Crikey appeared on the Today Show last month and observed that high costs and union featherbedding contributed to the demise of Ansett. Below is a sample of some of the abuse but first let’s have a look at what was actually said and Hugo Kelly’s introduction.

They’ve fired in emails calling Crikey everything from a farnarkeller to a blithering bottom feeder. Some government observers are suggesting it contributed significantly to the Ansett debate and AWU boss Bill Shorten, who declined to debate union feather-bedding on air with Stephen Mayne, was subjected to some awkward Steve Liebmann questions a couple of days later.

So what did Stephen say that so excited Ansett’s ex-employees and their vituperative friends? Read the interview for yourself, which was conducted over the rather cheeky strapline – “Stephen Mayne: Union Rorting Claims, 05”

The exact transcript

Steve Liebmann: Many commentators during this Ansett crisis have concluded the airline folded due to gross mismanagement. But the real reasons according to our next guest are many and varied, with one of the key elements being the union movement itself. Our guest is Stephen Mayne, a financial journalist and the editor of the political, finance and media website Crikey.com.au.

You say there are a few things that should be pointed out about Ansett’s industrial practices and union featherbedding. Well – such as?

Stephen Mayne: If you look at the customer service division at Ansett, when the business collapsed they were about $100 million over budget. And one of the reasons is that if you’re working in one of their call centres and you fill in for say 45 minutes as a supervisor, you get paid for the whole day as a supervisor. That’s just one example of the practices that were negotiated with the management at Ansett and don’t exist at Qantas. Also they’ve got some of the most generous redundancy provisions of any business in Australia. So, with 17,000 workers if you get some competition in the market, and you suddenly need to get that down to say 13,000, to get your costs down, then in some cases you’re paying out redundancies of more than two years pay to workers, and you can’t afford to do that.

So that’s one of the reasons why Air New Zealand has walked away. Because they didn’t have the flexibility to get their costs down, because of some of these practises, and the conditions of the unions – doing as they should do, negotiating good deals for their members – and they found the management was a bit of a soft touch, when compared with to what Qantas had been with their staff.

When Air New Zealand took over Ansett they talked about $200 million worth of synergies, and getting the costs down. And the management simply couldn’t deliver that because they had things like a five-month hiatus where there was no chief executive, and they found the union muscle was pretty hard to tackle when the pressure was on. And so they’ve simply walked away.

SL: Are you suggesting union rorting here in a sense?

SM: Well if you just look at the different work practices, the cost base was higher. Ansett was one of the least efficient airlines in the world. And you’re seeing it right now with Qantas. Because Qantas’ chief executive, Geoff Dixon, has been very tough on the unions. And that’s why you’ve had some years where Qantas has made $500 million profit in a year and Ansett’s only made $140 million at the peak and you’re seeing it right now with Qantas and Geoff Dixon preferring to go to the more efficient and cheaper Air Canada crews, rather than taking on the Ansett crews, because the Ansett crews are refusing to work on Qantas conditions.

SL: You also say that Ansett unions have dramatically upped their bargaining power by forcing PriceWaterhouseCoopers out. Can you explain that.

SM: I’ve never seen a situation where the workforce can come along and decide who the administrator of a business can be. But it was quite amazing seeing the ACTU go to the Federal Court and actually toppling an administrator appointed by the Air New Zealand board, and simply saying: we won’t cooperate with you unless we get another administrator from Arthur Anderson who is going to be more favorable to the unions. So I think it was just a great example of the power of the unions in this case. They are the biggest creditors with $500 million owed, and they’ve now got an administrator who’s going to look at getting those entitlements paid as a priority.

SL: Geoff (sic) Toomey. He is copping heaps at the moment. But in light of what you say, given that he came in at the last minute, is some of the criticism he’s getting not deserved?

SM: Well he only got to put hi new management team in place in February this year. And he did actually hire a number of people from Qantas. But I think you have to look at Sir Selwyn Cushing, the former chairman of Air New Zealand, and the former management. And ironically, Geoff Dixon the Qantas CEO, was a senior executive at Ansett for a number of years in the mid ’90s, and these long-standing work practices and high costs do go back quite a few of years.

