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Category Archives: cost-cutting

 Michelle Grattan

April 20, 2012

 THE government has seized on shadow treasurer Joe Hockey’s provocative attack on ”entitlements” to claim a Coalition government would make widespread cutbacks that would hit families.

In a major speech in London, Mr Hockey condemned systems of ”universal entitlement” in Western democracies, contrasting this with the concept of ”filial piety” thriving across Asia, where people get what they work for and families look after their own. Although Mr Hockey was more qualified about the Australian situation, when pressed later about whether the Coalition would look at the whole range of entitlements, he said: ”Yes.”

Prime Minister Julia Gillard said Australian families should be deeply concerned about Mr Hockey’s remarks.

She said he was talking about cuts ”to things like family payments to help people with the costs of raising the kids, things like pensions that older Australians rely on, all of the benefits and services that help families along, like relief on childcare fees, let alone of course the great benefits of things like Medicare and free public hospitals”.

The message of Mr Hockey and Opposition Leader Tony Abbott to families was ”you’re in for cutbacks and if you can’t cope, well, just try fending for yourself and if you can’t fend for yourself well, unfortunately that’s too bad”, she said.

But Mr Abbott said Mr Hockey was making the obvious point that governments had to live within their means. Australia’s situation had not got to the level of some other countries but ”there is a danger that we ourselves could ultimately go down an unsustainable path … it’s the job of the Coalition to ensure that we never do”. Greens leader Christine Milne said the logical conclusion of what Mr Hockey was saying ”is no universal healthcare, no universal access to public education”.

Ann Nevile of the Crawford school of public policy at the Australian National University said it was unlikely that the policies of Asian countries could be successfully transplanted to Australia because those countries’ social conditions were different to Australia’s.

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Reko Rennie
June 11, 2009 – 11:45AM

Australian aircraft engineers have blasted Jetstar and Qantas for using cheap maintenance facilities overseas after a Jetstar plane’s cockpit caught fire and forced an emergency landing in Guam early this morning.

The engineers union has disputed claims by Jetstar management that the aircraft had been maintained in Australia, saying its last major maintenance check occurred in the Philippines.

The Jetstar A330-200 aircraft – flight JQ 20 – left Osaka’s Kansai International Airport for the Gold Coast just before 11pm last night (AEST) carrying 186 adult passengers, four infants and 13 crew including 9 cabin crew and 4 pilots.

Jetstar in forced landing
A cockpit fire has forced an international Jetstar flight carrying 203 people into an emergency landing on the Pacific island of Guam.
Jetstar chief executive officer Bruce Buchanan said a computer error message identified a fault with a heating element in a cockpit window that caused a small fire.

The pilot managed to extinguish the fire and send out a mayday call before conducting an emergency landing at Guam airport.

The Australian Licenced Aircraft Engineers Association is angry about comments by Jetstar management that link the latest cockpit fire incident to Qantas engineering within Australia.

Jetstar spokesman Simon Westaway stood by his statements and told The Age the less than two-year old plane was checked in Australia only last month.

“The last major check on that aircraft is what’s called an A-check was undertaken in May of this year and it was undertaken by Qantas engineering in Australia,” Mr Westaway said.

But Steve Purvinas, the engineers association’s federal secretary, said the Jetstar A330 last underwent major maintenance in Manila in December 2008.

He said this was the second emergency landing forced by cockpit smoke in 18 months.

“Qantas group A330 aircraft have never undergone major maintenance in Australia,” Mr Purvinas said.

“This is the second cockpit smoke emergency landing on a Qantas group aircraft in 18 months and in both cases the aircraft had undertaken maintenance in the cheaper overseas facilities.

“The previous incident occurred in February 2008 on a Boeing 747 and resulted in an emergency landing in Sydney.”

He said Qantas and its subsidiary Jetstar were lucky the two cockpit incidents occurred in an area of the aircraft that was easily identifiable and accessible.

“Qantas are blessed that these incidents didn’t occur in cargo holds or electronic equipment bays,” he said.

