport and aviation support infrastructure.8 1.17 In addition, Mr James Goodwin, Chief Executive, Australian Airports Association, estimated that Australia's airports maintained the jobs of more than 200 000 Australians. 1.18 Furthermore, EY analysis for the Business Council of Australia estimated that international aviation supports around 515 000 jobs:  248 000 jobs associated with education services for international students;

Infrastructure, Transport, Regional Development and Communications, The Future of Australia's Aviation Sector: Flying to Recovery, Issues Paper 2020, August 2020; Australian Competition and Consumer Commission, Airline competition in Australia, September 2020.

3 Mr Scott McDine, Head of ITF Sydney, International Transport Workers' Federation, Proof Committee Hansard, 3 March 2021, p. 2.

4 Department of Infrastructure, Transport, Regional Development and Communications, The Future of Australia's Aviation Sector: Flying to Recovery, Issues Paper 2020, August 2020, p. 4.

5 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 2.

6 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 2.

7 Mr James Goodwin, Chief Executive, Australian Airports Association, Proof Committee Hansard, 29 January 2021, p. 15.

8 Australian Industry and Skills Committee, Aviation, 30 October 2020, https://nationalindustry insights.aisc.net.au/industries/transport/aviation (accessed 9 February 2021).

 129 000 jobs associated with freight transport;  75 000 jobs associated with international holiday makers;  32 000 jobs associated domestic leisure travel; and  31 000 jobs associated with business travel.9 1.19 In addition to aviation's contribution to the economy in terms of employment and contribution to GDP, it also acts as a multiplicative factor in the productivity of many other Australian sectors, facilitating business, employment, education, tourism and connectivity. For example, Mr Scott McDine, Head of ITF Sydney, International Transport Workers' Federation, informed the committee that '[w]e rely on aviation to support our valuable education and tourism industries, and to support primary producer products'.10 1.20 Similarly, Ms Teri O'Toole, Federal Secretary, Flight Attendants Association of Australia, stated that: Obviously we're a pretty broad country and we need to be able to get around it and we do need the infrastructure of aviation. It's not just tourism; absolutely everything relies on it, whether it's freight, whether it's cargo, whether it's getting from the western states to the east coast.11 1.21 Submitters highlighted the following benefits delivered by the aviation sector:  access to global markets;  exploitation of geographical comparative advantages;  promoting economies of scale; and  increased investment opportunities.12 1.22 The Australian Council of Trade Unions (ACTU) submitted that these benefits 'would likely add up to tens of billions of dollars per year'.13 1.23 Aviation also provides a critical connection between Australian communities and the world, with international aviation being vital to Australia’s tourism sector. In 2019-20, tourism directly contributed around $50 billion to Australia’s GDP (2.5 per cent of GDP) and around 620 000 jobs (4.8 per cent of the workforce).14

9 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, pp. 3-4.

10 Mr Scott McDine, Head of ITF Sydney, International Transport Workers' Federation, Proof Committee Hansard, 3 March 2021, p. 1.

11 Ms Teri O'Toole, Federal Secretary, Flight Attendants Association of Australia, Proof Committee Hansard, 3 March 2021, p. 55.

12 Australian Council of Trade Unions, Submission 13, pp. 3-5.

13 Australian Council of Trade Unions, Submission 13, p. 4.

14 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 2.

1.24 Moreover, the aviation sector serves as a crucial enabler and provides vital support to the agriculture, manufacturing and mining sectors:  some agricultural exports are highly dependent on aviation, with almost 80 per cent of seafood (by value) exported by air;  revenue from goods manufactured in Australia and exported by air is approximately $42 billion, or 11.7 per cent of manufacturing exports; and  Australians regularly fly from major population centres to remote mine sites for work, and thousands more fly-in fly-out workers serve the oil and gas industry.15 1.25 Some remote communities are long distances from major regional centres or capital cities, making regular road transport time consuming and expensive. A number of submitters noted as a result of the vast size of the continent that Australians are heavily reliant on aviation to travel domestically.16 1.26 Domestic aviation plays an important role servicing the needs of regional and remote communities across Australia by providing access to key services, including transport and freight, search and rescue operations, law enforcement and business and recreational travel. By way of example, the total number of passenger movements through regional airports increased from around 9 million in 1985 to around 26 million in 2019.17 In addition, Mrs Peta Rutherford, Chief Executive Officer, Rural Doctors Association of Australia, emphasised that the continued viability of regional and rural airports is essential to the provision of, and access to, healthcare.18 1.27 Without these services the social and economic existence of regional and remote communities and many regional industries are at risk. 1.28 The ACTU also highlighted a number of 'immensely valuable economic benefits' provided to regional areas as a result of aviation.19 These included:  reducing the tyranny of distance;  lowering the costs of doing business;  increasing competition in regional markets due to greater access to alternative suppliers;  enhanced innovation due to access to a wider range of skilled workers;

15 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 2.

16 See, for example, Mr Scott McDine, Head of ITF Sydney, International Transport Workers' Federation, Proof Committee Hansard, 3 March 2021, p. 1.

17 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 2.

18 Mrs Peta Rutherford, Chief Executive Officer, Rural Doctors Association of Australia, Proof Committee Hansard, 4 March 2021, p. 45.

19 Australian Council of Trade Unions, Submission 13, p. 5.

 improved ability to deal with temporary shortages of workers or of goods;  increased investment opportunities catalysed by familiarity with the potential place of investment, potential clients and collaborators; and  allowing for more efficient interaction between different levels of government.20 1.29 In addition to noting the critical importance of the aviation sector generally, Mr Andrew Jaggers, Deputy Secretary, Commercial and Government Services, Department of Finance, argued that '[i]t will also play a significant role in the economic recovery from COVID'.21

Impacts of COVID-19 on Australia's aviation sector 1.30 COVID-19 and associated travel restrictions have had a significant impact on the aviation sector. In response to the pandemic, Australian governments implemented health measures including quarantines, interstate and international border closures, limits on non-essential travel and stay at home orders. These measures, along with uncertainty for consumers, saw an unprecedented decline in air travel.22 1.31 Reduced demand saw domestic flights in April 2020 fall by around 97 per cent from pre-COVID levels, while international flights into Australia largely ceased due to a ban on arrivals of non-Australian citizens.23 The Department of Infrastructure, Transport, Regional Development and Communications informed the committee that:  the number of domestic passengers carried on regular public transport (RPT) flights declined by around 84 per cent between October 2019 and October 2020;  total domestic RPT load factors declined from almost 85 per cent in October 2019 to below 70 per cent in October 2020; and  passenger movements at regional airports declined by around 66 per cent between October 2019 and October 2020.24 1.32 In a report commissioned by the International Transport Workers' Federation, the McKell Institute found that, worldwide, by mid-April 2020 an estimated 12 400 aircraft had been placed into storage and passenger revenues for 2020

20 Australian Council of Trade Unions, Submission 13, p. 5.

21 Mr Andrew Jaggers, Deputy Secretary, Commercial and Government Services, Department of Finance, Proof Committee Hansard, 4 March 2021, p. 12.

22 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 5.

23 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 5.

24 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 5.

were forecast to be down $314 billion on the previous year, a drop of 48 per cent compared to around 16 per cent during the Global Financial Crisis.25 1.33 In addition, COVID-19 has had a significant impact on the operations of major airlines, which are the aviation sector's key employers. This includes the following:  The Qantas Group (Qantas) announced in March 2020 a 90 per cent reduction to international capacity and 60 per cent to domestic capacity, with around 150 aircraft being grounded.26 It also announced that 20 000 employees would be stood down until at least May 2020. Qantas reduced domestic operations to 5 per cent of capacity during April and had only recovered to 15 per cent of capacity through June 2020.  In August 2020, Qantas announced a $2.7 billion statutory loss for financial year 2020, following a 91 per cent drop in underlying profit before tax, $1.4 billion in write-downs and $642 million in restructuring and redundancy costs.27 It explained that the stand down of 20 000 employees would continue, and that 4 000 of at least 6 000 redundancies were expected to be finalised by end-September 2020. Qantas also announced it would outsource its ground handling operations, resulting in 2500 employees across 10 airports, some of whom has worked for Qantas for over a decade, losing their livelihoods.  Virgin Australia (Virgin) announced in March 2020 a 90 per cent reduction to domestic capacity, with 125 aircraft grounded. It announced that 80 per cent of its workforce would be temporarily stood down.28 Virgin also entered voluntary administration in April 2020, with an aim to restructure and refinance the airline. It announced in June 2020 that Bain Capital had entered into an agreement with the administrator, Deloitte, to become the new owner of the airline.  Rex Airlines made announcements in March 2020 that it would reduce its capacity by 45 per cent and subsequently suspend services entirely.29 However, after the federal and state governments provided assistance

25 McKell Institute, Australian Aviation and COVID-19: Analysis of support and impact, January 2021, p. 4.

26 Qantas Group, Qantas group update on coronavirus response, 17 March 2020.

27 Qantas Group, Qantas Group FY20 financial results—navigating exceptional conditions, 20 August 2020.

28 Virgin Australia, Virgin Australia Group makes further capacity reductions in response to COVID-19, 25 March 2020.

29 Rex Airlines, 'Rex announces reductions to network', Media Release, 19 March 2020; Rex Airlines, 'Rex to cease all passenger air services with the exception of Queensland', Media Release, 23 March 2020.

measures, Rex Airlines announced in April 2020 that it would run two to three return flights per week to all destinations on its network.30 1.34 It is expected that the aviation industry’s recovery will be much slower than the downturn, due to the ongoing risk of domestic border closures, the staggered reopening of international travel routes and the impacts of a broader economic downturn. Even once restrictions are fully lifted, overall demand for air travel is expected to be depressed by low consumer and business confidence.31 1.35 Notably, in January 2021, Professor Brendan Murphy, Secretary of the Department of Health, predicted international travel won't resume until 2022.32 Meanwhile, the latest International Air Transport Association forecast expects global passenger traffic to return to 2019 levels in 2024 at the earliest, with domestic markets recovering faster than international services.33

30 Australian Competition and Consumer Commission, Airline competition in Australia, September 2020, p. 4.

31 McKell Institute Victoria, Australian Aviation after COVID-19. The urgent need for an Australian aviation plan, June 2020, pp. 11-12.

32 Mr Tom McIlroy, 'Travel restart unlikely in 2021: Health boss', Australian Financial Review, 18 January 2021, https://www.afr.com/politics/federal/travel-restart-unlikely-in-2021-health-boss- 20210118-p56uyu (accessed 15 February 2021).

33 International Air Transport Association, Outlook for Air Transport and the Airline Industry, 24 November 2020, p. 11; International Air Transport Association, 2020 End-year report, 24 November 2020, pp. 3-4.

Chapter 2 Government support for aviation during COVID-19

Overview 2.1 Particular industries have borne the brunt of the public health measures implemented to contain COVID-19, with aviation amongst the first to feel the full economic impact of the lockdown. As noted in Chapter 1, border closures, limits on non-essential travel and stay at home orders have caused an unprecedented decline in air travel. In response, the Australian Government implemented a range of measures to assist the aviation sector, including temporary programs to subsidise the cost of operating a minimum domestic aviation network. 2.2 This chapter explores measures put in place by the Australian Government to support the aviation sector in response to COVID-19. In particular, it concentrates on evidence received by the committee in relation to JobKeeper, including eligibility criteria and the impact of these on the aviation workforce.

Overview of financial support for aviation in response to COVID-19 2.3 The Australian Government's COVID-19 economic response encompassed a number of measures to support sectors particularly impacted by COVID-19 and associated travel restrictions. 2.4 On 28 March 2020, two new grant programs were announced as part of the Australian Government's $1 billion COVID-19 Relief and Recovery Fund: the Regional Airlines Funding Assistance program and the Regional Airline Networks Support (RANS) program:1  Between April and December 2020, $100 million was made available to deliver last-resort cash flow assistance to regional airlines that provide essential services to regional and remote locations through the Regional Airlines Funding Assistance program.2  The committee understands that of the $70.6 million that has been paid out through the Regional Airlines Funding Assistance program, $53.9 million

1 The Hon Michael McCormack MP, Deputy Prime Minister, 'Additional new support for critical regional aviation services through COVID-19', Media Release, 28 March 2020.

2 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 14.

was paid to Rex Airlines,3 despite its offering a relatively small share of daily seats to regional ports pre-COVID-19, compared to the Qantas Group (Qantas) and Virgin Australia (Virgin), both of whom were ineligible for the program.  The committee heard that Rex Airlines received more than 76 per cent of the total funding allocated under the Regional Airlines Funding Assistance program, which provided last-resort cash flow assistance, despite Rex Airlines recording in its 2020 Annual Report an increase in revenue, and an underlying profit, excluding the $53.9 million received through the program.4  The RANS program is providing support to ensure minimum air connectivity to over 110 airports in regional and remote Australia from March 2020 to 28 March 2021.5 2.5 On 17 March 2020, the Australian Government announced relief measures for the Qantas, Virgin and regional airlines affected by COVID-19 (the Australian Airline Financial Relief Package). Overall, the Australian Airline Financial Relief Package provided $715 million in direct and indirect support to airlines, through fee-waivers, changes to operations charges and some limited direct financial assistance to 31 December 2020.6 The Department of Infrastructure, Transport, Regional Development and Communications (Department of Infrastructure) informed the committee that, as at 30 November 2020, the total benefit to industry in direct rebates for fuel excise and domestic security costs was $126.3 million. Additionally, the total charges waived for 1300 domestic flight operators came to $145.8 million.7 2.6 The following month, the Australian Government announced the $165 million Domestic Aviation Network Support (DANS) program to subsidise the cost of

3 Mr Richard Wood, First Assistant Secretary, International Aviation, Technology and Services, Department of Infrastructure, Transport, Regional Development and Communications Proof Committee Hansard, 4 March 2021, pp. 8-9.

4 Mr John Sharp, Deputy Chairman, Rex Airlines, Proof Committee Hansard, 3 March 2021, pp. 26-27; Patrick Hatch, 'Rex's airline miracle: revenue grows thanks to government handouts', The Sydney Morning Herald, 1 September 2020, https://www.smh.com.au/business/companies/rex-s-airline- miracle-revenue-grows-thanks-to-government-handouts-20200831-p55r29.html (accessed 17 March 2021)

5 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 12. As at the end of November 2020, more than 16 600 flights had been supported by RANS, enabling more than 245 000 passengers to travel and maintaining critical air freight links around Australia.

6 The Hon Michael McCormack MP, Deputy Prime Minister, 'Relief package for Australian aviation industry', Media Release, 18 March 2020, https://minister.infrastructure.gov.au/mccormack/media- release/relief-package-australian-aviation-industry (accessed 3 March 2021).

7 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 14.

operating a minimum domestic aviation network.8 The DANS program provided shortfall subsidies to four domestic commercial airlines to operate flights along the top 50 domestic routes from 16 April 2020 to 31 January 2021.9 2.7 Further measures put in place by the Australian Government to support the aviation sector are outlined below:  The $66 million Regional Airports Screening Infrastructure program was introduced to provide a funding contribution towards the minimum necessary capital and initial operational costs of enhanced security screening at eligible regional airports.10  Under the International Freight Assistance Mechanism (IFAM), $669 million has been committed to 30 June 2021 to maintain established supply-chains that support industries delivering high-value, time-sensitive, perishable and vital imports and exports. According to the Department of Infrastructure, IFAM funding supported transport of over 252 000 tonnes of air freight and reconnected supply chains to around 67 international destinations between April and 9 December 2020.11  Federally-leased airports were provided temporary relief and deferrals from land tax-equivalent payments if they provided rent relief to commercial tenants during the crisis.12

International comparison 2.8 Many jurisdictions introduced support measures for aviation in response to COVID-19. The Organisation for Economic Co-operation and Development (OECD) reported that two-thirds of that support consisted of direct aid (subsidies, loans, equity and cash injection).13 In addition, countries such as

8 The Hon Michael McCormack MP, Deputy Prime Minister, 'Federal Government guarantees domestic aviation network', Media Release, 16 April 2020, https://minister.infrastructure.gov.au/mcc ormack/media-release/federal-government-guarantees-domestic-aviation-network (accessed 3 March 2021).

9 Department of Infrastructure, Transport, Regional Development and Communications, Aviation, last updated 5 November 2020, https://www.infrastructure.gov.au/aviation/ #:~:text=Domestic%20Aviation%20Network%20Support%20(DANS)&text=DANS%20provides%20 shortfall%20subsidies%20to,(BITRE%202018%2D19) (accessed 18 February 2021).