SL: OK, good talking with you. Thanks for your time.

ends

Now, let’s get on with those wonderful abusive emails:

Crikey a pimple faced wanker

What a pimple-faced wanker you are. You must be 12 going on 13. As usual blame the unions for everything. I guess you would like us workers doing a 60 hour week at 10 dollars a hour, no holidays, no days of any sort off work. Get your head or is it johns head out of your arse. The next call your type want is us to call you master. You fucken FARNARKELING (sic) ought try an honest days work for a change you fatuous dick.

Beth Wyn

Crikey is as bad as Bin Laden

Don’t you feel like an asshole now? Perhaps ben Laden needs someone like you to hold his hand in the caves while he gets dialysis grows more poppies and contrives to blow up more buildings.

Just a thought, Barbara

Pilot threatens to sue

WITH PREJUDICE

Re your comments on the Today Show.

I would expect a web site such as yours would do more research prior to making defamatory comments. I am a current Ansett 767 captain. I was never approached by the administrator, Qantas, Ansett or my association to fly under any conditions. For the record Qantas flight crew have much more “feather bedding” than us.

Check it out. The aircraft Qantas wanted to bring in from Canada are 767 ‘s – the aircraft I am currently flying). Please contact Ansett pilots assocation on 03 93751941 to confirm the correct facts.

Post a apology on your web site plus you must return to the Today show to retract your comments or I will be seeking legal advise.

Name withheld

A rare voice in agreement

Hello Stephen,

I saw you at the PBL gathering at the Sheraton Sydney 18 months ago and was very impressed as you took on the great man!

I emailed John Laws 2 days ago re the Ansett people getting a better go that Qantas. Obviously they were not on an even playing field. No wonder they couldnt keep up.

I didn’t know a lot about the fine print just that Ansett were basically $300 per week better off. I saw you on TV this morning and hope you might call John and get him going on the subject as people need to know that its not just “Poor ansett staff”- that maybe they had a bit to do with it.

I have a friend who is a union delegate with TWU who told me about the federal airport award vs state award. Keep doing what you are doing- I just found the site but will read with interest.

Regards, Ros

Crikey on the payroll of Air New Zealand

It is blatantly obvious that Air New Zealand paid for your 2 minutes of fame on the Today show this morning.

Shame on you for Union bashing. Shame the more for not getting your facts right. You appeared as a blithering idiot or as Jackie Kelley (transport minister absent at large) would say you are a ‘little blip’.

Price Waterhouse Coopers was dismissed due to a conflict of interest as they were previously employed by Ansett/Air New Zealand on fiscal matters. It would hardly be appropriate for them to serve as administrators and acting in the interest of 17,000 employees.

Get your facts right unless you want to find yourself in court. Ansett and Qantas both operate under enterprise bargaining agreements struck with the ASU. The conditions, dumkopf, are the same. Would you or John Anderson as acting Prime Minister, perform higher duties without the benefit of consideration when taking on extra responsibility? I think not.

It is quite clear that your pathetic appearance was underwritten by those who have a greater interest ie Air NZ, the crackheads of Ansett Holdings management, the stylised sheep that is Helen Clarke, the anal retentives that are the Australia government and in particular John Howard (saved his brother with $10 million bailout for 5,000 employees), John Anderson (the truth will out), and Jackie (the badyear blimp) Kelly.

You should have fought for the workers that keep this country going and on it’s feet. The majority of staff are on award wages. Their superannuation is locked in. Their redundancies bear no correlation to that of what public servants award themselves and ahead of their retirement date. You vicariously blame the Ansett workforce via their Union conditions for the downfall of Ansett. Shame on you. May the wreckage that has been wrought upon Ansett by government, corporate law, corporate (censored) such as Jim Farmer, Gary Twoomey (sic) et al and posthumously abetted by bottom feeders such as yourself visit you and your families.

These were 17,000 decent and hardworking Australians. Not only are they out of work but out of luck. No hope for entitlements as Air NZ is trying to cut them off at the pass. No hope because Howard is too gutless and only looks after his rich mates at HIH and Onetel.

How are they going to service their mortgages – worse still, how are they going to feed their families? And you have the gall to introduce hard fought for union conditions. Did you bother to check what the call centre pay is? No, didn’t think so. You are just as gutless and stupid and into the back scratching that is politics.

