C2006/1487, Transcript of Proceedings [2006] AIRCTrans 687 (26 April 2006)

TRANSCRIPT OF PROCEEDINGS

---

Workplace Relations Act 1996 14832-1
14834-1

COMMISSIONER RAFFAELLI

C2006/1487 C2006/1488

AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION
AND
QANTAS AIRWAYS LIMITED
s.170FB - Application for employment termination orders
(C2006/1487)

AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION
AND
QANTAS AIRWAYS LIMITED
s.170GB - Application for orders to consult unions
(C2006/1488)

SYDNEY

9.12AM, TUESDAY, 11 APRIL 2006

Continued from 10/4/2006

Hearing continuing

PN671

THE COMMISSIONER: Yes, Mr Borenstein.

PN672

MR BORENSTEIN: Thank you, Commissioner. Our witness this morning is Joseph Campbell.

<JOSEPH MICHAEL CAMPBELL, SWORN [9.13AM]
<EXAMINATION-IN-CHIEF BY MR BORENSTEIN

PN673

THE COMMISSIONER: Yes.

PN674

MR BORENSTEIN: Mr Campbell, could you state your full name, please?
---Joseph Michael Campbell.

PN675

And your address?---(Address supplied).

PN676

Are you an aircraft maintenance engineer currently employed by Qantas?---That's correct.

PN677

And do you presently work at Bankstown?---That's correct.

PN678

Are you there on secondment from your former position which is at Mascot?
---That's correct.

PN679

And how long have you been at Bankstown?---Approximately two and a half years.

PN680

Now, for the purposes of this proceeding did you prepare a witness statement of some 17 paragraphs?---That's correct.

PN681

And have you recently had a chance to look at that document again?---Yes.

PN682

Can you tell the Commission whether its contents are true and correct?---True and correct, yes.

PN683

Can I tender that, please, Commissioner.

PN684

THE COMMISSIONER: Any objections, Mr Kenzie?

PN685

MR KENZIE: No objection.

EXHIBIT #AMWU3 STATEMENT OF JOSEPH MICHAEL CAMPBELL

PN686

MR BORENSTEIN: I would just like to clarify a couple of the matters in the statement with you if you don't mind, Mr Campbell. Could you look at paragraph 6 of the statement, please, do you see that?---Yes, I do.

**** JOSEPH MICHAEL CAMPBELL XN MR BORENSTEIN
PN687

Now, what are the other meetings at which you've been in attendance with
Mr Thompson?---I'm an elected member of the single bargaining unit in negotiation of our enterprise bargaining agreement with our employment contract.

PN688

And are they the meetings that you're talking about in paragraph 6?---That's correct.

PN689

Now, in paragraph 11 and following you give some evidence about the views of employees that have been expressed to you about the potential redundancies. Can you just explain to the Commission how it comes about that these people are speaking?---Well, I'm the democratically elected union representative on site. I'm also the chairman of the union for the site and the local delegate for the site so if any industrial matters come up or questions they might have they come to me.

PN690

In terms of the matters that people have raised with you in these discussions about the enterprise agreements can you tell the Commission what sort of matters or concerns they've raised with you about them?---Job security, long term job security, wages and conditions, things like that, of that nature.

PN691

All right. When you talk about wages and conditions, what do you mean by that?
---Well, when we talk about wages and conditions we want to keep the same wages we've got now, we don't want to go backwards for a start and the conditions of employment that we enjoy at the moment we don't want to be giving them up and losing them, whether they be penalty rates or overtime payments.

PN692

Well, how does that arise out of the redundancies - just excuse me. I'm sorry, I'm told that you may have misunderstood me. What I want to ask you about is not anything to do with the EBA negotiations?---Sure, yes.

PN693

I don't know whether I - I probably didn't make myself clear. In relation to the discussions that you've had with individual members about the proposed redundancies that have been announced?---Yes.

PN694

Are there any matters of concern that those people have raised with you in connection with the redundancies and whether they want to accept them or not?
---Well, it's a very testing time for our members at the moment. For the last few years all they've been hearing from the company is, as a lot of our members say, to doom and gloom, comparing our work practices and our costs structures to MROs overseas, so they don't know about the long term viability of engineering and heavy maintenance within Australia or within New South Wales. Could you repeat the question, please?

**** JOSEPH MICHAEL CAMPBELL XN MR BORENSTEIN
PN695

Yes, I was asking you what sort of issues people were raising with you in the context of the redundancies that have been put up for voluntary redundancy?
---Okay, yes.

PN696

Well, there's a few decisions people have got to make, whether they're going to stay, if they're going to stay they're going to lose a lot of their income from the proposed - - -

PN697

How does that happen?---From proposed shift changes that have been put in place by the company and in my section we're on a seven day roster, a nine and a half hour extended shift which gives us penalty rates of average between 28 and 30 per cent.

PN698

28 and 30 per cent of what?---Our basic wage.

PN699

And what is your basic wage?---Basic wage for me is approximately $900 gross.

PN700

So is it 28 per cent on top of the 900?---That's correct.

PN701

So does that take you up to around about $1200?---Between 11 and $1200, that's right.

PN702

Okay?---And the proposed new shift will mean that I'm going to lose 22.5 per cent of that shift loading which is approximately $200 and not only do you have to take into account the income loss but also the change of shift pattern.

PN703

What is that change that's proposed?---At the moment we're doing a day coverage only over a seven day coverage but the new pattern includes an afternoon shift, five afternoons in a 14 day cycle. Personally I haven't worked an afternoon shift in 12 years and a lot of other guys are in the same predicament so you're going to be going on a new shift which includes afternoons and taking a $200 pay cut to do it and try and explain that to the wife.

PN704

What's the problem about working on an afternoon shift, what are the hours for an afternoon shift?---The hours, 3 pm to 11 pm.

PN705

And what do you see or what have people told you are the problems connected with that?---Well, it's quality time with the family and whether it's - if you've got kids you might have swimming lessons, netball lessons, tutorials, just the quality time you spend with the kids helping them with homework. In my case my wife doesn’t work but in a lot of cases our other members both partners, both people work in the relationship so they've set up their lifestyle and sharing picking the kids up from school and so forth, taking them to these classes. They'd have to do a lot of reorganising because of the shift changes.

**** JOSEPH MICHAEL CAMPBELL XN MR BORENSTEIN
PN706

Now, from your discussions with your members about these redundancies that have been offered for voluntary acceptance is it your understanding that a number of people have in fact put in expressions of interest?---Yes.

PN707

And have you spoken to those sort of people about their decision to put in their expressions of interest?---That's all people talk about at the moment over the lunch table, every day.

PN708

Well, from your observations and from the discussions you've had, are you able to tell the Commission whether those sort of people would be prepared to withdraw their expressions of interest if the unions had an opportunity of discussing with Qantas possible changes to the proposal which has been put forward now?

PN709

MR KENZIE: Commissioner, there's all sorts of leniency allowed in this proceeding but that question, I mean the parameters are wide but that question which as I understand it invites this witness to comment on the numbers of people at large who would change their mind previously reached if some vague proposition was advanced, namely, that there was consultation is something this witness couldn't provide an appropriate answer to.

PN710

THE COMMISSIONER: Yes.

PN711

MR KENZIE: That really does stretch - objections need to be kept a minimum in this area but that I think stretches the matter - - -

PN712

MR BORENSTEIN: I will put it a bit more specifically, Commissioner.

PN713

In your discussions with people who have told that they have put in expressions of interest on this last occasion, this proposal that's been announced in March, have any of them said to you that if the proposal were different they would take a different view about accepting redundancies?---Definitely.

PN714

Thanks, Mr Campbell.

PN715

THE COMMISSIONER: Yes, Mr Kenzie.

<CROSS-EXAMINATION BY MR KENZIE [9.23AM]

PN716

MR KENZIE: Mr Campbell, you have told the Commission in your affidavit that you're a delegate for the AMWU at Bankstown and I think in your evidence today you've told us that you were the - did you say the chairman of the union on site?
---That's correct.

**** JOSEPH MICHAEL CAMPBELL XXN MR KENZIE
PN717

Before you went to Bankstown you were at Mascot?---That's correct.

PN718

Were you a delegate when you were at Mascot?---That's correct.

PN719

At Mascot in round terms what would be the delegate structure of the AMWU, how many delegates would there be in round terms?---In the AMWU only?

PN720

Yes, in the AMWU?---Approximately 20 to 30.

PN721

20 to 30, and at Bankstown where you are?---Well, we've only got four.

PN722

Four?---Four or five.

PN723

And in relation to your role as the delegate, that obviously involves you doing, amongst other things, providing a link between the members and management in terms of industrial information?---That's right.

PN724

I mean it's really the role of the delegate to actually try and keep the members as informed as possible about industrial matters affecting Qantas?---If we can.

PN725

And in relation to that role the delegates firstly at Mascot, they are provided with internet access to Qantas announcements and the like?---Yes, intranet, yes, that's correct.

PN726

And do you have that access at Bankstown as well?---Yes, we do, yes.

PN727

And it would be routine in relation to announcements by Qantas as to what it proposes to do with its business for that material to be made available over the internet to delegates such as yourself?---A lot of the information would be privileged, but yes, there are bulletins on the internet for general viewing of everybody.

PN728

I may be able to do this generally, Mr Campbell, but you would have been aware as delegate of a number of announcements from early 2005 by Qantas in relation to the conducting of a review of audits activities?---The review, I wasn't aware of the review until mid to late last year.

PN729

Mid to late last year?---Yes.

**** JOSEPH MICHAEL CAMPBELL XXN MR KENZIE
PN730

I see. Was it your practice to use your internet access to find out what Qantas was doing so that you can inform your members?---No, not really, no.

PN731

And why is that?---Well, although we have access to the internet they're shared terminals so in my work station for example there's two terminals that the leading hands, supervisors of our crews use predominantly all day and we have approximately 13 people in a section so you don't get much time on the computer and then you've got to juggle your productive time and that's not productive time.

PN732

Well, perhaps I better put this to you. Could I show the witness Mr Ratcliffe's statement, Commissioner. I will hand you a copy of this statement. I just want to find out from you, show you a number of documents, Mr Campbell. Is this the situation that a number of delegates both in Mascot and Bankstown would share the same sorts of facilities, internet and information facilities?---That's correct.

PN733

In addition to the internet facilities would it also be Qantas' practice to send by hard copy to employees announcements as to significant matters?---Hard copies to all employees?

PN734

To employees generally?---No, no.

PN735

You say that doesn't - - -?---No, very rarely, no.

PN736

I see?---Can you be a bit more specific.

PN737

Sure, yes. And is there a process of email that Qantas uses to communicate?
---There is, yes.

PN738

So Qantas would email significant announcements to its employees as a matter of course?---Yes.

PN739

Do you have a copy of Mr Ratcliffe's affidavit in front of you in the witness box?
---I'll just find it.

PN740

Sure. It should be the top document there, Mr Campbell and I just want to ask you about a few matters. Firstly, if you have a look at paragraph 3 of
Mr Ratcliffe's affidavit there do you see he refers to the announcement in February 2005 that Qantas was reviewing all parts of its business to identify possible costs savings and work efficiencies? Now, do I understand your evidence to be, speaking personally, that you weren't aware of that in
February 2005?---February 2005, no, it was mid to late last year.