10 The Hon Michael McCormack MP, Deputy Prime Minister, 'Regional airports land $66 million in grant funding', Media Release, 18 December 2020, https://minister.infrastructure. gov.au/mccormack/media-release/regional-airports-land-66-million-grant-funding (accessed 3 March 2021).

11 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, pp. 12-17.

12 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, pp. 12-17.

13 Organisation for Economic Co-operation and Development, COVID-19 and the aviation industry: Impact and policy responses, 15 October 2020, p. 4.

Australia, Singapore and the United Kingdom (UK) adopted wage subsidies to help employers maintain a connection with their workers. 2.9 Submitters raised concern regarding the level of support provided by the Australian Government to the aviation sector, compared to that of other nations. In a report commissioned by the International Transport Workers' Federation, the McKell Institute indicated that aviation support from the Australian Government totals $2.7 billion, or approximately 0.136 per cent of gross domestic product (GDP), compared to a mean of 0.24 per cent of GDP in support provided by countries analysed by the McKell Institute.14 According to the OECD, the Australian Government's support for the aviation industry ranks 18 out of the 28 countries it analysed.15 2.10 Additionally, the McKell Institute cited analysis undertaken by the World Bank regarding the size of support for the aviation industry, relative to the overall size of the relevant governments' support by way of economic stimulus in the context of COVID-19. This study found that Australia ranks poorly on this comparison, with only 0.33 per cent of our stimulus package being spent on aviation, compared to 2.4 per cent of the stimulus provided by both the United States of America (US) and New Zealand.16 2.11 Mr Scott McDine, Head of ITF Sydney, International Transport Workers' Federation, argued that the Australian Government should exceed the support packages of other governments for Australia's aviation industry, including airlines.17 In particular, he noted that the Singaporean government had provided the highest tier of support to aviation, aerospace and tourism workers under its Jobs Support Scheme (JSS), in recognition of the importance of aviation. This originally amounted to 75 per cent of average take-home weekly wages and has since been reduced to 50 per cent.18 2.12 Mr McDine contended that this higher rate of wage subsidy had significantly reduced the number of aviation job losses. He observed that Australian airlines have experienced job losses at 31.1 per cent, compared with 19.5 per cent in the US and 15.6 per cent in Singapore.19

14 International Transport Workers' Federation, Submission 18, p. 9.

15 Organisation for Economic Co-operation and Development, COVID-19 and the aviation industry: Impact and policy responses, 15 October 2020, p. 5.

16 International Transport Workers' Federation, Submission 18, p. 10.

17 Mr Scott McDine, Head of ITF Sydney, International Transport Workers' Federation, Proof Committee Hansard, 3 March 2021, p. 2.

18 Mr Scott McDine, Head of ITF Sydney, International Transport Workers' Federation, Proof Committee Hansard, 3 March 2021, p. 2.

19 Mr Scott McDine, Head of ITF Sydney, International Transport Workers' Federation, Proof Committee Hansard, 3 March 2021, p. 2.

2.13 The committee inquired whether there was a correlation between the level of financial support provided to the Australian aviation sector, relative to most OECD countries, and the proportion of job losses, relative to other countries. Mr Brine, First Assistant Secretary, Environment, Industry and Infrastructure Division, Department of the Treasury, accepted the existence of the correlation.20 2.14 The Australian and International Pilots Association (AIPA) also praised the responses of other governments. Specifically, Captain Murray Butt, President, AIPA, stated that: We have seen Singapore invest over A$20 billion into its airline. The US has been supporting the aviation industry such that all airline staff have been on 75 per cent of their salary. In the UK, staff have been on 80 per cent of their salary, and New Zealand is paying its airline staff 50 per cent of their salary until 2022. They recognise the importance of the sector and the retention of skills crucial for their infrastructure.21 2.15 The committee notes that the US' COVID-19 relief bill which passed on 10 March 2021 included an additional $23 billion in support for the aviation sector. The measures to date have reportedly saved 27 000 jobs at American Airlines and United Airlines alone.22

JobKeeper 2.16 The Australian Government responded to the first phase of the pandemic with three economic support packages.23 The third economic support package, announced on 30 March 2020, established a new wage subsidy in the form of JobKeeper, which initially provided a $1500 fortnightly wage subsidy to eligible employees of businesses that could demonstrate a sufficient decline in

20 Mr Matthew Brine, First Assistant Secretary, Environment, Industry and Infrastructure Division, Department of the Treasury, Proof Committee Hansard, 4 March 2021, p. 15.

21 Captain Murray Butt, President, Australian and International Pilots Association, Proof Committee Hansard, 3 March 2021, p. 57.

22 Niraj Chokshi, 'Relief Bill Gives Airline and Airport Workers a Reprieve, for Now', New York Times, 11 March 2021, https://www.nytimes.com/2021/03/11/business/stimulus-bill-airline- jobs.html (accessed 16 March 2021).

23 See, for example, the Hon Scott Morrison MP, Prime Minister, and the Hon Josh Frydenberg MP, Treasurer, 'Economic stimulus package', Media Release, 12 March 2020, www.pm.gov.au/media/economic-stimulus-package (accessed 4 February 2021); the Hon Scott Morrison MP, Prime Minister, and the Hon Josh Frydenberg MP, Treasurer, 'Supporting Australian workers and business', Media Release, 22 March 2021, www.pm.gov.au/media/supporting-australian-workers-and-business (accessed 4 February 2021); the Hon Scott Morrison MP, Prime Minister, and the Hon Josh Frydenberg MP, Treasurer, '130 billion JobKeeper payment to keep Australians in a job', Media Release, 30 March 2020, www.pm.gov.au/media/130-billion-jobkeeper-payment-keep-australians-job (accessed 4 February 2021).

revenue during the pandemic.24 JobKeeper was designed to help keep Australians employed as large parts of the economy went into 'hibernation'. It provided payments that enabled businesses to retain their employees where COVID-19 restrictions on movement reduced revenues. 2.17 For many Australian businesses and workers, the fallout from public health measures was immediate. By April 2020, the number of employed Australians had fallen by a total of 594 300—including 220 500 from full-time employment and 373 800 from part-time employment.25 828 300 people were unemployed and the underemployment rate had increased to 13.7 per cent.26 2.18 From April 2020, JobKeeper was supporting 850 000 organisations to pay 3.3 million working Australians a wage to live on in the absence of normal business operating conditions.27 According to Mr Brine this included: …over 300 unique entities in the air and space transport… covering on average around 31 000 employees per month and delivering assistance of around $250 million to the sector [during the first quarter of the extension phase of JobKeeper].28 2.19 On 21 July 2020, the Australian Government announced that due to the ongoing COVID-19 crisis, JobKeeper would be extended by six months until 28 March 2021, from the original end date of 27 September 2020. From 28 September 2020, the payment rate was reduced and a lower payment rate introduced for those who worked fewer hours.29 The JobKeeper payment is currently due to finish on 28 March 2021. 2.20 The majority of submitters voiced support for JobKeeper. For example, Mr Scott Connolly, Assistant Secretary, Australian Council of Trade Unions (ACTU), stated that '[t]here's no question that JobKeeper has played a

24 The Hon Scott Morrison MP, Prime Minister, and the Hon Josh Frydenberg MP, Treasurer, '130 billion JobKeeper payment to keep Australians in a job', Media Release, 30 March 2020, www.pm.gov.au/media/130-billion-jobkeeper-payment-keep-australians-job (accessed 4 February 2021).

25 Select Committee on COVID-19, First interim report, December 2020, p. 70.

26 Australian Bureau of Statistics, Labour Force, Australia, 14 May 2020, www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/apr- 2020#:~:text=Seasonally%20adjusted%20estimates%20for%20April,Employment%20decreased%20t o%2012%2C418%2C700 (accessed 10 February 2021).

27 Department of the Treasury, The Jobkeeper Payment: Three-month review, June 2020, p. 17.

28 Mr Matthew Brine, First Assistant Secretary, Environment, Industry and Infrastructure Division, Department of the Treasury, Proof Committee Hansard, 4 March 2021, p. 16.

29 For further information see The Treasury, Economic Response to the Coronavirus - JobKeeper Extension, https://treasury.gov.au/coronavirus/jobkeeper/extension (accessed 4 February 2021).

significant role in enabling the industry to survive and get to where it is today'.30 2.21 Ms Jayne Hrdlicka, Chief Executive Officer and Managing Director of Virgin, stated that JobKeeper had been essential for Virgin and the thousands of employees it had stood down throughout the pandemic: JobKeeper has meant that we have been able to keep the family together and retain thousands and thousands of skilled jobs that would otherwise not have been possible and to protect the integrity and resilience of our operations in an environment where the pandemic and border closures have caused demand to be highly variable, with no ability to plan and predict what tomorrow will bring.31 2.22 Similarly, Mr John Sharp, Deputy Chairman, Rex Airlines, commented that JobKeeper has 'enabled us to keep people stood down, but paid, and it enables us to bring people back into the workforce when things are picking up'.32 2.23 Mr Alistair Reid, Member, Australian Aviation Ground Handling Industry Alliance, stated that the $66 million received by Menzies Aviation through JobKeeper 'has enabled us to keep the staff attached to the business'.33 2.24 Captain Louise Pole, President, Australian Federation of Air Pilots, argued that JobKeeper has allowed a number of employees to maintain a connection with their employer, albeit with a reduced income in many cases. She called for the Australian Government to extend JobKeeper and argued that without it 'you will find more and more pilots considering leaving the industry permanently…'.34 2.25 Mr Daniel Gschwind, Chief Executive, Queensland Tourism Industry Council, told the committee that 'some businesses will not be able to survive without some additional support'. He recommended that Australian businesses severely impacted by international border closures and domestic disruption be given access to a wage subsidy program beyond 28 March 2021.35

30 Mr Scott Connolly, Assistant Secretary, Australian Council of Trade Unions, Virgin Australia, Proof Committee Hansard, 29 January 2021, p. 24.

31 Ms Jayne Hrdlicka, Chief Executive Officer and Managing Director, Virgin Australia, Proof Committee Hansard, 29 January 2021, p. 2.

32 Mr John Sharp, Deputy Chairman, Rex Airlines, Proof Committee Hansard, 3 March 2021, p. 23.

33 Mr Alistair Reid, Member, Australian Aviation Ground Handling Industry Alliance, Proof Committee Hansard, 3 March 2021, p. 38.

34 Captain Louise Pole, President, Australian Federation of Air Pilots, Proof Committee Hansard, 28 January 2021, p. 3.

35 Mr Daniel Gschwind, Chief Executive, Queensland Tourism Industry Council, Proof Committee Hansard, 29 January 2021, p. 29.

2.26 The Flight Attendants' Association of Australia (FAAA) agreed that JobKeeper had saved jobs and helped employees maintain their connection with their employer. In particular, it shared the results of surveys undertaken in relation to the impact of JobKeeper on cabin crew in 2020 and 2021 which found that JobKeeper had positively impacted 96.9 per cent of survey respondents.36 2.27 Aviation workers also emphasised the vital role that JobKeeper has played in keeping them connected with employment. Ms Anna-Maria Saglimbeni told the committee that '[t]he support the government has provided through the JobKeeper has kept my family afloat, financially, and has been a lifeline for me'.37 2.28 Ms Teri O'Toole, Federal Secretary, FAAA, relayed the following statements from the FAAA's members:  'My wife and I are both flight attendants. The shutdown has had huge financial ramifications for us. We have both managed to find some casual work. However, this is on a week-by-week basis. Without JobKeeper we would not have survived'.  'We're struggling to put food on the table and pay bills and our mortgage as my husband is also a pilot and he is stood down. Without JobKeeper we would not have been able to make our financial commitments. JobKeeper has also had a positive impact on our mental health'.  'I've been able to remain in employment at Qantas and keep food on the table. Without this support, I would have to have moved back to South Australia and possibly be split from my husband whilst I am pregnant with our first child'.38 2.29 Meanwhile, Ms Tanana asserted that '[s]hould JobKeeper be discontinued, our employer will have to discontinue the employment of thousands more staff'. She argued that '[JobKeeper] is an investment in the families and livelihoods of people in the industry and in this country. We need the funding to help us through'.39

Eligible employees 2.30 While the majority of submitters supported a large-scale wage subsidy, a number of submitters highlighted problems with JobKeeper: namely, the exclusion of many aviation workers from the scheme.40 For example, Mr James

36 Flight Attendants' Association of Australia, Submission 22, p. 9.

37 Ms Anna-Maria Saglimbeni, Private capacity, Proof Committee Hansard, 10 February 2021, p. 7.

38 Ms Teri O'Toole, Federal Secretary, Flight Attendants Association of Australia, Proof Committee Hansard, 3 March 2021, p. 54.

39 Ms Claudine Tenana, Delegate, United Services Union, Proof Committee Hansard, 10 February 2021, p. 7.

40 See, for example, Flight Attendants' Association of Australia, Submission 22, p. 7.

Goodwin, Chief Executive, Australian Airports Association (AAA), noted that while eligible airports are thankful for JobKeeper: …there are many organisations in the value chain of aviation that go unseen: ground handlers, people working behind the scenes in baggage handling, people in refuelling, people making sure that the airfield is safe and secure. Many of that workforce are going unseen by those who are on an aircraft, but they are vital. They are essential workers and, regardless of the company structure, they are workers in Australia and paying taxes in Australia. It's important that they are supported during this period.41 2.31 In its first interim report, the Select Committee on COVID-19 noted that in the initial design of the program the Australian Government made some deliberate exclusions primarily on the basis that, at a projected imposition of $130 billion on public finances, they needed to impose limits on the cost of the package.42 It received evidence that many of these exclusions severely impacted workers and industries who had been hardest hit by the pandemic.43 2.32 These exclusions cost thousands of Australian aviation workers access to a crucial lifeline during an unprecedented jobs crisis, including:  casual employees who could not demonstrate 12 months of continuous employment with the same employer;  all employees of local government (194 000 people)—including workers in council-operated airports; and  all employees of companies owned by foreign governments—including several thousand dnata workers.

Casual employees 2.33 Some submitters questioned the Australian Government's decision to exclude casuals who had not been with their employer for at least 12 months.44 2.34 The committee heard evidence that the vast majority of aviation workers are employed on a permanent part time or casual basis. For example, the Transport Workers' Union (TWU) submitted that Swissport, a ground and cargo handling services provider, employs all of its workers, save for senior managers, on a permanent part-time or casual basis.45 It also noted that '[p]art- time work has also become the dominant form of employment at all companies

41 Mr James Goodwin, Chief Executive, Australian Airports Association, Proof Committee Hansard, 29 January 2021, p. 16.

42 Select Committee on COVID-19, First interim report, December 2020, p. 75.

43 Select Committee on COVID-19, First interim report, December 2020, p. 76.

44 See, for example, Australian Council of Trade Unions, Submission 13, p. 11; International Transport Workers' Federation, Submission 18, p. 19.

45 Australian Services Union, Submission 19, p. 9; Transport Workers' Union, Submission 23, p. 6.

across ground handling operations'.46 For example, approximately 90 per cent of the Qantas Ground Services workforce is either part-time or casual.47 2.35 Ms Marian Harris, a cabin cleaner employed by Cabin Services Australia, told the committee that this exclusion disproportionately impacted the aviation sector, where '95 per cent of [dnata's] workers are casual'.48 2.36 The ACTU observed that '[m]any [aviation workers] were casuals who did not meet the tenure requirement the government put in place'.49 In addition, Mr Connolly drew the committee's attention to what he termed 'fundamental failings' with the package: In this sector, in particular, there are some challenges with the transitory nature of some of the workers—not by their choice, but by the design of their employment relationships being casual and insecure. They've been disadvantaged in terms of their capacity to receive the benefits.50 2.37 Furthermore, in its report Australian Aviation and COVID-19, the McKell Institute noted that some elements of the JobKeeper design were severely deficient: 'namely, its lack of application to companies owned by a sovereign entity, such as dnata, and the exclusion of recently hired casuals'.51 2.38 The Treasurer had previously justified excluding more than one million casual workers from JobKeeper using the rationale that 'at $130 billion… we had to draw the line somewhere. This is a massive call on the public purse and it is a debt that the country will pay for years to come…'.52

Local government 2.39 Local governments employ approximately 194 000 people, all of whom were excluded under JobKeeper eligibility rules.53 The committee heard evidence that the exclusion of local governments from JobKeeper disproportionately affected council-operated airports and the communities they serve in regional and remote Australia.54

46 Transport Workers' Union, Submission 23, p. 8.

47 Transport Workers' Union, Submission 23, p. 8.

48 Ms Marian Harris, Private capacity, Proof Committee Hansard, 10 February 2021, p. 7.

49 Australian Council of Trade Unions, Submission 13, p. 11.

50 Mr Scott Connolly, Assistant Secretary, Australian Council of Trade Unions, Proof Committee Hansard, 29 January 2021, p. 24.