Did you bother to expose what Twoomey (sic) and the rest of the scum walked away with? How can they award themselves performance pay bonuses when the well is dry? Did you bother to check that Air NZ stole eight engines last Wednesday and that they have been charging up one year’s worth of engine fuel to an Ansett charge card? Air NZ already owned half of Ansett – how could they have not known if there was any trouble with Ansett’s finances? Why then buy out the other half? They kidnapped Ansett and pack raped her repeatedly until nothing was left to take. Why, when Singapore Airlines wanted to buy Ansett, Air NZ guarded her fiercely? It’s because they didn’t want anyone to know what they were doing.

Don’t start apportioning the blame to the workforce and the Union. I can just see you now as one of those oven shovellers at Auschwitz – shoving the bodies into the ovens. You are a traitor to the people. You are an embarrasment to humankind. Shame on you. May God have mercy on your wretched soul.

Anna Romanov Ruff: [email protected]

Crikey has no idea but at least this is intelligent

Dear Stephen,

I have just watched your interview on the Today Show, and find you have little or no understanding of the affairs at Ansett. I am a former employee (1978-1992) who, has stayed in contact with a lot of friends in both Melbourne and Sydney, as I worked in both ports.

Firstly, the unions can not be held to blame. Why? The airline unions, with the exception of the Flight Attendants, were, and still are the weakest in acting in the best interests of employees. Many times during my experience we were divided and conquered, never making any gains.

The Flight Attendant Union, when under the direction of Maurice Alexander was in fact very strong and the conditions implemented under him cost Ansett a lot of money. The biggest problem his negotiations created was the unlimited paid sick leave for Flight Attendants, and the free travel vouchers not available to other employees, who worked a lot harder than the Trolley Dollies.

I was employed in the Flight Operations department, which was eventually dismantled, and the point where things really started to fall apart. There was always a problem in Middle management, to many of them, and no ideas amongst them.

Since Air New Zealand came into the picture, nothing really changed, excepting the redundancy payouts became larger, the maintenance section decimated due to loss of experience. Ansett really had no qualified Engineers left to sign off on a lot of work done. Customer service staff were cut back dramatically, and the overtime payments you made mention of, were simply unavoidable, due to the mass loss of staff.

The company believed it a more viable option to pay overtime instead of full time employees. My partner, an employee at Tullamarine would come home daily, with “You won’t believe what happened today”. I could go on for hours, and not showing any disrespect to your young age and way of thinking, but the truth goes back to when you were still at school.

The moment Murdoch/Abeles came into the frame, was the beginning of the end of a great company. I was fortunate to have worked a couple of years under the reign of Sir Reginald. Neither News Corp or TNT had any idea on running an airline. In fact the Pilots dispute of 1989 was a coup to Sir Peter on behalf of Ansett and Australian Airlines. As we headed into airline deregulation, both airlines were top heavy with pilots. Simple solution, pay off a union delegate, who then made unreasonable claims for a huge salary increase as the pilots had not had a wage rise for a few years.

Both companies refused the demands, the pilots stopped work to discuss action, and on being asked to sign a document proving attendance to the meetings, signed their own death warrants. These signatures were used against them and Abeles got what he wanted, the chance to hire back those the company wanted, get rid of the militants and those that didn’t fit in. On top of that he had the support of Bob Hawke, because of Hawke’s (censored) that Abeles covered.

There is always a lot more that meets the eye, and if you would like I can give you several names of employees past and current that will back up my claims

Regards, Pete

Loss of government contract hurt Ansett

Mr Mayne,

I think you need to get your facts correct, do you know that the Federal Govt took away the choice for all Government employs to fly Ansett over a year ago.

Do you know how much Ansett made in transporting public servants around the country?

Do you know why the Govt ended their contract with Ansett?

Talking from an emotive point of view isn’t what people like yourself were educated for, as a male you should try rely on your logic rather than talk from some emotional angle. People will look for any opportunity to get their 15 minutes of fame, I wish you picked a better issue to boost your ego’s energy.

You’re statements on TV this morning do call your integrity into question with discerning Australians who know the facts.

Your comments were duly noted for future reference.

Regards, De

If you’d like to join this debate send the email to [email protected]

So, what caused this diatribe

This is what Crikey sent to subscribers two days ago which prompted Today Show host Steve Liebmann to invite Crikey on:

UNIONS INCREASE ANSETT STRANGLEHOLD

In business there is always a trade-off between employees, shareholders and consumers and the unions representing Ansett workers have dramatically increased their bargaining position by forcing the resignation of PriceWaterhouseCoopers as voluntary administrators.