**** JOSEPH MICHAEL CAMPBELL XXN MR KENZIE
PN741

Yes, okay. But I'm focusing on February 2005?---Yes.

PN742

You wouldn't have been aware of that?---I would agree with that.

PN743

So if you could just open it to tab 1, you will see that at least has the form of a Qantas announcement where Qantas reports its half year profit and the like, do you see that?---Yes, is that DR1?

PN744

That's DR1, yes?---Yes.

PN745

And if you look at page 2 of that entry do you see just under a little bit further than halfway down the page Mr Dixon is recorded as well:

PN746

We will over the next three months conduct a review of processes and activities with a focus on processes that can be removed or redesigned.

PN747

Do you see that?---Yes.

PN748

Now, can the Commissioner take it that at least as far as you're concerned - you can't speak for other people but just as far as you're concerned, you didn't become aware of that at or about that time?---Not that early in the year.

PN749

Okay. And so at least as far as you're concerned that wouldn't have been reported to your members?---No, not unless they've read it.

PN750

Okay. And then would your answer be the same in relation to paragraph 4 of the affidavit, going back to the affidavit again, a reference to a review of all processes and the next tab, DR2, and if you look at DR2, the fourth paragraph, there appears to be a Qantas statement 1 March:

PN751

Two weeks ago when reporting the Qantas half year results we announced a review of all processes and activities across the Qantas group that would take at least three months.

PN752

Again your answer would be the same, would it?---That specifies half year results there?

PN753

Yes?---Okay. All right, I'm getting mixed up. Half year results is around December, isn't it, hence the full year is June. I'm just thinking aloud here, sorry.

**** JOSEPH MICHAEL CAMPBELL XXN MR KENZIE
PN754

Sure?---And your question was?

PN755

Well, I was simply asking you this, a little while ago you said that you hadn't seen the earlier announcement or a statement that's slightly later?---Yes.

PN756

And I'm just asking you to confirm at least from your own point of view that you weren't aware of this either?---No, I haven't seen that, no.

PN757

Okay, all right. Would you have a look at the next tab, DR3. This is something called ETOMS newsletter, have you familiarised yourself with the ETOMS newsletters when they came out from time to time?---No, I really haven't got time to read all these things, mate.

PN758

Okay, all right. So accordingly you wouldn't have seen this document, for example, would that be correct?---It doesn't look familiar.

PN759

And then if you have a look at DR5 which appears to be August 2005, this is a further ETOMS announcement and can I take it from your evidence that you wouldn't have seen this either?---No, it's not familiar either.

PN760

So can you help the Commission understand in what circumstances you did become aware of the review?---I can't give you a specific date but from my knowledge from my memory, the beginning of the bargaining period.

PN761

The beginning of the bargaining period?---Yes.

PN762

Well, can I suggest to you that the first enterprise bargaining meeting was in November?---October/November I'd say, yes.

PN763

About the time of the beginning of the bargaining period?---Yes, yes.

PN764

Are you sure it wasn't earlier than that?---As I said, to the middle to late last year. It mightn't have been as late as October but it was definitely later than what was it said, January or February.

PN765

Okay. And you can't remember the circumstances in which you became of this review?---Not off the top of my head, no. I'm trying to cast my mind back for you in specific detail but no.

PN766

Okay. Well, do you remember, in paragraph - I withdraw that. And so you would have no recall of any discussion before mid to late last year of the review amongst members of the AMWU?---No.

**** JOSEPH MICHAEL CAMPBELL XXN MR KENZIE
PN767

All right. Now, in paragraph 6 of your statement you say at the meetings you have attended Glenn Thompson has repeatedly asked for information on the review of heavy maintenance, do you see that?---That's correct.

PN768

And I think you've told us that they were enterprise bargaining meetings?---That's correct.

PN769

And so would it follow that those would be meetings that flowed from about November?---Yes, October/November I think it was the timing.

PN770

Okay, all right. Now, tell me, after you learned of the review did you communicate that fact to the members for whom you have the responsibility as a link in terms of information?---Yes, it was in their best interests of course, yes.

PN771

And so what you did was to tell them about that review and about it?---What I could just only tell them there's been taken place, I didn't have any details of it, but yes, I passed that on.

PN772

Did you have any dealings with Mr Aires on behalf of the union in 2005?---2005?

PN773

Yes?---He's been to one bargaining meeting, maybe two and definitely one, I think that was this year. Last year we would have had a mass meeting late in the year that I think he might have attended in relation to the bargaining period again, yes.

PN774

You can't recall Mr Aires having said anything at any time during 2005 about a review being undertaken by Qantas?---No. Which part of the year are you talking about this time?

PN775

Any time in 2005?---Well, as I said, our bargaining period started October/November and he might have mentioned it in the mass meeting we had in November/December, but I'm sure we did have a mass meeting in November/December.

PN776

All right?---We've had a few mass meetings so he would have mentioned about one for sure.

PN777

And tell me this, so far as you were concerned as an employee you were in receipt of Qantas email announcements from time to time?---Correct.

**** JOSEPH MICHAEL CAMPBELL XXN MR KENZIE
PN778

If Qantas had a practice of emailing its employees in relation to particular matters there would have been no reason why those emails wouldn't have come to you, you would have been expected to be included in that round?---I hope so.

PN779

Would that be correct?---Yes, I would have, yes.

PN780

Yes, thank you. Could you just pardon me a moment. Yes, thank you,
Mr Campbell. I wonder if that statement might be returned, Commissioner?
---Sorry, Mr Commissioner, that's mine.

PN781

THE COMMISSIONER: It's okay. What did you say, sorry, I got a bit waylaid? You hope what?

PN782

MR KENZIE: I was simply asking that the affidavit might be returned.

PN783

THE COMMISSIONER: I see, yes. Mr Borenstein.

<RE-EXAMINATION BY MR BORENSTEIN [9.39AM]

PN784

MR BORENSTEIN: Mr Campbell, just to clarify one matter arising out of
Mr Kenzie's last question, you said that you would have expected that you would have got the routine email announcements from Qantas the same as everybody else, notwithstanding that do you have any recollection of noticing in any of the emails that you received any references to a review other than in accordance with the evidence that you've given?---No.

PN785

I have no further re-examination.

PN786

THE COMMISSIONER: Thank you, Mr Campbell, you can go.

<THE WITNESS WITHDREW [9.39AM]

PN787

MR BORENSTEIN: Commissioner, we don't have any further oral evidence. I wish to tender a copy of the Qantas Airways Ltd AWU/AMWU Enterprise Agreement Number 6, please.

EXHIBIT #AMWU4 QANTAS AIRWAYS LTD AWU/AMWU ENTERPRISE AGREEMENT NUMBER 6

PN788

MR BORENSTEIN: That's our case, Commissioner.

PN789

THE COMMISSIONER: Yes, Mr Kenzie.

PN790

MR BORENSTEIN: Just one last thing, I'm sorry. Mr Kenzie asked a question of the witness yesterday about some mass meetings and passed a resolution and perhaps I can put on record the information that I've been instructed about those meetings. You will recall, Commissioner, this was the meetings that preceded the communication in any event to Qantas on 22 February. I'm instructed that that communication followed meetings which took place in Melbourne on
10 February, in Sydney on 17 February and a Brisbane meeting on 21 February and the communications on the following day. Yes, that's all, Commissioner.

PN791

THE COMMISSIONER: Yes.

PN792

MR KENZIE: I am grateful to Mr Borenstein for that clarification, if it please the Commission. Commissioner, in relation to the matters generally, the approach of Qantas to the applications and the issues that generally provide the parties both in terms of those matters under FA and GA will I think have been reasonably apparent from the course of the proceedings to date from involvement that the Commission has had in proceedings to date and hopefully from aspects of the cross-examination and indeed the evidence-in-chief that's been given and so I was proposing, unless the Commission wanted me to take a different course, to proceed to go to the substance of our evidence and as the Commission knows from the materials filed, we have filed two witness statements, those of
Mr Ratcliffe and Mr Clark and I propose first to call Mr Ratcliffe.

PN793

THE COMMISSIONER: Yes.

<DENNIS MICHAEL RATCLIFFE, SWORN [9.42AM]
<EXAMINATION-IN-CHIEF BY MR KENZIE

PN794

MR KENZIE: Mr Ratcliffe, are you Dennis Michael Ratcliffe?---I am.

PN795

Could you state for the purpose of the record your address?---It's (address supplied).

PN796

And still are you employed by Qantas Airways as Head of People Qantas Engineering?---I am.

PN797

And in relation to these proceedings you have made a statement in writing of some 43 paragraphs and annexures, is that so?---That's correct.

PN798

Do you say that to the best of your knowledge and belief that the contents of that statement are true?---I do.

PN799

I tender Mr Ratcliffe's statement, Commissioner.

EXHIBIT #QF1 STATEMENT OF DENNIS MICHAEL RATCLIFFE

PN800

MR KENZIE: Thank you. Mr Ratcliffe, just some additional matters if I might. There's been some evidence in the proceeding I think this morning in relation to modes of communication by Qantas to its employees, are you able to assist the Commission in terms of the means by which Qantas would communicate industrial matters to its employees in general?---Qantas has a number of mediums of communication. There's the Qantas News which is a group wide document that comes out every couple of months. Every Friday there is a Friday flier that is published by the corporate group that is distributed by email to all employees with email access. Within Qantas Engineering there is the Qantas Engineering Leading Edge news document which is distributed regularly again by email, posted on the Qantas intranet and hard copy. Various business units have their own communication newsletters which they issue from time to time and managers will meet on a regular basis to hold communication meetings and tool box meetings.

PN801

I just want to ask you some general questions about some of the tabs that are in your statement and tell us if you can, you may not be able to tell us, but for example, do you see from paragraph 3 of your statement and following you detail a number of announcements and indications in newsletters and the like in relation to the review of operations in 2005?---Yes.

**** DENNIS MICHAEL RATCLIFFE XN MR KENZIE
PN802

What I want to ask you and I will deal with them one by one is whether you can tell anything to the Commission about the means by which, if any, these matters would have been communicated to Qantas employees. So just taking DR1, for example, that's the announcement of the half yearly profit and the statement of
Mr Dixon?---Yes.

PN803

Do you see that?---Yes, I do.

PN804

By what means, if any, would that have been disseminated?---That would have been sent out on the company email system and it would have been published in the Qantas News and it would have been referred by Mr Cox, the Executive General Manager of Qantas Engineering in his communications to people in Qantas Engineering.

PN805

Now, in relation to tab 2, the further statement of Qantas on 3 March, could I ask you the same question?---Yes, again it would have been sent out on the company email system and issued as a statement group wide.

PN806

Now, just stopping you there, would that have meant that it would have been generally sent to employees?---To those employees with email access, yes.

PN807

And who would that be?---That would be the bulk of employees. There would be some perhaps who did. I don't have an exact knowledge of who doesn't access. Access is granted by local management on an as needs basis.

PN808

Now, are you able to provide any assistance at all in terms of the distribution or likely distribution of DR3, that's a newsletter, you may not be able to comment?
---Yes, the newsletter is published on a regular basis. It's distributed through Qantas Engineering. There are both soft copy and hard copies there available throughout the workplace. Managers would use that to communicate in the sessions.

PN809

DR4, which is the report of the profit before tax on 18 August 2005?---Again as I described earlier, it would be sent out group wide on the company email system. It would have been published in a special Qantas News edition which is the normal practice and Qantas News distributed right throughout the group.

