Former Australian Prime Minister Paul Keating said on Thursday that the government should not have intervened in the Qantas labor row. Instead of referring the problem to Fair Work Australia, he said the Gillard government should have let Qantas Chief Executive Alan Joyce take full responsibility for the consequences of his unilateral decision to ground all Qantas fleet.

"The chances are there would have been no more Alan Joyce, a very good chance. Having taken his airline out, how was he going to get it back," Sky News quoted Mr Keating.

Because of government intervention, he said Mr Joyce was saved and the unions left off the hook. He opined that shareholders and the board would have to do something about the labor dispute which would have led to a bargained outcome.

Mr Keating said that if the present government had stuck with the principles in the legislation of 1992, things would have been different now. He cited that based on those principles, inflation rate was down to 2.5 per cent for 20 years, there was moderate wage outcomes and a low level of industrial dispute.

The former prime minister also pushed for the Gillard government to work on Australia becoming a republic, even before Queen Elizabeth dies or abdicates.

"You just imagine the impact on this country psychologically of a shift to an Australian person as head of state," he told Sky News.

"The fact is that Australia can only be a great country when it claims its head of state as one of its own.... It will forever have that derivativeness about it while every our head of state is the Queen of Great Britain and we share her with 16 other countries," he added.

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