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Crikey says: privatise Australia Post

Keane’s week in review: Palmer a cheap date, Madigan ructions, military in Ukraine and Iraq. Behind the MEAA’s internet filtering fracas. Echoes of Santamaria in DLP split. Coalition’s bounce in the polls not all it seems. The intruder asteroid heading Earth’s way. A political lobbyist shares the tricks of his trade. And “worse than no more Rivers, no more Rivers jokes”: Rundle farewells a master of dark comedy.

For years, Australia Post has fought the threat of the internet to its core business creatively, making sure it was competitive in the burgeoning parcel business to take advantage of the growth in online shopping, expanding into other service delivery areas to take advantage of its large footprint across the country, and encouraging the junk mail industry, one of the few remaining growth areas in its letter delivery business.

Now, its CEO Ahmed Fahour has revealed, the tipping point has been reached and the company is unlikely to continue to pay a dividend to its owners — taxpayers — given the extent of its losses on its highly regulated letters business.

To survive as a business, Australia Post needs to be deregulated — allowed to charge more for letter delivery, allowed to scale back its delivery services. If there are valid concerns about the need for the maintenance of delivery services, especially in regional areas, let those be the subject of an explicit service obligation and appropriate government funding.

Consideration should also be given to privatising Australia Post. Indeed, Labor should have done that while in government, and then it would have been able to sell a viable business that was still generating a substantial profit. Now the government is left with having to either support an unviable regulated business, or free it up to address the dramatic change in the way Australians communicate. The time for avoiding this decision is over.

21
  • 1
    paddy
    Posted Friday, 5 September 2014 at 1:23 pm | Permalink

    Ah yes, let’s privatise Australia Post eh?
    Because that Telstra deal sure worked out a treat for the punters.
    No doubt, “this time it will be different”.
    No thanks.

  • 2
    Dogs breakfast
    Posted Friday, 5 September 2014 at 1:26 pm | Permalink

    While privatisation may look good on first glance, if they had privatised AustPost they would now be paying a service obligation subsidy to the privatised body to deliver uneconomical mail.

    Either that, or make a politically courageous decision to free AustPost of its service obligations.

    And although that seems the obvious way to go, do you think any politician today has that sort of courage?

  • 3
    Chris Gulland
    Posted Friday, 5 September 2014 at 2:51 pm | Permalink

    Perhaps someone could explain the value of such a highly paid CEO under such straightened times.

  • 4
    David Hand
    Posted Friday, 5 September 2014 at 4:07 pm | Permalink

    Yes!
    A Crikey editorial that I completely agree with.

    Like the milkman, the daily tour of suburbs to deliver post are numbered and a publicly owned business with its servitude to its workforce though union influence and control simply cannot make the adjustment.

    This will of course mean that the privatised company will slash redundant services and return to a handsome profit and correspondents to your publication will rage about the evils of private enterprise but when was it ever different?

    The future model of mail is free post boxes in commercial centres where you collect it when you visit. It is particularly compelling in rural areas where people regularly go into town for services. Why should your banker expect you to go there to get money but your postal service come to you? Home delivery of groceries is a premium service.

    Home delivery of mail is a premium service as well and just like telecommunications, most of the cost is in the last kilometre.

  • 5
    Kevin_T
    Posted Friday, 5 September 2014 at 4:38 pm | Permalink

    How much has CEO Ahmed Fahour’s ability to alienate Australia Post’s core customers (and staff), accelerated Australia Post to this “tipping point”.

    Price increases every six months, some at about 30%, have channelled many of those selling online and sending decent volumes of parcels into the arms of courier companies that were not previously considered. Taking two or three days to deliver local letters which are now sent to a different city to be sorted, undermines confidence in the system, and awarding the CEO massive pay increases while preaching restraint to staff does nothing for staff morale (in this aspect AP is already behaving like a public company).

    Kevin, in Regional NSW, and still a small business customer of Australia Post.

  • 6
    Jaybuoy
    Posted Friday, 5 September 2014 at 6:07 pm | Permalink

    Ahmed said the internet and this email thingy had something to do with the drop in letter deliveries .. you don’t get the big bucks for nufink…

  • 7
    Draco Houston
    Posted Friday, 5 September 2014 at 6:14 pm | Permalink

    yeah, if it is to survive as a business something has to change, but what if we just didn’t run letter delivery like a business? You know, one of those ‘services’ we used to have.

