2.1
This chapter discusses evidence regarding the Australian Postal Corporation (Performance Standards) Amendment Regulations 2020, which were introduced in response to the COVID-19 pandemic, including:
the need for regulatory ‘relief’;
the development of the regulations, and consultation processes;
their impact on postal delivery service levels;
impacts on the Australia Post workforce; and
levels of support for the amended regulations.
The need for regulatory ‘relief’
2.2
Australia Post identified a number of factors that led Group Chief Executive Officer and Managing Director, Ms Christine Holgate to approach government seeking temporary changes to Australia Post’s statutory service standards as a result of the COVID-19 pandemic. These included resultant impacts on customer demand for some services, impacts on transport and logistics, and (to a lesser extent) workforce management concerns.
2.3
Conversely, the Communications Electrical and Plumbing Union (CEPU) Communications Division (also known as the Communications Workers Union or CWU) acknowledged the challenges posed by the pandemic, but disputed the need for regulatory relief, saying ‘total revenue was higher than budget in March and April 2020–prior to the granting of regulatory relief on 15 May’.
Demand for postal services
2.4
Ms Holgate described the early days of the pandemic and the impacts on the global postal network, referring specifically to:
packages from China to Australia ‘starting to fall’ in February 2020;
post offices in some countries ‘beginning to close their borders and stop receiving or distributing leaflets’ in March 2020;
worker attendance levels falling ‘as low as 62 per cent’ due to health concerns in the United States;
‘letters becoming volatile’ in Australia; and
parcel volumes falling in some countries, including New Zealand, which saw a 70 per cent fall on the fourth day of its lock down [in March 2020].
Letters and passport applications down
2.5
According to Australia Post, domestic letter volume demand ‘has been notably volatile and predominantly negative since the pandemic began’, with year-to-date March 2020 letter volume declines at around 11 per cent compared to 2019. As shown in Figure 2.1, the April 2020 volume decline was 28 per cent and the May 2020 decline was 36 per cent.
2.6
Asked to account for the sudden decrease in letter volumes during the pandemic, Ms Holgate said:
Because nearly 98 per cent…of letters come from businesses and those businesses hibernated as they went into lockdown. The second challenge is that the very thing that caused parcels to rise is digitisation; that is the same thing that's causing a reduction in letters.
2.7
Further disruptions to the business described by Ms Holgate included reductions in international parcels and passport applications due to border closures, and a significant reduction in foot traffic in metropolitan post offices—as much as 55 per cent in many central business districts.
2.8
At the same time, Mrs Angela Cramp, Executive Director of Licensed Post Office Group Limited (LPOGroup) reported seeing an increase in foot traffic in her Wollongong post office, as people were no longer commuting to Sydney.
Parcels up
2.9
As letter volumes dropped, parcel volumes increased. Ms Holgate reported that Australia Post recorded a half-year total increase in parcel volumes of 11 per cent. Ms Holgate said: ‘that is seen as a massive parcel growth for a business of our size and much more significant than any other.’ Executive General Manager of Community and Consumer at Australia Post, Ms Nicole Sheffield added that April parcel volumes had increased by 64 per cent.
2.10
As a result of the lockdown measures, Australian businesses were ‘rushing to move online’. Between April and June 2020, Australia Post saw:
800,000 new customers sign-up to its MyPost Business accounts;
8.4 million parcels delivered via SafeDrop and Parcel Lockers (double the volume from the previous year); and
call centre contact volumes over 60 per cent higher year-on-year in April, and over 25 per cent higher year-on-year in May.
2.11
The National Retail Association confirmed the increase in online shopping, leading to an increase in parcels:
Foot traffic in shopping malls and strips plummeted as a result of the COVID-19 crisis. In the first week of April, there was a 93.6 per cent reduction in foot traffic when compared to the same period last year. In the eight weeks to 15 May 2020, there was an 80 per cent increase in online shopping. In late April, Boston Consulting Group (BCG) surveyed Australian consumers and found that the percentage of people who shopped online had increased to 76 per cent, compared to just 39 per cent four years ago.
2.12
Australian online retailer, Kogan.com highlighted the rapid rise in online shopping, submitting that in the second quarter of 2020, it shipped over 1.4 million products, exceeding its previous quarterly record by 51 per cent.
2.13
Kogan.com also submitted that Australia Post’s retail outlets function as ‘a physical point of presence’ for online businesses, and the relaxed service requirements would allow Australia Post to support businesses to ‘adapt to the changes in consumer spending behaviour’.
2.14
Australia Post submitted that ‘capacity limits’ associated with its postie vehicles, most of which are motorbikes, has meant that much of the growth in parcels had to be outsourced to delivery contractors.
Transport and logistics
2.15
Arguably the key reason for requesting temporary changes to its service standards is the significant transport and logistical challenges Australia Post has faced during the pandemic.