PN810

And DR5 is the ETOMS announcement and I take it that your comments that you've already made would - well, perhaps you can tell us about ER5 if there's any difference there, how would you have expected that to have - - -?---Yes, same way.

**** DENNIS MICHAEL RATCLIFFE XN MR KENZIE
PN811

The same way, all right. Now, bearing in mind that evidence and just speaking generally, Mr Ratcliff, what would your evidence be in relation to any suggestion that might be made that the review a subject of those documentations was something that was not or would not have been known to the AMWU or its members prior to the middle of 2005?---Well, I think the newsletters and the statements that went out were widely distributed. There were road shows that employees attended where they were able to ask direct questions of senior management and in my view it was quite well known in Qantas Engineering that the review was under way.

PN812

Now, Mr Ratcliffe, your statement also refers to the events post the announcement in early March 2006 and to the processes that have been developed or are developing in relation to the consequences of that announcement, is that correct?
---That's correct.

PN813

And those processes I think you deal with, for example, in paragraphs 38, 39 and 40 of your statement, is that correct?---That's right.

PN814

Now, in paragraph 37 you discuss the extensive EOI process and redeployment program. I don't need chapter and verse, Mr Ratcliffe, but can you tell us as we speak where are we in relation to that EOI program?---Okay, is that in relation to the AMWU and AWU members?

PN815

In relation to AWU members?---Generally the first phase of the process concluded on 31 March. We had 900 preference sheets submitted. Generally were over subscribed in terms of people who have indicated they wish to take voluntary redundancy, however there are some issues in terms of skills retention and skills match. We are currently working through the preference of each employee, noting that there could be up to nine preference options for people to indicate what they wish to do. My staff advise me that we're down to approximately the last 30 and at this stage I’m reasonably confident that there will not be the need for involuntary redundancies.

PN816

And the reason, could you just explain to the Commission the aspect in relation to that 30, is that 30?---There are 30 people who they just happen to be the last 30 that we're dealing with. Some of them have skills that are not as easily transportable as others so we're looking at how we might be able to move people around in different parts of the business and match those skills up. That may involve some additional training for individuals and we hope to get through that process in the next couple of days. I did state in my statement and it's probably timely, Mr Commissioner, at paragraph 34 we had scheduled a meeting between Qantas, the AMWU, AWU, CEPU and the ASU on 7 April 2006 to discuss any further issues. That should be updated to today's date. We’ll be meeting with the unions this afternoon to give them an update on where we are with the EOI process.

**** DENNIS MICHAEL RATCLIFFE XN MR KENZIE
PN817

And is the information that you've just provided to the Commission, is that information you would have expected to have been involved in the meeting that was earlier?---Yes, yes.

PN818

But will now be the subject of discussion?---This afternoon, that's correct.

PN819

Thank you. And in paragraph 39 you have indicated a request from the AMWU convener as to whether that process could involve employees taking voluntary redundancy earlier than planned, I take it that's to widen the scope of voluntary redundancy and to play a role in the minimisation of involuntary redundancy, is that correct?---That's correct. There were some employees who were able to obtain employment external to Qantas who wanted to be released early so that they could take up those positions and we agreed to do that.

PN820

Yes, thank you.

PN821

THE COMMISSIONER: Yes, Mr Borenstein.

<CROSS-EXAMINATION BY MR BORENSTEIN [9.55AM]

PN822

MR BORENSTEIN: Thank you. Mr Ratcliffe, while it's fresh in our mind, in relation to the expressions of interest that you have received you said that there were nine preference options that were available to be expressed by the applicants, can you tell us what they are, please?---They would be to remain in the cost centre that they were in.

PN823

I'm sorry, I didn't hear the last part of your answer?---That would be to remain in the cost centre that they are currently employed in. It would be to transfer to another cost centre in heavy maintenance at Mascot. It would be to transfer to a cost centre at Bankstown. It would be to transfer to the Brisbane heavy maintenance facility. It would be to transfer to the QDS facilities at Richmond, at Amberley and at Villawood.

PN824

And what about an option to just leave?---And that is an option too, to take redundancy.

PN825

What is a cost centre, you mentioned a cost centre?---It's a work unit.

PN826

A work unit, so the first option you mentioned was that you could put in a piece of paper which expressed an option to remain where you are?---That's correct.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN827

So to say that there were 900 pieces of paper returned to you to make that a meaningful piece of information one would need to know, wouldn't one, how many of those pieces of paper said, well, I want to stay where I am?---Yes, we're working through that at the moment.

PN828

And are you in a position to tell the Commission how many people expressed an option to stay where they were?---No, I don't have that detail.

PN829

All right. Are you able to tell the Commission how many people expressed an option to leave the company altogether?---I think in terms of AMWU/AWU I think it was in the region of about 156.

PN830

156?---I think that's contained in my statement actually.

PN831

Is it?

PN832

THE COMMISSIONER: 59, paragraph 36, Mr Ratcliffe?---159, sorry, and there are other employees, 52 licensed engineers have also expressed an interest in voluntary redundancy.

PN833

MR BORENSTEIN: And the total number of positions that you have to shed I think you have said earlier is 340, is that correct, at paragraph 24?---The total number of positions that would be abolished is 484, taking into account redeployment opportunities we estimated that there could be 340 employees facing compulsory redundancy. However, a number of people have indicated they wish to take voluntary redundancy.

PN834

Yes, but when you say 340 employees could face compulsory redundancy what that means, isn't it, that there are 340 positions that have to go, 340 jobs that have to be terminated one way or the other?---That's correct.

PN835

Now, could I just ask you some questions about your position in the company. You have told us in your witness statement that you're the Head of People Qantas Engineering and that you report to Kevin Brown who is the Executive General Manager of People. Is Mr Brown the General Manager of People for Qantas overall?---That's correct.

PN836

Where does Ms Bussell fit into the picture?---Ms Bussell reports to Kevin Brown.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN837

And do you report to her as well?---No.

PN838

So she's in a different stream?---Yes.

PN839

Okay. And you say in paragraph 2 that you have functional reporting responsibilities to Mr Cox. Now, pardon my ignorance but could you tell me, please, what functional reporting responsibilities are?---I'm part of the Qantas Engineering management team and whilst I report to Mr Brown as part of the human resources group Qantas wide I'm assigned to Qantas Engineering and I'm part of the senior management group that assists Mr Cox in running Qantas Engineering.

PN840

And are you part of that - sorry. And in that group are you the person responsible for providing the group with industrial advice?---No, I'm not responsible for providing industrial advice to the group.

PN841

Who does that?---Corporate Industrial Relations.

PN842

And who is the person in charge of that?---Ms Bussell.

PN843

Ms Bussell, I see. On a day to day basis though you'd tell us that you're responsible for the management of industrial relations issues in Qantas Engineering?---That's correct.

PN844

And on this management team for the engineering unit do you provide input on industrial relations issues in the engineering area?---I do in conjunction with Corporate Industrial Relations so there is a specialist department that provides that information that if I needed to go to get the information I would.

PN845

Okay. Now, could I ask you a question about attachment DR1, please. You might just turn that up and look at the second page. In the middle of the second page there's a reference to what's called the sustainable future program?---Yes, I can see that.

PN846

Can you tell the Commission what program is or what it constitutes?---That's a program, as you sort of see from the name of it, it's about sustaining Qantas' future and it's looking at ways in which costs and efficiencies can be obtained across the Qantas group.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN847

Have you been involved at all in any part of that program?---No, that's listed corporately.

PN848

Can you tell us which part of Qantas administers that?---Yes, it's administered corporately. There is a Head of Sustainable Futures who runs that program.

PN849

And do you know how it operates?---It operates on the basis that each of the segments within the Qantas group would be asked to meet particular targets on a year by year basis and there's the Sustainable Futures Group would monitor that and track the savings and efficiencies that have been delivered.

PN850

Now, a couple of paragraphs down from that reference there's a reference by
Mr Dixon to a review process, do you see that? He says:

PN851

To this end we will over the next three months conduct a review of process and activities with a focus on processes that can be removed or redesigned.

PN852

?---Yes, I can see that.

PN853

Now, can you tell us, and this is a document that's dated February 2005, can you tell us whether in 2005 or in the following three months a review process was in fact undertaken in the engineering section where you work?---A process commenced, yes.

PN854

And did you have any involvement in that process?---I had some involvement in it, yes.

PN855

What was your involvement?---As part of a team that looked at range of options and considered those options at that time.

PN856

And did you do that within that three month period that Mr Dixon is speaking about or at some later stage?---We commenced at that point but it continued on.

PN857

And who else was involved with you in the activity you've just described?---There were members of Qantas Engineering management and Qantas Industrial Relations.

PN858

So is that Ms Bussell's organisation?---Yes, and - yes, that's right.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN859

Okay. So just to understand how the review actually proceeded, did somebody, for example, call a meeting on a Monday, invite a number of people say, well, let's sit down and talk about options?---Well, the review commenced with a discussion about the heavy maintenance business and how that might proceed so there was some general discussion about the best way in which that review should take place and then it commenced.

PN860

And what sort of options were discussed about how that review should take place?---Well, the options were after a bit of discussion, I think it came down to basically continue with the business as usual, look at an internal transformation option or an off shoring option.

PN861

That seems to suggest, correct me if I'm wrong, that seems to suggest that people were having this discussion on certain premises about the state of the business at that time. Certain assumptions were made about the state of the business at that time and the options were discussed based on those assumptions, is that correct?
---There was some work that had been done by a consulting company that Qantas engaged that provided some information in relation to Qantas sat relative to its competitors.

PN862

What was the name of the consulting company?---Seabury.

PN863

And at what point in time did they provide that information?---I think it was around about this time last year.

PN864

So if it was April 2005 that's two months after the announcement?---That's right.

PN865

So who was it that initiated that particular exercise by Seabury?---I think it was senior management, I'm not quite sure but I believe it's - - -

PN866

Qantas or in the engineering department?---In Qantas.

PN867

In Qantas, okay. And are you saying to this Commission that the first time that the engineering department was involved in the process was at the meeting, the review meeting that you've just described or do you say that there was involvement from the engineering department earlier which led to the commissioning of the Seabury work?---There had been some earlier work done by Qantas Engineering. There had been work going on across a number of areas of Qantas Engineering for some time prior to Seabury getting involved.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN868

So is it the case that that prior work was information gathering work?---It was. There were a number of different areas that were under review. The engine business had been under review. There had been working going in the ..... maintenance business and there was working going on in the heavy maintenance business.

PN869

When you say there was work going on can we just be specific. Are you saying that there was work in the sense of people collecting information that would indicate the state of each of those businesses?---There was work to look at, for instance, in the engine business how we say relative to other options. The outcome of that review was that there was an investment into the business and the work was kept at Mascot.

PN870

Is my impression correct, that the way in which Qantas seems to go about these things is to identify options and then undertake what it calls a review to see which option it will adopt?---Well, it looks at its businesses. It looks at how those businesses compare with its competitors in terms of turn time and cost to the airline. It would review what options were available to it.

PN871

So the review process goes back to the process of looking at the businesses, assessing the businesses, getting information from other businesses for comparative purposes and then determining and assessing options?---That's correct.

PN872

And the process of assessing the internal businesses and getting information about external businesses for comparative purposes all took place before this announcement by Mr Dixon?---Some did. Some occurred after.

