It's a sensible business decision, why fly an empty first class seat around when you can have three economy ones in it's place. Even if only one is occupied the income will be better than nothing.
Leave the premium passengers to the airlines which have a premium product and concentrate on the mass market instead. Knackered B767s with surly old boilers in the cabin won't cut it against the likes of SQ and CX so why bother trying ?
QF have been in decline for years and now at last realise where they stand.