51 International Transport Workers' Federation, Submission 18, p. 19.

52 The Hon Josh Frydenburg MP, Treasurer, 'Interview with David Speers, Insiders, ABC', Transcript, 12 April 2020, https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/transcripts/inter view-david-speers-insiders-abc-0 (accessed 10 February 2021).

53 Select Committee on COVID-19, First interim report, December 2020, p. 77.

54 Australian Local Government Association, Submission 15, [p. 2].

2.40 The majority of registered airports in Australia are owned and operated by local government.55 Indeed, more than 200 regional, rural and remote council-owned airports provide aviation services to their populations, as well as providing vital services to local health, education and other providers and local businesses.56 2.41 The Australian Local Government Association (ALGA) submitted that '[t]hese airports are needed for everything from passenger transport to [] tourism, postal services, air ambulances, emergency services operations, crop dusting, surveying and flight training'.57 It further noted that the impact of COVID-19 has severely impacted the revenue that local governments draw from their airports and, in some cases, this has put their ongoing operation at risk.58 2.42 Mr Adrian Beresford-Wylie, Chief Executive, ALGA, argued that it was a 'bitter disappointment' that local government employees were excluded from JobKeeper.59 He pointed out that councils are not motivated by profit, but instead 'undertake a lot of activities in thin markets where there aren't private sector suppliers' to provide benefit to their communities.60 2.43 The AAA contended that the exclusion of employees of local governments from JobKeeper eligibility has resulted in skilled workers leaving the aviation industry. It argued that this represents a significant loss of competency, skills and experience in airport operations and will slow the restart of the aviation industry through the need to re-certify, re-qualify and re-accredit staff returning to the sector.61 2.44 In addition, Mr Goodwin called for JobKeeper to be extended to cover local government staff employed in the aviation sector.62 He argued that if JobKeeper were not extended there is a 'very real threat that many airport

55 Australian Airports Association, Australia's regional airports: facts, myths and challenges, November 2021, p. 56; Australian Local Government Association, Submission 15, [p. 1].

56 Australian Local Government Association, Submission 15, [p. 2].

57 Australian Local Government Association, Submission 15, [p. 2].

58 Australian Local Government Association, Submission 15, [p. 2].

59 Mr Adrian Beresford-Wylie, Chief Executive, Australian Local Government Association, Proof Committee Hansard, 4 March 2021, p. 34.

60 Mr Adrian Beresford-Wylie, Chief Executive, Australian Local Government Association, Proof Committee Hansard, 4 March 2021, pp. 36-38.

61 Australian Airports Association, Submission 16, Attachment 1, p. 8.

62 Mr James Goodwin, Chief Executive, Australian Airports Association, Proof Committee Hansard, 29 January 2021, p. 15.

operations would become unsustainable' and 'it would be a devastating blow to many regional areas if it were to occur'.63 2.45 Mr Trevor Willcock, Chief Executive Officer, Mildura Airport, provided insight into the experience of council-owned regional airports. He explained that Mildura Airport was corporatised in 2008, but remains owned by Mildura Rural City Council. As a result, it did not qualify for JobKeeper. Mr Willcock revealed that Mildura Airport can only absorb further operational losses for a further 6 to 12 months before all cash reserves have been depleted.64 He contended that an extension to JobKeeper for a further 12 months to all airport employees, regardless of ownership structures, is '[v]ery essential' and 'would go a long way in keeping us compliant, safe and open'.65 2.46 The AAA estimated that more than 70 per cent of staff at regional airports have been placed on reduced hours, been re-deployed or made redundant.66 2.47 Similarly, the ACTU noted that most regional airports are council-owned and are not well-capitalised or self-sustaining in terms of direct fees received for use. It submitted that '[w]hat this means is that ultimately shortfalls are met through general council revenue, meaning that regional airports are predominantly supported by ratepayers'.67

Australian companies owned by foreign sovereign entities 2.48 Employees of companies owned by sovereign entities were also excluded from JobKeeper due to a 'deliberate decision to refine the policy'.68 As a direct result of this exclusion, thousands of Australian aviation workers faced job losses, including over 5500 staff in aviation catering and ground handling business dnata.69 2.49 Mr Hiranjan Aloysius, Chief Executive Officer, dnata Catering Australia, explained that prior to COVID-19, dnata employed approximately 6800 people in Australia. Since April 2020, some 2500 dnata workers have been made

63 Mr James Goodwin, Chief Executive, Australian Airports Association, Proof Committee Hansard, 29 January 2021, p. 16.

64 Mr Trevor Willcock, Chief Executive Officer, Mildura Airport, Proof Committee Hansard, 4 March 2021, p. 40.

65 Mr Trevor Willcock, Chief Executive Officer, Mildura Airport, Proof Committee Hansard, 4 March 2021, p. 42.

66 Australian Airports Association, Submission 16, Attachment 1, p. 5.

67 Australian Council of Trade Unions, Submission 13, p. 13.

68 Mr Matthew Brine, First Assistant Secretary, Environment, Industry and Infrastructure Division, Department of the Treasury, Proof Committee Hansard, 4 March 2021, p. 19.

69 See, for example, Kate Burgess, 'JobKeeper: Aviation workers rally for support', The Canberra Times, 10 June 2020, www.canberratimes.com.au/story/6788036/thousands-excluded-from- jobkeeperafter-company-was-sold-to-a-foreign-government/ (accessed 4 February 2021).

redundant. Mr Aloysius told the committee that hundreds of these jobs could have been saved if JobKeeper had been extended to dnata.70 2.50 A number of submitters criticised this exclusion, with some going so far as to describe the treatment of these workers as 'gobsmacking' and an 'absolute disgrace'.71 In particular, these submitters highlighted the sale of Qantas' catering business to dnata in 2018. Following completion of the sale, 1200 Qantas employees become part of the dnata operation.72 The committee heard evidence that despite having no say in this decision these workers were, as a direct result, excluded from JobKeeper.73 2.51 The TWU noted that '[t]hese workers are paid in Australia and pay taxes in Australia'.74 Mr Michael Kaine, National Secretary, TWU, argued that 'it was Australian workers [the Australian Government] were depriving of money'.75 The TWU submitted: Over a thousand of the workers were originally employed by Qantas, until the airline sold its Q Catering arm to Emirates-owned Dnata in 2018. The Federal Government did not intervene in the sale of an Australian business to a foreign-owned business, yet used this distinction to exclude thousands of tax-paying workers from wage subsidy support.76 2.52 The TWU further noted that '[a]lthough the changes impacted aviation workers at Dnata and SNP, Swissport, which is owned by Chinese controlled HNA, continued to receive the subsidy'.77 2.53 The AAA expressed concern that the 'exclusion of foreign-owned firms from JobKeeper eligibility also cut out many links in the aviation value chain from income support, including ground handling and security screening firms'.78

70 Mr Hiranjan Aloysius, Chief Executive Officer, dnata Catering Australia, Proof Committee Hansard, 3 March 2021, p. 34.

71 Mr Scott McDine, Head of ITF Sydney, International Transport Workers' Federation, Proof Committee Hansard, 3 March 2021, p. 2.

72 Qantas Group, 'Sale of Qantas catering business', Media Release, 11 April 2018, https://www.qantasnewsroom.com.au/media-releases/sale-of-qantas-catering-business/ (accessed 3 March 2021).

73 See, for example, Transport Workers' Union, Submission 23, p. 36; Ms Darlene Bailey, Submission 26, [p. 2].

74 Transport Workers' Union, Submission 23, p. 36.

75 Mr Michael Kaine, National Secretary, Transport Workers' Union, Proof Committee Hansard, 3 March 2021, p. 44.

76 Transport Workers' Union, Submission 23, p. 36.

77 Transport Workers' Union, Submission 23, p. 35.

78 Australian Airports Association, Submission 16, p. 4.

2.54 Submitters questioned why they should be excluded from JobKeeper on this basis. Ms Harris asked 'We pay our taxes. We're foreign owned. How come they take it off us?'79 2.55 Mr Brian Bevan submitted that: The reason given to us was that our company was owned by a foreign government. But what does that mean to me? I'm a tax-paying Australian. Not a dollar of my money goes offshore.80 2.56 In addition, Ms Edesse Hakko stated: I am an Australian citizen, I was born and raised here and I pay taxes. But, because my company was owned by a foreign government, I did not receive JobKeeper. I am disgusted that we were left with no support from the Australian government yet there were people who weren't working getting one-off payments. What happened to us, the hardworking workers?81 2.57 Similarly, Ms Darlene Bailey expressed her frustration that as a former Qantas employee who had been 'sold' to dnata in 2018 she was ineligible for JobKeeper 'through no fault of [her] own'.82 2.58 When questioned regarding the rationale behind excluding the employees of entities that are wholly owned by foreign governments, the Department of the Treasury responded that '[r]eally those governments should support the companies that they own'.83 However, Mr Aloysius noted that dnata's exclusion from government support is unique to Australia.84 For example, Mr McDine noted that all aviation workers in Singapore, including dnata employees, are eligible for JSS.85

Misuse of JobKeeper 2.59 The committee heard evidence that some aviation employers have 'used the cover of the pandemic to reduce conditions, outsource jobs, and implement restructures'.86 For example, Mr Connolly informed the committee that there

79 Ms Marian Harris, Private capacity, Proof Committee Hansard, 10 February 2021, p. 7.

80 Mr Brian Bevan, Submission 27, [p. 2].

81 Ms Edesse Hakko, Private capacity, Proof Committee Hansard, 10 February 2021, p. 6.

82 Ms Darlene Bailey, Submission 26, [p. 2].

83 Mr Matthew Brine, First Assistant Secretary, Environment, Industry and Infrastructure Division, Department of the Treasury, Proof Committee Hansard, 4 March 2021, p. 16.

84 Mr Hiranjan Aloysius, Chief Executive Officer, dnata Catering Australia, Proof Committee Hansard, 3 March 2021, p. 32.

85 Mr Scott McDine, Head of ITF Sydney, International Transport Workers' Federation, Proof Committee Hansard, 3 March 2021, p. 4.

86 Australian Services Union, Submission 19, p. 6.

have been some abuses of JobKeeper, including 'manipulation of rostering systems to take advantage of and profit from the scheme'.87 2.60 The TWU argued that Qantas had arbitrarily enforced an inflexible and unworkable method to the stand down of its workers across Australia. In particular, it submitted that 'Qantas began engaging part-time QGS staff to fill full-time Qantas Airways staff roles, and standing those workers down instead'.88 2.61 The TWU also criticised the absence of any conditions tied to JobKeeper to ensure appropriate use of funds: No demands were made on retaining jobs, ruling out outsourcing, committing to regional Australia, keeping fares affordable, capping CEO salaries, cancelling executive bonuses or cancelling dividends.89 2.62 The TWU argued that JobKeeper relies on companies to behave conscionably, 'leaving workers powerless and reliant upon their employer to claim and pass on the full amount of the subsidy'.90 In particular, it expressed concern that the Australian Government's 'failure to intervene and apply funding with conditions to ensure vital regional air services continue is leaving the survival of regional Australian communities in the hands of airline executives and their profit-based priorities'.91 2.63 The Australian Services Union (ASU) outlined a number of specific examples of what it categorised as poor employer behaviour. These included the following:  Qantas manipulated the JobKeeper scheme to reduce the take home pay of some employees who work overtime and hours that attract penalty rates.  Qantas made several thousand employees redundant based on their projected need for labour in 2022. This was described by the company as a 'right-sizing process'. These include several hundred employees at airports, lounges and corporate areas. Following the right-sizing process, Qantas proposed to restructure its airport, lounges and freight operations. According to the ASU, this restructure targeted better paid, high-skilled staff, shifting the work to centralised call-centres.  Virgin made thousands of employees redundant and sought long term wage freezes and drastic permanent cuts to conditions from its workforce.

87 Mr Scott Connolly, Assistant Secretary, Australian Council of Trade Unions, Proof Committee Hansard, 29 January 2021, p. 24.

88 Transport Workers' Union, Submission 23, p. 38.

89 Transport Workers' Union, Submission 23, p. 45.

90 Transport Workers Union, Submission 23, p. 36.

91 Transport Workers Union, Submission 23, p. 25.

 Rex Airlines attempted to vary their enterprise agreements covering customer service staff, flight attendants and aircraft engineers to remove pay increases due to employees on 1 July 2020.92 2.64 Furthermore, the TWU suggested that Qantas was using the COVID-19 pandemic to provide an excuse to outsource this workforce 'in order to cut the existing wages and conditions to the minimum standards, or below'.93 2.65 The ASU also contended that airlines misused the JobKeeper payment to subsidise overtime payments.94 For example, it claimed that Menzies Aviation forced its employees to use their accrued leave while they were stood down and being paid JobKeeper. For many employees, they saw no additional income while their accrued leave balances were run down. The ASU argued that this meant that the company reduced its accrued liabilities using taxpayer money without offering any benefit to the affected employees.95 2.66 Mr Toohey, a former Qantas employee, raised concern that Qantas had used JobKeeper to pay off leave entitlements. He noted that '[t]here are guys who now have no annual leave, nothing in their redundancies…'.96 In addition, Mr Peter Seymour described his personal experience as a Qantas employee who, after 31 years of employment, was on paid sick leave following a stage 5 prostate cancer diagnosis: Then the pandemic hit and JobKeeper was introduced, and I was on sick leave and just managing to cover bills. Then, without any warning, Mr Joyce, the CEO of Qantas, decided to take staff off sick leave and put them on JobKeeper and stand down staff for weeks at a time.97 2.67 Moreover, Mr Seymour described being refused overtime, despite working on a rostered day off. He informed the committee that: In that two-week period, [Qantas] put you on from Monday to Thursday. They give you Friday off, Saturday off and Sunday off so they don't have to pay penalty rates. Then they put you back on Monday, Tuesday, Wednesday, Thursday.98

92 Australian Services Union, Submission 19, pp. 6-7.

93 Transport Workers' Union, Submission 23, p. 9.

94 Australian Services Union, Submission 19, p. 6.

95 Australian Services Union, Submission 19, pp. 6-7.

96 Mr Sean Toohey, Private capacity, Proof Committee Hansard, 3 March 2021, p. 48.

97 Mr Peter Seymour, Private capacity, Proof Committee Hansard, 3 March 2021, p. 46.

98 Mr Peter Seymour, Private capacity, Proof Committee Hansard, 3 March 2021, p. 46.

2.68 Relevant to this inquiry, Qantas is currently engaged in litigation over its alleged misuse of JobKeeper.99 On 13 January 2021, the TWU, ASU, FAAA and the ACTU sought leave to appeal to the High Court of Australia, arguing that employers should not be able to use JobKeeper to pay penalties. The High Court is yet to hear this special leave application.100

Committee view 2.69 The committee agrees with the views of submitters that the effect of the financial support discussed above has been crucial in saving jobs, maintaining air connectivity and protecting supply lines. In particular, JobKeeper has been critical in preserving aviation capacity and providing much needed financial support to employees of the severely impacted aviation industry. 2.70 Whilst welcoming the economic support measures put in place by the Australian Government, the committee believes that are some issues with the timing and design of the packages and that the Australian Government should have expanded JobKeeper eligibility to cover all tax-paying aviation workers. 2.71 The Australian Government's last-minute decision to exclude employees of foreign government entities from JobKeeper eligibility caused thousands of workers to be disqualified from the Australian Government's wage subsidy program. If JobKeeper had been designed to include all aviation workers, many more jobs could have been saved. 2.72 The committee shares the view of the Select Committee on COVID-19 that unnecessarily excluding many of the people and sectors hardest-hit by the pandemic has undermined the economic benefits of JobKeeper and its goal of keeping as many workers employed as possible.101 2.73 The committee also notes the correlation between the low level of financial support provided by the Australian Government to the aviation sector, relative to other OECD countries, and the relatively high proportion of Australian aviation job losses. 2.74 Furthermore, the evidence presented to the committee called into question the behaviour of certain employers in the aviation sector, such as Qantas. The committee finds that the decision of Qantas to outsource 2500 ground handling roles, notwithstanding being in receipt of significant government funding, goes against the spirit of JobKeeper. Despite the significant amount of financial

99 Australian Services Union, 'ASU takes Qantas all the way to the High Court over JobKeeper wage theft', Media Statement, 13 January 2021; Transport Workers' Union, 'Unions to take Qantas to High Court over JobKeeper wage theft', Press Release, 13 January 2021.

100 High Court of Australia, Special leave applications results 2021, https://www.hcourt.gov.au/registry/special-leave-applications-results-2021 (accessed 15 February 2021).