PN873

So we can say that the review process commenced before Mr Dixon's announcement?---There was reviews that have been going on in Qantas Engineering for quite some time. Mr Dixon was talking about, I believe, the whole of the Qantas Group business, not just Qantas Engineering.

PN874

But there is no document to which you have referred which indicates in this sort of public way that a review of the engineering department was occurring before February 2005, is there?---No, but in the time I've been at Qantas reviews have been undertaken quite regularly.

PN875

And it's not common practice for Qantas to say we're reviewing the engine maintenance section or we're reviewing this department or that department, that's not its usual practice, is it?---Yes, if we're reviewing we will tell people.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN876

Well, why didn't you tell them about the review that you had been undertaking before February 2005?---Well, we communicated that the review was going on in other parts of the business. People knew in engine maintenance that there was a review going on. There was a review that went on two or three years ago with General Electric engines and people understood what the outcome of that was.

PN877

What the outcome was?---Yes.

PN878

But what I'm putting to you is that Qantas's case here seems to be look, we've made an announcement about the review, you should have all known about the review because we made an announcement. Your evidence now is that the review in relation to the particular part of Qantas's operation that we're concerned with in fact predated this so called announcement and you've told us that there was no announcement about that review. Now, that's correct, isn't it?---I don't think it's that at all.

PN879

But that is the fact, isn't it?---I'm not sure I understand your question.

PN880

Well, you do understand the question, Mr Ratcliffe, I put it to you a moment ago. There was no document issued by Qantas prior to February 2005 saying we are going to undertake a review of the maintenance engineering department of Qantas?---There is no document that's in my file, that's correct.

PN881

And as you said a moment ago, this reference to a review is a general reference to review through the Qantas group?---Yes.

PN882

And the same may be said about attachment DR2?---I think DR2 is a statement by Mr Dixon referring to a figure of redundancies.

PN883

Now, if you have a look at the second last paragraph of that statement which is 1 March 2005 you will see it says:

PN884

Mr Dixon said Qantas was consulting -

PN885

was consulting -

PN886

and would continue to consult extensively with its people over proposed future changes.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN887

?---I see that, yes.

PN888

Can you tell us what consultations were taking place in relation to proposed future changes in the area of the review you were engaged in?---At that time there'd been the statements issued by Mr Dixon.

PN889

And you say that's consultation?---There'd been statements issued by Mr Cox.

PN890

Mr Ratcliffe, do you say that the statement issued by Mr Dixon constitutes consultation?---I'm saying that that was communicated to people, yes.

PN891

Could you answer my question, do you say that that constitutes consultation?
---Well, I suppose we could have a debate about what constitutes consultation.

PN892

Well, do you say it constitutes consultation?---I'm saying it was communicated to people.

PN893

Mr Ratcliffe, it would of assistance and much quicker if you could just answer my question. Do you say that it constitutes consultation?---In terms of what I understand was going on in the business at that stage was that managers would have been discussing Mr Dixon's statement with their employees in regular meetings.

PN894

You were engaged in a specific review, you tell us, on the maintenance engineering section of the business from early 2005 together with a number of other executives?---Yes.

PN895

Is that correct?---That's correct.

PN896

Now, that group was in charge of that specific review, was it not?---Yes, it was.

PN897

Now, can you tell me whether in relation to that specific review there was as at
1 March 2005 consultation going on with anybody and if so with whom?---Not from that group, no.

PN898

And so Mr Dixon's statement in DR2 does not apply to the review that was taking place of the maintenance engineering department, does it?---Well, Mr Dixon's statement is Mr Dixon's statement.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN899

But it's not correct insofar as it applies to the review that you were engaged in, you've just told us that?---Well, at that point there was no formal consultations but down the track there was consultations because we did not have any particular option that was favoured at that stage.

PN900

And when you say down the track there was consultation, when do you say that that consultation commenced?---I need to refer to my statement. On page 2 at paragraph 9 there was a meeting in August 2005 where Mr Cox, Ms Bussell,
Mr John Vincent and myself met with the AMWU and a number of issues were canvassed including the review of the heavy maintenance business.

PN901

And you say that you've told them what was happening with the engineering review?---We talked about a number of issues including the competitive pressures on the business, the price of fuel, where Qantas Engineering was placed in relation to competitors and what was happening in the engineering review.

PN902

Could I just ask you, Mr Ratcliffe, apart from what's in the statement do you have an independent recollection of this particular meeting?---Yes.

PN903

What did you tell them was happening in the engineering review?---We talked about the pressures facing the business, the options that were under review, as I described earlier, and the need to continue to improve the business.

PN904

Did you tell them about the Seabury report?---I can't recall that.

PN905

You didn't tell them, did you?---I can't recall that.

PN906

When you say you can't recall does it mean that it didn't happen or that you can't remember whether it did or it didn't?---It means I can't recall.

PN907

Yes, but somebody cannot recall because something doesn't happen or somebody cannot recall because they're not sure whether it did or didn't?---I'm not saying - I'm not saying whether it did or it didn't. I'm saying I can't recall.

PN908

And at that point did you invite any input from the unions with whom you were meeting into your deliberative processes?---There was discussion around a range of issues that day and the unions put their views to us.

PN909

What views did they put?---They put the views around, you know, the need to maintain job security and functions on shore in Australia.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN910

You didn't engage them in any detailed discussion about the cost advantages and disadvantages by comparison with other providers such as had been displayed to you by the Seabury report, did you?---No.

PN911

You would agree, wouldn't you, that if the unions were to have some useful input into your processes it would have been desirable for them to be able to address that pretty significant issue, wouldn't you?---At that point there was no decision on what we may do.

PN912

Well, can you tell the Commission whether at any point in the whole process up until 15 March the unions were ever given an opportunity of addressing the decision makers in Qantas about the comparisons between the Qantas performance and its engineering maintenance - aircraft maintenance and the comparators that were used by Seabury, were they ever given an opportunity of putting anything to you about that?---Well, they could have put whatever they wanted at any time, that was up to them if they wanted to do it. Until such time as we have taken a decision there was really nothing to consult with people about.

PN913

I see. But it's correct, isn't it, that at no point in the entire process did you invite them to address the comparisons which you had and which led you, or led Qantas, to make the present decision?---Well, we didn't at that time because we didn't have a decision.

PN914

But you didn't at any time, did you?---We invited them once we'd made a decision.

PN915

Once you'd made the decision on 9 March do you say that you invited them to address the comparisons between the Qantas operation and the external operators which led you to the decision?---Following on from that decision on 9 March we had a number of meetings with unions and I'll just refer to the statement, on page 7, paragraph 30, we met with the AMWU, AWU, CEPU and ASU and at that meeting there was a presentation given by Mr Matt Bresler and discussion took place with the unions around the benchmarking used by Qantas.

PN916

Were you at that meeting?---Yes, I was.

PN917

It's correct, isn't it, that that was a meeting that was requested by the unions?
---That's correct.

PN918

And there had been no offer to present Mr Bresler and his presentation from the company until the unions had requested it?---I think at one of the earlier meetings we'd asked the unions what information they would like to present to us. We'd met with them shortly afterwards from the announcement by Mr Dixon - - -

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN919

Are you referring to the meeting on 13 March?---I'm referring to the meeting on
9 March, approximately 4 o'clock.

PN920

And what do you say you said to the unions at that meeting?---I think we talked about ongoing meetings and what issues they would wish to discuss with us.

PN921

The ongoing meetings were designed to try and avoid as many as possible compulsory redundancies, weren't they?---That's correct.

PN922

The ongoing meetings were not intended by Qantas to canvass the actual decision itself, were they?---That's right.

PN923

There was nothing that the unions could have done after 9 March to persuade Qantas to go back on the decision that was announced on 9 March no matter what information you then provided to them?---Well, I'm not sure that anyone would have wanted to go back on the decision because the other alternative was not something anyone wanted.

PN924

Well, that's not really a point of the exercise, Mr Ratcliffe, as you probably know, but the fact of it is that on 9 March the unions were presented with a fait accompli which began to be implemented on the very same day, isn't that correct?---They were presented with the outcome of the review which was the decision of the company.

PN925

Yes, and that was a decision which was not going to be revoked no matter what?
---Well, I guess it could be changed if the company felt that this outcome was not going to be workable.

PN926

And there was nothing that the unions could do from 9 March onwards to change the decision which was announced on that day by the company, was there?---The decision had been taken and we were moving to implement that decision.

PN927

And the decision was not only taken but on the very same day and at the very same time as the unions were being informed about it you had begun implementing it, isn't that correct?---In what way?

PN928

By putting out - not notices, presentations and applications for EOIs to your workforce?---We met with our employees on that day. We gave them out information packs which included an expression of interest process so that we could start to understand what our employees wanted to do.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN929

About the redundancies?---About the decision in the business, yes.

PN930

Well, just let's be clear and not mince words, Mr Ratcliffe, you gave the employees the packages for the EOIs, the expressions of interest, to determine what the employees response would be to the redeployment and redundancy parts of the decision, isn't that right?---Yes.

PN931

You didn't ask the employees what their attitude was to the decision itself?---No.

PN932

And I think you said that it was at that point on 9 March that you engaged in consultations with the unions for the first time, is that correct?---For the first time what?

PN933

First time you engaged in consultations with the unions about the decision?---On the 9 March, yes, when the decision had been taken.

PN934

Yes, exactly. And the extent of the consultations was as to how to minimise compulsory redundancies?---That's correct.

PN935

And there was no facility to avert redundancies altogether in that consultation process, was there?---No.

PN936

Now, you have told us in your witness statement in paragraph 35 that as Head of People for Qantas Engineering you're aware of Qantas obligations under its various certified agreements and awards, do you recall that?---Yes.

PN937

Was it also part of your function as Head of People for Qantas Engineering to be aware of Qantas' obligations under the Workplace Relations Act?---I would take advice on that from Corporate Industrial Relations.

PN938

And did you?---Yes.

PN939

Did you take advice about the obligations in respect of the decision from that organisation?---Yes.

PN940

And were you directed to the provisions of section 170FCA and section 170GA?
---Not those two sections particularly, no.

PN941

Well, not particularly but were you in general referred to them?---In general I was referred to the obligations that Qantas had under its various certified agreements and awards and the Workplace Relations Act.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN942

Okay. And you told us in 35 that you were familiar with the award or enterprise agreement operations?---Yes.

PN943

Did you take the trouble to check out the obligations under the Act?---No, I didn't.

PN944

You didn't. Was the handling of the industrial relations aspects of the decision a matter that was decided by Ms Bussell's department, or did you decide how that would be handled?---There was discussion with myself, Corporate Industrial Relations and Qantas Engineering management.

PN945

As to how to involve the unions in the processes?---They still had to meet our obligations under our awards and EBAs.

PN946

And in those discussions was there any reference made to the need to comply with sections 170FA or 170GA?---I can't recall specifically having discussions around those particular sections.

PN947

The source of that advice I think you told us would be Ms Bussell?---Ms Bussell or Mr Morley.

PN948

Or Mr Morley. And he's in her section as well is he?---That's correct.

PN949

Yes. And they're located in Sydney are they?---Yes.

PN950

And over the last few days they haven't been overseas or uncontactable or anything of that sort?---The last few days?

PN951

Yes, the last week or so?---Not that I'm aware of.

