Tail wheel is largely correct, Australia needs to get smarter or go back to just being a primary producer.
Why do we have fruit rotting on trees because farmers can't find the labour to pick it ? It's not worth it for the locals, they get more on the dole. How about a guest worker scheme ? Plenty of cheap labour available overseas, pay them the award and charge the employer a small levy so that an Australian will always be cheaper but someone will always be available.
Help business by reducing regulations and taxes, identify areas where Australia can compete and concentrate on those. Some offshoring may be necessary where the expertise is not available locally or the cost is prohibitive.
Virgin have shown that Australian airlines can deliver a competitive product and respond to the demands of a changing market. Nice new aircraft, friendly staff, attractive fares and innovation by going after the premium traveller with the services he wants. If they can do it why can't QF ?