101 Select Committee on COVID-19, First interim report, December 2020, p. 79.

assistance these companies have received from the Australian Government in order to keep workers employed, thousands of aviation workers have had their employment terminated, conditions cut and roles outsourced. This is discussed further in the following chapter.

Chapter 3 The impact of the COVID-19 pandemic on the aviation workforce

Overview 3.1 It is clear from the evidence presented to the committee that public health measures taken in response to COVID-19—for example, border restrictions— have had significant consequences for Australia's aviation sector.1 This chapter explores the evidence received by the committee to date regarding the impact of COVID-19 on the aviation sector in terms of job losses, stand downs and outsourcing. Witnesses and submitters highlighted the financial and mental health impacts on aviation workers, as well as the risks of skill loss given the highly specialised nature of the aviation workforce. 3.2 The chapter also details the evidence provided in relation to how COVID-19 and the downturn in passenger movements have affected regional Australia and sectors dependent on aviation, such as tourism.2 For example, in a report commissioned by the International Transport Workers' Federation (ITF), the McKell Institute pointed out that as a result of Australia's geographically dispersed population and large land mass, remote and regional communities rely heavily on aviation to remain connected to wider Australia and have many aviation-reliant jobs, including tourism.3 3.3 This chapter then examines the evidence received in relation to the need for ongoing support.

Job losses, stand downs and outsourcing 3.4 As discussed in Chapter 2, submitters described a number of different actions taken by different aviation employers in response to COVID-19. These included:  reducing workloads from full-time to part-time;  requesting employees to take any accrued annual or long service leave;  standing employees down with or without pay;  reducing pay and conditions;  voluntary and involuntary redundancies; and  suspending enterprise bargaining.4

1 Transport Workers Union, Submission 23, p. 1.

2 See, for example, Australian Airports Association, Submission 16, Attachment 1, p. 9.

3 International Transport Workers' Federation, Submission 18, pp. 7 and 17.

4 Australian Federation of Air Pilots, Submission 3, p. 6.

3.5 The Department of Infrastructure, Transport, Regional Development and Communications (Department of Infrastructure) submitted that at the peak of the crisis, passengers carried in Australia fell by around 97 per cent and over 30 000 aviation workers were stood down or laid off.5 3.6 According to Mr Scott McDine, Head of ITF Sydney, '[a]pproximately 30 per cent of [the aviation] workforce has been let go and is now out of work'. He argued that this represents a greater proportion than in other comparable nations, such as the United States of America and Singapore.6 3.7 Mr Matthew Brine, First Assistant Secretary, Environment, Industry and Infrastructure Division, Department of the Treasury, explained that payroll jobs in the air and space transport industry are continuing to decline: '[t]hey are now at almost 19 per cent below pre-pandemic level'. In contrast, economy-wide payroll jobs fell by 8.5 per cent between 14 March and 18 April 2020 but have since recovered to be just 3 per cent below pre-pandemic levels.7 3.8 The committee heard evidence that the aviation sector suffered large job losses particularly in the major airlines, which are the sector's key employers. For example, following voluntary administration, Virgin Australia (Virgin) was acquired by private equity firm Bain Capital. The company restructure cut 3000 jobs cut and discontinued the Tigerair Australia brand. In addition, Qantas outsourced over 2000 ground handling positions at 10 Australian airports, made 6000 positions redundant and stood down 25 000 workers.8 3.9 Ms Jayne Hrdlicka, Chief Executive Officer and Managing Director, Virgin, explained that: When borders closed in March last year demand for air travel reduced to almost zero overnight. [Virgin's] domestic flying reduced by more than 90 per cent and international stopped 100 per cent, forcing us to ground 125 aircraft and stand down roughly 80 per cent of our workforce.9 3.10 Ms Hrdlicka outlined the impact of these measures on Virgin's staff: Many have lost their jobs and others remain stood down with no certainty about when they will be able to return, as we must align our workforce to the day-to-day dynamics in play with borders. We started with around

5 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 1.

6 Mr Scott McDine, Head of ITF Sydney, International Transport Workers' Federation, Proof Committee Hansard, 3 March 2021, p. 2.

7 Mr Matthew Brine, First Assistant Secretary, Environment, Industry and Infrastructure Division, Department of the Treasury, Proof Committee Hansard, 4 March 2021, p. 13.

8 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 7.

9 Ms Jayne Hrdlicka, Chief Executive Officer and Managing Director, Virgin Australia, Proof Committee Hansard, 29 January 2021, p. 1.

10,000 employees at the commencement of the pandemic. While we expect to be able to support at least 6,000 jobs once borders are open domestically and stay open and once the international borders are open, right now we have roughly 3,000 employees fully stood up and working.10 3.11 The Transport Workers' Union (TWU) submitted that '[b]y March 2020 tens of thousands of aviation workers had been stood down from their jobs'.11 It reported that dnata and SNP Security workers left without support due to JobKeeper exclusions 'were longstanding aviation workers struggling to find a job elsewhere'. Furthermore, 78 per cent of these workers had worked in the industry for seven years or more and 62 per cent were actively seeking work.12 3.12 In March 2021, the TWU published the results of a survey of 900 aviation workers which found that only 11 per cent of aviation workers have resumed normal working hours. Furthermore, of the workers who have left aviation or been made redundant, more than 35 per cent had over 20 years' experience and 25 per cent had between 10 and 20 years' experience.13 3.13 The Australian Council of Trade Unions (ACTU) noted that '[s]ignificant proportions of the workforce had been outsourced to contractors who were often forced to work long hours with insufficient resources'.14 3.14 According to a survey undertaken by the Australian Federation of Air Pilots (AFAP), 57 per cent of surveyed pilots had been stood down and 23 per cent had been made redundant.15 3.15 Another survey carried out by the Australian Services Union (ASU) found that 88 per cent of aviation workers have been stood down during COVID-19 and, as at January 2021, 30 per cent had no hours of work.16 3.16 As noted in Chapter 2, the Australian Airports Association (AAA) estimated that more than 70 per cent of staff at regional airports have been placed on reduced hours, been re-deployed or made redundant. It further submitted that: Reductions in jobs and core airport activity also affect airport-related services (food and beverage, retail, hospitality) along with a deferment of capital works and construction activity. This means reduced wages and

10 Ms Jayne Hrdlicka, Chief Executive Officer and Managing Director, Virgin Australia, Proof Committee Hansard, 29 January 2021, pp. 2-3.

11 Transport Workers' Union, Submission 23, p. 35.

12 Transport Workers' Union, Submission 23, p. 36.

13 Mr Michael Kaine, National Secretary, Transport Workers' Union, Proof Committee Hansard, 3 March 2021, p. 45.

14 Australian Council of Trade Unions, Submission 13, p. 6.

15 Australian Federation of Air Pilots, Submission 3, [pp. 25-26].

16 Australian Services Union, Keep Australia flying, 10 February 2021, p. 2.

salaries paid to staff, contractors and suppliers which has also had negative effects in the wider economy, particularly in regional communities.17 3.17 Mr James Goodwin, Chief Executive, AAA, added that: Prior to the pandemic Australia's airports maintained the jobs of more than 200,000 Australians, including almost 9,000 directly employed by airports. We estimate that almost 10 per cent of full-time airport workers have lost their jobs, with many more being underemployed or placed on reduced hours. 3.18 The committee also heard that many smaller airport businesses have also stood down or laid off staff during COVID-19.18 For example, Ms Rachel Crowley, Executive General Manager, Communications and Public Affairs, Brisbane Airport Corporation, estimated that around 10 000 jobs have been lost or stood down at Brisbane Airport across airlines, the staff that they have based at the airport, ground handlers, security, contractors, cleaners and retailers. 19 3.19 The ASU submitted that throughout the pandemic, employers have abandoned any roster patterns and stand employees up and down with very little notice. It argued that this 'unpredictability makes it almost impossible for workers to supplement their JobKeeper income by working in alternative employment, or organising care for their children'.20 3.20 Mr Bruce Rogers, a delegate for the ASU and United Services Union, noted that '[i]n the whole of last year I was only stood up for two weeks'.21 Similarly, Mrs Desiree Sheets-Chavolla told the committee that she was stood down between April and November 2020,22 while Ms Nerisa Tofete explained that she had gone from working full-time to 12 hours per week.23 3.21 Ms Darlene Bailey, a former dnata employee, informed the committee that the majority of Qantas catering staff took redundancies as they weren't getting any work. However, Ms Bailey observed that a small number were retained to

17 Australian Airports Association, Submission 16, Attachment 1, p. 5.

18 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 7.

19 Ms Rachel Crowley, Executive General Manager, Communications and Public Affairs, Brisbane Airport Corporation, Proof Committee Hansard, 29 January 2021, p. 36.

20 Australian Services Union, Submission 19, p. 7.

21 Mr Bruce Rogers, Member, Australian Services Union NSW & ACT, Proof Committee Hansard, 10 February 2021, p. 3.

22 Mrs Desiree Sheets-Chavolla, Private capacity, Proof Committee Hansard, 10 February 2021, p. 6.

23 Ms Nerisa Tofete, Delegate, Victorian Private Sector Branch, Australian Services Union, Proof Committee Hansard, 3 March 2021, p. 43.

retrain lower paid dnata staff to do the jobs that the former Qantas workers were performing in the catering centres.24 3.22 A number of submitters observed that '[t]o supplement their income to make ends meet many employees have obtained additional casual or fixed-term employment, such as working at a supermarket'.25 Ms Tina Courtenay, formerly a relieving duty manager with Qantas, pointed out that this was resulting in exhaustion amongst many stood down aviation workers.26 3.23 Additionally, the committee heard that aviation employers have refused to accommodate job share and flexible work arrangements due to COVID-19.27 3.24 Individuals and organisations alike identified a range of impacts on the aviation workforce flowing from job losses, stand downs and outsourcing. Stakeholders expressed particular concern in relation to the 'enormous' financial and mental health impacts affecting aviation workers.28 Mr Hiranjan Aloysius, Chief Executive Officer, dnata Catering Australia, commented that '[t]he challenges of COVID-19 have pushed aviation workers to the brink financially, physically and emotionally'.29

Financial impacts 3.25 Several submitters provided evidence in relation to the financial impact of being stood down. A number of these submitters reported taking out loans to make ends meet, putting off medical appointments and bills and withdrawing money from superannuation.30 3.26 According to a survey undertaken by the TWU, 67 per cent of aviation workers not receiving JobKeeper were also not receiving JobSeeker support. In addition, a 'further 64 per cent of Dnata and SNP workers said they were

24 Ms Darlene Bailey, Private capacity, Proof Committee Hansard, 10 February 2021, p. 13.

25 Australian Services Union, Submission 19, p. 8.

26 Ms Tina Courtenay, Member, Australian Services Union NSW & ACT, Proof Committee Hansard, 10 February 2021, p. 2.

27 Australian Services Union, Submission 19, p. 7.

28 See, for example, Ms Tina Courtenay, Member, Australian Services Union NSW & ACT, Proof Committee Hansard, 10 February 2021, p. 2

29 Mr Hiranjan Aloysius, Chief Executive Officer, dnata Catering Australia, Proof Committee Hansard, 3 March 2021, p. 33.

30 See, for example, Mr Bruce Rogers, Member, Australian Services Union NSW & ACT, Proof Committee Hansard, 10 February 2021, p. 3; Ms Claudine Tenana, Delegate, United Services Union, Proof Committee Hansard, 10 February 2021, p. 7; Ms Edesse Hakko, Private capacity, Proof Committee Hansard, 10 February 2021, p. 6.

suffering financial hardship, and 72 per cent had, or intended to withdraw their superannuation to pay the bills'.31 3.27 The TWU submitted that the exclusion of dnata workers from the JobKeeper subsidy served a devastating blow that forced thousands of families into financial hardship. It argued that: The repercussions of this are still deeply felt in many Australian households while the majority of planes remain grounded. Some workers were forced to take redundancy to pay off some debts in spite of having no other employment options, while others are still stood-down without pay, or picking up shifts wherever they can – though these tend to be few and far between.32 3.28 The TWU conveyed the following statements from its members:  'Both my husband and I have been stood down from work due to COVID and as a result we are facing extreme financial hardship'.  'I have no income at all. I find it hard to survive with the bills, mortgage, health and other insurances, to make ends meet'.  'This has been terrible for us. I can't explain to you how this has impacted my life! I have no future I have no life. I am very depressed. I've worked for Dnata Catering for 28 years, my whole life. I don't even feel like living anymore. That's the impact that this has done to my family'.33 3.29 The ASU reported that of 563 members in the aviation sector, 43 per cent had accessed their superannuation, 41 per cent deferred school fees and other expenses and 50 per cent are struggling to pay their mortgage or rent.34 3.30 Furthermore, Ms Emeline Gaske, Assistant National Secretary, ASU, raised concern that if the Australian Government goes ahead with its plan to cut JobKeeper on 28 March 2021, these workers 'won't be able to pay the mortgage, pay the rent or put food on the table'.35 3.31 The Australian and International Pilots Association (AIPA) argued that '[e]ven those that are left hanging onto the "stand down" lifeline are rapidly losing

31 Transport Workers' Union, Submission 23, p. 36.

32 Transport Workers' Union, Submission 23, p. 35.

33 Transport Workers' Union, Submission 23, p. 36.

34 Adam Thorn, 'Three in four can't support family without JobKeeper, says ASU', Australian Aviation, 10 February 2021, https://australianaviation.com.au/2021/02/three-in-four-cant-support- family-without-jobkeeper-says-asu/ (accessed 12 February 2021); Australian Services Union, Keep Australia flying, 10 February 2021, p. 2.

35 Ms Emeline Gaske, Assistant National Secretary, Australian Services Union, Proof Committee Hansard, 3 March 2021, p. 42.

their connection to their occupation, both physically and mentally, with significant remediation costs looming'.36 3.32 Mr Stephen Purvinas, Federal Secretary, Australian Licensed Aircraft Engineers Association (ALAEA), communicated his members' concerns: The immediate concern for our members is that they do not lose the JobKeeper they get. That is the only thing. They've extended the mortgage repayments as far as they can. They've done everything. They're getting desperate.37 3.33 One submitter explained their circumstances: Since March we have faced endless uncertainty. We were stood down indefinitely. Our international jobs were made redundant. By May, we still weren't sure if we were eligible for the JobKeeper payments which would be crucial for our financial survival. The company was now in administration and the threat of not even receiving redundancy payouts was real.38 3.34 Ms Claudine Tenana stated that '[i]n August 2020 we were financially in trouble, with strata bills banking up and with electricity bills'. She described the mental health toll this had on her family: '[it] caused us to reach out for help, for counselling. We've had to take out a $20,000 loan to make ends meet'.39 3.35 Ms Edesse Hakko was ineligible for JobKeeper as an employee of one of the three major Gulf carriers (Emirates, Etihad Airways and Qatar Airways). She told the committee that prior to being made redundant in December 2020: We were told that we had to accept pay cuts of 20 to 25 per cent. My base rate was incredibly low, and I had to make my wage from penalty rates. Just to give you an example, my penalty rate every shift was $28, but I was paying $22 in tolls, so it wasn't really worth going to work for $6.40 3.36 Ms Bailey described being forced to take compulsory redundancy, 'even though there was some work being given to lower-paid staff members to do my job'. She expressed the view that: Things would have been very different if we had received JobKeeper. We would still have been stood down, but at least we would have had money

36 Australian and International Pilots Association, Submission 14, p. 4.

37 Mr Stephen Purvinas, Federal Secretary, Australian Licensed Aircraft Engineers Association, Proof Committee Hansard, 3 March 2021, p. 60.