“Qantas need to come clean about the high level of overseas maintenance on Australian aircraft or better still, bring the full workload back to Australia where aircraft maintenance over a long period of time has proved to be second to none.”

The Australian Transport Safety Bureau has sent investigators to Guam to examine the aircraft, while the US-based National Transportation Safety Board and Qantas would also investigate the incident, Mr Buchanan said this morning.

“It’s no human error.”

Mr Buchanan said the aircraft went into service in August 2007 and the window was one originally fitted by the manufacturer.

Passengers – most of whom were Japanese nationals except for 44 Australians – were unaware of the incident and there was no smoke or fire in the cabin. No one was injured.

“He’s (the pilot) called a mayday and diverted into Guam and all passengers and crew are safe,” Mr Buchanan said.

“In fact most of the passengers were unaware until they got onto the ground and the captain informed them of what actually happened.”

The flight landed safely without incident at Guam International Airport at 2.20am (AEST).

Mr Buchanan commended the crew’s quick actions in putting the fire out. He said the chief pilot had 14 years’ experience flying with Qantas.

“I’d just really like to commend the pilots … they’ve reacted swiftly and in a very professional manner,” Mr Buchanan said.

Jetstar will send a plane from Sydney at 11am today to collect the passengers and crew, who are being accommodated in hotels in Guam. The plane is then due to depart from Guam at 6pm to fly back to Brisbane.

The island of Guam is a US territory, located in the Pacific Ocean about 2100 kilometres east of the Philippines.

The aircraft is the same model as the Air France flight which disappeared over the Atlantic Ocean earlier this month.

A team of ATSB investigators, including operations, electrical engineer and licensed aircraft maintenance engineers, will travel to Guam this morning to commence the investigation.

A passenger on board the flight, Adam Power, told 3AW he could smell something for two hours before the plane descended.

“I think their main aim was to just keep us calm. There were no bumps or anything like that, just a heavy smell. I wouldn’t say it was a fire smell, it was like someone was cooking or something like that. A different sort of smoky smell … it was a weird smell.”

He said they were told there were “technical difficulties” while they were in the air, with the passengers being told there was a fire after they had landed.

He said that the jet landed about half an hour after the announcement, but the smell was present for about two hours before that.

Mr Power, a musician, said the worst thing was he had to cancel a gig schedule for tonight in Brisbane. “I’ve got to call the manager of that bar. Hopefully he’ll believe me.”

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Cosima Marriner and Peter Martin
May 22, 2009

THE chairman of Australia’s largest company, BHP Billiton, has contradicted assurances by the Rudd Government, Treasury and Reserve Bank that an economic recovery is imminent, warning instead it will be “protracted and complex”.

Speaking at his old high school in Brisbane yesterday, Don Argus said he was “pessimistic” about prospects for recovery in the short term.

His comments follow spirited defences by Treasury Secretary Ken Henry and Reserve Bank governor Glenn Stevens of growth forecasts in last week’s federal budget. The economy is projected to grow above 4.5 per cent from the middle of 2011, a forecast economists have questioned and Opposition Leader Malcolm Turnbull has labelled “completely unbelievable”.

“(Dr Henry and Mr Stevens) have got the levers of the economy,” Mr Argus said. “I’ve got a balance sheet, I’ve got revenue statements, I deal with customers, I’m a contributor to the Australian economy … I’m just calling it from where I see it.”

Mr Stevens tipped on Tuesday that “a recovery will get under way towards the end of the year”. But Mr Argus warned it would be a “pretty tough” 2009 and 2010. “We can hope for recovery. We should also have contingency plans for scenarios where world capital markets continue to provide surprises on the downside.”

He said that while some people would call his comments pessimism, “I prefer to call it caution that 50 years in corporate life engenders … The current outlook is very uncertain.

“It’s very much reliant on the Government, corporate and regulatory response to the global financial crisis. It will be a difficult transition period. Governments and corporates have to pay off debt and rebuild their balance sheets.”

