Anne Ruston (SA, Liberal Party) Share this | Link to this | Hansard source

I present the report of the Senate Environment and Communications Legislation Committee on Australia Post, together with the Hansard record of proceedings and documents presented to the committee.

Ordered that the report be printed.

I move:

That the Senate take note of the report.

As the chair of the committee that held this particularly important inquiry into Australia Post for the last couple of months, it is a great pleasure to hand down the consensus report today. There was absolutely no doubt amongst the people who were involved and who gave evidence—and to the committee at the end of the inquiry—that the Australian postal network now finds itself in a massive state of change. There is certainly no doubt that electronic means for communication is substituting letters, that internet substitution for across counter transactions is significant and that there is an increase in parcel mail due to the online environment. So we see the Australian postal network operating in an extraordinarily changing environment and this is having a major impact on the operations of Australia Post. We have seen a decrease of one billion letters over the last five years. We have seen an explosion in the number of parcels that are delivered by this network.

Unfortunately, in the first half of this calendar year we saw Australia Post post a half-year loss for the first time in its corporate history. What we do need to remember though is that Australia Post is not a private business. Australia Post is a monopoly. It is a monopoly that heads a very complex network of operations that make up the Australian postal network. It is made up of Australia Post, Australia Post post offices, licensed post offices, corporate post offices and franchisees. It is also very much intrinsically engaged in every way with the Australian public. Therefore, we had to look at this particular issue through the prism that the Australia Post network is such an integrated part of everyday Australian life.

The hearing was instigated initially by a number of licensed post offices, who came to the Senate as a last resort because, no matter how hard they tried, they found that they were just not able to find any reprieve in the market they were operating in. They claimed that Australia Post's behaviour was having a detrimental effect on their profitability. We have to remember that because Australia Post is a monopoly and not a private business it has a number of community service obligations that it has to deliver to the Australian public. For instance, I think all of us know that it has to deliver mail to the majority of Australians on a reasonably regular basis at a reasonably uniform rate. It does this by using this extraordinary network of licensed post offices, corporate post offices and the franchisees. The ability of Australia Post to deliver its community service obligation is predicated on this network. This very network, particularly the licensed post offices and the franchisees, came to us and said that the behaviour and activities of the Australia Post were having such a detrimental impact on their capacity and ability to be financially viable that they were struggling to keep their doors open. This was of extreme concern to the committee.

In summary, the concerns that were put to us were that these licensees and franchisees were struggling to recover the costs that they were incurring to provide the mandated Australia Post services. We have to remember that Australia Post in this space does not operate in a competitive environment. Australia Post, because of its position, does have the capacity, to a large extent, to dictate the prices of these mandated services. As a consequence, the assets of these licensees and franchisees have dropped significantly in value—because, of course, when you attempt to sell any business, the profitability of that business is one of the major factors that you consider as to the value of the business—and that was somewhat exacerbated by the bad publicity that has surrounded this very unfortunate situation that was allowed to occur.

Another concern that was expressed was the lack of consultation being undertaken by Australia Post in this extraordinarily changing environment and the fact that they were taking quite a dictatorial approach to how they drove the changes and the things that were happening, instead of a more consultative approach that allowed the various players to have their say, express their concerns and be listened to in this marketplace.

Another concern that was put on the table was the predatory behaviour of Australia Post, particularly in relation to the marketplace—because, of course, we have Australia Post postal offices as well as licensees and franchisees. Australia Post needs to be very careful, because of its obligations, that it does not actively seek to poach the business of its licensees and its franchisees to the benefit of its post offices—and there was concern that this activity was happening in the marketplace.

Another concern put to us was the fact that Australia Post is obliged to only consult with the Post Office Agents Association in determining the pricing of the activities that the licensees perform on behalf of Australia Post. The licensees were concerned that they were not being well represented in this space and did not believe that their best interests were being represented by this body in its negotiations with Australia Post.

I would like to quickly mention, specifically about the franchisees, that we have a real concern that Australia Post had provided what we thought was false and misleading information to the franchisees when they negotiated their original agreements to take over the franchises, because Australia Post was in possession of information that it reasonably should have made the potential franchisees aware of. As a result, we saw a much smaller number of franchisees in the marketplace, and this created a much smaller pool of franchises, which, of course, diminished the value of the assets of these franchisees.