38 Name withheld, Submission 29, [p. 1].

39 Ms Claudine Tenana, Delegate, United Services Union, Proof Committee Hansard, 10 February 2021, p. 7.

40 Ms Edesse Hakko, Private capacity, Proof Committee Hansard, 10 February 2021, p. 6.

for food, mortgages and rent et cetera—and a job to go back to at the end of this.41 3.37 The committee heard that many aviation workers sought secondary employment as a result of the downturn. For example, Ms Cory Flynn, Airline Worker and Delegate, Victorian Private Sector Branch, ASU, explained that '[e]ven with JobKeeper, we've still had to go out and find other, casual work with employers willing to take us on casually while knowing that, at any stage, we could be recalled to our primary employment'.42 3.38 Ms Courtenay told the committee that she 'currently [has] four casual jobs on top of the Qantas stand-up standdowns'.43 Ms Courtenay went on to describe the 'enormous' financial and personal impact of being stood down: I live as frugally as I can. I have cancelled my health and other insurances to cut back on expenses. When this first started I was eating one meal a day. I haven't bought one piece of clothing in a year or had a haircut. I have used New South Wales state government electricity vouchers. Sydney is an incredibly expensive city and even the original JobKeeper rate was nowhere near enough to live on. I have withdrawn all the super I can to pay my existing expenses.44

Mental health impacts 3.39 Many submitters also highlighted the mental health impacts of being stood down. For example, the TWU described the situation as 'leading to a mental health crisis among aviation workers',45 while Mr Nicholas Harris, a Virgin employee, emphasised that '[t]he mental health impact that this situation has taken on people really can't be underestimated'.46 3.40 The Rural Doctors Association of Australia (RDAA) noted that the operation of health services at reduced capacity due to aviation sector disruption had a number of consequences. These included 'job loss or insecurity and consequent negative mental health repercussions for staff, as well as possible poorer health outcomes in the broader community in the immediate and longer terms'.47

41 Ms Darlene Bailey, Private capacity, Proof Committee Hansard, 10 February 2021, p. 3.

42 Ms Cory Flynn, Airline Worker and Delegate, Victorian Private Sector Branch, Australian Services Union, Proof Committee Hansard, 3 March 2021, p. 43.

43 Ms Tina Courtenay, Member, Australian Services Union NSW & ACT, Proof Committee Hansard, 10 February 2021, p. 2.

44 Ms Tina Courtenay, Member, Australian Services Union NSW & ACT, Proof Committee Hansard, 10 February 2021, p. 2.

45 Transport Workers' Union, Submission 23, p. 41.

46 Mr Nicholas Harris, Delegate, Australian Council of Trade Unions, Proof Committee Hansard, 29 January 2021, p. 23.

47 Rural Doctors Association of Australia, Submission 1, p. 3.

3.41 A number of aviation workers also described their personal experiences. For example, Ms Courtenay told the committee that her 'health is suffering because I'm now often working over 70 hours a week just to survive and pay the bills'.48 She argued that the 'physical, financial and mental health toll on all those who are affected by this will have long-term impacts and costs on our health and social care systems'.49 3.42 In addition, Mrs Sheets-Chavolla stated 'I cannot explain to you what that stress has meant to me, and I don't think my happiness will ever be restored',50 while Ms Flynn explained '[i]t's just put a lot of added stress and pressure on our family unit'.51 3.43 One member of the Flight Attendants' Association of Australia (FAAA) commented that '[n]aturally AviationKeeper is necessary for survival. Financially, of course. However many are struggling with their mental health'.52 The FAAA asserted that this impact would be compounded in the absence of JobKeeper.53 3.44 Similarly, Ms Anna-Maria Saglimbeni, a Qantas employee, explained that 'the standdown has affected my mental health because I am so worried about the uncertainty with my job and how I'm going to pay my bills'.54 3.45 Likewise, Ms Bailey described the impact of COVID-19 on her outlook on life: My colleagues and I have gone from happy, independent, hardworking members of the aviation industry to broken, disheartened people who no longer have their jobs and have a bleak future ahead.55 3.46 Ms Edesse Hakko reported that '[t]his experience has had a drastic effect on my mental health. I don't think people understand the toll it has taken on aviation workers'.56

Qantas outsourcing

48 Ms Tina Courtenay, Member, Australian Services Union NSW & ACT, Proof Committee Hansard, 10 February 2021, p. 2.

49 Ms Tina Courtenay, Member, Australian Services Union NSW & ACT, Proof Committee Hansard, 10 February 2021, p. 2.

50 Mrs Desiree Sheets-Chavolla, Private capacity, Proof Committee Hansard, 10 February 2021, p. 6.

51 Ms Cory Flynn, Airline Worker and Delegate, Victorian Private Sector Branch, Australian Services Union, Proof Committee Hansard, 3 March 2021, p. 43.

52 Flight Attendants' Association of Australia, Submission 22, p. 9.

53 Flight Attendants' Association of Australia, Submission 22, p. 11.

54 Ms Anna-Maria Saglimbeni, Private capacity, Proof Committee Hansard, 10 February 2021, p. 7.

55 Ms Darlene Bailey, Private capacity, Proof Committee Hansard, 10 February 2021, p. 3.

56 Ms Edesse Hakko, Private capacity, Proof Committee Hansard, 10 February 2021, p. 6.

3.47 On 25 August 2020, Qantas revealed plans to outsource 2500 ground handling positions at major Australian airports, including Sydney and Melbourne, as well as at larger regional airports.57 3.48 Mr Andrew David, Chief Executive Officer, Qantas Domestic and International, stated that the decision was terrible but necessary in light of the COVID-19 crisis which had seen the airline hand down a $1.9 billion annual loss for the 2019-20 financial year.58 3.49 Despite this, a number of submitters criticised Qantas' decision. The TWU noted that although Qantas was given a 'huge amount of public support financially through JobKeeper and other financial aids', it had outsourced its 'entire ground operation in a direct attack on collectivised workers, to push out the union and engage labour-hire workers on lower wages and conditions'.59 The TWU argued that this decision 'will have the effect of further eroding wages and conditions across ground handling'.60 3.50 Similarly, Mr Harris stated that outsourcing leads to 'a very toxic culture in workplaces' due to different people performing the same jobs but being paid different wages and entitled to different conditions.61 He argued that this 'is creating that disparity in incomes',62 while the ASU stated that '[c]ontracting out and competitive tendering have consistently shown to be associated with reductions in terms and conditions of employment and reductions in numbers of employees'.63 3.51 In contrast, the Australian Aviation Ground Handling Industry Alliance (AAGHIA) claimed that outsourcing of airline ground handling can achieve many benefits, including providing competition, driving innovation and improving efficiency. However, in the short term it brings significant extra

57 Elysse Morgan and David Chau, 'Qantas plans to cut another 2,500 ground crew jobs, on top of 6,000 existing redundancies', ABC News, 25 August 2020, https://www.abc.net.au/news/2020-08- 25/qantas-plans-to-cut-another-2500-ground-crew-jobs/12593454#:~:text=The%20plans%20will% 20likely%20cut,smaller%20airports%20around%20the%20country (accessed 24 February 2021).

58 Patrick Hatch, 'Qantas set to cut another 2400 jobs by outsourcing ground handling', The Sydney Morning Herald, 25 August 2020, https://www.smh.com.au/business/companies/qantas-set-to-cut- another-2400-jobs-by-outsourcing-ground-handling-20200825-p55p3l.html (accessed 24 February 2021).

59 Transport Workers' Union, Submission 23, p. 19.

60 Transport Workers' Union, Submission 23, p. 9.

61 Mr Nicholas Harris, Delegate, Australian Council of Trade Unions, Proof Committee Hansard, 29 January 2021, p. 23.

62 Mr Nicholas Harris, Delegate, Australian Council of Trade Unions, Proof Committee Hansard, 29 January 2021, p. 23.

63 Australian Services Union, Submission 19, p. 9.

costs in staff training and reaccreditation, along with major capital investment. It submitted that as a result: There is now significant pressure on ground handlers – and their workforces, most of whom have not worked since March – to support the potentially dramatic and imminent rebound in domestic travel as state borders open.64 3.52 On 9 December 2020, the TWU filed a case in the Federal Court seeking to overturn Qantas' decision to outsource its ground handling workforce on the basis that it was unlawful under the Fair Work Act 2009 (Cth). The case is due to be heard in April 2021.65 As noted in Chapter 2, Qantas is also engaged in ligation over its alleged misuse of JobKeeper.66 3.53 Mr Michael Kaine, National Secretary, TWU, informed the committee of a third lawsuit against the airline due to its refusal to pay sick leave to stood down employees. The circumstances of Mr Peter Seymour, a former Qantas employee who was refused paid sick leave following the introduction of JobKeeper despite his 31 years of service, were discussed in the previous chapter. The TWU, Electrical Trades Union, Australian Workers Union and Australian Manufacturing Workers Union have sought leave to appeal to the High Court of Australia.67 Mr Kaine remarked that: Qantas has spent its money trying to push into other areas of aviation, trying to smash other aviation companies and fighting its workers in the courts, and the federal government's processes and lack of plan has allowed them to do that.68

Impact on regional employment 3.54 Many submitters also emphasised the ramifications of public health measures on rural and remote communities dependent on air travel. Issues raised

64 Australian Aviation Ground Handling Industry Alliance, Submission 24, [p. 3].

65 Sarah Danckert, '"Appalling": Qantas steels for union fight after outsourcing 2000 jobs', Sydney Morning Herald, 21 January 2021, https://www.smh.com.au/business/companies/appalling-qantas- steels-for-union-fight-after-outsourcing-2-000-jobs-20210121-p56vyo.html#:~:text=Around%2013% 2C500%20Qantas%20staff%20have,not%20be%20heard%20until%20April (accessed 12 February 2021).

66 Australian Services Union, 'ASU takes Qantas all the way to the High Court over JobKeeper wage theft', Media Statement, 13 January 2021; Transport Workers' Union, 'Unions to take Qantas to High Court over JobKeeper wage theft', Press Release, 13 January 2021.

67 Transport Workers' Union, Unions take Qantas to the High Court over sick leave, 23 December 2020, https://www.twu.com.au/press/unions-take-qantas-to-high-court-over-sick-leave/ (accessed 11 March 2021).

68 Mr Michael Kaine, National Secretary, Transport Workers' Union, Proof Committee Hansard, 3 March 2021, p. 49.

included interruptions to supply chains and poorer access to health services, education and employment.69 3.55 The RDAA informed the committee that regional Australia is highly dependent on aviation. It submitted that the consequent negative impacts on rural and remote Australia have been extensive: …not only in relation to industries and businesses in sectors such as agriculture, fishing, mining and tourism, but also on the rural and remote public and private health services which are not only health care providers but also businesses and employers.70 3.56 In particular, the RDAA warned that the restrictions on passenger flights and interruptions to the flow of needed supplies into Australia's rural and remote communities have had a negative effect on the physical and mental health of people living in these communities.71 3.57 Furthermore, the ACTU argued that regional areas are likely to be disproportionately impacted by any reduction in the size or vigour of the aviation sector. It submitted: Regional areas would experience a devastating loss of economic activity and potentially a loss of emergency response capacity. With an unsupported aviation industry, regional communities risk being cut off from health care, education, economic and travel opportunities that the industry provides.72

Tourism 3.58 As noted in Chapter 1, the aviation sector plays an important role in facilitating international tourist arrivals and supporting domestic tourism activity. For example, the McKell Institute estimated that Australia's tourism industry employs 666 000 people, while the Department of Infrastructure submitted that tourism directly contributed around $50 billion to Australia's gross domestic product in 2019-20, or approximately 2.5 per cent.73 3.59 Mr Daniel Gschwind, Chief Executive, Queensland Tourism Industry Council, stated that '[w]e need the aviation pipeline for tourism'.74 Similarly, the AAA

69 See, for example, Rural Doctors Association of Australia, Submission 1, p. 4.

70 Rural Doctors Association of Australia, Submission 1, p. 1.

71 Rural Doctors Association of Australia, Submission 1, p. 4.

72 Australian Council of Trade Unions, Submission 13, p. 13.

73 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 2.

74 Mr Daniel Gschwind, Chief Executive, Queensland Tourism Industry Council, Proof Committee Hansard, 29 January 2021, p. 28.

submitted that '[t]here is no doubt that many key sectors of the economy rely on aviation, particularly inbound tourism'.75 3.60 In addition, the AFAP highlighted tourism as a 'prime example[] of the economic activity and prosperity enabled by Australia's aviation sector'.76 3.61 The COVID-19 pandemic began as Australia's tourism sector was still dealing with the aftermath of one of the worst bushfire seasons on record. Travel restrictions had a large and immediate impact on many Australian businesses and their workers. By the start of April 2020, most international tourists had left Australia, causing tourism exports to significantly reduce.77 3.62 The Department of Infrastructure reported that international passenger travel declined by 98 per cent in October 2020, compared to October 2019.78 EY estimated that, as a result, Australia lost around $61 billion in economic value between March and October 2020, or approximately $250 million per day.79 No material recovery is expected until international travel restrictions are eased.80 3.63 Prior to COVID-19, aviation moved over 100 million domestic and international passengers each year.81 According to Queensland Airports Limited, this included about 8.4 million passengers travelling through the Gold Coast, Townsville, Mount Isa and Longreach airports to various tourist destinations in Queensland. It reported that this number dropped by approximately 80 per cent as a result of public health measures from April to November 2020.82 3.64 Mr Adam Rowe, Executive General Manager, Business Development and Marketing, Queensland Airports Limited, advised that '80 per cent of the visitation to the Gold Coast is from domestic markets' and '[d]epending of

75 Australian Airports Association, Submission 16, p. 3.

76 Australian Federation of Air Pilots, Submission 3, p. 4.

77 Philipp Grozinger and Stephanie Parsons, 'The COVID-19 Outbreak and Australia's Education and Tourism Exports', Reserve Bank of Australia Bulletin, December 2020, p. 40.

78 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 8.

79 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 8.

80 Philipp Grozinger and Stephanie Parsons, 'The COVID-19 Outbreak and Australia's Education and Tourism Exports', Reserve Bank of Australia Bulletin, December 2020, p. 43.

81 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 1.

82 Queensland Airports Limited, Submission 6, p. 4.

course on the seasonal nature of the market, 20 to 30 per cent of a domestic service will have an international traveller component'.83 3.65 Mr Gschwind told the committee that 'a very good portion of the estimated 50,000 tourism businesses that are registered in Queensland… would be in some way impacted by the absence of international visitors'.84 3.66 A number of submitters also highlighted the link between domestic tourism recovery and state border controls. For example, the committee heard that South Australia's three-day lockdown period in November 2020 resulted in visitor cancellations within 48 hours.85 3.67 The Department of Infrastructure noted that the opening of a number of state borders had an immediate positive effect on the aviation and accommodation industries, with more flights being scheduled and accommodation bookings on the rise.86 Similarly, Mr Gschwind noted that 70 per cent of domestic interstate visitors rely on aviation to visit Queensland.87 3.68 The committee heard evidence that domestic tourists have different travelling and spending patterns to those travelling overseas: trips tend to be shorter, lower yield and involve fewer activities.88 Margy Osmond, Chief Executive Officer, Tourism and Transport Forum, stated that: …there is no way that domestic tourism can fill the gap that will be left by inbound international… Essentially your average Chinese visitor to Australia probably spends $8,500 while they're here. Your average Aussie who heads off for a holiday is probably spending about $1,500.89 3.69 A number of submitters argued that the tourism sector requires ongoing financial support due to its dependence on aviation. For example, Mr Scott Connolly, Assistant Secretary, ACTU, stated that 'there is a need for ongoing

83 Mr Adam Rowe, Executive General Manager, Business Development and Marketing, Queensland Airports Limited, Proof Committee Hansard, 29 January 2021, p. 46.

84 Mr Daniel Gschwind, Chief Executive, Queensland Tourism Industry Council, Proof Committee Hansard, 29 January 2021, p. 34.

85 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 8.

86 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 8.

87 Mr Daniel Gschwind, Chief Executive, Queensland Tourism Industry Council, Proof Committee Hansard, 29 January 2021, p. 34.

88 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 8.

89 Department of Infrastructure, Transport, Regional Development and Communications, Submission 20, p. 8.

support for the aviation sector and for the tourism sector that's so closely related to it'.90 3.70 Likewise, Mr Gschwind contended that 'businesses severely impacted by international border closures and domestic disruption must have access to a wage subsidy program post JobKeeper'.91

Regional tourism 3.71 Inquiry participants particularly highlighted the importance of tourism in regional areas. For example, Mr Brine commented that the parts of the tourism sector that are most affected are those that are further from the capital cities, as they rely heavily on the aviation sector to transport domestic and international tourists.92 3.72 The ACTU submitted that 45 per cent of all tourism in Australia is regional tourism, with regional airports acting as transport hubs for passengers and goods.93 It stated: Approximately 15 million passengers pass through regional airports each year in Australia – representing 12% of total air passengers nationally. Tourism brings hundreds of millions of dollars to regional areas each year and supports a plurality of private sector employment in many regional areas. The Australian Airport Association estimates that regional airports alone support the employment of some 4450 people nation-wide – an estimate which does not include the thousands of indirect jobs which would be lost if regional routes were to shut down or see reduced activity levels.94 3.73 Meanwhile, in a report commissioned by the ITF, the McKell Institute found that 91 694 businesses in regional communities heavily reliant on aviation-driven tourism filed for JobKeeper as at August 2020. It argued that this significant uptake of JobKeeper demonstrated the reliance of these communities on the economic activity driven by regional tourism.95 3.74 The Australian Local Government Association commented that '[o]ne of the hardest hit aviation-related sectors are the regional tourism operators'.96

90 Mr Scott Connolly, Assistant Secretary, Australian Council of Trade Unions, Proof Committee Hansard, 29 January 2021, p. 24.

