Regulator’s comment fuels debate over postal privatisation in Australia

Rural postal customers would suffer if Australia’s national postal service is privatised, post office agents have warned. An Australian Financial Review interview with the Australian Competition & Consumer Commission (ACCC) over the weekend stirred up the privatisation debate in the national media, although the regulator has since clarified that its comments were not meant to be taken as specific demands to sell off specific state assets including Australia Post.

Australia’s new government is to carry out a “root and branch” review of state ownership, but while welcoming this, the ACCC said today that its chairman’s remarks over the weekend had merely stated the view that the private sector generally will run commercial enterprises more efficiently than government.

Rod Sims had said that selling off government assets would provide the “most important driver” for Australia to improve its productivity. However, the Commission’s clarification stated today regarding the interview: “There was no reference made to privatise any specific Commonwealth owned entity.”

The interest in postal privatisation comes as Australia Post has been making healthy profits thanks to its booming package business, but its core mail business has been losing money because of the global trend for communications moving to Internet-based channels.

While profits rose 10.9% last year overall, Australia Post lost $220m through its letters business, 60% worse than the letters loss made the previous year. Letter volumes have been falling 5.4% year-on-year, so that the company now delivers 1bn fewer letters than it did in 2008.

In response, the company has been pushing to grow its parcel operations and expand into digital mail communications.

Government

Over the weekend, Australia’s opposition Labor Party demanded clarification from the government as to its intentions regarding Australia Post in the wake of Sims’ comments in the press. Communications minister Malcolm Turnball said the government had “no plans” to privatise the postal service.

However, an interview with the Acting Treasurer Mathias Cormann today saw the government avoiding questions about Australia Post, declining to rule out a sale for the country’s oldest continually operating organisation. Cormann stated that while policy “right now” is not to sell anything other than the state healthcare organisation Medibank, the government is waiting for the full results of the review to make any decisions.

“I’m not going to speculate on what the Commission of Audit may or may not recommend right now. The only privatisation that is on the table is the privatisation of Medibank Private,” he said.

“No benefits”

The Post Office Agents Association Limited, which represents about 3,000 licensed post office operators, today warned that privatising Australia Post would see the company’s services focusing on main population centres.

POAAL said Australia had a significant proportion of its population concentrated in metropolitan areas on the eastern seaboard, and that the country poses unique challenges when it comes to mail delivery in rural areas. Mail delivery in rural areas already makes use of the private sector through licensed post offices and the contractors who deliver mail and parcels in regional, rural and remote areas.

Ian Kerr, the POAAL chief executive warned that as with licensed post office owners, selling off Australia Post would bring significant disadvantages to rural Australians.

“POAAL has watched closely as European postal operators have been privatised, and it is clear that there would be no benefits to Australians if Australia Post were to be privatised,” he said.