  • 8
    Gratton Wilson
    Posted Friday, 5 September 2014 at 6:30 pm | Permalink

    We used to have first class mail and second class mail. First class was for private correspondence and 2nd was unsealed for business accounts and cards and postcards. Then they put up the price of 2nd class mail and it was all treated as first class. The ostage stamp and taxes paid for the service. There has to be something that taxes payers get for their money. Not everybody gets five days a week mail delivery. We second class citizens in rural areas get either three times a week or have to go to the nearest town and pick up the mail at the Post Office.

  • 9
    Posted Friday, 5 September 2014 at 8:45 pm | Permalink

    Canada Post is also government owned, highly regulated and starting to lose money on its mail services. It has started to introduce community mail boxes. Instead of getting your mail delivered to a letter box at your front gate it is delivered to your letter box at the end of your street or the next street.

    It is also increasing basic stamp prices this year from $0.63 to $1.00.

  • 10
    CML
    Posted Saturday, 6 September 2014 at 12:36 pm | Permalink

    Like some of the comments above, I think AP should be a SERVICE, not just a business.
    Since the government would have to subsidise the delivery of letters and parcels to regional and remote areas if AP was privatised, what is the difference in subsidising the whole outfit and leaving it in public hands?
    The CEO salary is obscene - especially as he doesn’t seem to have a clue about the postal needs of customers. What are the elderly and disabled, those who can’t get to a post office ‘in town’ or ‘down the end of the street’, supposed to do?
    Just go away, or live without yet another service that the government should be providing, I suppose.

  • 11
    David Hand
    Posted Saturday, 6 September 2014 at 2:39 pm | Permalink

    It’s all very well to fantasise about postal delivery as a service but the problem is that most of us don’t want it any more.

    What’s next? Bring back telegrams because someone on an outstation 500k from Alice Springs has an old telex machine?

    Opposition to the privatisation of Australia Post is driven mostly by its rent seeking workforce.

  • 12
    Kevin_T
    Posted Saturday, 6 September 2014 at 3:24 pm | Permalink

    Quote: “It’s all very well to fantasise about postal delivery as a service but the problem is that most of us don’t want it any more.

    David Hand,
    Thank you for your incisive analysis. Can you just do me one small favour and give a link to the official figures that confirm that the majority of Australian citizens do not want any postal service.

    In the mean time I will continue to make about 80% of my living selling items that are delivered by or sent by Australia Post, until either you are successful in having it closed down as an obsolete function in modern society, or until it successfully prices itself out of the viable delivery of small items to customers.

    I don’t believe that the postal service is in the same state of obsolescence as telegrams or the phonograph, and it seems to me that it is a combination of both the internet AND the postal system that have made bricks and mortar retailing much harder (at least for those who have not added those into their business model properly).

    Still if you are correct and the majority of people in Australia do not want a postal service, it probably should be closed down. I think that the consequences would be far reaching, but that is probably just me being selfish because I am reliant on the “service” for my own livelihood (as were the 32,732 employees at the time of Australia Post’s 2013 Annual Report).

    Regards, Kevin

  • 13
    Posted Saturday, 6 September 2014 at 8:01 pm | Permalink

    The claim that ‘Opposition to the privatisation of Australia Post is driven mostly by its rent seeking workforce’ projects onto others the author’s own perception of all issues in terms of their own self interest.

    But a substantial majority of Australians oppose privatisation of any government activity including Australia Post, yet a small minority are employed by government enterprises. People prefer activities to be owned and run by government for several reasons. The most common expressed on this thread is that they prefer people to be treated according to their needs, not according to the profit they may generate.

    In general people support government ownership because they prefer activities to be conducted for the common or shared good, not to maximise the interests of a few owners and senior managers.

  • 14
    David Hand
    Posted Saturday, 6 September 2014 at 10:14 pm | Permalink

    It’s true that most people as a matter of principle oppose privatisation of state assets and therefore my expressed opinion that it’s mostly the postal workforce is probably an overstatement.

    But when you get unrelenting opposition to such an utterly sensible view as expressed even by Crikey, it’s not from the average bloke who may offer an opinion to a pollster. It’s more likely from those with a vested interest in staying on the public teat because they know what would happen if management with a commercial molecule in their brain were running it.

    There is no worked example of what Australia might be like should all those companies sold off in the last 30 years have remained public but the failed socialist states are an approximation.

    If ever there was a case to get some innovation and business nous into a government business it’s Australia Post.

    Good grief! Even Crikey is advocating it!