2.16
Many of Australia Post’s letters are transported in domestic passenger airplanes by Qantas. The reduction in passenger flights ‘to virtually zero’ announced on 8 April 2020 removed ‘critical capacity’. Australia Post submitted: ‘it was at this point that it became physically impossible for us to continue meeting our delivery speed.’ Much of the cargo was then shifted to ‘road movements’, but the smaller-capacity, slower land vehicles were unable to meet the transit times required by the existing regulations.
2.17
Qantas submitted its support for temporary regulatory relief, confirming that while domestic and international passenger flights have massively reduced, the airline is operating more freight flights to service an upturn in Australia Post demand: ‘increasing our freighter network to 46 sectors and uplifting an average of 265 tonnes per night’.
2.18
Ms Holgate acknowledged the 17 chartered flights that Qantas is providing to help Australia Post cover the domestic service shortfall, but pointed out that this has increased costs ‘by about $1 million a week’.
2.19
A further transport challenge has been servicing Indigenous communities, which are traditionally accessed using Greyhound buses, which ‘shut down’ during the pandemic.
2.20
During April and May, parcels increased not only in volume, but in size, with the growth ‘disproportionately coming from Melbourne and certain pockets’, where there is a concentration of e-commerce merchants. Managing these challenges meant quickly establishing additional parcel posting and sorting facilities in key locations.
2.21
Ms Holgate told the committee that Australia Post asked the government for temporary regulatory relief because it ‘could not meet [its] delivery standards when [it was] operating in such a complex and challenging operational world’.
2.22
The Department of Finance suggested the temporary regulatory relief would assist in maximising ‘efficiencies’ throughout the postal network, and containing costs, as well as letting Australia Post pursue:
…other initiatives that deliver a public good, such as the recent agreements with the Pharmacy Guild of Australia (to deliver medicines) and Woolworths (to deliver essentials boxes to vulnerable Australians) with no significant resourcing impacts…
Development and consultation
2.23
Witnesses including Australia Post were questioned around the development of the temporary regulations, and the processes and nature of consultations leading to their announcement and implementation.
Development
2.24
Ms Holgate stated that she held ‘a long conference call with the CEO of New Zealand Post’ in March 2020 during which she ‘became extremely alarmed for Australia Post’ as she heard about what was going on in New Zealand:
That was day 4 of their lockdown and their parcels had fallen 70 per cent, never mind their letters. It became very evident from the CEO that they were going to need help and support.
2.25
Australia Post ‘reached out’ to government for assistance early, seeking at first to be declared ‘an essential service’ in order to guarantee that its operations could continue during the pandemic. The initial approach was made on 14 March 2020, with a subsequent approach for assistance, which canvassed a number of additional options, made on 31 March 2020.
2.26
Representatives from the Department of Infrastructure, Transport, Regional Development and Communications (the Communications Department), confirmed that the departments of Finance and Communications were contacted with a request for assistance from Australia Post as indicated. Deputy Secretary, Mr Richard Windeyer, said the temporary regulatory changes were developed as a response to these requests, in order to address the specific challenges of the pandemic. In response to questioning, Mr Windeyer said that the changes were not made ‘with reference to earlier strategic reviews’.
2.27
The regulations were prepared by the Communications Department through ‘an iterative process’, involving:
seeking further information from Australia Post ‘to understand the nature of the circumstances they were facing’;
departmental staff preparing drafting instructions and providing them to the government legislative drafters; and
negotiations between the department and the drafters to ensure the regulations were ‘technically capable of being delivered’.
Adequacy of consultation
2.28
Concerns were raised by some witnesses as to the adequacy of consultation on the amended regulations.
2.29
Ms Holgate said Australia Post consulted widely throughout the pandemic with workers, shareholders, stakeholders, licensees, unions and customers. Ms Susan Davies, Executive General Manager of People and Culture at Australia Post, said consultations had been ‘extensive’, adding that Australia Post met with the CEPU:
‘more than 38 times’ since 19 March 2020 ‘to discuss the impacts of the pandemic on Australia Post’;
seven times to discuss enterprise bargaining; and
‘no less than’ 22 times to discuss ‘the delivery frequency changes’.
2.30
In addition, Australia Post had 43 written exchanges with the CEPU ‘talking about alternatives to bargaining and the pandemic and the delivery frequency changes’.
2.31
Mr Shane Murphy, National President of the CEPU, strongly disputed Australia Post’s assertions that consultation had even occurred:
There was no consultation upfront. Thirty minutes prior to the minister's announcement is not consultation with adequate detail about what the regulation was. We sought that information from the minister. It wasn't forthcoming soon after. We wrote to the minister again seeking that information and then again it took some weeks to meet with Australia Post. In a meeting about significant operational change under regulation reform, we were given one hour, with no documents, no detail and very little information provided at that meeting. Over the course of a number of meetings after that…there was evasiveness and answers not being provided promptly.
