LookinDown has summarisied exactly the logic that was applied to LOA161.
Historically cadets have started immediately after their training, and received seniority based on that date. Now, they are placed in regional airline positions for 2 years between those two events.
Qantas could indeed employ the cadets and grant a leave of absence for the CIPP thus providing them with a seniority date based on graduation (2 years ahead of you HO). The end result is exactly the same, however the company does not have the protections or flexibility in place if it decides subsequently to not progress a cadet from the CIPP to become a TSO.
It all comes down to this: "Cadet pilots are not employees of Qantas and Qantas gives no guarantee or commitment of future employment at any time after completion of the training program"
This is a legal phrase that allows Qantas to refuse employment at any time during a cadet's development. Refusal sometimes (although very rarely) happens, and without that phrase termination can be subject to a legal challenge by the cadet. The intention of LOA161 allows cadets to gain a seniority number that they would otherwise have if employed, while preserving a mechanism to deny actual mainline employment if necessary.
On a similar issue, all those affected by LOA161 are also directly and equally affected by the Jetstar MOU. There are many, many more protected seniority numbers.