Now receivers are the hard men of business so to see PWC’s Peter Hedge almost break down in tears was certainly a first.

It was right that PWC be replaced and says a lot about Australia that it was only the ACTU that could deliver such an outcome. Why haven’t we got shareholder activists, regulators or media that can leap on an obvious issue like this and force change?

Crikey has been harping about this conflict from the night of the PWC appointment but the Fin Review left the story alone despite being prodded about it.

I wouldn’t be at all surprised if Labor’s financial services spokesman and former TWU organiser Senator Stephen Conroy was a key player in this union move because he told an Australian Shareholders’ Association forum a couple of months back that the big 5 accounting firms have a huge blind spot when it comes to conflicts of interest.

The PWC appointment was a pretty dodgy try-on by the board of Air New Zealand who are trying to cover their butts.

We’ve heard that PWC advised Air New Zealand on the Ansett acquisition from News Ltd, have been receiving $2-3 million a year in consulting fees, were working for Air New Zealand at the time of the appointment and were also advising Singapore Airlines on the proposed bailout of Ansett. That’s a pretty comprehensive set of conflicts.

They were hand-picked to do the board’s dirty work and dump the employee entitlements whilst Air New Zealand traded on as if nothing happened. No wonder the unions wanted them replaced.

In the small world of Big Five accounting firms, the same outfit that failed to blow the whistle as auditors of HIH and had several connections to the HIH board, Arthur Andersen, have now got the gig as Air New Zealand administrators and should reap many millions in fees.

The creditors meeting will start at 10am at Crown Towers today as scheduled with the unions appointed as proxy for the entire Ansett workforce so they will have the numbers and should be able to dictate what happens in the administration.

The unions are skilled media manipulators but there are a few things that should be pointed out about Ansett’s industrial practices and union feather-bedding. We’ve seen with the move by Continental to axe 12,000 staff that the global airline industry needs to move rapidly to reduce its cost-base in the face of forecast drops in passenger number of up to 50 per cent. Boeing should stop building planes now as their share price plunged 20 per cent overnight in anticipation of airlines collapsing and people not flying.

Ansett never had the luxury to move quickly on its workforce because the redundancy payouts – which are never included in the balance sheet – were prohibitively expensive. Air New Zealand clearly decided its only survival route was to walk away from this $500 million-plus liability.

Anyway, if you want some insight into the union power at Ansett, check out this email from one employee:

HOW THE UNIONS PILLAGED ANSETT

“As an ever interested and long suffering (non union) Ansett employee, I have observed all the usual intimidatory tactics of the various trade unions that made my company so inefficient and uncompetitive against its leaner and meaner rivals.

Working for an airline sees employees automatically receive one free international airline ticket per year to anywhere in the world and that’s even before we get into wage and enterprise bargaining agreements!

At one point, airline management agreed to a scheme of Key Performance Targets that effectively meant the staff would work less hours and be paid more. In fact this particular scheme made it even more attractive for permanent day workers to become shift workers (employee bonuses would be higher!) and work when the incoming business and call loads were less than when real demand was required during the business week.

This scheme was abandoned when management realised the Australian Services Union had dudded them and that word had got around that ASU reps were laughing behind their backs as to how “generous” Ansett management had now become!

Another ridiculous agreement in the pay structure which still continued to operate is when a regular employee in a base position is called up to relieve a supervisor in a particular department that I work in.

As an example, this particular employee works 9-5 every day and at 4.15pm in the afternoon, he or she is called up to fulfil the supervisor role as the supervisor is called to speak with a manager or leave early etc. etc. In a normal world, this employee would then get paid for 45mins at the supervisor wage and the rest of day at normal rate, however, AN management was dudded into an agreement with the ASU which sees the regular employee paid for the whole day at the Supervisors rate, not just the 45 minutes. If you compound this kind of agreement over all of AN’s airport, travel centre and call centre operations, you can begin to imagine just how hard it became for my company to compete! The Customer Service Division was at least $100 million over budget at the time of Ansett’s collapse.

I only wish I had more time and space to tell you about the many examples of waste and inefficiency inside my organisation caused by management going soft on the Unions.