2.32
Ms Davies recalled that she had informed the union about the regulations in a telephone call made to CEPU National Secretary, Mr Greg Rayner, on 21 April, ‘before any releases were made’.
2.33
Mr Rayner confirmed that he was phoned prior to the media announcement, but only 30 minutes prior, which he said was ‘a shock’. He said that the unions were provided with no information around what the regulatory change would mean for jobs at that stage.
2.34
The CEPU submitted that Australia Post had ‘resisted consultation efforts’ in relation to how the regulatory changes could impact jobs in supporting operations, including van and transport operations, and mail sorting and processing areas.
2.35
The CEPU argued that inadequate consultation on the regulations represented ‘a clear violation of the trust developed between CEPU and Management’, leading to ‘distrust and suspicion over management and federal government’s intentions as to the future of Australia Post’.
2.36
The Communications Department confirmed that only Australia Post was consulted in developing the regulations, and that the minister met with union representatives on 27 April 2020—after the changes were announced—‘to explain the rationale for the regulatory relief’. The department submitted the rapidly evolving situation dictated the consultation process:
Given the urgency and unprecedented circumstances, broader public consultation was not possible in advance of the regulatory relief being announced.
2.37
The CEPU told the committee the multiple requests they made for a copy of the draft regulations following a meeting with the Minister on 27 April 2020 were unsuccessful.
2.38
Assistant National Secretary of the Print and Packaging Membership Area of the Australian Manufacturing Workers Union (AMWU), Ms Lorraine Cassin, said, despite the significant impact the regulations could have on its members, the AMWU ‘had no consultation with Australia Post around this proposal’, and no one in the print and packing industry was contacted ‘as far as we are aware’.
2.39
Ms Muscat-Bentley, Deputy National President of the Community and Public Sector Union (CPSU), raised concerns about the nature of consultation with Australia Post employees and their unions:
The CPSU is concerned that Australia Post has not been upfront with its employees and the Australian public about the effect of COVID-19 on its financial position and its future plans for major change beyond 2021. While Australia Post did have regular meetings with the CPSU during the height of the pandemic, management was less than forthcoming about plans to mitigate work health and safety risks or how to facilitate working-from-home arrangements. While we understand that the current environment is volatile and uncertain, this lack of transparency and good faith erodes employee morale and makes it harder to function in the interests of the community. Our members feel that the employer's decision-making during COVID-19 was a day-by-day knee-jerk reaction, and they've deliberately avoided being transparent regarding proposed organisational changes which have been linked to the pandemic.
2.40
Ms Muscat-Bentley argued Australia Post needed to work towards achieving ‘transparency and genuine consultation with unions about future plans for Australia Post’.
2.41
The CEPU recommended that the Senate disallow the regulations and that Australia Post:
…seek no further regulatory amendments without worker involvement via formal consultation with the CEPU; and…Shareholder Ministers agree not to table further regulatory amendments in the Parliament without formal consultation with the CEPU on behalf of the Australia Post workforce.
2.42
As discussed in Chapter 1, the Minister for Communications, Cyber Safety and the Arts, the Hon Paul Fletcher MP, confirmed that the regulatory changes are time-limited (set to end 30 June 2021), with a review scheduled to occur before the end of 2020. As part of the review process, the minister said, ‘consultations with all relevant parties’ would be undertaken, and a new disallowance period would ultimately be provided, ‘enabling Parliamentary oversight’.
2.43
The committee’s comments on the adequacy of consultation in relation to the regulations are presented at the conclusion of this chapter.
Impacts on service levels
2.44
Evidence to the inquiry explored the issue of how the temporary regulations could impact service levels for Australia Post’s customers.
2.45
The Department of Finance (Finance) outlined the government’s position on potential impacts on service levels represented by the temporary regulations:
Under the temporary relaxation in regulatory requirements for Australia Post:
its required delivery time for regular intrastate letters will be extended to five days after the day of posting;
it will be permitted to adjust its delivery frequency, in metropolitan areas only, from every business day to every second business day; and
it will have greater freedom in managing post offices while there is a pandemic, but will take all reasonable steps to keep outlets open.
2.46
Finance clarified that, while the priority letter service has been suspended by the temporary regulatory changes, it accounts for just 12 per cent of total mail volumes. Express Post services, which are unregulated, are set to continue despite the changes, and:
To minimise the impact on businesses of the temporary suspension of priority mail, Australia Post has implemented a temporary alternative priority timetable to assist businesses that require urgent delivery of large volumes of mail.