PN952

Could I ask you to have a look at attachment DR3 now please. Now, do you see that in the last paragraph on the first page, this is Mr Cox isn't it?---Yes.

PN953

There's a reference to benchmarking that was being done at ETOMS?---Yes.

PN954

Apart from the fact that you've told us already about the Seabury Group being engaged do you have any detailed knowledge of how that benchmarking was carried out?---Not detailed knowledge. I have a general knowledge.

PN955

But you don't know the processes that Seabury go through?---No.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN956

Did you have any involvement yourself with Seabury in the course of them carrying out their investigation?---No.

PN957

And I think you've already told us that to your knowledge there was no union involvement in that benchmarking process at all?---That's correct.

PN958

All right. Now, I know that DR4 relates to the Qantas group as a whole and your interest is a narrow one, but could I ask you to have a look at page 3 please. About a third of the way down you'll see that Mr Dixon says:

PN959

Importantly in the last four years and so on there have been fewer than 400 compulsory redundancies of award based staff.

PN960

Do you see that?---Yes, I see that.

PN961

It would be correct wouldn't it to assume that over that four year period if there were 400 compulsory redundancies the likelihood is that there were many more voluntary redundancies because of the processes that Qantas uses?---Across the group there have been redundancies as a result of the impact of 9/11 and the SARS outbreak, and I think in about 2003 there was quite a number of redundancies, mainly voluntary.

PN962

What I'm really getting at Mr Ratcliffe, is that the Qantas approach is to try and achieve reductions in work force by voluntary redundancy and only go to compulsory redundancy if there aren't sufficient volunteers?---That's correct.

PN963

So the likelihood is that 400 compulsory redundancies doesn't give even a close indication of the total number of departures from the company over that period?
---Well, over that period, yes, we'd created far more new jobs than had been made redundant.

PN964

I understand that, but I'm just focusing on the figure that Mr Dixon has put forward. Would you agree with me what I've said about it?---That there was more redundancies than the 400, yes.

PN965

Now, could I ask you to go to DR5 please. This is another document of Mr Cox on 19 August which you've produced?---Yes.

PN966

And which is referred to in paragraph 7 of your statement. And you will see in the middle of the page he says:

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN967

I can understand that everyone in ETOMS has concerns about what is being said regarding future workplace changes. We are very conscious of this. It was announced in February. We have been reviewing all parts of ETOMS segment to ensure we've built a sustainable engineering and maintenance business for Qantas.

PN968

And then can I ask you to particularly look at the next sentence:

PN969

When decisions that need to be made become clearer we can assure everyone that full consultation will occur with you and respective union groups.

PN970

And do you agree with me that that sentence conveys the sense that once options are clear but before decisions are made that full consultation will occur?---No, I don't. Because it didn't talk about options, it talked about decisions.

PN971

Yes. But it speaks about decisions that need to be made, not decisions that have been made, do you accept that?---Yes.

PN972

And do you accept that it intends that the consultations will take place about the decisions that need to be made before they're made?---No. I believe it meant that once a decision had become clear and we took that decision then we would consult with people.

PN973

In the way in which you've done on this occasion?---That's correct.

PN974

Now, in paragraph number 10 you refer to the announcement about the establishment of the new maintenance Centre of Excellence, and the reduction of 60 positions?---Yes.

PN975

And you say there was no need to do that without resort to compulsory redundancies. But the reality of that position was wasn't it, that 60 employees had their employment terminated?---Sixty employees voluntarily left the company with a redundancy package.

PN976

I see. So 60 employees, whoever they were, wherever they came from in that centre, could simply come to you and say I'm leaving, let me have my redundancy?---They would put in an expression of interest, we assessed it, and if we were able to let those people go we let them go.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN977

Yes, you retrenched them?---Yes.

PN978

Yes. So you terminated their employment?---They voluntarily took redundancy.

PN979

They submitted to your termination of their employment?---They voluntarily put forward an expression to leave the company and take a redundancy package.

PN980

Do you say that their submission of the expression of interest constitutes a termination of their employment?---Well, the employment terminated at their initiative.

PN981

Do you say that the submission of their expression of interest terminated their employment?---Well, the - - -

PN982

You retained a discretion didn't you as to whether or not you would terminate their employment once you received all the expressions?---Yes, that's correct.

PN983

And the employer chose which ones it was prepared to terminate and which ones it wasn't?---That's correct.

PN984

And as it happened on this occasion there were 60 people that it was prepared to terminate?---Yes.

PN985

The process of expressions of interest, calling for expressions of interest, is a process that's initiated by the employer isn't it?---That's correct.

PN986

Now, could I ask you to turn to DR6 please. This is a publication by Mr Cox again. And do you see in the section at the bottom of the page under the heading, Reduction in engine maintenance staff?---Yes.

PN987

It says:

PN988

This reduction will occur over the next months and impact will be minimised through expressions of interest for redundancy and outplacement. All staff and unions have been consulted about the reduction requirements.

PN989

Do you see that?---Yes.

PN990

Were you involved in those consultations?---I was involved in some of them.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN991

Okay. Did they occur before or after the decision had been made to reduce staff by 60?---At the point that we took the decision.

PN992

Okay. So the process was the same as on 9 March?---Yes.

PN993

Now, the next attachment is a document that seems to be a press release from Mr Dixon referring to the same engine maintenance centre I think?---What tab is that?

PN994

Seven?---Yes.

PN995

Can I ask you to look at the second last paragraph. He says:

PN996

While reducing staff numbers is always a difficult decision to make we've been discussing the work force requirements of the new centre with staff for more than 18 months.

PN997

?---Yes.

PN998

Were you involved in that?---No, not directly.

PN999

So do you know who was involved in those discussions?---The general manager of the engine maintenance business and his management team.

PN1000

Is that Mr Cox?---No.

PN1001

Who was that?---At the time it was Mr Harris.

PN1002

Mr Harris. Why weren't you involved?---The discussions were around a reorganisation of the business. I had been involved in early discussions when we introduced a new form of work into the centre and there had been extensive consultation with the unions and the delegates around the introduction of team based work, I've been involved in some of those discussions but not all of them.

PN1003

Okay. And apart fro the subjects that you were involved in for discussion do you now what subjects were discussed?---Yes. Processes within the business, structures within the businesses.

PN1004

The need for reduced work force?---The need for the reduced work force as a result of the General Electric engines coming out of Sydney and going to JDS in Melbourne.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN1005

So all of those things took place before the announcement that was referred to in Mr Cox' statement on 31 August, it took place over 18 months?---Well, the decision on the 18th of - sorry, on 31 August was about whether there would be an engine maintenance business or there wouldn't be. The team based work that had occurred prior to that was part of ongoing improvements in the business.

PN1006

Well, Mr Dixon seems to say that it was discussions about work force requirements of the new centre, and they had been taking place for some 18 months before the decision?---Yes.

PN1007

That would seem to suggest that contrary to what you told us a little while ago the process there was different from the process which you undertook in this decision of 9 March because there was no discussion on this occasion with the unions about work force requirements?---There had been a program of change in the engine maintenance business for some time, unions have been involved in the discussions around the General Electric engines and the - - -

PN1008

Are we talking now about the Centre of Excellence issue?---No. I'm talking about the establishment of JDS. The unions had been involved in that discussion and they had been involved in the discussions about the need to make the Sydney engine maintenance centre competitive.

PN1009

Yes. And that had all happened over a period of 18 months?---There had been ongoing discussions over that period of time, yes.

PN1010

And at the end of that period on 31 August Mr Cox made the announcement of the final outcome?---That's correct.

PN1011

Okay. And can I suggest to you that that's not the process that was followed in relation to the decision on 9 March of this year?---Well, the process was that when we announced the decision on 31 August there were a number of redundancies and we engaged in a process to minimise those redundancies, and that is the same process we engaged in on 9 March.

PN1012

A process that took place over 18 months before 31 August of 2005 was not replicated in any way, shape or form for any period prior to 9 March 2006, was it?---There had been in heavy maintenance there had been process improvement going on in heavy maintenance for a period of time in a similar way to engine maintenance.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN1013

But there had been no discussion about work force requirements, to use the phrase which Mr Dixon has used in attachment 7?---Over a period of time there had been discussions with the unions at various points going right back to the establishment of a decision to build a new facility in Brisbane and to transfer the 767 work out of Brisbane - sorry, out of Sydney to Brisbane. There had been discussions with the unions, I think it was about '98, 99 in regard to ongoing requirements.

PN1014

And are you seriously suggesting to the Commission that you treat that as consultations connected with the decision that was made on 9 March, are you seriously suggesting that?---I'm not suggesting that at all. I'm suggesting - - -

PN1015

Well, then why are you telling us about it?---There had been ongoing consultations over a period of time.

PN1016

There had been no consultations about work force requirements at the Mascot heavy maintenance facility over the period of 12 months or thereabouts prior to
9 March of 2006 had there?---Not directly with the unions, no.

PN1017

No. And not even indirectly with the unions, correct?---There had been programs in place within the business around the production requirements of the business.

PN1018

And that's the best you can answer is it?---That is my answer.

PN1019

Now, can I ask you to go to the paragraph 20 of your statement?---Yes, I have that.

PN1020

You see you've told us there that on 22 February the IR department caused an invitation to be sent to the unions for a meeting on the following day to discuss the heavy maintenance review, but then the meeting was cancelled because no decision was made?---That's correct.

PN1021

Okay. The intention on 22 February was to inform the unions on the following day that a decision had already been made by that day, correct?---No.

PN1022

Well, then why couldn't the meeting - why was the meeting called off simply because the decision hadn't been made?---Because the decision had not been made.

PN1023

And the point of meeting with the unions was simply to tell them that the decision had been made?---That's correct.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN1024

And so it couldn't go ahead?---Yes.

PN1025

But as at 22 February - sorry, I'll start again. The letter on 22 February, was that a letter that you sent?---No.

PN1026

Can you tell us who sent it?---I believe it was sent from Qantas industrial relations and it would probably have been sent by Ms Bussell.

PN1027

How do you know about the letter at all?---Because in preparing for a possible announcement we discussed contacting the unions to bring them in for a briefing and they would have been advised of that.

PN1028

Okay. There was nothing that would have prevented the use of the meeting on
23 February to inform the unions of the decision which was in mind to be made by Qantas at that time was there?---Not that I'm aware of.

PN1029

No. And it was quite clear as at 22 February what that decision was going to be wasn't it?---No.

PN1030

It was not?---No.

PN1031

Are you sure about that?---There was no decision taken.

PN1032

I understand that. That wasn't my question. My question was, it was clear at that date what the decision was going to be?---Well, there was a number of decisions - there were a number of options still under consideration.

PN1033

There were three options available weren't there?---Yes.

PN1034

There was do nothing?---Yes.

PN1035

There was the restructure within Australia?---Yes.

PN1036

And there was the offshore option?---That's correct.

PN1037

And it was clear on 22 February that the Australian restructure was the path that Qantas was going to go down?---No decision had been taken.

PN1038

Yes, I understand that. But it was apparent to everybody in Qantas that that was the decision that was going to be taken?---Well, I didn't know what decision was going to be taken.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN1039

You didn't?---I was not the decision maker.

PN1040

Now, you tell us that on 8 March a decision was made by Mr Cox which was the decision that was announced on the following day?---Yes.

