Major government audit urges privatisation of Australia Post
A major review on the effectiveness of Australia’s government, its agencies and assets, has recommended that Australia Post be privatised. The National Commission of Audit was tasked by the new Australian government last October to assess the performance, functions and roles of the Commonwealth government with a view to find ways to cut costs and improve effectiveness.
Laying out its findings, the Commission said up to 10 organisations that operate in “contestable markets” should be privatised. Australia Post was among those recommended for privatisation in the “medium term”.
At the very least, the report said 205-year-old Australia Post should be considered for privatisation.
If it is privatised, the Commission said government would have to decide whether it should be set certain community service obligations.
A scoping study would need to consider whether letter delivery services and other monopoly services would need to be protected with a privatised Australia Post. While Australia Post as a whole is highly profitable, its letters business is currently losing more than $200m a year.
The Commission report noted: “The majority of Australia Post’s business is in the competitive retail, parcels and logistics markets. Due to the increased use of e-mail and other forms of electronic communication, Australia Post is facing a rapid decline in its letter volumes. While this same trend has led to an increase in online shopping and growth in Australia Post’s parcels business, it only partly offsets the costs of the decline in letter volumes.”
Value
The Commission values Australia Post’s assets at around $1.6bn ($1.5bn USD)
In detailing its findings, the Commission report said the Australian government would have to continually invest in its infrastructure in order to avoid problems and the decline of its assets like Australia Post.
It noted that Australia Post has already invested more than $1bn in its letters, parcels and retail networks since 2009-10, and is in the process of investing $2bn over the next four years to modernise its parcels and retail networks, as well as developing its digital communications capabilities.
In its report, the Commission valued Australia Post’s infrastructure of depots and sorting centres at $1.616bn ($1.5bn USD).
Australia Post currently operates a postal network of 4,429 retail outlets, 409 mail and parcel processing facilities, 71 automated parcel locker terminals, 44 business hubs and four gateway facilities.
The company collects from 15,927 on-street postboxes, operates through 1,868 retail outlets in metropolitan areas and 2,561 outlets in regional and remote areas, and runs a fled of more than 10,540 trucks, vans and bikes.
Australia Post said last month that its whole business model was changing to reflect the needs of its customers.
CEO Ahmed Fahour said: “Our customers’ needs are changing and Australia Post must evolve our services to ensure that we continue to help people stay connected by providing a range of choices of relevant services, whether it’s physical or digital.”
Post Office Agents
The Post Office Agents Association Ltd (POAAL), whose members are among the independent owner-operators of Licensed Post Offices that make up about 75% of Australia Post’s post office network, said today that it was against privatisation of Australia Post.
Commenting on the Commission’s report, the POAAL chief executive Ian Kerr said Australia would not benefit from its national postal operator being privatised.
He claimed that a privatised postal operator would focus its efforts on main population centres, at the expense of customers in rural Australia.
With a significant proportion of Australia’s population concentrated in metropolitan areas on the eastern seaboard, Kerr said the nation has “unique challenges” when it comes to delivering postal services to other parts of the country.
“Australians living in rural Australia would also be seriously disadvantaged if Australia Post were to be privatised,” Kerr said, adding that privatisation would “significantly” disadvantage Licensed Post Office owners and mail contractors operating in rural areas.
“POAAL has watched closely as European postal operators have been privatised, and it appears that there would be no benefits to Australians if Australia Post were to be privatised.”
