Australian government could raise AUD 7 bln via post office sale
The Australian government could raise up to AUD 7 billion through the sale of Australia Post, and there is a solid case for a disposal, CommSec chief equities economist Craig James said Monday.
“Australia Post is the last major commercial business remaining in government hands,” James said in a research report. “But with the monopoly letter delivery agency increasingly relying on other services such as promotional mail and parcel handling to boost revenue, the relevance of government ownership is continuing to diminish,” he said.
He said although there would need to be significant public debate on the merits of a sale, other markets such as Japan are preparing to privatize postal services, while Germany has floated Deutsche Post.
“While a number of government businesses have been sold over the past 15 years, it is interesting – to say the least – that there has been little discussion about the value of retaining Australia Post in public ownership,” he said.
Based on Australia Post’s net profit of AUD 367.9 million for the 2005-2006 financial year, James expects Canberra could reap AUD 5 billion-AUD 7 billion from a sale.
“In turn, a privatized Australia Post could utilize the additional capital into developing a globally-competitive parcels and logistics business – a business that will prove valuable in boosting productivity and efficiency across corporate Australia,” James said.
He said like the privatizations of Telstra Corp., Qantas Airways Ltd. and Commonwealth Bank of Australia, Canberra will need to determine whether the essential service aspects of the business preclude it from moving into private hands.
“Like Telstra, a sticking point with any sale of Australia Post is community service obligations, especially for rural and regional areas,” James said.
“The bottom line being that Australians wouldn’t want to lose their regular mail service, experience any decline in delivery times or pay a substantially higher cost for the service.”
However, he said widespread community debate can ensure that current essential service obligations are maintained with a privatized Australia Post.