He predicted that Australians who had so far been shielded from the impact of the crisis would start to be affected, as the Government was forced to pay back debt incurred with its stimulus packages. “They can’t do that without budget cuts and increasing taxation.”

Mr Argus based his analysis on an International Monetary Fund report, his own analysis of the 1987 crash, and business conditions BHP is experiencing. “The IMF report makes it easy to conclude that the road to economic recovery will be slow, hence my cautious response to the recent political rhetoric.”

He said the recovery would be under way when financial institutions had access to good liquidity and had dealt with distressed assets, and weak institutions had been recapitalised.

His comments came as it was revealed Australians paid off $19.7 billion of credit card debt in March — the second-biggest amount on record — as $900 and $950 cheques directed at single-income families, carers and parents of children at school went out. The record for card repayments was in December, when stimulus cheques of between $1000 and $2000 went out.

There was also a spending surge in March, with credit cards getting their second-biggest work-out on record, again exceeded only in December. “We’re both spending and saving at the same time,” CommSec economist Savanth Sebastian said.

The next stimulus payments began hitting bank accounts in April, suggesting spending and saving will continue to climb.

Some of the extra spending appears to have gone on cars, passenger vehicle sales up a seasonally adjusted 1.8 per cent in April after months of decline.

The rebound is consistent with a Westpac-Melbourne Institute survey this week showing a rise in consumer sentiment.

Other figures showed that average full-time earnings climbed 5.6 per cent to more than $61,000 in the year to February. But the rate of increase is slowing as fewer hours and less overtime are worked.

“Workers in the public sector are enjoying better conditions than private sector workers,” said Commonwealth Bank economist James McIntyre.

“Public sector households are getting the benefits of significant interest rate cuts, stimulus payments, petrol price falls and tax cuts without the job security concerns.”

Meanwhile, new figures yesterday showed investment in minerals and energy projects hit a record high in April, defying budget forecasts.

May 15, 2009 12:01am

BRIDGESTONE has cut three production shifts at its Salisbury factory as demand slumps for its truck and trailer tyres.

The company told workers this week it needed to reduce inventory levels to match sales, which have fallen during the economic downturn.

Workers will be given other duties during the seven-week hiatus, which will cut truck and bus tyre production by 20 hours a week.

The production shutdown came into force last night and will continue until the end of June.

A spokeswoman for Bridgestone insisted the company had not cut any shifts, but that “we have simply adapted our production mix to meet customer needs”.

“As a result, there has been a simple reallocation of duties for our employees,” she said.

The Advertiser understands affected workers are being deployed in cleaning and painting duties.

In a notice issued to employees, managing director Shawn Hara said the global financial crisis was affecting the automotive industry particularly hard.

“Truck and trailer manufacturers have recently announced the need to reduce their daily build rates due to falling customer sales,” he said. “Additionally, there has been a decline in commercial TBR (tyre, bus radials) replacement demand (and) as a result we need to adjust TBR inventory levels to the market demand.”

The Bridgestone spokeswoman said the situation was “something we normally do as demand fluctuates”, but general manager John Signoriello said the adjustment was a result of current economic conditions.

In a factory notice, Mr Signoriello said there would be no change to passenger and light vehicle tyre production as inventory adjustments had been ongoing since February.

Last month, the factory closed for two weeks to reduce inventory.

There are 600 employees at the Salisbury factory, which is Australia’s only tyre manufacturing plant.

Earlier this year, business information analyst IBISWorld ranked tyre manufacturing in its 10 most risky Australian industries for 2009.

Bridgestone has previously said it was committed to maintaining tyre production at Salisbury, despite the tough economic conditions.,22606,25484604-2682,00.html

May 16, 2009 11:30pm

ABOUT 1000 workers at a Lockleys call centre have been asked by employer EDS to take a pay cut and have no guarantee their jobs are safe.

The data services provider’s parent company, computer giant Hewlett Packard, is embarking on a global plan to cut wages by up to 20 per cent in response to the global economic recession.

But Adelaide EDS staff have been told not to assume their jobs are secure, even if they agree to the cut.