PN1041

And that was - do you know at all about how that decision came to be made? If you don't know just say so?---I believe it was made as a result of a recommendation that went from Mr Vincent, the head of maintenance services, to Mr Cox.

PN1042

And is that all that you know about the process of the decision making?---That's generally what I'm aware of, yes.

PN1043

Now, you told Mr Kenzie that you have received a number of expressions of interest and that you are in the final stages of processing those expressions of interest?---That's right.

PN1044

I just want to ask you this. There is a timetable is there not for the processing of the redundancies and redeployment?---Yes.

PN1045

And can you recall the timetable in question?---Broadly, yes.

PN1046

Is it correct that the acceptances of the expressions of interest and the redeployments are to be effected by 28 April?---The expressions of interest closed about 31 March. We're currently working through the process of preferences. What we indicated to the unions, that commencing 28 April and shortly after that we will be contacting people in regard to the outcome of the review, and if - given the letters of offer for positions in terms of redeployment.

PN1047

Okay. So that's all to happen by 28 April?---That's what we're aiming to do, yes.

PN1048

Were you involved in the preparation of the packages that were given to people for expressions of interest?---I saw them, yes.

PN1049

Who prepared them?---People who work for me.

PN1050

Okay. So when did you first see them?---Early this year.

PN1051

Can you give us a date?---Probably in the February timeframe.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN1052

So when you told us a little while ago that at the time of the letter on 22 February no decision had been made and it was all still up in the air?---Yes.

PN1053

It appears that your department has already prepared the expression of interest packages to be distributed to the workers?---We were in preparation for all outcomes of the review.

PN1054

I see. Is that a very cost effective way to run a department?---I believe so, yes.

PN1055

So at that point did you also have paperwork prepared to cover the possibility that the company was going to offshore all of its maintenance?---We had options. All options were under consideration in terms of those sort of options, yes, we would have had paperwork ready to go.

PN1056

You would have?---Yes.

PN1057

You're sure about that?---Yes.

PN1058

So you had two sets of paperwork, one for distribution if the offshore option was taken and one for the current option?---Well, the difference would be that in the offshore option there would not have been opportunities for redeployment in heavy maintenance. There may have been opportunities for redeployment in other areas, but the expression of interest process we would have followed.

PN1059

But the material that was distributed on 9 March covered the options of redeployment as well as redundancy?---That's correct.

PN1060

And the materials that would have been distributed if you'd decided to go offshore would have only had a redundancy option?---No. They would have had opportunities for redeployment in other parts of Qantas engineering.

PN1061

So they would have been different?---Somewhat different, yes.

PN1062

Yes. And you say that you had prepared those different documents on a contingent - - -?---We had templates for all options if they were needed.

PN1063

Okay. And when do you say that you put together the many hundreds of packages that were necessary to go out on 9 March, when were they all put together and collated?---Late February, early March.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN1064

Well, that was before the decision was made?---We were preparing for the expectation of a decision.

PN1065

So did you have packages fully prepared beyond the template stage for the other option of going offshore?---No.

PN1066

You didn't?---No.

PN1067

Well, why not? That was an option?---It was an option.

PN1068

Well, but you said nobody had made a decision yet?---They had not made a decision.

PN1069

Well, when were you going to do that? If they made the decision on 8 March to go offshore you would have been caught short?---We would have printed the necessary documents that we would have needed prior to that.

PN1070

Well, when?---Well, prior to that decision being made.

PN1071

Well, that was the 8th?---Yes.

PN1072

Well, why didn't you follow the same process with the one that you did prepare?
---The preparation was made in anticipation of one of two decisions. We prepared the packs when I think it was becoming apparent that the onshore option was the one that we would probably go down.

PN1073

But you told me when I asked you about this subject earlier, you told me that as at February, late February, there was no indication as to which option was preferred?---I had no knowledge of any option that people were going to take. However, I felt that I should get ready for a particular option, and the particular option I thought from my own point of view was the onshore option.

PN1074

And you're seriously telling the Commission that when you produced the packages for one option and didn't do the other one that was simply on your hunch about which one would be chosen in March, is that what you seem to be telling the Commission that?---I'm not saying it was a hunch, I'm saying it was what I thought we would do.

PN1075

And what basis did you have for thinking that?---Due to my involvement in the discussions just prior to that time.

**** DENNIS MICHAEL RATCLIFFE XXN MR BORENSTEIN
PN1076

And in those discussions you were told by the people who were going to make the decision who were involved in it that that was the likely decision, isn't that the case?---I wasn't told by the people that were making the decision, but I think in terms of my discussions with the people that were putting the recommendation up that we were leaning towards that option in terms of a recommendation.

PN1077

Yes. And that's a subject that could have been discussed in consultations with the unions on 23 February couldn't it?---If the meeting had have gone ahead.

PN1078

Exactly. And it was Qantas that cancelled it wasn't it?---Yes.

PN1079

Yes, thank you.

PN1080

THE COMMISSIONER: Can I just ask one question Mr Ratcliffe. When you were talking about those nine options, nine choices, and then later on you've just gone on with it a bit. Apart from the transfers interstate and in fact to Bankstown and Richmond and places, if they wanted to stay at Mascot you said they could go to other cost centres within heavy maintenance?---Other cost centres within heavy maintenance, and we've also received expressions of interest from our component maintenance, which is a separate business from heavy maintenance and from line maintenance, again a separate business.

PN1081

So they could be swapped?---Yes.

PN1082

Yes, I get you. And if it had gone overseas, the decision had been to transfer everything overseas, you would have broadened the options to the entire Qantas group, you said that at the end?---Yes, we were going right across the whole of Qantas engineering business, and if there were options that side of Qantas engineering people could take those up, as they can now.

PN1083

Yes, thank you. Yes, Mr Kenzie?

PN1084

MR KENZIE: Sir, I have no re-examination. Might Mr Ratcliffe be excused?

PN1085

THE COMMISSIONER: Yes, thank you, Mr Ratcliffe.

<THE WITNESS WITHDREW [11.08AM]

PN1086

THE COMMISSIONER: We might break for 10 minutes.

<SHORT ADJOURNMENT [11.08AM]
<RESUMED [11.22AM]

PN1087

MR KENZIE: I'm sorry, Commissioner. The remaining witness is Mr Clark. Before I call Mr Clark, there is an additional document that has been the subject of discussion between counsel. Mr Borenstein needs to get some instructions on it. And when we close the evidence today it will be subject to the resolution of an issue about a document which will I'm sure not take the Commission's time, but will need to be attended to tomorrow morning before submissions.

PN1088

THE COMMISSIONER: Yes.

PN1089

MR KENZIE: I call Mr Keith Clark.

<KEITH BARRY CLARK, SWORN [11.23AM]
<EXAMINATION-IN-CHIEF BY MR KENZIE

PN1090

MR KENZIE: Mr Clark, could you state your full name for the record please?
---Keith Barry Clark.

PN1091

And your address?---(Address supplied).

PN1092

And are you still employed by Qantas in the position of general manager heavy maintenance?---I am.

PN1093

In relation to this proceeding, Mr Clark, have you made a statement of some 39 paragraphs?---That's correct.

PN1094

And do you have a copy of that statement in the witness box with you?---I do.

PN1095

With the annexures?---I have.

PN1096

And do you say to the best of - I withdraw that. In paragraph 36 of that statement I see there there's a date in the second line of June 2006. Does that require amendment, Mr Clark?---Yes, it does. I'd just like to draw the Commission's attention to that error in paragraph 36 where I say June 2006, that should read
June 2007.

PN1097

Thank you. Subject to that amendment do you say that to the best of your knowledge and belief the contents of the statement are true and correct?---I do.

PN1098

THE COMMISSIONER: I'm sorry, Mr Kenzie. I was a looking at all this last night. I seem to have lost the statement of Mr Clark. I've got the attachments. I don't know where it's gone.

PN1099

MR KENZIE: It sounds like barristers. We've got a copy of the statement with the annexures I can make available.

PN1100

THE COMMISSIONER: No. I'll give you back one sheet because I may have marked these things.

EXHIBIT #QF2 STATEMENT OF KEITH BARRY

PN1101

THE COMMISSIONER: And I note the change. What paragraph was it?
---Paragraph 36.

PN1102

And that's 6 of 2007?---Correct, yes.

<CROSS-EXAMINATION BY MR BORENSTEIN [11.26AM]

PN1103

MR BORENSTEIN: Mr Clark, can you just explain to us at the outset the reporting hierarchy from your position upwards?---Yes. My position is general manager heavy maintenance as stated. I report to Mr John Vincent who is the head of maintenance services. He reports to Mr David Cox who is the executive general manager of Qantas engineering, and David Cox reports to Geoff Dixon.

**** KEITH BARRY CLARK XXN MR BORENSTEIN
PN1104

Okay. As the general manager of heavy maintenance is your area of responsibility basically around Mascot?---No. My responsibility covers off a number of heavy maintenance sites, Sydney, Brisbane, Avalon and Melbourne. Bankstown of course is included within the Sydney organisation.

PN1105

Yes, thank you. And the same geographic cover would apply to Mr Vincent and to Mr Cox?---That's correct.

PN1106

Could I ask you firstly about what you've said in your statement about the Avalon facility which you talk about at paragraphs 9 to 12. You say at that part of the statement that a second line was established at Avalon to do modifications to the 747 series aircraft which you call a sky deck program, is that correct?---That's correct.

PN1107

And that that is now coming to an end and that allows you excess capacity at Avalon?---That's correct.

PN1108

The work force - sorry, when you say excess capacity are you talking about physical or man power capacity?---I talk about both. Excess capacity means capacity within a maintenance line, and of course in the maintenance line there are employees.

PN1109

Yes. In terms of the physical structures, the physical aspects of what's now excess capacity at Avalon are we talking about hangar space for example?---Yes.

PN1110

Anything else?---No.

PN1111

In terms of work force excess capacity these are people who are employed by Qantas?---Qantas and Forstaff Aviation.

PN1112

Okay. What level of employees are employed by Qantas, what classification levels?---Senior LAME and upwards, senior LAME maintenance supervisor and manager.

PN1113

And in terms of numbers how many all together does Qantas employ at Avalon at the moment?---Approximately 60.

PN1114

Sixty. And how many of them are dedicated to the sky deck program?---About one third.

**** KEITH BARRY CLARK XXN MR BORENSTEIN
PN1115

The balance of the work force overall at Avalon is employed by Forstaff you say?---That's correct.

PN1116

Forstaff is a labour hire company is it not?---That's correct.

PN1117

And is it correct that they absorb fluctuations at Avalon in the need for work force from time to time?---What we do with Avalon is we set the labour requirements at the beginning of the year, define the numbers and the skills, and Forstaff Aviation recruit to those levels.

PN1118

Yes. And if there are fluctuations in the course of the year what happens?---In terms of work load?

PN1119

In terms of the numbers of people that Forstaff present for work each day?
---Obviously Forstaff Aviation is part of their contractual arrangements with us. They're required to ensure that the numbers and the skills are at the workplace each day.

PN1120

As required each day?---And they will manage that accordingly.

PN1121

Yes. But my point was really this. That if on Monday you need - let's just take a figure out of the air - 500 people, Forstaff have to provide 500 people on Monday. If by Thursday you only need 150 - and I know this is not realistic, but just for example - if on Thursday you need 150, then under your contract with Forstaff does Forstaff only have to present 150 people?---No. Forstaff are contracted to present the number of the people that we agree to at the beginning of the year, and it is our responsibility to do whatever we can to ensure that the work load matches those head count numbers.