  • 15
    Posted Saturday, 6 September 2014 at 10:28 pm | Permalink

    The claim that ‘when you get unrelenting opposition … It’s more likely from those with a vested interest …’ again projects on others the author’s propensity to act only in their self interest in face of evidence to the contrary. As I observed before, most of the comments on this thread support Australia Post’s comprehensive service, which posters fear would be reduced if it were privatised. As Paddy pointed out, that is a reasonable fear in the light of the experience of Telstra’s privatisation.

    It would be far better to read what people write and take it at its face value than gratuitously impute motives which might drive you but which don’t obviously animate others.

  • 16
    David Hand
    Posted Saturday, 6 September 2014 at 10:52 pm | Permalink

    Kevin,
    You need to read the newspaper mate. No, even better, just read this article again. I’m sure there are official figures but just the free fall in revenue and profit from letters alluded to in this article should be enough for you.

    Letters volumes are plummeting. And it’s the only part of Australia post that is protected by regulation. Parcels are completely unregulated and Australia Post only competes with the likes of TNT etc. because its parcels ride on the back of a huge infrastructure set up for letters - an infrastructure that is essentially obsolete. It’s been made obsolete by us as we have shifted online.

    Your cheap distribution system for your small parcels is being subsidised by the rest of us through the regulated letters system and that will end in the next couple of years because most of us not using it anymore.

    Closing it down is a bit like taking your bat and ball home just because you are in trouble. Why destroy all that capability just because the government can’t run it profitably?

  • 17
    Kevin_T
    Posted Sunday, 7 September 2014 at 12:42 am | Permalink

    David,

    Communications have changed meaning less letters are sent, and parcel volumes have increased, both because of the internet. Sorry, but I don’t read that as most Australians not wanting a postal service, moreso that many have changed how they use the postal service. If the percentage of items shipped through the Post Office now has swung from low charge items to higher charge items, then problems with letter rate should not be the core problem of the Post Office.

    I personally think there is a leadership and management problem, and that CEO Ahmed Fahour has done more to exacerbate problems than to remedy them, and has done much to alienate customers and staff. That is not to say that I think that privatising it will do better, as a full postal system will by the necessity of the vast area of Australia always have unviable areas of operation - and that is why it should be treated as an important infrastructure for the country as a whole, and indeed as a service, rather than being sold off as a public company whose responsibilities are required to be to the shareholders and not the community.

    As for the “fantasy” of the postal system as a service, if the Post Office is not returning a dividend to the Government, is it then dragging down the Australian economy or still substantially supporting it? Are roads really the only infrastructure a modern government should be supporting that does not return a dividend to the Government, (and in relation to your comment above it should also be remembered that not having to pay for the road infrastructure is a reason that TNT can in turn compete with the Post Office).

    Does a postal service that is viable for the communities, whether in the capital city CBD’s, outer suburbs, or rural and outback regions that supply us much of our food and clothing fibre, really drag down the economy if it does not return a dividend to the Government, or will removing the postal service make some communities (and many livelihoods within them) less viable and less productive?

    Regards, Kevin

  • 18
    klewso
    Posted Sunday, 7 September 2014 at 11:31 am | Permalink

    The tyranny of affordability”?

    Guess who won’t be getting a Christmas card from me this year (or whenever they make it dearer)?

  • 19
    zut alors
    Posted Sunday, 7 September 2014 at 1:54 pm | Permalink

    No way should Australia Post be privatised. It’s an essential service & provides a network connecting the community in a hands-on manner.

    Let’s employ some foresight on a matter rarely discussed: with ageing one day some of us may no longer be mentally adept at using a computer. Effectively this means being cut off from any internet correspondence or skyping. However, a letter from a friend or family member via Australia Post will still get through.

    Technology is a fine thing but we are yet to understand what happens to individuals who cannot keep up after falling through society’s internet-dependent crack.

  • 20
    AR
    Posted Monday, 8 September 2014 at 6:44 am | Permalink

    There is nothing I can add to any of the comments here - a rilly, rilly dumb idea.
    When OneHand approves of something Crikey, that ought to be proof of how stupid it is.

  • 21
    warwick fry
    Posted Thursday, 11 September 2014 at 11:40 am | Permalink

    Agreed - I have always been puzzled by Bernard’s brilliance in most areas but his weakness for ‘privatization’ and a pathetic belief that the ‘commons’ of government enterprise is somehow inherently ‘inefficient’. I can only assume that he developed his intellect during the Keatin/Hawke era of privatization, during those two decades when Thatcherism and Reaganism terrified us Aurstralienns into throwing
    Fabianism (let alone socialism) out the window.

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