91 Mr Daniel Gschwind, Chief Executive, Queensland Tourism Industry Council, Proof Committee Hansard, 29 January 2021, p. 29.

92 Mr Matthew Brine, First Assistant Secretary, Environment, Industry and Infrastructure Division, Department of the Treasury, Proof Committee Hansard, 4 March 2021, p. 13.

93 Australian Council of Trade Unions, Submission 13, p. 4.

94 Australian Council of Trade Unions, Submission 13, p. 4.

95 International Transport Workers' Federation, Submission 18, pp. 7 and 17.

96 Australian Local Government Association, Submission 1, [p. 2].

3.75 The committee intends to address the impacts of the COVID-19 pandemic response on sectors that rely on aviation more fully in its final report.

Skilled aviation workforce 3.76 The committee received evidence that working in aviation encompasses a wide range of jobs and skill sets, including:  pilots;  cabin crew;  aircraft engineers (mechanical and avionics);  operations;  ground services; and  management, finance and administration.97 3.77 In its 2012 report Australia's regional airports: Facts, myths & challenges, the AAA stated that running an airport requires significant skills, including commercial expertise, airport-specific technical skills, airport safety, security and environmental regulation.98 It noted that training arrangements to acquire the relevant skills are sometimes complex, as aviation skills development is pursued at a number of levels by industry, including through higher education and vocational education and training.99 3.78 Aviation has extremely high standards of procedural compliance and training standards, owing to safety, anti-terrorism and national security needs. Mr Hiranjan Aloysius, Chief Executive Officer, dnata Catering Australia, told the committee that, because of this, 'it takes an incredible amount of time and financial investment to train, accredit and on-board employees'.100 3.79 In addition, the committee heard that the aviation industry is a significant driver of skills acquisition. The ACTU submitted that aviation drives skills acquisition by creating demand for skills in both upstream and downstream industries to service aviation, including government, manufacturing, security, retail, food services, hospitality, engineering, logistics, public safety and tourism. It argued that: It is through this combination of both direct and indirect effects that the aviation sector represent[s] a key driver of vocational skills within the Australian economy. Without this sector driving demand for these

97 Air Transport Action Group, Aviation: Benefits Beyond Borders, 'Developing skills', https://aviationbenefits.org/social-development/developing-skills/ (accessed 23 February 2021).

98 Australian Airports Association, Australia's regional airports: Facts, myths & challenges, November 2012, p. 31.

99 Australian Airports Association, Australia's regional airports. Facts, myths & challenges, November 2012, p. 57.

100 Mr Hiranjan Aloysius, Chief Executive Officer, dnata Catering Australia, Proof Committee Hansard, 3 March 2021, p. 32.

transferable skills the Australian workforce would be significantly less prepared for the future job market than it already is.101

Pilots 3.80 The Civil Aviation Safety Authority is responsible for setting the minimum requirements of flying experience and knowledge standards for pilots and engineers. For a commercial pilot license, this includes 150 flight hours, proficiency checks, a Class 1 medical certificate and completion of theory exams within a two-year period, while an air transport pilot license additionally requires at least 1500 hours' experience and completion of an approved training course in multi-crew cooperation.102 3.81 A significant barrier to entry into the aviation industry is the cost of undertaking relevant pilot training and courses. For example, the Expert Panel on Aviation Skills and Training reported that: [In 2018], a Bachelor of Aviation student will incur a FEE-HELP loan for the flying training of $100,070 (minimum) and an additional HECS-HELP debt of $27,555 (minimum). In addition, there is an upfront cost of equipment/publications, and medical of $4,938 bringing the total to $132,563. If a student elects to undertake a Flight Instructor rating then the fee costs (plus equipment) costs will increase to $145,788. For a double degree student that increases to $154,973.103 3.82 The committee heard evidence that as a result of the downturn pilots are struggling to meet ongoing pilot experience requirements. These include minimum experience (flight hours) and knowledge and period currency standards.104 For example, the AFAP submitted that: Employed pilots have unique safety and performance checks embedded in workplace practices and procedures. Given the predicament of there being significant cuts to flying opportunities, many qualified but stood down pilots face the risk that their skills and qualifications have or will become stale. Furthermore, pilots who are not employed also face the possibility of needing to self-fund such recurrent check arrangements.105 3.83 The committee heard that pilots are a heavily scrutinised workforce and that a new or returning pilot candidate can take many months to be inducted and

101 Australian Council of Trade Unions, Submission 13, p. 6.

102 Civil Aviation Safety Authority, CASR Part 61: Pilot Licensing, October 2014, p. 15.

103 Expert Panel on Aviation Skills and Training, Final Report, 2018, pp. 10-12.

104 Civil Aviation Safety Authority, License structure and types, last modified 29 July 2020, https://www.casa.gov.au/licence-structure-and-types (accessed 16 February 2021). Flight crew are subject to licensing rules contained in Part 61 of the Civil Aviation Safety Regulations 1998. These rules cover what flight crew need to do to obtain and maintain licences, ratings and endorsements and the limitations that apply to exercising their privileges.

105 Australian Federation of Air Pilots, Submission 3, p. 7.

cleared due to regulatory requirements.106 The AFAP explained that 'the longer a pilot is away from active flying duties, the higher the cost and longer the timeline to reactivate them to a 'Job-Ready' status'.107 3.84 Furthermore, if made redundant a pilot is unable to obtain the relevant authorisations under Part 61 of the Civil Aviation Safety Regulations 1988 through their airline.108 3.85 Evidence was provided in relation to the prohibitive costs involved in maintaining a pilot license while not employed as a pilot, including costs associated with medical examinations, licensing and proficiency checks.109 The AFAP argued that this is not only problematic for unemployed pilots, but also for the aviation sector which may face skills shortfalls in the wake of the pandemic.110

Engineers 3.86 In particular, the committee received evidence that engineering skills are critical to the aviation sector. For example, the ACTU submitted that: Science technology engineering and maths skills are essential in underpinning multiple facets of the aviation sector. From the advanced manufacturing and technical supply chains that engineer, build and maintain aircraft, to the IT professionals enabling the operation of airlines and our airport in a complex operating environment, the air safety and regulatory professionals ensuring that the industry meets high levels of operational safety.111 3.87 Australia has two primary aircraft engineer trade qualifications. An aircraft maintenance engineer (AME) maintains and services aircraft under the supervision of a licenced aircraft maintenance engineer (LAME). LAMEs work at a more senior level of aircraft maintenance engineering.112 A Certificate IV is required to attain an AME qualification. However, a licensed AME must also hold an Aircraft Engineering Licence issued under Part 66 of the Civil Aviation Safety Regulations 1998.113

106 Australian Federation of Air Pilots, Submission 3, p. 9.

107 Australian Federation of Air Pilots, Submission 3, p. 9.

108 Civil Aviation Safety Authority, License structure and types, last modified 29 July 2020, https://www.casa.gov.au/licence-structure-and-types (accessed 16 February 2021).

109 Australian Federation of Air Pilots, Submission 3, p. 10.

110 Australian Federation of Air Pilots, Submission 3, p. 7.

111 Australian Council of Trade Unions, Submission 13, p. 14.

112 Civil Aviation Safety Authority, 2019 Career's Guide: Aircraft maintenance engineer, 2019, p. 8.

113 Expert Panel on Aviation Skills and Training, Final Report, 2018, p. 14.

3.88 To qualify and apply for a licence, an AME must have successfully completed the required units of competency and theory module examinations through a CASA-approved maintenance training organisation for the particular category of licence and meet practical experience requirements.114 Furthermore, AME licences are perpetual, but to keep licences current, AMEs are required to have six months' experience in the field during the previous two years.115 3.89 Mr Purvinas detailed his personal experience of attaining a LAME qualification: 'I started at the age of 16. I got my first licence when I was 30. It took me 150 exams to get the qualifications that I hold to be licensed on four aircraft types'.116

Professional training requirements 3.90 As noted above, the committee received evidence that COVID-19 has impacted the ability of certain aviation workers to continue to meet professional training requirements. As a result, issues have arisen relating to the maintenance of skills and capabilities during the downturn. Submitters noted that due to the long period of negligible flight activity resulting from COVID-19, many aviation workers will need to be retrained and reaccredited to ensure safety standards are maintained for both domestic and international flights.117 3.91 The AAGHIA submitted that, in addition to pilots, personnel requiring recertification include aircraft tow drivers, aircraft load controllers, aircraft movement coordinators, trainers, systems experts, aviation safety and compliance personnel and leaders across the sector. Furthermore, it argued that '[w]ithout these functions, airlines cannot fly'.118 3.92 Mr Glenn Rutherford, Member, Australian Aviation Ground Handling Industry Alliance, informed the committee that due to the long period of negligible flight activity, almost the entire ground handling workforce has needed, or will need, to be retrained and accredited.119 He estimated that this would require a training investment 'in the order of $15,000 per skill'.120

114 Civil Aviation Safety Authority, 2019 Career's Guide: Aircraft maintenance engineer, 2019, p. 3.

115 Civil Aviation Safety Authority, 2019 Career's Guide: Aircraft maintenance engineer, 2019, p. 3.

116 Mr Stephen Purvinas, Federal Secretary, Australian Licensed Aircraft Engineers Association, Proof Committee Hansard, 3 March 2021, p. 59.

117 Australian Aviation Ground Handling Industry Alliance, Submission 24, [p. 7].

118 Australian Aviation Ground Handling Industry Alliance, Submission 24, [pp. 7-8].

119 Mr Glenn Rutherford, Member, Australian Aviation Ground Handling Industry Alliance, Proof Committee Hansard, 3 March 2021, p. 37.

120 Mr Glenn Rutherford, Member, Australian Aviation Ground Handling Industry Alliance, Proof Committee Hansard, 3 March 2021, p. 37.

3.93 The ASU explained that aviation workers are required to 'understand and comply with an extensive set of regulations and requirements to ensure a safe and secure airline environment'. Furthermore, it submitted that each person in a critical front-line aviation occupation must have licenses, certifications, training and experience.121 For members of the ASU, this includes holding an Aviation Security Identification Card, forklift license or being registered as a regulated air cargo agent, as well as completion of formal qualifications, such as in relation to airport operations, management or aircraft movement control.122 3.94 Mr Goodwin pointed out that 'even a security screener requires weeks of training and certification and needs to go through security vetting, so it would take a number of weeks, and potentially months, to have somebody available in a role like that'.123 3.95 Similarly, Mr Rogers commented that '[t]o do the basic job of checking in a passenger you get two weeks training and then you're buddied for two weeks and then you learn the rest of it on the job'. He estimated that it 'could take a good six months to get the skills and the knowledge of every situation you're going to encounter [for check-ins]', plus a further six months for concourse.124 3.96 Mr Damian Pollard, a current Qantas employee, stated that 'Qantas workers go through hundreds if not thousands of hours of training'.125 3.97 Mr Aloysius added that '[r]ight now it is an eight-week process to bring back a new employee or to bring a stood-down employee back to work, retrained, reaccredited and ready for service'.126

The need for ongoing support 3.98 Submitters agreed that 'aviation is essential to Australia's economic recovery'.127 In support of this view, the committee heard evidence that there is a need for ongoing financial support to preserve aviation capacity, foster consumer confidence and sustain aviation workers.128 The following section

121 Australian Services Union, Submission 19, p. 4.

122 Australian Services Union, Submission 19, p. 5.

123 Mr James Goodwin, Chief Executive, Australian Airports Association, Proof Committee Hansard, 29 January 2021, p. 16.

124 Mr Bruce Rogers, Delegate, Australian Services Union and United Services Union, Proof Committee Hansard, 10 February 2021, p. 12.

125 Mr Damian Pollard, Private capacity, Proof Committee Hansard, 3 March 2021, p. 47.

126 Mr Hiranjan Aloysius, Chief Executive Officer, dnata Catering Australia, Proof Committee Hansard, 3 March 2021, p. 32.

127 Flight Attendants' Association of Australia, Submission 22, p. 7.

128 See, for example, Flight Attendants Association of Australia, Submission 22, p. 8.

will address the need for ongoing support, with particular regard to the important role of skilled aviation workers in COVID-19 recovery, before turning to explicitly address the evidence received in relation to 'AviationKeeper'. 3.99 Ms Jayne Hrdlicka stated that without JobKeeper it would take several months for Virgin to 'get stood back up and to get the capacity to support the demand'.129 In particular, she emphasised the importance of the flexibility enabled by JobKeeper: As borders have opened and shut, it has proven invaluable in giving us the flexibility to quickly ramp back up with the skilled workforce to support Australians… and then of course to just as quickly stand down employees when borders close due to outbreaks and keep our highly skilled workforce ready so we are able to respond in weeks and days, not months and years.130 3.100 Ms Hrdlicka contended that '[n]o business can survive these sorts of unplanned extreme demand swings without support, especially an industry that has heavily fixed costs'.131 She argued that without support: …it is impossible for us to stand back up quickly and support the country as it opens up and to take advantage of those moments when we can all be free and are back to normal. Without a way to keep these critical employees connected, it's not financially viable either for us or for them, as they seek to manage their living expenses. The aviation industry risks being materially delayed in its recovery and forced to downsize while demand is significantly depressed and then rehire and retrain when it ramps up, and the implications of that for the economy are going to be significant. The consequences that will have with respect to fares and accessibility will also be felt by people in the regions, and they will be significant.132 3.101 Mr Rutherford stated that without government support, the entire aviation industry will be constrained on how quickly it can recover. He estimated that would be likely to have 'a multibillion-dollar flow-on effect to the entire economy at a time when Australia needs its economy growing'.133

129 Ms Jayne Hrdlicka, Chief Executive Officer and Managing Director, Virgin Australia, Proof Committee Hansard, 29 January 2021, p. 3.

130 Ms Jayne Hrdlicka, Chief Executive Officer and Managing Director, Virgin Australia, Proof Committee Hansard, 29 January 2021, p. 2.

131 Ms Jayne Hrdlicka, Chief Executive Officer and Managing Director, Virgin Australia, Proof Committee Hansard, 29 January 2021, p. 2.

132 Ms Jayne Hrdlicka, Chief Executive Officer and Managing Director, Virgin Australia, Proof Committee Hansard, 29 January 2021, p. 3.

133 Mr Glenn Rutherford, Member, Australian Aviation Ground Handling Industry Alliance, Proof Committee Hansard, 3 March 2021, p. 37.

3.102 Similarly, Ms Teri O'Toole, Federal Secretary, FAAA, highlighted the critical importance of a trained aviation workforce for recovery: Our cabin crew will be instrumental for post-COVID recovery. They will be need to be trained, know their emergency procedures, have their security compliance as per CASA requirements and be ready to get their uniforms on to start at short notice to get the planes back in the air.134 3.103 Mr Gschwind emphasised that '[t]he expertise required to operate and manage airlines, airports and associated support infrastructure cannot be purchased off-the-shelf'. He argued that aviation, and industries dependent on aviation, 'need to be able to hang onto staff and their skills to be able to scale up when the time comes'.135 To this end, Mr Gschwind argued in favour of a wage subsidy program post-JobKeeper for those businesses severely impacted by international border closures and domestic disruption.136 3.104 Ms Edesse Hakko offered an employee perspective. She stated that: The government need to stand up and support the aviation sector and work in all companies because they will need us once planes start flying again. Not only that; they will need the experienced workers.137 3.105 Mr Rogers, a full-time employee with Jetstar, explained that JobKeeper 'makes a world of a difference' for aviation workers.138 He observed that 'all you need is a border closure and it is back to zero, so we need that guarantee of JobKeeper to keep us going, especially for a person who is full-time'.139 3.106 Similarly, Ms Tofete argued that 'we were the first industry to be affected and we are definitely going to be the last one to be back on its feet'.140 3.107 The committee also heard concerns in relation to the sustainability of regional airports. Mr Goodwin explained that prior to COVID-19, regional airports were struggling to meet their operating expenses, with local governments (and

134 Ms Teri O'Toole, Federal Secretary, Flight Attendants Association of Australia, Proof Committee Hansard, 3 March 2021, p. 54.

135 Mr Daniel Gschwind, Chief Executive, Queensland Tourism Industry Council, Proof Committee Hansard, 29 January 2021, p. 29.

136 Mr Daniel Gschwind, Chief Executive, Queensland Tourism Industry Council, Proof Committee Hansard, 29 January 2021, p. 29.