2.47
Finance stated that ‘Australia Post’s customers will observe minimal disruption’, particularly those in regional, rural and remote Australia, for whom delivery frequency will not be affected. Ms Holgate reiterated the point that only metropolitan addresses will be affected by the changes, with regional customers and those PO boxes continuing to receive daily delivery of letters.
2.48
The CEPU disputed the classification of some of the areas classified as metropolitan, saying that it includes ‘a number of areas ordinarily associated as being regional and/or rural’. Areas such as the Central Coast of New South Wales, the Newcastle Hunter Valley region, Cessnock, Maitland, Taylors Beach, Kiama, Geelong and Townsville ‘are now to be considered part of this change, as part of a metropolitan city’.
2.49
Mr Gary Starr, Executive General Manager, Business, Government and International at Australia Post, explained the removal of the priority mail service:
The priority mail service was one of the services for which we sought regulatory relief. It is a service that provides a next-business day service, within one or two days of the mail being lodged. Through the regulatory relief, we've worked with the bulk mailers to offer an alternate priority timetable, so that we can sift the time-sensitive lodgements that they have…the banks, the telcos and utilities have been the biggest users. Red Energy, Origin Energy and the big banks in particular are the major users of the priority service.
2.50
Delivering priority mail according to the regulated standards had become too difficult, Ms Holgate said, ‘due to the operational network constraints, particularly the challenges…with Qantas and long haul constraints’.
2.51
Asked about next day delivery, Australia Post’s representatives confirmed that express post is still available, but at a cost of $7.50. The regulated priority mail product was $1.50.
2.52
The CPSU reported concerns that the amended regulations would negatively impact upon the community's needs. Ms Muscat-Bentley said:
Members working in customer services comment that they are being inundated by public inquiries about deliveries being slowed down as mail and parcel services have been significantly delayed. Our members report that the community is more than aware of the reduced level of service and has vented its frustrations.
2.53
Ms Sheffield reported that Australia Post has ‘an ongoing survey of the community’ in place and is regularly seeking feedback on its services. She said: ‘Our post offices are the frontline, and our contact centres take calls about this, so we definitely are always open to feedback and consultation’.
Licenced Post Offices
2.54
Under the original regulations, Australia Post is required to maintain at least 4000 retail outlets around Australia, with strict requirements around the numbers, locations and distances from residential populations. The amended regulations provide ‘flexibility to temporarily close outlets should this be necessary due to workforce impacts of COVID-19’.
2.55
Australia Post submitted that, throughout the pandemic so far, it has provided support including protective screens, hand sanitiser, gloves and face masks to help licensees ‘minimise temporary post office closures’. This has resulted in only 21 closures occurring between March and May 2020, most of them temporary.
2.56
Mrs Cramp reported a similar number, saying:
The older licensees have taken the choice to close their outlets for a period of time, and Australia Post has relocated the parcels or manned that office for a limited amount of time. But there really was only I think about 19 LPOs out of 2,840, so it wasn't a lot. Mostly they stayed.
2.57
Australia Post also stated that it has provided flexibility to LPOs around operating hours ‘to suit their local business situation’, as well as providing ‘localised support to keep post offices open where licensees, agents or their staff had to go into quarantine’.
Is mail being withheld?
2.58
An issue that arose during the inquiry was the question of whether mail is being withheld due to staff shortages, or shortened shifts.
2.59
Mr Lee Morton, a postal worker from the NSW Central Coast with 24 years' experience, told the committee he works at a postal delivery centre where:
Some days four runs aren't delivered, some days two, some days one, but mail is being withheld from customers that pay to get the mail delivered and it sits in the delivery centre. Then a poor postman like I used to be has to come in and work from five o'clock in the morning until five o'clock in the afternoon, delivering two days' worth of mail and parcels.
2.60
Mr Murphy suggested this was a result of Australia Post removing ‘casuals from the workforce’ early on in the pandemic to save money, leading to understaffing in delivery. He said, ‘there is clear evidence of two and three days of runs not being delivered to the same customers in regional areas’.
2.61
The CEPU submitted that underemployment in Australia Post has led to delays in both letter and parcel deliveries, which has been occurring since before the pandemic.
2.62
Asked about delays in deliveries, Mrs Cramp said:
I think it's fair to say that we have all experienced delays, changes, adjustments. Mail is definitely coming at different time frames. We have seen a large increase on Tuesday, as opposed to Monday, which is unusual in rural areas. A lot of rural areas do not get a delivery to their roadside boxes every day. The mail definitely comes to the LPOs every day. But, with changes to the restrictions of the borders and movement of the mail, especially with, I assume, the flight bringing the mail to all the regional centres around the country, there have been backlogs of mail and more mail turning up at different times of the week than we would normally see.