Under the proposal, staff would give up 2.5 per cent of their pay and any salary-related benefits from June 1.

The Finance Sector Union has urged EDS employees to reject the offer, claiming it is illegal under present wage agreements.

Hewlett Packard, which bought EDS last year, announced in February it would slash salaries globally after first quarter profits fell 13 per ent to $2.5 billion. In an email sent to Lockleys staff – who process mortgages for Westpac – EDS said “cost actions” were needed in the face of the “current challenges”.

“We greatly appreciate your understanding and support in this difficult and challenging time, and trust that your efforts to co-operate with company policies will yield positive results for the operations of the company,” the company said in the email, titled “salary reduction letter”, a copy of which was obtained by the Sunday Mail.

“Please note that your acceptance of this request does not constitute a guarantee of ongoing employment.”

EDS does not comment on how many staff work at the Lockleys centre, but the FSU estimates the number to be about 1000. The union’s SA/NT secretary, Debbie Black, said employees could lose up to $1000 a year.

“We believe what they are asking staff to do is not entirely legal in the current industrial relations climate,” she said.

EDS Asia Pacific and Japan executive relations manager Tamara Plakalo said the pay cuts would allow it to emerge from the recession in a “powerful position”.

Kenneth Davidson
May 18, 2009

Turnbull is wrong, it is not the size of the deficit that matters, but how it is used.

THE political debate about the budget is bizarre. The fiscal strategy is not rocket science. As the budget papers say, the task of budgetary policy is “supporting the economy and jobs now while investing in infrastructure for the future”.

The prime short-term objective of budgetary policy (reinforced by monetary policy) is to balance the economy. In other words whether the budget should be in balance, surplus or deficit depends on the rest of the economy. There is no particular virtue in a surplus budget unless the surplus is designed to offset a potential inflationary gap between expenditure plans and economic capacity.

Today there is a deflationary gap which can be measured by rising unemployment. As the world is experiencing the biggest recession since the 1930s, it isn’t surprising that Australia is running the biggest deficit since the end of World War II. It is also at least arguable that the reason the world is unlikely to experience another Great Depression is because of the willingness of the industrial nations to “pump prime” demand to offset the crisis in consumer and business confidence.

Because the budget accounts for about a third of gross domestic product and sets expenditure and revenue-raising priorities, it is also the major direct government influence on income distribution and the allocation of resources. This in turn influences the growth in living standards.

Yet all the Opposition can do is bleat about the size of the budget deficit. In a truly pathetic budget reply in Parliament last week, the Leader of the Opposition, Malcolm Turnbull, said: “Australians are now paying the price for Labor’s reckless spending” and he contrasted this with the record under the Howard government when “… the Coalition, together with the Australian people, (took) 10 years to pay off $96 billion of Keating Labor debt”.

The Howard government paid off the debt by a slash and burn policy on higher education, public schooling, training and hospitals, as well as the privatisation of Telstra, airports and virtually all government office buildings.

Arguably, the net sale of the overwhelming majority of these assets generated no net benefit to the nation.

The Howard government undermined support for CSIRO and independent university research. The bureau of manufacturing industry was abolished, meaning the future of manufacturing was left to the tender mercies of the Treasury and the Productivity Commission.

This contributed to the destruction of manufacturing know-how and capacity and the blow-out in foreign debt from about $150 billion in 1996 to about $600 billion now.

And, despite the erosion in services that added to household expenses, there was no tax relief. The tax burden rose from 22 per cent of GDP under Labor to a peak of 25 per cent between 2004 and 2006. The diminution of public services, which led to higher private costs in health and education and the rise in the tax burden, was a major factor in the rise in household debt to a record 160 per cent during the Howard era. It is household debt and foreign debt that is the real burden on Australians.

Government debt raised domestically is largely owed to ourselves. If it is borrowed from the Reserve Bank, the interest charged becomes part of the profit of the RBA, which is owed to the Government.

The money borrowed from the public is a burden on us as taxpayers but it is an asset to us as superannuants and as depositors in financial institutions.