PN1122

I understand that, thank you. This year on year figure, when is that determined, which date?---That's generally around about budget build time which is usually in the first quarter of the calendar year.

PN1123

And so in that first quarter you determine how many people you will need in the coming year, is that correct?---Correct.

PN1124

And then when does the actual contract year with Forstaff start, what
date?---Well, it's a contract that spans a number of years, but we have an obligation to speak to Forstaff at the beginning of the financial year around numbers and skills, and those numbers are maintained throughout the course of that year.

**** KEITH BARRY CLARK XXN MR BORENSTEIN
PN1125

Okay. So say by 1 July you have to let Forstaff know what the number is for the coming financial year?---Correct.

PN1126

Okay. So in terms of excess capacity in the work force you could within the terms of your contract with Forstaff between now and 1 July come and say to Forstaff, well, the sky deck program is now completed and so next year the total number of people we need is this figure instead of the figure we had in the last year?
---Correct.

PN1127

And if you were to do that, hypothetically, if you were to do that, that in terms of excess capacity at Avalon the only issue you'd be confronting would be the issue of excess physical capacity in terms of facilities?---Correct.

PN1128

Now, can you just tell me please, in terms of the proposal that was announced on 9 March what heavy maintenance work is it intended will be carried out at Avalon?---As part of that announcement Avalon will take on the maintenance program for the 747 400 and the 747 300 fleet.

PN1129

And in the papers there's references to C checks and D checks and so on?---They are the various checks that make up the maintenance system within an aircraft type.

PN1130

Yes, I understood that. Is Avalon going to carry out C checks on these aircraft?
---Yes.

PN1131

Is it going to carry out D checks on this aircraft?---Yes.

PN1132

And when is that due to commence?---That's due to commence, the first D check is at Avalon on 29 April.

PN1133

Of which year?---Of this year. Now, Avalon is already in its current capacity performing work on 747 400s and 747 300s.

PN1134

What work is it doing currently on them?---C checks and super As and D checks on 747 300s.

PN1135

And is it intended that that work which is already there will continue alongside the new work that comes to it?---That's correct.

**** KEITH BARRY CLARK XN MR BORENSTEIN
PN1136

It's correct isn't it that a D check is the most thorough going maintenance check of an aircraft?---It is.

PN1137

You've got to virtually take the aircraft apart and go through all the component parts and then put it back together?---Well, it's the largest of the checks that falls within the maintenance system for those wide bodied aircraft, yes.

PN1138

But it does involve dismantling, significantly dismantling the aircraft and the various components being sent to workshops to maintain?---Correct.

PN1139

Those checks are currently being done at Mascot, correct?---For the 747 400, yes. For the 747 300, no.

PN1140

Okay. And there are various differences between the two aircraft, that's correct isn't it, or only just minor?---Minor differences.

PN1141

At Mascot for the performance of these D checks there are a number of support facilities, workshop support facilities are there not?---Correct.

PN1142

And as part of this program they're going to go are they not?---Part of them will go.

PN1143

Yes. There are presently no similar workshops at Avalon are there?---There is.

PN1144

And what are they used for?---They are used for providing the support activities whilst a 747 300 D check is undertaken at that facility.

PN1145

But if they're being utilised to capacity on the work that they are now doing and you wish to introduce a new line to do checks on new aircraft, doesn't that suggest that you will need expanded workshop facilities?---No.

PN1146

It doesn't?---No, because there is only ever one D check in at a time.

PN1147

Then what's the advantage that I thought you were referring to in your statement about having a second line at Avalon?---The advantage is the benefits that the business gets through better management of labour resources about having multi line facilities.

PN1148

Can you explain that please?---Well, you can have facilities, and it doesn't have to be Qantas, it could be any facility around the world that runs single lines of operation. The most leading maintenance repair organisations, as we call them, run multi line facilities, so the business gets the benefit of being able to better utilise and manage the resource split across those maintenance lines, which you don't always get the benefit of doing if you have a single maintenance line.

**** KEITH BARRY CLARK XN MR BORENSTEIN
PN1149

But if you've got - at the moment you've got a facility that is there and available to be used for a D check, let's say a D check on a 300 series 747, and a 400 series come in onto the second line and you're doing both of them at the same time, then you wouldn't have the facilities to attend to both?---We won't be doing both at the same time, that's what I said before.

PN1150

It's a matter of scheduling?---Correct.

PN1151

If it's simply a matter of scheduling why isn't it possible to schedule the 300 series on 1 March let's say, and then schedule the 400 series on a date when that one is complete and so on, and just have them consecutively instead of having them on parallel lines?---Well, you're confusing checks with aircraft types. I mean, the statement I made a minute ago was with respect to checks. We do not run concurrent D checks in one line and in another line concurrently, and we've never done that in Sydney and we've never done that in Avalon.

PN1152

I see, okay. Now, in paragraph 13 of your witness statement you say that there's been a review conducted of the ongoing viability of the heavy maintenance operations against the national benchmarks since August of 2004?---Correct.

PN1153

What involvement did you have in that review process?---Very little personally apart from some people that work for me being involved in that process.

PN1154

Who was in charge of the repair?---In 2004 Business Planning, which is a support area of Qantas engineering, was tasked with the job of performing benchmarking studies across all areas of Qantas engineering, my area in particular, and I had one or two people on occasions involved with that process, and that process meant those individuals visiting various MROs and facilities around the world to gather information.

PN1155

And they're the people out in your section?---Correct.

PN1156

And what sort of information did they collect?---Well, you collect information on the number of employees, the skills, the capabilities and turn times in particular.

PN1157

Work practices?---Work practices, yes.

PN1158

Management structures?---Well, organisations.

**** KEITH BARRY CLARK XN MR BORENSTEIN
PN1159

Organisational structures?---Mm.

PN1160

Yes. Because they all in their way impact on the inefficiencies of the operation?
---Correct.

PN1161

So that was done by people out in your section?---It was done by Business Planning, and we involved people out of our section to ensure that we had some visibility of that process.

PN1162

Yes. And because the people in your section would have familiarity with the processes and perhaps draw attention to the relevant aspects of the operations that people are looking at overseas?---Correct.

PN1163

And what happened to all that information that was gathered?---That information was compiled by Business Planning and put together in a report.

PN1164

And who did that report go to?---That report went to David Cox.

PN1165

And was there a similar exercise carried out in respect of the domestic operations?---Correct.

PN1166

And did that also find its way into a report to Mr Cox?---It did.

PN1167

And do you know what happened with the information after Mr Cox got it?---As a result of that report it was that report that identified in heavy maintenance in particular where we sat competitively across or in comparison to other facilities that we'd benchmarked against.

PN1168

Now, we've been told that an organisation called the Seabury Group had some involvement in the process. Do you know of that?---Yes, I do.

PN1169

What was their role in it?---Their involvement was in 2005.

PN1170

So it was after this process had been completed?---Correct.

PN1171

Yes. And what was their function?---Their function was to validate the benchmarking that Qantas had undertaken in 2004, as well to initiate a process whereby they would commence a process of seeking an RFI from other maintenance repair organisations around the world.

**** KEITH BARRY CLARK XN MR BORENSTEIN
PN1172

What's an RFI?---It's a request for information, and we were asking, or they were engaged in seeking information from each of those providers around their ability to be able to perform work against a defined work scope, so it was looking at capacity, it was looking at man hour rates, it was looking at turn times and so on.

PN1173

So would it be fair to describe the steps along the way as being the collection of information for the benchmarking process that took place in 2004?---Correct.

PN1174

Reporting the outcome of that to Mr Cox and then the engagement of the Seabury Group to, as you say, validate the outcome. Now, when you say validate the outcome, can you just explain to me what you understand that process involved?
---Well, the process that we undertook in 2004 identified a 20.9 per cent gap between the costs of my business compared to the costs of those businesses that we benchmarked against. It is fair - - -

PN1175

Can I just interrupt you for a moment. You told us that there were a number of other providers of maintenance that you went to look at. When you talk about 20.9, should we take that as being an average of the costs at each one of them?
---Yes. Well, I'll explain that. So the 20.9 difference was a dollar per block hour rate which is a measurement that we use in the airline industry. You gather a whole lot of data. A lot of that data is data that's available in the public arena for any airline or MRO to access. As well as that we gathered a lot of other data but, however, you need to be absolutely certain that we were making apples to apples comparisons. So the Seabury process was to validate that process as well as initiate the process that they undertook with the various vendors.

PN1176

When you say compare apples with apples, where's the potential pitfall, if you're going to MROs around the world, they're all MROs, presumably they all do D checks on the aircraft that you're interested in?---Well, sometimes there are subtle differences.

PN1177

Of what kind?---Well, I mean, Boeing when they build an aircraft, or Airbus when they build an aircraft design a maintenance system to go with that aircraft. It is then up to the operator, the airline to decide whether they adopt that maintenance system or they do something different. So you need to be absolutely certain that you understand the system of maintenance that exists at those facilities.

PN1178

I see. So in Australia for these aircraft Qantas has adopted a particular maintenance program or process?---Correct.

**** KEITH BARRY CLARK XN MR BORENSTEIN
PN1179

And so when you were going around to the various MROs to see how they do it, it's not a genuine comparison if they do a different process?---Correct. But that was why I had my people there, to ensure that the comparison that was being made was a genuine one.

PN1180

I understand that now. And when you talk about the 20.9 per cent differential, presumably calculations were done for the different MROs, and is that 20.9 per cent a comparison for the average across all of the comparators?---Correct.

PN1181

And then coming back to the function that Seabury undertook, you said that they validated that, you've explained that, and then you said they did something further about the, I think you called it the vendors?---Yes, sorry. The vendors were - we've used the term vendors as the term that we used to identify those facilities that Seabury undertook the RFI process with.

PN1182

Okay. And that second stage was to see whether there was capacity to accommodate your needs if you decided to go that way was it?---No. That process was asking a number of questions of those providers, some of which, or one of which was the capacity issue, yes.

PN1183

Now, you tell us in paragraph 13 that as a result of the review process the heavy maintenance business developed and evaluated three main transformation options, and you've set them out; business as usual, offshore, internal transformation, correct?---Correct.

PN1184

Were you involved in the development of those options?---Not directly, but many people in my area were.

PN1185

Well, you were kept informed about the process?---Yes.

PN1186

Okay. Were you informed to the extent that you can tell us when these options were developed and evaluated?---Well, the options were developed following the 2004 exercise, and we've made no secret of that. I mean, in many presentations that I made we spoke about the three options, because obviously we needed to put together a plan as to how we might move the business forward.

PN1187

Part of the - as you've told us, part of the comparisons between the existing structure at Mascot and the MROs that you were looking at elsewhere was the labour component, the utilisation of labour, the cost of labour. At no point in this process does there seem to be any facility provided to the unions to provide comments or input, suggestions in relation to the options, correct?---They were options and they were still - they were under view. At that stage we had made no decision as to which option.

**** KEITH BARRY CLARK XN MR BORENSTEIN
PN1188

But you were in the process of making a decision, you were going towards a decision?---We were in the process of reviewing the options, yes, ultimately to make a decision on one of those options.

PN1189

Yes. The review would lead you to the option which was the best, and that's the one you'd tick off?---One would hope so.