The committee heard many concerns raised by a lot of people, so the committee has made a number of very substantial recommendations. We believe that Australia Post and the rest of the postal network, including the licensed post offices, the corporate post offices, the unions and everybody involved in this space, need a networking strategy group put together so that we can manage and inform the changes that need to take place to make the Australian postal network a viable operation into the future. We believe that the dispute resolution mechanism could be significantly improved. We think that there needs to be an audit to determine that the payments being made for these services are fair and reasonable. We believe that Australia Post must be held to account and that its monopoly position cannot be used to abuse its market power. We think that Australia Post must not be able to transfer its liabilities to the licensees and franchisees, because they are in no way able to defend themselves in this space. Most particularly, we believe that all of these things have to happen as a matter of some urgency. These issues have been going on for too long and we need to resolve them as a matter of some urgency so that the people who have entered into these agreements in good faith can get on with their lives.

Finally, I would like to thank the committee secretariat, particularly Christine McDonald. This has been a very long process. It has taken a lot longer than any of us would have imagined it would, but, considering the extraordinary significance and relevance of the information made available to the inquiry, and the fact that so many licensees, so many franchisees and so many people involved in the Australian postal network wanted to have their say at this committee, we made the decision that we would rather hear everybody, get all of the information and try to make sure that this report was absolutely as comprehensive as it possibly could be so that we could reflect the importance and magnitude of the issues brought before us. As you can tell from my comments, we are very concerned that Australia Post needs to play a more proactive role in this space.

In conclusion, the committee recognise the difficulties currently being faced by all stakeholders in the Australia Post network, but we believe that, if we are going to resolve this situation and enable the profitability of all of the players in this space into the future, we must have a transparent and consultative approach to move forward. We need a transition plan put in place that everybody takes ownership of—because the future of Australia Post is important not just to the stakeholders but to every single Australian. I commend the report.

Anne Urquhart (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I rise to take note of the report of the Senate Environment and Communications Legislation Committee's inquiry into Australia Post and the licensed post office network. The committee received 213 submissions and 845 letters from licensed post offices. I also received a large amount of correspondence on this inquiry and I thank all those who have taken the time to make a contribution. The inquiry was conducted in a good spirit across party lines both under the previous chair, Senator Williams, and the chair since July, Senator Ruston. I also thank the secretariat, led by Christine McDonald, for their guidance, research and support. It has been a long inquiry, but we have got there. Thanks also to Sophie, Meryl, Ruth and Dianne.

With my colleague Senator Cameron, I have provided some additional comments to the majority report around outsourcing of government services to Australia Post, and I will return to those comments later. However, I want to begin with what we agreed upon. The committee is making 18 recommendations that encompass the future of mail in this country and the impacts on Australia Post employees, contractors and the licensed post offices, community postal agencies and franchised post offices that make up Australia's postal network. I want to focus my remarks on four of these recommendations.

Recommendation 4 goes to the heart of the future of mail in our country. The committee is recommending that the Commonwealth government immediately commission an independent review of the community service obligations contained in the Australian Postal Corporation Act 1989 and associated regulations.

In doing so, the committee also recommends that the government include an assessment on the future of mail delivery services; an assessment of the number of retail outlets required in the network; an investigation into the effects of any changes to the community-service obligations on Australia Post employees, licensed post offices, community postal agencies, franchisees and mail contractors; and consideration to the needs of remote rural and regional communities, particularly where other service providers have ceased to operate.

The postal environment worldwide is experiencing rapid and significant change. In Australia, the substitution of digital communications for letters is now so pervasive that Australia Post is reporting escalating losses in its letter business. As a result, the future of postal services in Australia is at a crossroads and there are a number of significant far-reaching issues that need to be addressed. These include the type and scale of the postal network that can be sustained into the future, the funding options available to maintain the network and how, and to what extent the current community-service obligations can be preserved.

In this context it must be recognised that Australia Post is not a private business. Its shareholders are the entire Australian community and the postal network is woven through the fabric of Australian life. Further, the most fundamental responsibility of Australia Post is to supply a letter service that is accessible to all people in Australia on an equitable basis, wherever they may reside or operate a business.

Changes to Australia Post and its network will have an impact on our communities and way of life. During the latter stages of the inquiry I was visited by a group representing the printing industry, unions, licensed post offices and community users of postal services. This group was created simultaneously to the inquiry, and the leaders of the group should be commended for bringing together a varied range of groups to talk through the future of mail in Australia.

One of the members of the group, a retired AMWU member from Melbourne, John, came to Canberra to represent pensioners—a section of our communities whose working lives often ended before the widespread use of the internet came to being. John remarked to me that once we lose a government service were never get it back. These ideas to move to mail delivery only three days a week are likely to be just the beginning. Once the infrastructure is gone for delivering daily mail, we will not get it back. This was wise advice from John, who went on to tell the group of the many reductions in services that started out as a small change but ended up being much more drastic than first thought.

