Crikey Says

Sep 5, 2014

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.

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21 thoughts on “Crikey says: privatise Australia Post

  1. paddy

    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

    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

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

  4. David Hand

    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

    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

    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

    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

    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. Gavin Moodie

    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

    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.

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