2.63
Australia Post responded to a question on whether mail was being deliberately ‘withheld or delayed’:
Delivery of mail has on some occasions been delayed to manage competing priorities, including to support Australia Post’s workforce through the impacts of the pandemic (for example, to accommodate around both planned and unplanned staff leave during the pandemic period and its related uncertainties) whilst supporting all applicable service commitments, including those applicable to our parcel and express post services. Such delays, however, have not—to Australia Post’s knowledge—prevented timely delivery of affected mail.
2.64
Australia Post explained that transport issues during the pandemic had also seen mail deliveries delayed ‘relative to our service commitment’, and the delays had led to ‘a small number’ of internal complaints.
Impacts on the workforce
2.65
The primary issue of concern with the regulations has been around how the changes may impact upon the Australia Post workforce, especially posties. Evidence to inquiry discussed:
early impacts of the pandemic on the workforce and measures taken by Australia Post;
expected impacts of the regulatory changes, as foreshadowed by Australia Post in its briefing to postal area managers in May 2020; and
subsequent assurances from Australia Post culminating in the signing of a Memorandum of Understanding (MOU) with the CEPU on 7 July 2020.
Measures taken by Australia Post
2.66
In the early days of the pandemic Australia Post was concerned for the future of the business and its workforce and implemented several initial savings measures to sure up cash reserves. These included:
the CEO, executive team members, and board members voluntarily taking a pay reduction of 20 per cent for the fourth quarter of financial year 2019-20;
a temporary recruitment freeze across the organisation;
contracts ended with 306 ‘white collar contractors’;
all non-essential ‘people related training’ deferred or cancelled from 18 March 2020; and
a head office Easter shut-down period imposed for two weeks, which meant that approximately 3,675 employees took an average of 4 days ‘planned recreational, special pandemic purchased or unpaid leave’.
2.67
Ms Muscat-Bentley told the committee that staff included in the Easter shut‑down reported ‘being threatened with being stood down without pay and pressured into exhausting their annual leave and long service leave entitlements’. CPSU members told the union that employees with no available leave entitlements were made to purchase additional annual leave, take leave without pay, or ‘accept new employment contracts at lower pay grades’.
2.68
Initially concerned the pandemic may impact the workforce by putting jobs at risk, Ms Holgate explained that the rise in parcel volumes had somewhat offset this concern while creating other workforce challenges. Ms Holgate praised the workforce for choosing to work overtime in parcel-sorting facilities ‘to help…clear the massive backlogs that came at us’.
2.69
Ms Davies said that Australia Post had been able to support workers stood down from other companies, including Qantas. This included employing 600 ‘frontline workers’ and 150 contact centre workers on a casual basis for periods of up to 12 weeks.
Would ‘one-in-four’ posties lose their job?
2.70
A key point of contention around the regulations has been a suggestion that one-in-four posties may no longer be required under the new regulatory regime. The CEPU submitted:
Despite claims by Australia Post that the workforce impact is merely a reallocation of resources from letter delivery to parcel delivery, the operational changes proposed by Australia Post in order to implement Regulatory Relief, shared by management with the Officials of the CEPU and the postie workforce [in May 2020], demonstrated a reduction of one ‘postie’ job, in every four.
2.71
Ms Davies disputed this claim, saying Australia Post had communicated to all employees on 11 June that there would be ‘no forced redundancies’, and confirmed this in writing to the CEPU on 12 June 2020. Following this, Ms Davies explained that Australia Post's position had been confirmed on three subsequent occasions:
There were three more cases of a draft MOU, on 30 June, 1 July and 3 July, where we have confirmed that there are no forced redundancies and one in four posties will not lose their job.
2.72
Ms Davies was of the view that the idea that one-in-four posties was set to lose their job had come from a misunderstanding in relation to a single slide in a presentation given to postal area managers in May 2020:
On one those pages we had a scenario. It was made up of four posties with pseudonym names… It said what we would do with four 'letters and mail and parcel' posties at this moment in time. We said we would allocate two of the posties to two rounds so they had full capacity of delivery in two rounds. We said the third postie would take the existing parcels—posties today deliver small packets and parcels, as you are probably aware—that are currently allocated across the four posties. We said the fourth postie would be allocated to a parcel round. That meant he wouldn't retain a letters and mail round; he was actually allocated to a parcel round. It would seem that that has been used out of context…
2.73
Australia Post tabled the slides from the presentation in question at the public hearing on 8 July in Canberra. Figure 2.2 below shows a slide depicting current and future scenarios featuring four fictitious posties—Allan, Brad, Dan and Cindy. In the future scenario, Allan and Brad retain letter delivery rounds, Cindy has been redeployed to parcel delivery in a van and ‘Dan is no longer assigned to a round’.
2.74
Asked to comment on words in the text of presentation which say the fourth fictitious postie, Dan, ‘is no longer assigned to a round’, Ms Davies said: ‘They would be covering the significant increase and surge in parcels that we've seen as a result of COVID-19.’