It is why recommendation 6 is vital. While recommendation 4 sets out for the government to review the community-service obligations, recommendation 6 requests that the Minister for Communications form a formal postal-network strategy group that engages all stakeholders in the development of a comprehensive strategy to inform changes to the Australia Post network in the face of emerging changes.

This group has already formed itself, separate of government, separate of political parties. It spans the full scope of the printing and postal industry and includes a wide range of consumer groups. This group is the perfect body to be the minister's formal postal-network strategy group. It is also my hope and the committees hope that the minister will instigate a broad community-consultation program because, as the report outlined, Australia Post shareholders are the entire Australian community.

In doing so, it is my hope that Australia Post will do away with some of its glossy brochures and that the government and Australia Post will sit down and have meaningful discussions with people, right across the country, about the future of our mail delivery. Rather than have a predetermined opinion, it is my hope that the government and Australia Post actively engage with the community and work together to determine how the postal network can meet its challenges. It was the committee's consensus view that at present Australia Post is making changes without involving stakeholders and it considers that this has contributed to the growing divide between the various stakeholders and Australia Post.

The evidence presented by the licensed post offices demonstrates that the relationship between Australia Post and its licensees is particularly dysfunctional. LPOs and community postal agencies account for a clear majority of the national postal network and cover nearly all of rural and regional Australia. As senators would be aware, the local post office is often the last institution in many towns across the country. Unfortunately, evidence to the inquiry was quite damning of the conduct and representative skills of the current sole accredited association, the Post Office Agents Association Limited. POAAL is the only association accredited by Australia Post under the Licensed Post Office Agreement.

Over the past few years, another organisation has been formed and the evidence presented by the LPO Group to the committee has demonstrated that in its future efforts to be more consultative Australia Post should treat this association on the same terms as POAAL. As such, the committee is recommending that the definition of 'association' in the LPO agreement be amended to include, in addition to POAAL, other licensee-representative groups, but not limited to the LPO Group.

I commend the leadership and tenacity of Angela Cramp and Andrew Hirst, from the LPO Group, who are in the gallery today. Throughout the course of this inquiry they have represented their members with vigour, honesty and consistency. I hope the frustrations you have outlined to me and the committee over the past year begin to be resolved by the government and Australia Post.

I finally want to touch on recommendation 17 that the Minister for Communications, as a matter of urgency, commission an independent audit of the activities undertaken by the Licensed Post Office network. This independent audit should specifically determine the validity of claims made by licensees that payments made under the LPO agreement are not fair or reasonable. Further, it is recommended that where a payment is found to be not fair or reasonable a study should be conducted to determine what an appropriate payment rate should be.

The basic problem with the LPO agreement is the indexation of payments to the basic postal rate. As the basic postal rate has increased at a much slower rate than inflation over the past 20 years, many LPOs are struggling to keep their businesses afloat. There were many other claims raised by LPOs that time prevents me from detailing today.

I conclude on the one aspect of the report that Labor senators disagreed on: the assertion in the majority report that the postal network provides an opportunity for government to deliver services more efficiently. I note that no evidence was provided to support this claim. The evidence from Australia Post provided no comfort that it could handle many of the face-to-face operations of Centrelink and Medicare. Rather, the assertion is simply another attempt by the Liberal Party to promote its ideological belief that the outsourcing of government services increases efficiency

As such, Labor senators strongly recommend that the government does not outsource any functions of the Department of Human Services, such as Medicare and Centrelink, to Australia Post.

In conclusion, it is my hope that Australia Post and the government can work with Australia Post employees, unions, contractors, licensees, the printing industry and the community to pave a sustainable footing for our postal network. As John said, once we've lost it, we won't get it back.

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

The Greens would also like to acknowledge the LPOG network, especially Angela and Andrew, and all the hard work and tenacity that they have shown. I think it has been very clear to all members of the committee that this really is a David and Goliath situation. The committee has had to approach small businesses, particularly in remote rural and regional areas, which are having to look at the viability and sustainability of the businesses that they have put their life savings into. Some of them moved into communities that had not previously been in.

The Greens are very pleased that the report has been done. It has been a long, complicated process and there has been a lot of hard work done by a large number of people, including through cross-party support between the minor parties and Labor and Liberal committee members. We have come together to present this report today.