If Singapore Airlines had bought into Ansett back in late 99, instead of Air New Zealand the full 100%, things would have been very interesting indeed when they realised what a financial basketcase the company had become. The reality of Eddington’s years was that Ansett really only made profits on the back of its asset sales like its Diners Club shareholding, Hamilton Island Airport & Transport Industries Insurance to mention but a few. He was there to sell off just about any non-airline related activity and sell the remainder to the highest bidder.

Today, the legacy of soft management and poor leadership means I am one of 16,000 employees who are out of a job and a domestic aviation market where one carrier holds at least 93% of it!

Anon

CRIKEY: So while it is good and well to feel sorry for the Ansett workers, think about all those contractors and small businesses that will get nothing, think about the Air New Zealand shareholders who now look like they’ll lose the lot and think about the taxpayers and air-travellers who will pay this new tax to fund the entitlement payouts.

I don’t reckon it is fair that workers of a business that has failed could pick up payouts averaging $30,000 across 17,000 workers (presumably super is on top of this) and then about 35 per cent of them will finish up working for Qantas in the next few months anyway.

Union rorting has contributed to this collapse and now the unions want their members to collect on some outrageously generous redundancy provisions that could see some workers walk away with six figures.

It is not popular to say these sorts of things with hard-luck stories being told by Ansett workers across the country but it is a reality of the situation that can’t be ignored.

ends

As I said, Crikey is a shareholder activist who normally beats up on incompetent boards but sometimes the unions are also responsible for corporate collapses and this is one case of joint responsibility, along with other factors such as Murdoch-Abeles neglect, competion, high fuel prices, the low dollar and the strength of Qantas after it was privatised.

If you’d like to contribute to this debate please email [email protected]

Michael Pascoe gets stuck into the unions

Finally, Crikey is not alone in its views here. Check out this recent article from the Nine Network’s business editor Michael Pascoe:

This might offend some people in the present heated Ansett environment, but it’s beginning to look like the union movement is acting despicably, with not much interest at all in creating jobs. Mind you, that’s not unusual.

After a first paragraph like that, I had better claim quickly that I’m not a union basher. There are good unions and bad unions, good union leadership and disgustingly cynical manipulators of workers – no wonder it’s a fertile breeding ground for politics.

What has seemed obvious to me though, in the Ansett collapse, is that the first priority of the union leadership hasn’t been jobs, but politics and furthering the interests of the unions, rather than workers.

To backtrack a little, the ACTU leaders have quietly admitted that the biggest mistake they have ever made was not to understand the swing in employment from manufacturing to service industries. They blame this for the massive fall-off in union membership as a proportion of the workforce – barely a quarter of private sector workers now bother to belong to a union.

The unions have been working hard to try to make up for lost ground as their power base and revenue slip away. Thus One.Tel’s collapse was the best thing to happen for the ACTU in decades, and they’ve been beating the “workers’ entitlements” drum ever since.

The very first response from a unionist that I saw over Ansett struck me as utterly appalling. I can’t remember who he was, but he hit the Today show with both lips moving the day the airline stopped flying, repeatedly blaming John Howard for the failure and job losses.

Yes, there is an election in the offing and the Labor Party has played Ansett as cynically as John Howard has worked the Tampa. I hope it is simply too cynical to wonder if that particular official was working up some brownie points for a pre-selection vote down the track.

Since then, there has been a mounting body of evidence that the ACTU has been flexing all manner of muscle for political and recruitment ends, rather than putting employment as a first priority.

The whole workers’ entitlements business has become quite ridiculous – and I say that having had dear friends lose their jobs at Ansett and finding themselves in a rather desperate need of money. There is no equity at all in imposing a tax on airline passengers to fund a preferential system for one group of workers when the many others who lose their jobs get nothing.

Similarly, there is no equity in preferential treatment for the luxury of redundancy pay when some of the recipients might well walk into employment quickly.

There is a need for a cool appraisal of the economic impact and benefits involved in the “workers’ entitlements” catchphrase – and we won’t get one while there’s an election in the offing and the ACTU is using it as its main recruitment campaign.

Some of today’s suggestions about union behaviour and interference in possible employment are too scurrilous to run without further confirmation than the wire services have provided. I hope they are not true, I hope the ACTU has not stood between workers and jobs, but I wouldn’t be surprised if they are confirmed.

At a time when there is a sudden massive excess of planes and crews around the world, this is not the time to be grandstanding on a few fringe benefits.

ends

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