2.75
The union disputed this interpretation, saying:
Australia Post understood, right from the outset, that this plan would mean job losses. We believe the government also knew this plan would mean job losses… Under the document provided to the Senate, management briefings were held early on in their modelling that clearly outlined to senior executives and lower-level delivery managers that one in four posties, such as Dan, no longer had a job to do.
2.76
However, Mr Murphy went on to say that, under the MOU agreed between the union and Australia Post, Dan would no longer lose his job.
2.77
Ms Holgate argued that it was not in Australia Post’s interests to lay-off posties and ‘keep outsourcing work to third parties when we have the best delivery network’.
2.78
Australia Post submitted that the workforce restructure is already underway, which will see a percentage of posties move from delivering letters to delivering parcels:
We have undertaken an expression of interest (EOI) process, following extensive consultation with the CEPU, to understand our employees’ delivery preferences, which we will seek to accommodate wherever we can in line with our business needs. We have a strong return rate of the EOIs so far, with over 70% of impacted posties completing the EOI and, of these, around 30% having indicated a preference to deliver parcels in a van, which generally aligns with our delivery modelling to date. In addition, 258 responders expressed comfort with delivering either letters or parcels. We have seen a keen interest from our posties to move to delivery in vans for some time. Since 1 April 2020 we have trained 568 posties to safely deliver in a van, due to a surge in parcel volumes during the pandemic.
The Memorandum of Understanding
2.79
Australia Post and the CEPU were in enterprise bargaining discussions across the period that Australia Post has been dealing with the COVID-19 pandemic. An MOU was signed on 7 July 2020 which maintains employee conditions under the existing 2017 Enterprise Bargaining Agreement. According to Australia Post:
This MoU will protect jobs and take-home pay as Australia Post implements the Alternating Delivery Model (ADM) from next month in metropolitan areas. This will see letter delivery occur every second day with some Posties redeployed to deliver and process parcels. No posties, or other employees directly impacted by this change, will be made involuntarily redundant during the period of the MoU, which expires on 9 August 2021.
2.80
Ms Davies said that the MOU secures the union’s agreement to support Australia Post in relation to the temporary regulations. Mr Murphy confirmed that the MOU does indeed mean the unions have agreed to ‘support temporary reform’. However, the MOU ‘doesn't say that [the CEPU] support the [Alternative Delivery Model]; it says that we support temporary reform at this point in time’.
2.81
The CEPU explained that the MOU extends a 15 per cent penalty rate currently paid to some employees (depending on start time) to all delivery personnel from 30 September 2020.
2.82
In addition, under the MOU, ‘frontline workers will be paid a [one percent] thank you bonus’ to recognise their hard work under difficult conditions during the pandemic.
2.83
Ms Muscat-Bentley was concerned that the MOU ‘does not extend to administrative, clerical or call centre employees’, who may still be vulnerable to forced redundancies.
Impacts on the printing and packing industry
2.84
The AMWU supports employees in industries associated with paper, envelope and ink production, mail houses, direct marketing and delivery, including delivery of brochures, leaflets, etc. The AMWU submitted that, in its view ‘the proposed changes to Australia Post’s performance standards would have a severe impact on an industry already suffering from COVID-19 job losses’.
2.85
Ms Lorraine Cassin, the AMWU's Assistant National Secretary for Print and Packaging, told the committee that the print and packaging industry works directly with Australia Post and the priority mail sector. In Ms Cassin's words, the union was ‘shocked’ to hear the announcement that Australia Post was reducing its mail delivery services and would no longer be providing a priority mail service. Ms Cassin said: ‘it's quite an extraordinary time to be having discussions around reducing any sort of government services’.
2.86
Ms Cassin reported that the AMWU has had contact from members concerned about how the regulatory changes at Australia Post will impact their businesses:
I'm getting calls from businesses and from workers that they're not going to survive and they don't know where it's all going to end up. In this submission we put that the job losses that will be equated in our industry if this is go through will be our paper makers, our envelope makers, our mail houses directly.
2.87
The AMWU expressed concerns that the temporary regulations could be a kind of ‘beginning of the end’ for the printing and packing industry:
The AMWU does not want to see Australia Post ‘manage the decline’ so that the mail service dies. Such death usually begins with an act to downgrade such as the priority mail service.
2.88
The Real Media Collective, an industry association representing the paper, print, publishing, mail and distribution sectors across Australia and New Zealand, made a detailed submission on the industry’s future in light of falling postal volumes. The key points were:
the paper, print, publishing, mail and distribution sector is worth approximately billion $18.9 and employs 258,000 Australians across 17,756 businesses;
Australia needs a commercially-viable letters service to off-set digital exclusion, which disproportionately impacts the elderly and those with disabilities;
increased postage costs by 50 per cent over the last four years are ‘not sustainable’; and
the current crisis (of letter volume decline) ‘will lead to industry collapse and significant job losses across the largest industry manufacturing employer across the country’.
