hIf the flight was cancelled, then you are entitled to a refund of the fare and so can rebook on another flight of another airline quite happily

As far as upgrade/downgrade goes; if the aiirline moves you to economy class on the new flight ( and you choose not to cancel ) then you would be entitled to a refund of fare difference

You are not entitled to an upgrade in this situation, though Qantas does sometimes do them . If it is done and you choose to make changes later, then you will not get business class on the rebooked flight

What I would do if it is trying to rebook you into economy, is to cancel and rebook elsewhere on the grounds that the change was only accepted based on the rebooking into business class