Unfortunately they can... Airlines are pretty much a law unto themselves. Just a couple of weeks ago my Dad and his partner were on their way back from the UK and had a stopover in Dubai. They had their boarding passes and everything (from when they checked in in London). They got to the gate in Dubai and were told that they no longer had seats and would be on a flight the next day! The airline put them up in a crappy hotel for the night and gave them a $300 voucher (like they'll want to fly with them again)!

Anyway, that's not really relevant is it?

Jetstar do have to offer you another flight and 'may' give you the option of a refund (but I don't think that they have to). Do you have travel insurance? If you do, then the travel insurance might cover your costs for switching to the Qantas flight.

HTH