Part of the debt will be borrowed offshore. But these borrowings will be largely associated with the necessity to finance the foreign debt burden that grew out of the Howard government policies that undermined Australia’s balance of payments in the first place.

If the budget reply by Turnbull can be taken at face value, he would impose a smaller deficit on the economy than the Government.

This is the path to the Great Depression Mark 11. The budget is already deflationary. The impact of the budget on the economy is measured by the change in the surplus or deficit, not its size.

The net injection into the income-expenditure flow this financial year is equal to 4.4 per cent of GDP (from 1.7 per cent in 2007-08 to -2.7 per cent in 2008-09).

In 2009-10, the net injection from the budget into the income-expenditure flow will be halved to 2.2 per cent of GDP according to the budget papers (from -2.7 per cent in 2008-09 to -4.9 per cent in 2009-2010).

In 2010-11 the forward estimate suggests the budget deficit will contract from 4.9 per cent of GDP to 4.7 per cent, resulting in a cut in the contribution to the income expenditure flow of 0.2 per cent.

Just because the stock of debt will be increasing over the two years, it doesn’t mean fiscal policy is contributing to an expansion in consumer demand and job creation.

One of the oldest confusions in economics is between stocks and flows and there always seem to be plenty of politicians happy to exploit this, rather than educate themselves and the public. This is reinforced by financiers whose prestige and profits would be diminished by a more active fiscal policy underpinned by financial reregulation.

By maintaining the fiction that responsible fiscal management demands balanced or surplus budgets, the opportunity for profit from “innovative financial products” that got the world into the present financial mess is maximised.

Whatever. Both sides of this political debate are reluctant to embrace deficits of the scale necessary to support employment, even though there is little risk that this would promote inflation.

While the cynicism on both sides of this debate is palpable, I don’t think either party is aware that the greatest danger to the prospect of an above trend 4 per cent growth rate after 2011-12 is not the level of debt— which is forecast to be a piddling 13.6 per cent of GDP with an interest burden of 0.6 per cent of GDP — but questionable infrastructure projects such as the $4.3 billion express rail project from West Werribee to Southern Cross Station.

It is not the size of the deficit that matters in terms of the burden on future generations, but how it is used. Households and corporations use debt to enhance their long-term wealth. The same principles apply to government debt. Providing the debt yields a higher rate of return than the cost of borrowing, there is no burden on the future.

Conversely, where governments sell productive assets for a price that yields a lower return to the taxpayer than if the assets and the dividends were kept in public ownership, then the nation is impoverished.

Posted Wed May 13, 2009 8:00am AEST
Updated Wed May 13, 2009 8:06am AEST

The Community and Public Sector Union has welcomed the Federal Government’s decision to remove the extra 2 per cent efficiency dividend imposed on the public sector.

The Government did not include the additional dividend in last night’s Budget. Government departments will now have to reduce their running costs by 1.25 per cent rather than 3.25 per cent over the next financial year.

CPSU national secretary Stephen Jones says while the union would like to see the efficiency dividend removed altogether, it is a welcome first step.

“It’s a welcome surprise, we’ve been campaigning hard in the community over the last nine months to have that special efficiency dividend knocked off,” he said.

“That’s a good start but there’s more work to be done to ensure that this blunt instrument which is a tax on jobs and a tax on services is removed from the Budget in future years.”

Mr Jones says on the jobs front, the Budget has delivered mixed results.

He says the Government has created around 3,200 real jobs.

“Unfortunately at the same time it’s axed around 1,700 existing positions, that to us doesn’t make sense – you don’t create jobs by cutting them,” he said.

“So on a critical test, the Government gets about five out of 10 on public sector jobs.”

May 11, 2009 – 6:50AM

A French textile firm has caused outrage by telling nine of its workers that they have the choice between the sack and redeploying to an Indian factory and taking a gigantic pay-cut.

Carreman told its workers at a plant in the southwestern town of Castres that it would offer them pay of 69 euros ($122.37) a month if they moved to Bangalore, union officials said at the weekend.