I would like to say that I am disappointed—I think I probably reflect the disappointment of some of the other senators right across the political spectrum—that we could not get recommendation 17 done during the inquiry. There was a genuine attempt by all members of the committee to get a comprehensive time-and-motion study done. Senator O'Sullivan particularly led the charge on that. We wanted to get that comprehensive study done by the Senate so that it was seen to be independent. However, we got a study done by Australia Post by KPMG. I have received information, through the committee, from one LPO in Tasmania that certainly casts doubt on the validity of some of the conclusions of that report.

The really hard work probably starts here now in getting the government to take some action to see out these suggested studies that the Senate committee has so strongly recommended—particularly recommendation 17, as Senator Urquhart outlined, and recommendation 4.

It also is important that, given the proposed changes to the franchising code of conduct—the new powers that the ACCC will shortly get—that the ACCC uses these new audit powers to obtain documents that the franchiser relied upon to support statements. It has new far-reaching powers to have a look at the franchising agreements between the licensed post offices and Australia Post. I think this is going to be quite important. I understand that the committee is considering writing a letter on behalf of the licensed post offices to the ACCC—hopefully, it will—asking them to have a look at this.

Over recent years a number of small licensed post offices and some post office groups have written to the ACCC. It is outlined on page 11 of the report that back in 2004, at a POAAL national conference, the then ACCC commissioner John Martin stated:

Given Australia Post’s dominant position—

with regard to market power—

any allegation of conduct by it which deliberately damages the competitive process would be investigated by the ACCC.

My understanding is that the allegations that have been made to the ACCC have not been investigated. I hope that the committee will be able to write and ask them—particularly after any laws are passed by parliament in relation to the franchising code of conduct—also to do a comprehensive additional study on the issues, which we have spent the last nine months listening to, with respect to agreements that have been in place, in some cases, for over 20 years.

As was quite rightly pointed out by Senator Ruston, over the last couple of decades the whole landscape of the postal industry in this country has changed quite substantially. However, it has become very clear to committee members that the nature of franchise agreements has not changed in line with the changing landscape.

We have seen some very genuine distress in a number of the licensed post office groups, especially in Tasmania. I met with nearly 35 of them. They really are under significant pressure. They are small businesses that provide a vital public good through their community service obligations, particularly in rural and regional areas. They are a huge part of the community. They are pretty much everything we should be supporting and pretty much everything that is good about small businesses in this country.

Unfortunately, I only have a few seconds left but I hope that from here on in we can keep the tri-partisan support that the committee has had to put pressure on the government to make sure these studies get done and that we get you guys in the gallery the result that you need.

Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

I, too, rise to take note of the report. I particularly want to support the comments of the previous speakers in relation to the level of cooperation between all of the parties, including the Independents in this place, who participated in this inquiry. What bound us all, I think, was a sense of fairness—or lack thereof—with respect to the treatment of so many of these small businesses known as licensed post offices around Australia. I would like to recognise the chairmanship of my colleagues Senator Williams and, later, Senator Ruston. And I would like to compliment the secretariat on a very comprehensive and, I think, excellent report.

I would like to briefly mention, also, retired senator Boswell, who made a big contribution to this in the beginning, and certainly inspired and motivated any number of us to stay the course, as he used to stay, to see that this work was done. I also recognise the work of Angela Cramp and Andrew Hirst and, through them, the dozens and dozens of licensed post offices who went way above the call of duty in making contributions to equipping those of us in this inquiry to remain up to speed with what was happening, and to providing us with data and research. Your contributions are seriously acknowledged, and we thank you on behalf of the entire licensed post office network.

I am going to be brief because a number of people want to speak. I want to put a couple of points on notice. We should never forget in this place or in the House of Representatives that we are the owners of Australia Post. In fact, the minister owner sits with us here today, so he will be able to listen to the recommendations we are making. It is owned by the Minister for Communications and now Minister for Finance. So we do not have to look too far to find out who was responsible for us being in the position that we are in with these licensed post offices. We do not even have to look any further to find where the solutions to these problems exist.

There have been failures on behalf of the Commonwealth owner of Australia Post for literally decades in keeping the principle of using the base postal rate to increase the payments to these post offices for the services that they provide. These are very vital public service commitments that we have made. I am told that delivery of post was one of the first obligations that we made as a nation when we settled here in 1788.

Finally, I want to put Australia Post on notice. These are my words and I do not speak for anyone else in the inquiry. At times I found Australia Post frustrating. I do not think they were as forthcoming as they ought to have been. I found their attitude wanting on occasions when we were looking for their cooperation to work with this investigation to determine the depth and the breadth of the problems within these post offices. So I say to Mr Fahour: it does not end here today with this report; it begins here today and we will be watching. The same collection, the same cohort, of senators from this place who have taken this challenge will be watching.