2.89
While the future of the paper, print, publishing and packing industries were not addressed in depth during the inquiry, issues relating to the future of letter delivery services are further discussed in Chapter 3.
Opposition to the regulations
2.90
The majority of submissions received were supportive of the temporary regulations. However, this was not the case for all submitters.
2.91
Aside from union representatives, who raised concerns with the temporary regulations, other organisations also raised concerns. For example, the Country Women’s Association of Australia (CWAA) submitted that it has ‘long-held concerns’ about the accessibility, speed and reliability of postal services for rural, regional and remote Australians. The CWAA said it sees the temporary regulations as a step towards more a permanent reduction in Australia Post’s service obligations, which ‘would have negative consequences for the livability of the regions’.
2.92
The CWAA said residents in rural, regional and remote areas sometimes have to rely on the postal service for their official documents, ‘where digital connectivity is poor or digital literacy is low’. According to the CWAA these residents are already reporting slower service, in terms of letter deliveries, since the start of the pandemic, and the CWAA fears the regulatory changes will cause services to become even slower.
2.93
The National Farmers Federation held similar concerns, stating:
The NFF would be very concerned if changes made to specifically respond to the COVID-19 circumstances led to longer term erosion of Australia Post’s service standards and withdrawal of resources. Providing Australia Post with the flexibility to allocate more resourcing to parcel delivery services in response to the surge in customer demand is a practical decision, but should not come at the expense of other important services that many Australians rely on.
2.94
Evidence from Finance suggested customers in rural and regional areas would face the least disruption as a result of the changes in the temporary regulations:
The proposed regulatory relief ensures that regional and rural Australians and their communities are not disproportionately impacted. Delivery frequency in regional, rural and remote Australia will not change.
2.95
UNICEF Australia was opposed to the regulatory changes, which it submitted will ‘have a significant impact’ on UNICEF Australia’s operations. UNICEF relies on letters for ‘awareness and fundraising efforts’, and receiving donations through the post (accounting for 25 per cent of its campaign income). UNICEF Australia sends approximately 20,000 letters each month.
2.96
Reducing the frequency of mail deliveries to every second day will create delays for UNICEF, and increase the costs of its campaigns, and the temporary suspension of the priority mail service will mean UNICEF ‘cannot communicate urgently to certain donors if necessary’.
Support for the regulations
2.97
Many submitters to the inquiry supported the regulatory changes—from post office licensees to business owners and charities from across Australia.
2.98
Post Office Licensees overwhelmingly supported the relaxed service obligations, and argued for more long term reforms to Australia Post’s service delivery standards. Mrs Cramp said of the LPOGroup ‘[w]e are here today to support change’, adding:
For the LPO network to thrive and prosper, Australia Post must be viable and sustainable, and it is therefore in our best interests that Australia Post operates in a commercially sound manner and that the business continues to meet the changing needs of our customers and our communities.
2.99
The Australia Post Licensee Advisory Council submitted a similar view:
These Regulations enable Australia Post, and its posties, to meet the shifting customer demand for parcels and to continue to support us, and other LPOs, as we navigate the ongoing challenges of COVID-19. We support the making of these Regulations.
2.100
A total of 125 small, medium and large businesses that interact with Australia Post submitted form letters to the inquiry. The committee published a representative sample of these form letters. In them, businesses talked about the ways in which COVID-19 had impacted their business, the move to greater online purchasing, and their increased reliance on Australia Post during the crisis.
2.101
A typical example is the letter from Australian department store chain, Myer, which submitted:
During the COVID-19 crisis, a fast and reliable parcel delivery service has been key to ensuring businesses, both large and small, across metropolitan and regional Australia, have continued to reach their custome… We are supportive of the Regulations because they will enable Australia Post, and its posties, to meet current unprecedented customer demand for parcels and continue to support our business…
2.102
Eighteen charities submitted form letters supporting the regulations. A representative sample of these was also published. These letters focussed on the role of Australia Post in supporting charities by providing discounted bulk mail rates for fundraising letters, avenues for distributing aid, and assistance with promoting local campaigns. Australia Post confirmed that, among other charity initiatives, it has supported around 700 charities with discounted mail in the last 12 months.
2.103
A typical statement from the charity form letters to the inquiry is this one from the Local Community Services Association:
Australia Post has supported community-led initiatives by:
posting letters from school children to elderly residents of retirement villages and nursing homes;
in partnership with the local Neighbourhood Centres, they have delivered food parcels and care packages to people in need during lockdown especially in rural areas;
they have supported children and parents during lockdown and school holidays by delivery of craft and activity boxes to children who are able to do similar activities together through Zoom.