PN1190

Yes, one would hope so. But it's precisely because that was the process that you're in that I'm suggesting to you that if the unions were to have any meaningful thing to contribute, that that would have been the time to contribute it rather than when everything was signed off, wouldn't you agree?---No.

PN1191

Once the thing is signed off as it was on 8 or 9 March, there was no facility for going back was there?---No.

PN1192

So anything that the unions put at that point was a waste of time?---Well, I wouldn't say a waste of time, but a decision was made.

PN1193

Right. Now, you know that this case is a case about the unions' complaint about not having been given consultation?---Yes.

PN1194

Now, you'd accept wouldn't you that - I'm sorry, one question before that. You understand that Qantas' position is that the unions were given the opportunity to consult on and after 9 March?---Correct.

PN1195

And that was a point of time which the decision was signed, sealed and delivered, so to speak?---Correct.

PN1196

And indeed was in the process of being implemented by the distribution of packages of expressions of interest to be made?---No, that's not correct. I mean, the - I was intimately involved in that process leading up to the signing of the business case on the 8th. Certainly the internal option was one that I had a personal view on obviously, it was my business, but there was a whole lot of different scenarios within the internal option, and that decision had not been made.

PN1197

I wasn't asking you about that, Mr Clark. I was saying to you that after 9March - I'm sorry, I was saying to you that on 9 March after the decision had been made, on the same day packages of expressions of interest were going out to employees?---Correct.

**** KEITH BARRY CLARK XN MR BORENSTEIN
PN1198

And that's part of the implementation of the decision?---Correct.

PN1199

Yes. And what I was putting to you was that the decision was announced on 9 March, and immediately there was the commencement of implementation?
---There was commencement of communication, yes.

PN1200

Well, part of the implementation of the decision was to call for expressions of interest wasn't it?---Correct.

PN1201

And that happened on the same day?---It did.

PN1202

Yes. Now, at that point there's nothing that the unions could have said to you, you Qantas, that could have undone the decision is there?---No.

PN1203

No. And so don't you agree that any so called consultation at that stage was pretty well fruitless?---The consultation process as I understand it is all about once a decision is made, in this particular case this one, engaging unions and employees about that decision and continuing that consultative process for as long as it takes to ensure that both parties, or the unions in this case in particular, are fully briefed on the decision, the options and the process moving forward.

PN1204

And that's your understanding of consultation?---Yes.

PN1205

And in arriving at that understanding have you undertaken any study of, for example, the Workplace Relations Act?---No.

PN1206

Now, if it were the case that the legislation called for consultations to be undertaken with a union for the purpose of trying to avert the need for terminations of employment - do you understand what I mean?---Yes.

PN1207

You'd agree with me wouldn't you that that would be inconsistent with the sort of consultation that you undertook from 9 March onwards?---Well, it's consistent with the consultation we undertook. The process was to - or the consultative process was all about mitigating redundancies as much as we could.

PN1208

Well, how can that be when you had made the announcement of the number of employees that had to go from Mascot?---Yes, but there was a consultative process that we undertook on the day of announcement in conjunction with the unions, and that consultative process I might add is still continuing now about the process.

**** KEITH BARRY CLARK XN MR BORENSTEIN
PN1209

But there's nothing that the unions could have said to you that could have changed the number of positions that had to go?---No.

PN1210

And so there is no consultation that they could have had with you for the purpose of averting any - - -?---If you're talking about absolute numbers, yes.

PN1211

Yes?---Well, if you're talking about did the unions have the opportunity to change a number from something to something, no. But the process that we have undertaken is to in a great deal of detail explain to the unions about the redundancy numbers, the numbers of employees affected in those respective areas and the process that we will put in place to try and do whatever we can through redeployment and other opportunities to mitigate or minimise.

PN1212

If I'm talking about averting the number of positions that have to be disposed of, your answer was that the unions could have changed nothing?---Correct.

PN1213

Now, you said a moment ago that prior to the decision on 8 March there were a number of options that were still alive and that you had a particular interest in, in terms of maintaining that stand for personal reasons, as may have been the case with the workers who worked there. There was no exploration by the company with the unions in an effort to address some of the work practice issues that may have been thrown up by the benchmarking that you'd undertaken, there was no such approach to the unions was there?---Well, that's incorrect.

PN1214

Is it?---The last two EBA processes I have had on the table a number of flexibilities that I believe would be able to assist the heavy maintenance in improving its competitive position.

PN1215

And in the context of the decision itself to close down the heavy maintenance facility do you say that you put it to the unions in the period leading up to March, February, January, December, that this was an option that was being considered and that if these work practices could be introduced it would influence the decision?---No, I didn't say that.

PN1216

Now, in terms of the business case that Mr Cox was given on 8 March by Mr Vincent, you've attached that as attachment KC1 to your statement?---Correct.

PN1217

Did you have any role in the preparation of that business case?---No.

**** KEITH BARRY CLARK XN MR BORENSTEIN
PN1218

Do you have any knowledge of how Mr Vincent put the case together?---We had a person that was nominated to prepare a business case on our behalf, which I obviously reviewed and put a recommendation to Mr Vincent.

PN1219

And is that pretty much the document that you see in KC1?---Correct.

PN1220

Now, Mr Cox would have been alive wouldn't he to the various options that had been under discussion for a number of months?---He was.

PN1221

And before this business case came to him he would have been in communication with Mr Vincent and perhaps others about the direction in which I think he was going?---He was aware of the options, certainly aware of the options, he was aware of the various options within the internal transformation package, but ultimately he was to be the decision maker, so he was being briefed but was not intimately involved in the process.

PN1222

Okay. He would have had to bring to bear presumably various political considerations as well as just a pure business case?---Well, that's a question for Mr Cox, I've got no idea.

PN1223

No. But you would understand that in terms of the fuss that was made about the suggestion that came out early in the year from Mr Dixon that maintenance might be sent offshore?---I read the newspapers as well.

PN1224

Yes. Do you know whether there were any, and if so, what discussions between Mr Vincent and Mr Cox in the days around 8 and 9 March - perhaps not 8 and 9, but leading up to 8 March about this business case before Mr Cox signed off on it?---I'm not aware. I wasn't certainly involved in any discussions personally.

PN1225

Are you aware that on 22 February it was thought - sorry, I'll put it another way. On 22 February a letter went out to the unions inviting them in for a session with Mr Dixon to inform them of the decision that had been made about heavy maintenance, do you recall that?---I do.

PN1226

And then it was cancelled?---Correct.

PN1227

Can you tell us what the circumstances were of that cancellation?---Well, as I understand it was unclear, certainly unclear to me as to when a decision would be made, and it was obviously unclear to others. There were a lot of press reports at the time. There were press reports in January about decisions in February, there were press reports about decisions made in March.

**** KEITH BARRY CLARK XN MR BORENSTEIN
PN1228

But they were the press?---Sorry?

PN1229

But they were the press. You're on the inside?---Well, I had no idea personally as to when the decision would be made, and that made my position somewhat difficult as well. So I know of the letters, I know of the letters that they - I know the fact that the letters went out and I know they were recalled, and that's all.

PN1230

But you don't know what happened?---No, I don't.

PN1231

Okay. Now, in this business case at page 7 there is a heading Risks. This is in attachment KC1, Commissioner. And you will see in the mitigation summary that it's said that:

PN1232

Working with IR Qantas engineering has developed a comprehensive strategy to manage compliance with a job security provision and to manage any industrial action which may occur as a result of this decision.

PN1233

Do you see that?---Yes, I do.

PN1234

Were you involved in that?---Not directly, no.

PN1235

People in your section?---No.

PN1236

So you know nothing about this?---No. One of the attachments to the business case is that summary, and I was not the author of that document.

PN1237

Can you just identify the page that you have in front of you?---Well, if you have a look at the operations impact assessment, which is an attachment to the business case.

PN1238

Yes. You're looking at page 4 are you?---Well, I'm looking at the attachment to the business case.

PN1239

Yes, I know. I'm looking at that document too. But of that document - - -?---I'm sorry. Yes, I've got page 4.

PN1240

Now, I think there's further elaboration of that on pages 10 and 11, if I'm not wrong?---Yes.

**** KEITH BARRY CLARK XN MR BORENSTEIN
PN1241

And you say you're not the author of that. But were you aware of the policy, the mitigation policy?---Yes, I was.

PN1242

And are you able to say to the Commission, are you able to tell the Commission whether or not it was part of that policy to tell the unions of the decision only after it was made so as to mitigate the risks of industrial action preventing the decision being made?---No. I mean, our decision was to inform and consult with the unions as per the protocol once a decision had been made.

PN1243

Thank you.

<RE-EXAMINATION BY MR KENZIE [12.08PM]

PN1244

MR KENZIE: Mr Clark, just a couple of matters. You said a couple of times, and you referred a couple of times to the options within the internal transformation package?---I did.

PN1245

Could you just expand a little bit for me on that. What sort of options within the internal transformation package would there have been? It would be the sub options really are they?---Correct. So internal transformation could have taken a number of models. It could have been to continue Sydney performing a particular work scope, moving some of the work that's currently performed in Sydney to Avalon. It included moving all of the work to Brisbane, and it included doing options with A330, a whole lot of options around what the footprint might finally look like.

PN1246

Thank you, Mr Clark. Might Mr Clark be excused?

PN1247

THE COMMISSIONER: Yes, thank you, Mr Clark, you can go.

<THE WITNESS WITHDREW [12.09PM]

PN1248

MR KENZIE: As we indicated, that subject to a document that Mr Borenstein and I were to discuss, that will be the evidence of Qantas in the proceeding. And as we understand the arrangements, the Commission will otherwise proceed to hear the parties' submissions.

PN1249

THE COMMISSIONER: Tomorrow morning, yes, at 9 o'clock. Yes, okay, we'll adjourn until 9 am tomorrow. Thank you.

<ADJOURNED UNTIL WEDNESDAY 12 APRIL 2006 [12.09PM]

LIST OF WITNESSES, EXHIBITS AND MFIs

JOSEPH MICHAEL CAMPBELL, SWORN PN672
EXAMINATION-IN-CHIEF BY MR BORENSTEIN PN672
EXHIBIT #AMWU3 STATEMENT OF JOSEPH MICHAEL CAMPBELL PN685
CROSS-EXAMINATION BY MR KENZIE PN715
RE-EXAMINATION BY MR BORENSTEIN PN783
THE WITNESS WITHDREW PN786
EXHIBIT #AMWU4 QANTAS AIRWAYS LTD AWU/AMWU ENTERPRISE AGREEMENT NUMBER 6 PN787
DENNIS MICHAEL RATCLIFFE, SWORN PN793
EXAMINATION-IN-CHIEF BY MR KENZIE PN793
EXHIBIT #QF1 STATEMENT OF DENNIS MICHAEL RATCLIFFE PN799
CROSS-EXAMINATION BY MR BORENSTEIN PN821
THE WITNESS WITHDREW PN1085
KEITH BARRY CLARK, SWORN PN1089
EXAMINATION-IN-CHIEF BY MR KENZIE PN1089
EXHIBIT #QF2 STATEMENT OF KEITH BARRY PN1100
CROSS-EXAMINATION BY MR BORENSTEIN PN1102
RE-EXAMINATION BY MR KENZIE PN1243
THE WITNESS WITHDREW PN1247