I urge Mr Fahour and his executive management team to get out in front of our ministers, to get out in front of the owners, and fix these issues over the coming months. These are very seriously urgent issues. There are many people on the breadline. They have been waiting patiently for us to stand up because we are their cul-de-sac. There is nowhere for them to go after they have been to us. We stand between them and viability of their businesses. I say to Mr Fahour: keep an ear to the ground and keep an eye on what is happening because I promise you that that is what I am doing with you, and I am certain that is the case with many of the other senators who make a contribution.

We will see justice done here because we have no other course to take. This is an unusual relationship between this government and these people and we have a responsibility to ensure that we behave in a proper manner. While ever I am in this place—and I speak for the others in this place—we will see that that outcome is achieved. I thank you for the chance to speak.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I concur with the comments made by my colleagues Senators Ruston, Urquhart, Whish-Wilson and O'Sullivan. This is an issue that goes beyond politics. The viability of post offices around this country and, in particular, the viability of almost 3,000 licensed post offices is at stake and, with that, a very key part of community infrastructure. We cannot afford to ignore this issue. Furthermore, the government must act on the recommendations made by this committee. These were non-partisan recommendations. This was a unanimous report. I commend the former chair, Senator Williams, and the current chair, Senator Ruston, who did a terrific job in bringing this together. Senator Urquhart from the opposition, Senator Whish-Wilson and Senator O'Sullivan all played very valuable roles in this inquiry. Again, I thank Bozzie, former senator Ron Boswell, for the driving role he played in this.

The recommendations must be implemented. We have in the chamber the finance minister, Senator Cormann, who is the nominal owner of Australia Post on behalf of the government and a shareholder as finance minister. I urge Senator Cormann to read each and every one of the recommendations and to read this report because, if it is not acted on, we are looking at many licensed post offices around the country falling over the edge. If that happens, it will end up costing Australia Post a hell of a lot more to pick up the pieces. There are so many licensed post offices in this country which have been hanging on, some of them by a thread, waiting for this inquiry's recommendations and to see what action the government will take. We cannot and must not let them down.

Pointedly, many LPO operators tell me that they would be happy to work the long hours they are working if only they got the award rate they were paying their employees, because many of them are living at a subsistence level and too many of them are actually selling their assets and eating into their savings just to stay afloat. That is completely unsatisfactory for such an important community service. That is why we need that audit. That is why we need to ensure that there is fair remuneration for those men and women who run the almost 3,000 post offices around the country.

I think it is fair to say that if we do not fix this up there will be huge implications around Australia, particularly in regional communities. There will be huge implications in respect of the community service obligations of Australia Post. I note that the Australia Post management participated in this inquiry. Mr Fahour comes from a distinguished career in banking. He is a very competent man. It is within his wherewithal to fix this by driving the changes that are required. The additional payments that were made, whilst welcome, were just a drop in the bucket because they are not enough to sustain those post offices in a viable way.

I want to comment on the lack of candour and cooperation of POAAL, the official organisation that represents the post office licensees.

Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

It's a disgrace!

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Senator O'Sullivan said, 'It's a disgrace.' He is a very kind man. Mr Ian Kerr, the head of POAAL, was one of the most underwhelming and hapless witnesses I have ever seen in my six years in this Senate. He was hopeless, and I have got to say that he does not reflect well on his organisation. They did not provide documents in response to the reasonable requests that were driven by Senator O'Sullivan. I would strongly suggest to anyone listening, who is a post office owner or post office licensee and a member of POAAL, to consider seriously leaving that organisation and joining the rival LPO group who do a much better job in advocating for their members. Mr Kerr needs to stand judged for the way that he simply ignored the committee and treated the committee in a way that verged on contempt.

The way Australia Post has treated mail houses is very disturbing, given that direct mail is still a very fine form of marketing. They bumped up the rates without reference to the ACCC as it is no longer required, but it should be required in the future. It does not make sense. Direct mail is still a very good form of marketing and Australia Post seems to be crawling away from one form of mail that is still very viable for them. But mail houses are walking away from Australia Post because of the way they have been treated by them.

The serious and difficult circumstances that so many LPOs and franchisees are facing cannot be understated. They cannot be ignored by this government. Unless there is urgent remedial action, the personal and community consequences will be enormous. The government cannot afford to sit on these recommendations. To do so would be equivalent to that old adage that 'the cheque is in the mail'. This must be fixed as a matter of urgency.

I seek leave to continue my remarks.

Leave granted.