The minimum legal monthly salary in France is 1321 euros ($2342.82).

Francois Morel, the boss of the factory, told a local paper that before being allowed to lay off the workers he was obliged to offer them work elsewhere in the group under legal requirements which he described as “stupid”.

CGT union official Edmond Andreu told AFP that the offer had provoked “anger mixed with stupefaction” among workers at the factory, who say it is obvious no-one will take up the proposition.

Workers at the Bangalore factory are paid the equivalent of 69 euros a month for working a six-day week, and get an annual bonus of a month’s pay as well as medical insurance.

The nine Castres workers were also offered free plane tickets and a 1000-euro bonus for moving.

06 May 2009 6:28am

More than half of employers still believe there is a talent shortage and that it is having a negative impact on their organisation, according to the Randstad 2009 Employment Trends Report.

The proportion of employers affected by the shortage is lower than last year (59% versus 67%), the report says, but nearly half (46%) complain it is increasing workload stress among staff (46%).

Some 22 per cent say company performance is suffering and 14 per cent are reporting higher turnover.

These are problems that recruiters can focus on when selling the benefits of their service to potential clients, the report indicates.

Not surprisingly, respondents to the survey (2,682 across Australia, New Zealand and Singapore) say their biggest human capital challenges for the next 12 months will be managing internal change (20%), people and productivity (19%) and human capital costs (15% – up from 4% last year), rather than attraction and retention.

Report can be downloaded form here:

Kate Benson and Louise Hall
May 5, 2009

“I become a zombie” … O’Bray Smith, a midwife, warns that patient safety is threatened by lengthy night shifts. Photo: Ben Rushton

FOR the first time, the life-threatening physical and psychological effects of shift work are being used to push for bigger pay packets for nurses and midwives in NSW.

The NSW Nurses Association launched its claim in the Industrial Relations Commission yesterday, calling in experts to cite studies linking shift work with higher rates of breast cancer, heart disease, miscarriage, clinical depression and divorce.

The test case could improve conditions for thousands of shift workers in other professions who have spent decades battling its effects.

“The reality is after a lifetime of nursing there are effects. Somebody has to work the night duty because hospitals operate 24 hours a day, seven days a week,” the union’s general secretary, Brett Holmes, said yesterday.

He said the State Government was opposing the claim, which calls for night penalty rates to rise from 15 per cent to 25 per cent – the first increase in more than 30 years – arguing it would cost too much and could set a precedent for other public servants.

Professor Ron Grunstein, a sleep expert from the Woolcock Institute of Medical Research, said the ill effects of working nights could not be ignored.

He spent five hours in the witness box yesterday, citing scientific evidence from studies that included more than 100,000 nurses in the United States and showed those on night duty experienced increases in coronary artery disease, breast cancer, weight gain, eating disorders, miscarriage, premature birth and low birth weight.

“In the 1970s, it was thought the effects of shift work were minor and transitory, but we know better now,” he said.

Last year the Australian Workers Union called for a review of working hours after a United Nations report found people who worked night shifts had a higher risk of contracting cancer.

The study, which was published in The Lancet and endorsed by the World Health Organisation, found that night shifts were carcinogenic because workers were exposed to light at night, disrupting their circadian rhythms.

It found that nurses who worked at night and flight attendants who continually crossed time zones had a higher risk of breast cancer than women who did not have their circadian rhythms disrupted, and that constant light, dim light at night, or simulated chronic jet lag could substantially increase tumour development.

O’Bray Smith, a registered midwife who works in a Sydney delivery ward, spends four months a year working 10-hour nights and says it completely disrupts her life.

“I become a zombie, I don’t see my friends, I can’t play competitive sport, I don’t do any physical activity before or after my shift because I am too exhausted, I never have time to shop so I eat junk food and I get depressed when there is nothing to be depressed about.

“I end up doing a full shift in an acute area without having enough sleep, and that impacts on patient safety. The extra money won’t give us our health back but at least it will reward us for doing what we are doing.”