137 Ms Edesse Hakko, Private capacity, Proof Committee Hansard, 10 February 2021, p. 6.

138 Mr Bruce Rogers, Member, Australian Services Union NSW & ACT, Proof Committee Hansard, 10 February 2021, p. 3.

139 Mr Bruce Rogers, Member, Australian Services Union NSW & ACT, Proof Committee Hansard, 10 February 2021, p. 3.

140 Ms Nerisa Tofete, Delegate, Victorian Private Sector Branch, Australian Services Union, Proof Committee Hansard, 3 March 2021, p. 44.

regional taxpayers) absorbing this cost.141 He called for the Australian Government to extend its support for the aviation sector, including a six-month extension to JobKeeper.142 3.108 The ACTU contended that failure to support the aviation sector would have a number of serious short and long-term consequences, particularly in regional areas. It submitted that: Many regional areas, without industry assistance, will therefore likely face a reduced connection to the aviation industry and the loss of significant benefits to the economy and the consumer that this connection brings, not to mention the employment and direct economic activity.143 3.109 Moreover, submitters argued that an ongoing wage subsidy will ensure that airports can play their critical role in Australia's economic recovery by securing employment for not only the aviation industry, but also for aviation-dependent sectors such as tourism.144

Risks of skill loss 3.110 As noted above, the aviation workforce is comprised of individuals with extensive knowledge, skills and experience across a range of areas, including engineering, safety, operations and ground handling. Even before COVID-19 hit, Australia faced an aviation skills shortage.145 Meanwhile, the impacts of the pandemic have forced airlines to make drastic cuts to workforces. As a result, many skilled workers have left the sector. In this section, the committee considers evidence received regarding the need to prevent further skill loss. 3.111 A number of submitters reflected on the importance of aviation skills for recovery. For example, Ms Christine Dacey, Deputy Secretary, Transport Group, Department of Infrastructure, Transport, Regional Development and Communications, noted that 'in order to have any restart happen in any sensible, methodical way you need to have the right number of people with currency and [] skills'.146 Similarly, Mr Brine commented that 'there's a need to

141 Mr James Goodwin, Chief Executive, Australian Airports Association, Proof Committee Hansard, 29 January 2021, p. 17.

142 Mr James Goodwin, Chief Executive, Australian Airports Association, Proof Committee Hansard, 29 January 2021, p. 17.

143 Australian Council of Trade Unions, Submission 13, p. 13.

144 See, for example, Adelaide Airport Limited and Parafield Airport Limited, Submission 7, [p. 2].

145 Expert Panel on Aviation Skills and Training, Final Report, 2018.

146 Ms Christine Dacey, Deputy Secretary, Transport Group, Department of Infrastructure, Transport, Regional Development and Communications, Proof Committee Hansard, 4 March 2021, p. 6.

maintain a critical mass of those skills if we're to see the aviation sector recover quickly'.147 3.112 Mr Rowe highlighted that the loss of critical technical and safety skills could be a key hindrance to recovery.148 In addition, Mr McDine commented that '[f]urther loss will cripple the aviation sector and slow the economic recovery and slow the recovery of air travel, freight and the export industries that it supports'.149 3.113 Ms Gaske noted that '[r]ecovery is on the horizon, and we need these workers if that recovery is to be as successful as we all want it to be'.150 3.114 Some submitters highlighted the time involved in training new workers. For example, Mr Aloysius stated '[dnata] cannot afford to lose skills and talent. When we do, we certainly cannot bring replacements in the next day, the next week or the next month like many other less regulated industries can'.151 3.115 On this point, the AIPA added that: For highly qualified licenced personnel, the gaining of essential knowledge and experience creates a lead time for supply that will substantially lag the demand if we are forced to respond to a whole cadre of those personnel being permanently lost to the industry.152 3.116 Professionals Australia emphasised that '[c]ritical skills in engineering, IT and STEM broadly are at risk of being lost from the industry due to stand downs, restructures, and redundancies'.153 For example, the ALAEA explained that 600 of its members, comprised of LAMEs employed in regular public transport and regional airlines, had left the sector during the COVID-19 pandemic.154 It argued that without JobKeeper many more would be forced to seek employment elsewhere:

147 Mr Matthew Brine, First Assistant Secretary, Environment, Industry and Infrastructure Division, Department of the Treasury, Proof Committee Hansard, 4 March 2021, p. 15.

148 Mr Adam Rowe, Executive General Manager, Business Development and Marketing, Queensland Airports Limited, Proof Committee Hansard, 29 January 2021, p. 44.

149 Mr Scott McDine, Head of ITF Sydney, International Transport Workers' Federation, Proof Committee Hansard, 3 March 2021, p. 2.

150 Ms Emeline Gaske, Assistant National Secretary, Australian Services Union, Proof Committee Hansard, 3 March 2021, p. 43.

151 Mr Hiranjan Aloysius, Chief Executive Officer, dnata Catering Australia, Proof Committee Hansard, 3 March 2021, p. 32.

152 Australian and International Pilots Association, Submission 14, p. 4.

153 Professionals Australia, Submission 4, p. 3.

154 Australian Licensed Aircraft Engineers Association, Submission 32, [pp. 2-3].

Many of our members do not want to leave the industry. Some of them are left with little choice. They cannot pay their bills or mortgages whilst employers keep them on hold awaiting a day's work.155 3.117 Mr Bruce Stokes, Member, AAGHIA, advised the committee that it would take the ground handling sector years to rebuild key skills: From the point of hiring green staff to enter the industry, some of the senior roles or some of the specialist roles—such as, loading the aircraft or performing load control functions—really are a factor of years. You have to start on the tarmac, so to speak, and there are costs associated with that. Then you have to progress to being a driver, then to being a load operator and then to being a load controller. That really is years.156 3.118 The committee heard strong concerns that without support there would likely be major employment impacts, as well as a significant reduction in the industry's capacity to act as a driver for skills acquisition.157 The ACTU argued that this would result in 'a less effective aviation workforce and an overall less skilled Australian workforce'.158 3.119 Mr Stephen Byron, Managing Director, Canberra Airport, expressed concern that if JobKeeper were to conclude on 28 March 2021 this 'would lead to the airlines having to take tougher decisions to reduce their workforce further, which would then in turn reduce their capacity to ramp up if and when demand returns…'.159 3.120 Submitters also raised concern that the loss of skilled aviation workers would have significant safety implications. Qantas was rated the safest airline in the world by AirlineRatings.com, the world's only safety, product and COVID-19 rating website.160 Ms Courtenay attributed this status to the 'vast experience of the staff' and contended that Qantas could not afford to lose its skilled workers.161 Likewise, Mr Don Dixon, a Qantas employee with 20 years' experience, confirmed that the loss of experienced aviation workers would

155 Australian Licensed Aircraft Engineers Association, Submission 32, [pp. 2-3].

156 Mr Bruce Stokes, Member, Australian Aviation Ground Handling Industry Alliance, Proof Committee Hansard, 3 March 2021, p. 38.

157 Australian Council of Trade Unions, Submission 13, p. 13.

158 Australian Council of Trade Unions, Submission 13, p. 14.

159 Mr Stephen Byron, Managing Director, Canberra Airport, Proof Committee Hansard, 3 March 2021, p. 66.

160 Christine Forbes Smith, 'World's safest airlines; Qantas tops once again as safest airline for 2021', AirlineRatings, 4 January 2021, https://www.airlineratings.com/news/worlds-safest-airlines-qantas- tops-safest-airline-2021/#:~:text=Qantas%20has%20been%20put%20at,from%20the%20385%20it %20monitors (accessed 23 February 2021).

161 Ms Tina Courtenay, Member, Australian Services Union NSW & ACT, Proof Committee Hansard, 10 February 2021, p. 2.

lead to a decrease in safety,162 while Ms Hakko stated that airlines will need the experienced workers once travel restrictions are lifted.163 3.121 Likewise, Captain Louise Pole, President, AFAP, noted that the organisation is 'in a position where we are potentially going to lose huge amounts of experience, which will tell on our safety record in the future, after the pandemic moves on'.164 3.122 The committee received evidence that with reduced flying activity and an uncertain rate of recovery, many aviation workers had sought alternative employment or early retirement.165 For example, the AIPA noted that '[f]or many, the rate of recovery will force a choice between the uncertainty of resuming their aviation careers and the apparent security of alternative employment'.166 It claimed that the loss of knowledge presents significant challenges: if the supply of skilled personnel is substantially reduced, the industry may be unable to meet demand when it increases and there is a notable time-lag in equipping new staff with the appropriate degree of skill.167 3.123 The AIPA argued that even for aviation professionals who return to the industry, they will require refresher training that may exceed the capacity of existing training systems. To address these concerns, it concluded that aviation staff require targeted support in addition to JobKeeper.168 In particular, it submitted that '[s]upport for qualified pilots stood down due to the COVID-19 induced market collapse is critical'.169 Additionally, the AIPA submitted that 'stood down maintenance personnel, cabin crew supervisors, operations controllers, dispatchers an airport safety managers need similar support so that we do not bleed future capacity due to financial distress'.170 3.124 Prior to COVID-19, the shortage of skilled personnel in the aviation sector was a global problem. Mr Gschwind highlighted that due to COVID-19 '[s]taff and

162 Mr Don Dixon, Private capacity, Proof Committee Hansard, 10 February 2021, p. 5.

163 Ms Edesse Hakko, Private capacity, Proof Committee Hansard, 10 February 2021, p. 6.

164 Captain Louise Pole, President, Australian Federation of Air Pilots, Proof Committee Hansard, 28 January 2021, p. 5.

165 Australian and International Pilots Association, Submission 14, Attachment 1 (Australian and International Pilots Association, AIPA Responses to the Future of Australia's Aviation Sector Issues Paper 2020), p. 10.

166 Australian and International Pilots Association, Submission 14, p. 4.

167 Australian and International Pilots Association, Submission 14, p. 4.

168 Australian and International Pilots Association, Submission 14, Attachment 1 (Australian and International Pilots Association, AIPA Responses to the Future of Australia's Aviation Sector Issues Paper 2020), p. 10.

169 Australian and International Pilots Association, Submission 14, p. 4.

170 Australian and International Pilots Association, Submission 14, p. 8.

skills shortages are already emerging as our next significant challenge' in Australian aviation.171 3.125 The committee heard that competition for skilled workers may be a key challenge for the aviation sector. Mr Connolly stated that: There will be serious compromises on safety in the sector as skilled workers leave to find other work, regulators will be forced to manage with fewer staff and lower funding, and companies, either by choice or no choice, will cut corners to remain profitable.172 3.126 Mr Kelly noted that 'STEM skills, once lost, are not easy to replace'.173 Likewise, Mr Goodwin stated that in the absence of an ongoing wage subsidy '[t]here's a real danger that we'll lose a skilled workforce and the capability to recover'.174 3.127 In addition, submitters also highlighted the age profile of the aviation workforce. For example, Mr Dixon advised that the average age 53,175 while Ms Gaske and Mr Kaine informed the committee that 'the overwhelming majority of employees are over 35'.176 Correspondingly, Mr Purvinas advised that the average age of ALAEA members is 49.9.177 3.128 The loss of skills, experience and competency as a result of COVID-19 related redundancies and stand downs has arguably been exacerbated by the decision of Qantas to outsource 2500 ground handling roles across 10 airports in the middle of the pandemic. The majority of these roles were not stood down and remain critical to the ongoing operation and recovery of the aviation sector. 3.129 The committee heard from highly experienced Qantas workers who will, or have, lost their jobs as a result of the outsourcing, and who upon re-applying for their roles with the companies which were now providing those services, were rejected. Mr Sean Toohey, a former baggage handler for Qantas Ground Services, said: We have a skilled workforce that want to continue in this industry, in aviation. They’re willing to step across to Swissport at lower pay rates, but

171 Mr Daniel Gschwind, Chief Executive, Queensland Tourism Industry Council, Proof Committee Hansard, 29 January 2021, p. 29.

172 Mr Scott Connolly, Assistant Secretary, Australian Council of Trade Unions, Proof Committee Hansard, 29 January 2021, p. 22.

173 Mr Matthew Kelly, President, Australian Government Group, Professionals Australia, Proof Committee Hansard, 3 March 2021, p. 52.

174 Mr James Goodwin, Chief Executive, Australian Airports Association, Proof Committee Hansard, 29 January 2021, p. 16.

175 Mr Don Dixon, Private capacity, Proof Committee Hansard, 10 February 2021, pp. 9-10.

176 Mr Don Dixon, Private capacity, Proof Committee Hansard, 10 February 2021, p. 9.

177 Mr Stephen Purvinas, Federal Secretary, Australian Licensed Aircraft Engineers Association, Proof Committee Hansard, 3 March 2021, p. 58.

we’re not being taken on…These guys have 30 years' experience, and they can’t get it. Now we’re looking at people who are coming in, and within two weeks, are being asked to push back a plane, which Peter [Seymour] was doing for 31 years… Is that safe?178 3.130 Mr Pollard, who has worked as a Qantas baggage handler for 12 years, similarly expressed concern about the implications of the outsourcing, for the wellbeing of the workers and the impact on safety. Mr Pollard stated that: I remember when the safety of the new operator was questioned and a spokesman from Qantas quoted that legacy workers actually had a higher rate of reportable incidents…I would put it back to them that this is because we have a safety culture instilled in us, so we will report everything. Qantas also has a just culture. I shouldn’t make assumptions, but I believe that maybe isn’t the case in some of the third-party operators.179

AviationKeeper 3.131 As noted in Chapter 2, the majority of submitters expressed support for JobKeeper. A large number of these submitters argued in favour of 'AviationKeeper'—a targeted industry assistance scheme intended 'to apply to all aviation workers right up until the industry recovers'.180 Submitters, such as Mr McDine, contended that AviationKeeper is 'essential' as the sector 'was hit like no other during the pandemic and, while most industries are transitioning, airlines continue to operate under capacity and in an uncertain policy environment'.181 3.132 Mr Gschwind advised the committee that skill losses would '[w]ithout a doubt' be exacerbated if JobKeeper ended in March 2021. He continued: I'm pretty sure that there will be jobs lost or put on hold. But the risk is that people, if they are temporarily laid off, may drift away geographically— literally drift off—or certainly in terms of industries they work in. That's already happening. We try to stem the tide, if you like, where it's possible. JobKeeper will be an important tool, or some payments of that sort, for stemming that tide.182

178 Mr Sean Toohey, Private capacity, Proof Committee Hansard, 3 March 2021, p. 48.

179 Mr Damian Pollard, Private capacity, Proof Committee Hansard, 3 March 2021, p. 47.

180 Transport Workers' Union, Submission 23, p. 39. See also Flight Attendants' Association of Australia, Submission 22, p. 4.

181 Mr Scott McDine, Head of ITF Sydney, International Transport Workers' Federation, Proof Committee Hansard, 3 March 2021, p. 2.

182 Mr Daniel Gschwind, Chief Executive, Queensland Tourism Industry Council, Proof Committee Hansard, 29 January 2021, p. 35.

3.133 Qantas expressed the view that 'it is vital that the government extend and enhance all existing aviation support programs, at least until international travel resumes'.183 3.134 The FAAA argued that the only way the Australian Government can meet its long-term objectives is to ensure continued support for the industry beyond March 2021 in the form of AviationKeeper.184 It argued that AviationKeeper would 'enable our industry to be ready to keep the economy moving again once flying picks up'.185 3.135 Mr Aloysius contended that AviationKeeper 'would ensure organisations like [dnata] are geared for the resumption of travel by allowing us to retain skilled talent by staying connected to them'.186 He stressed that support for the aviation sector should include air-services providers.187 3.136 Ms Gaske stated that if any further skilled workers were lost, 'we won't have the workers ready to go to build the industry through the recovery'. She also emphasised the multiplicative factor of aviation. Ms Gaske argued that: We need JobKeeper extended so we can keep the industry going not just for these workers themselves; the whole industry ultimately means jobs on the ground all over Australia for regional communities and the tourism industry. That's income going into local communities to boost the local economies.188 3.137 The ASU relayed the feedback from its members that the reduced JobKeeper amount is not sufficient as a sole source of income for affected aviation workers. Instead, it recommended a rate of $1500 per fortnight.189 3.138 As discussed in Chapter 2, many individual submitters requested JobKeeper be extended beyond March 2021.190 Ms Saglimbeni said: It is important that the government does more to support the aviation workers, because the aviation industry has been and continues to be severely impacted… Us aviation workers are hardworking, experienced

183 Mr Andrew Parker, Group Executive, Government, Industry, International and Sustainability, Qantas Airways Ltd, Proof Committee Hansard, 3 March 2021, p. 9.