2.104
The National Retail Association submitted that parcel deliveries have provided ‘a lifeline’ for the retail sector during the pandemic. Small business, the Association said, have felt ‘the full force’ of the economic downturn, and had to innovate to survive the pandemic: ‘for these businesses, every parcel delivery has supported employment’.
2.105
According to the National Retail Association, the ‘there isn’t a more important partner to support the retail sector’s recovery over the next 12 months’.
2.106
The South Australian Wine Industry Association similarly explained that the wine industry in South Australia, which is mostly based in regional areas, has relied on Australia Post’s outlets and services ‘to get deliveries done in a timely manner’.
2.107
Online retail platform, eBay Australia & New Zealand, submitted that recent border closures and lockdowns resulting from the ‘second wave’ of infections in Victoria provide ‘further evidence of the critical need for’ the regulations:
The shift to online demands our postal service be able to operate flexibly and respond to the rapid changes brought about by COVID 19 by re‑focusing on parcel services. Both business and consumer expectations on delivery of goods is clear. Delivery needs to be fast, affordable, safe and trackable from point-to-point.
2.108
Another submitter, the Indigenous Literacy Foundation, described a partnership with Australia Post, in which Australia Post delivers approximately 100,000 books to over 400 remote locations through its postal network. The Foundation noted that COVID-19 has impacted Australia Post’s capacity to access some of the more remote locations ‘in a timely manner’, but said it believed without the regulatory reform, Australia Post’s capacity to continue supporting the program would be negatively impacted:
We need Australia Post to be in a sustainable position so that we can continue to reach those vulnerable members of our community. That is why the Indigenous Literacy foundation supports the making of these Regulations.
Committee view
2.109
The impacts of the coronavirus pandemic have been deep and wide. Lockdowns, travel bans, social distancing and other restrictions continue to impact the lives of Australians, and few sectors of the economy have escaped without detrimental effects.
2.110
The committee appreciates the uncertainty and disruption influencing the operations of Australia Post since February 2020. It acknowledges the hard work and dedication of Australia Post’s staff and contractors throughout the pandemic period, and notes actions taken by management and the board to safeguard the ongoing viability of the business and to protect its workforce.
2.111
The committee understands that Australia Post sought temporary regulatory relief through its shareholder departments during March 2020, and this was granted through temporary amendments to the Australian Postal (Performance Standards) Regulations 2019.
2.112
The committee believes the temporary regulatory changes are a proportionate and reasonable response to an extraordinary and unanticipated situation. They provide Australia Post with a degree of flexibility to allocate its workforce to priority operations in uncertain and ever-changing circumstances, while still ensuring Australians continue to receive regular letter deliveries and prompt parcel services.
2.113
The committee acknowledges the concerns raised by unions and worker representatives, who felt they were not adequately consulted prior to the public announcement of the regulatory changes. However, the committee notes the unprecedented circumstances of the pandemic, and the urgent challenges posed by the sudden and substantial increase in parcel delivery volumes in April and May 2020.
2.114
The committee understands there may have been anxiety among some sectors of the postal workforce as to possible implications of the temporary changes. The committee believes Australia Post took steps to communicate comprehensively with stakeholder groups, including workforce representatives, as soon as was practical.
2.115
The committee notes that, despite early opposition, the CEPU has provided support for the temporary regulatory changes in exchange for assurances from Australia Post that frontline jobs and take-home pay will be protected. The committee hopes the signing of a Memorandum of Understanding will help these employees feel more confident about their futures at Australia Post.
2.116
The committee thanks all the business, charities and individuals who wrote to the inquiry expressing support for Australia Post and its important role in Australian society and the economy. It is heartening to read that many business and community groups facing grave challenges have been able to quickly adapt and innovate, and to hear about the role Australia Post has played in supporting those organisations.
2.117
The situation in relation to COVID-19 is still, and will continue to be uncertain and ever-changing. The regulatory relief provided to Australia Post has been provided as a temporary measure, and this is appropriate.
2.118
The committee supports the temporary regulations, and notes that they are due to expire on 30 June 2021 with a review to occur before the end of 2020.
2.119
It critical that Australia Post and its shareholder departments use the time until the end of 2020 to consult widely on the future of Australia’s postal performance standards, and that the Senate has further opportunities to consider any additional regulatory changes or extensions.
2.120
Chapter 3 of this report discusses the future for Australia Post and postal services, including evidence around the rise in demand for parcels, the long term decline in letter volumes, and proposals for more permanent reforms to Australia’s postal services.
2.121
The committee recommends that the Senate demonstrate its support for the Memorandum of Understanding signed on 7 July 2020 by Australia Post and the Communications, Electrical, and Plumbing Union by opposing the disallowance of the Australian Postal Corporation (Performance Standards) Amendment Regulations 2020.