“A second officer at Qantas may earn similar to a first officer at an Australian competitor”
Would that be an Australian competitor that is also un profitable?
Your problem is NOT with other Australian carriers. Second Officers at Qantas in many cases earn MORE than Captains at airlines Qantas is trying to compete with. This is not the golden bullet that will determine the airlines future but you must understand that the business will not support the disparity for ever.
“….who would apply to work for Qantas?”
This bombshell indicates just how little you understand about employment and motivation. I will give you a hint; successful companies are often not the ones offering the highest salaries.
“If Qantas offered the lowest salaries in Australia would that satisfy you? Maybe. But then, who would be the top paid? And would they be getting paid too much?”
Who cares who pay the highest and lowest? The point is that labor costs at Qantas (and most legacy carriers) are considerably higher than competitors labor costs within similar markets. This will not last forever and the longer the can is kicked along the road, the harder the fall will be.