184 Flight Attendants' Association of Australia, Submission 22, p. 7.

185 Flight Attendants' Association of Australia, Submission 22, p. 12.

186 Mr Hiranjan Aloysius, Chief Executive Officer, dnata Catering Australia, Proof Committee Hansard, 3 March 2021, p. 32.

187 Mr Hiranjan Aloysius, Chief Executive Officer, dnata Catering Australia, Proof Committee Hansard, 3 March 2021, p. 32.

188 Ms Emeline Gaske, Assistant National Secretary, Australian Services Union, Proof Committee Hansard, 3 March 2021, p. 42.

189 Australian Services Union, Submission 19, p. 6.

190 See, for example, Mr Marcus and Mrs Diane De Battista, Submission 30, [p. 2].

and dedicated to our jobs. JobKeeper needs to be extended so we can continue to support our families and be ready to go back to work, at short notice, as the industry recovers.191 3.139 Ms Saglimbeni added that 'if JobKeeper is not extended it will mean I will be in financial difficulty and I will not be able to support my family'.192 3.140 Ms O'Toole contended that the absence of an ongoing wage subsidy for aviation workers 'will force cabin crew to find permanent positions outside the industry'.193 She stated that '[t]his loss will take years to recover from'.194 3.141 In addition, many submitters emphasised the need to extend AviationKeeper to all aviation workers. For example, the ASU argued that AviationKeeper is needed 'to ensure that all aviation workers receive financial support and remain employed until the industry recovers' and must include all aviation workers, regardless of ownership structures.195 3.142 Ms Marian Harris explained that: We need 'AviationKeeper' because in the example of dnata and Cabin Services Australia, because we're foreign owned, you gave us one payment and you took it off. We cannot survive on what you're giving us now. We need some sort of stimulus package.196 3.143 The TWU argued for AviationKeeper to come into effect to support aviation workers after the planned JobKeeper cut-off date of 28 March 2021. It shared the view of other submitters that AviationKeeper would address the financial hardship faced by stood down aviation workers excluded from JobKeeper and support recovery efforts.197 3.144 On 22 January 2021, the TWU, ASU and others joined companies across the industry such as Virgin, dnata, Menzies Aviation, Gate Gourmet and Swissport to urge the Prime Minister implement AviationKeeper. The letter argued that this would ensure that the aviation industry can sustain the lasting impact of the pandemic, while maintaining and supporting its skilled and highly trained workforce.198 It was proposed that this scheme:

191 Ms Anna-Maria Saglimbeni, Private capacity, Proof Committee Hansard, 10 February 2021, p. 7.

192 Ms Anna-Maria Saglimbeni, Private capacity, Proof Committee Hansard, 10 February 2021, p. 7.

193 Ms Teri O'Toole, Federal Secretary, Flight Attendants' Association of Australia, Proof Committee Hansard, 3 March 2021, p. 54.

194 Ms Teri O'Toole, Federal Secretary, Flight Attendants' Association of Australia, Proof Committee Hansard, 3 March 2021, p. 54.

195 Australian Services Union, Submission 19, p. 6.

196 Ms Marian Harris, Private capacity, Proof Committee Hansard, 10 February 2021, p. 7.

197 Transport Workers Union, Submission 23, p. 40.

198 Signatories included the Transport Workers' Union, Australian Services Union, Electrical Trades Union, Australian Manufacturing Workers' Union, VIPA, Australian Licensed Aircraft Engineers

 be extended to all aviation workers;  extend beyond March 2021; and  be phased out as domestic and international borders are phased open and confidence in aviation returns and flying returns to normal.199 3.145 In addition to these requirements, Ms Gaske argued that any future wage subsidy payments made to businesses must 'be tied to ensuring that the workforce is supported, not the executives and the shareholders'.200 3.146 Mr Kaine expressed similar concerns. He advised that 'the government should have required companies to keep workers connected with their employer, with themselves, and not allow them to do whatever they wanted'.201 3.147 Ms Sally Taylor, Industrial Officer, FAAA, recommended that 'if a package is to continue, there be strict conditions on the company's ability to manipulate the system to the disadvantage of employees'.202 3.148 Likewise, the AIPA noted that 'no small number of employers and institutions game the system to maximise cash flow and fee-syphoning rather than maximising efficient training and capacity maintenance'. Consequently, it argued that financial support needs to be provided directly to individual workers and, for pilots, tied to demonstrating a level of continuing competence.203

Committee view 3.149 The devastating impact of COVID-19 on the aviation sector—which has been running at between 5 and 10 per cent of normal market capacity since April 2020—cannot be underestimated. It is apparent that COVID-19 has exacerbated underlying issues within the sector, including job security, deskilling and outsourcing in crucial safety and regulatory roles. Furthermore, it is clear that it will take airlines longer to bounce back than other parts of the economy, and it is unlikely that people will resume interstate and international travel at the pre-COVID rates for some time. Given these challenges, the

Association, Flight Attendants' Association of Australian, Australian Workers' Union, Australian Federation of Air Pilots, Virgin Australia, Menzies Aviation, dnata, Gate Gourmet and Swissport.

199 United Services Union, 'Aviation workers & employers send fresh appeal for "AviationKeeper"', Airline News, 22 January 2021, https://usu.org.au/aviation-workers-employers-send-fresh-appeal- for-aviationkeeper/ (accessed 16 February 2021).

200 Ms Emeline Gaske, Assistant National Secretary, Australian Services Union, Proof Committee Hansard, 3 March 2021, p. 50.

201 Mr Michael Kaine, National Secretary, Transport Workers' Union, Proof Committee Hansard, 3 March 2021, p. 49.

202 Ms Sally Taylor, Industrial Officer, Flight Attendants Association of Australia, Proof Committee Hansard, 3 March 2021, p. 55.

203 Australian and International Pilots Association, Submission 14, p. 4.

committee would like to acknowledge the resilience and efforts of aviation businesses and workers over the past year. 3.150 The evidence discussed throughout this interim report clearly indicates that aviation is key to Australia's prosperity and economic recovery as the country emerges from the health and economic effects of COVID-19. As a vast and decentralised country, economic recovery cannot occur in Australia without a robust and viable aviation industry. As pointed out at the beginning of this chapter, the pandemic has had a marked impact on the aviation sector and, in particular, its workers. With uncertain economic conditions on the horizon, it is critical that the Australian Government provide adequate support to sustain the highly-skilled aviation workforce. 3.151 Moreover, the tourism industry is highly dependent on air transport. With Australia's aviation sector directly employing over 90 000 employees, and also supporting the employment of 666 000 people in the tourism industry, there are many jobs and livelihoods at stake. 3.152 The committee is deeply concerned that due to substantial redundancies and stand downs at Australian airports during the pandemic, there has been a significant loss of competency, skills and experience in airport operations. This loss of skill and experience has significant safety implications for workers, customers and the Australian economy at large. Submitters also mentioned that without the support of an ongoing wage subsidy current instability in the aviation sector, combined with the fundamental changes in the nature of work and loss of income, may result in further aviation workers leaving the sector. 3.153 The committee notes that the significant loss of skills and experience in the aviation sector has been exacerbated by Qantas' decision to outsource 2500 ground handling roles. There have also been substantial concerns raised about the implications for worker and passenger safety as a result of the outsourcing. 3.154 Importantly, throughout this inquiry, the committee heard testimony from aviation workers that clearly exposes deficiencies in the current financial support scheme, JobKeeper. The evidence discussed in this chapter reinforces the findings of Chapter 2 of this interim report: namely, that JobKeeper does not, and has not, provided adequate financial assistance to aviation workers. 3.155 The committee is of the view that if the Australian Government wishes to preserve critical aviation capacity, they must introduce a targeted wage subsidy for all aviation workers as JobKeeper is wound up. To this end, an extension to JobKeeper beyond 28 March 2021 paid directly to all aviation workers should be introduced as soon as possible to ensure the Australia's aviation sector is ready to lead economic recovery once travel restrictions are lifted.

Chapter 4 Initial committee view on the aviation support package

Committee view 4.1 The committee notes the Australian Government's announcement of a $1.2 billion support package for the aviation and tourism sectors on Thursday, 11 March 2021.1 While the committee has not yet had the opportunity to scrutinise the impact of the package in-detail, it notes the following initial reactions. 4.2 The package includes a new Tourism Aviation Network Support (TANS) program, which it is claimed will subsidise 800 000 reduced-cost airline tickets for consumers on select routes. 4.3 It also includes a $200 million new International Aviation Support (IAS) package for the Qantas Group (Qantas) and Virgin Australia (Virgin), which is intended to maintain a core Australian international aviation capability, however the committee notes it is not directly tied to maintaining jobs. 4.4 The package includes a new Aviation Services Accreditation Support Program, which will provide funding over six months for mandatory training, certification and accreditation, and a Domestic Airports Security Costs Support program to provide funding to eligible domestic airports to meet security screening costs. It remains to be seen how these programs will be administered, and which workers and airports will be eligible for the scheme. 4.5 The package also extends the Domestic Aviation Network Support, Regional Airline Networks Support, International Freight Assistance Mechanism and 50 per cent waiver of domestic air services charges for regular public transport and aeromedical flights programs to 30 September 2021. 4.6 The committee notes the selective handpicking of eligible routes under the TANS program has attracted substantial criticism from a broad range of stakeholders, including:  New South Wales (NSW), Victoria and Queensland state governments;2

1 The Hon Josh Frydenberg, Treasurer, 'Tourism and aviation's flight path to recovery', Media Release, 11 March 2021.

2 Charlie Moore, 'Gladys Berejiklian blasts Scomo's half-price flights plan for favouring Queensland even though tourism pain there was "self-inflicted" by Annastacia Palaszczuk', Daily Mail Australia, 12 March 2021, https://www.dailymail.co.uk/news/article-9352733/Gladys-Berejiklian- blasts-Scomos-half-price-flights-plan-roasts-Annastacia-Palaszczuk.html (accessed 16 March 2021); the Hon Annastacia Palaszczuk, Queensland Premier and Minister for Trade, and the Hon Stirling Hinchliffe, Minister for Tourism Industry Development and Innovation and Minister for Sport, 61

 the mayors of Hobart, Dubbo, Wagga Wagga, Mildura and Albury;3  Rex Airlines;  Australia's oldest bus company, Greyhound;4  Australian Chamber of Commerce and Industry;5  Australian Tourism Industry Council;6  Queensland Tourism Industry Council;  Victorian Chamber of Commerce and Industry;7 and  NSW Tourism Industry Council.8 4.7 The committee notes the absence of a JobKeeper, or 'AviationKeeper'-style program which would provide direct financial support to impacted workers across the aviation and tourism sectors, has also attracted substantial criticism, including from:  Queensland Government;9  Tourism Accommodation Australia;

'"It's not too late" – PM urged to extend JobKeeper to save tourism jobs', Media Release, 15 March 2021.

3 Mirage News, 'Mayors push for Hobart to be added to discount airfare scheme', Mirage News, 12 March 2021, https://www.miragenews.com/mayors-push-for-hobart-to-be-added-to-discount- 527504/ (accessed 15 March 2021); ABC News, 'Regional centres, tourism operators slam the government's half-price flight package', ABC News, 12 March 2021, https://www.abc.net.au/news/2021-03-12/regional-centres,-tourism-operators-slam-half-price-fligh ts-deal/13241068?utm_source=abc_news_web&utm_medium=content_shared&utm_content=link& utm_campaign=abc_news_web (accessed 15 March 2021).

4 The Australian, 'Tourism bosses hit out at rescue package', The Australian, 12 March 2021, https://www.theaustralian.com.au/business/tourism-bosses-say-more-help-needed-to-stave-off- disaster/news-story/805d38073638cd7ab968bc06c691562b (accessed 15 March 2021).

5 Australian Associated Press, 'Not all happy with JobKeeper substitute', Business News, 11 March 2021, https://www.businessnews.com.au/article/Not-all-happy-with-JobKeeper- substitute (accessed 15 March 2021).

6 Patrick Hatch, 'Half-price airline tickets not enough to save jobs, tourism groups say', The Sydney Morning Herald, 11 March 2021, https://www.smh.com.au/business/companies/half-price-airline- tickets-not-enough-to-save-jobs-tourism-groups-say-20210311-p579qd.html (accessed 15 March 2021).

7 Gay Alcorn, 'More must be done to help the ailing tourism sector', The Age, 12 March 2021, https://www.theage.com.au/politics/federal/more-must-be-done-to-help-the-ailing-tourism-sector- 20210312-p57a3o.html (accessed 15 March 2021).

8 The Daily Telegraph, 'Half price airfares on offer in government tourism support package', The Daily Telegraph, 10 March 2021, https://www.dailytelegraph.com.au/news/nsw/half-price-airfares- on-offer-in-governments-tourism-support-package/news-story/7120453cd5c698ead0b297c866663a 20 (accessed 15 March 2021).

9 The Hon Annastacia Palaszczuk, Queensland Premier and Minister for Trade, and the Hon Stirling Hinchliffe, Minister for Tourism Industry Development and Innovation and Minister for Sport, '"It's not too late" – PM urged to extend JobKeeper to save tourism jobs', Media Release, 15 March 2021.

 Accommodation Association of Australia;10  Tourism & Transport Forum;11  Heinemann Australia;  Australian Retailers Association;12  Flight Centre;  Accor Hotels;13  Australian Council of Trade Unions;14  Transport Workers Union;  Australian Services Union;  Association for Virgin Australia Group Pilots;  Flight Attendants' Association of Australia;  Australian Licensed Aircraft Engineers' Association;  Electrical Trades Union;  Australian Workers Union; and  Australian Manufacturing Workers' Union.15 4.8 In line with the concerns raised by the aforementioned state and local governments, employers, employer associations and unions, the committee is of the view that the package will provide only a very narrow scope of direct financial support to some workers in international aviation, with no ongoing support for most workers in domestic aviation and aviation services once JobKeeper ends on 28 March 2021. 4.9 The committee notes that even Qantas, the single biggest recipient of support under the package, has refused to rule out further job losses,16 and that Qantas

10 Matt Lennon, 'Associations critical of stimulus as JobKeeper cliff looms', Hotel Management, 12 March 2021, https://www.hotelmanagement.com.au/2021/03/12/associations-critical-of- stimulus-as-cities-ignored/ (accessed 15 March 2021).

11 Patrick Hatch, 'Half-price airline tickets not enough to save jobs, tourism groups say', The Sydney Morning Herald, 11 March 2021, https://www.smh.com.au/business/companies/half-price-airline- tickets-not-enough-to-save-jobs-tourism-groups-say-20210311-p579qd.html (accessed 15 March 2021).

12 Sue Mitchell, 'Travel retailers to cut jobs after being left out of tourism package', Financial Review, 12 March 2021, https://www.afr.com/companies/retail/travel-retailers-to-cut-jobs-after-being-left- out-of-tourism-package-20210311-p579vi (accessed 15 March 2021).

13 The Australian, 'Tourism bosses hit out at rescue package', The Australian, 12 March 2021, https://www.theaustralian.com.au/business/tourism-bosses-say-more-help-needed-to-stave-off- disaster/news-story/805d38073638cd7ab968bc06c691562b (accessed 15 March 2021).

14 Australian Council of Trade Unions, 'JobKeeper replacement for aviation industry will not protect jobs', Mirage News, 11 March 2021, https://www.miragenews.com/jobkeeper-replacement-for- aviation-industry-526658/ (accessed 15 March 2021).

15 Adam Thorn, 'Unions express 'utter dismay' at JobKeeper replacement', Australian Aviation, 11 March 2021, https://australianaviation.com.au/2021/03/unions-express-utter-dismay-at- jobkeeper-replacement/ (accessed 15 March 2021).

and its workers remain unsure of how the IAS package for workers in international aviation will be administered.17 4.10 The committee also notes that there have not been any conditions placed on funding under the package which would limit the ability for major recipients, such as Qantas, to pay dividends, executive bonuses or excessive executive remuneration using the funding provided.

Senator Glenn Sterle Chair

16 Sunrise Live, 12 March 2021, https://twitter.com/sunriseon7/status/1370111840483635201 (accessed 16 March 2021).

17 Adam Thorn, 'Qantas yet to be told details of new wage subsidy', Australian Aviation, 15 March 2021, https://twitter.com/sunriseon7/status/1370111840483635201 (accessed 16 March 2021).

Government members - additional comments

1.1 Government members wish to note their disappointment that they were given a period of less than 24 hours during a busy parliamentary sitting week to read and respond to this interim report. It is requested that the Chair acts more courteously and provides more time to consider reports in the future. Given this, Government members will include their full commentary regarding this inquiry within the final report.

Senator Susan McDonald Deputy Chair

Senator Gerard Rennick Member