This inquiry was established to investigate two interconnected issues:
the events relating to the standing aside and resignation of former Australia Post Group Chief Executive Officer and Managing Director (CEO),
Ms Christine Holgate, and whether the Board of Australia Post exercised its role with appropriate care and due diligence; and
issues related to the secret Boston Consulting Group review and the future of Australia Post's service delivery obligations.
More broadly, the inquiry explored fundamental questions regarding the financial viability of Australia Post and potential changes to the service model to improve sustainability and access, including in rural and regional Australia.
The Holgate matter
On 22 October 2020, Ms Holgate, then-CEO of Australia Post, appeared at Senate Estimates and disclosed the purchase of Cartier watches for the senior executives involved in negotiating the Bank@Post deal in 2018. This deal was a major financial success for Australia Post that secured significant additional revenue for licensed post offices, especially in rural and regional areas. Although Ms Holgate's decision to reward the watches was certainly regrettable, a Shareholder Ministers' commissioned investigation of the purchase found 'no indication of dishonesty, fraud, corruption or intentional misuse of Australia Post funds'.
The events that transpired on 22 October 2020, and in the weeks that followed, exposed serious shortcomings in Australia Post's governance, the Board's processes and its relationship to government.
Within hours of Ms Holgate's fateful estimates appearance, a high performing and well respected CEO of one of Australia's most significant and valued government institutions, was placed in an untenable position by the Prime Minister's declaration during Question Time that if Ms Holgate did not wish to stand aside, 'she should go'.
The evidence before this Committee indicates the ultimatum that 'the chief executive has been instructed to stand aside and, if she doesn't wish to do that, she can go' was not a spur of the moment reaction, but rather a calculated response aimed at achieving a predetermined outcome.
Evidence to this inquiry revealed the Minister for Communications had, on two separate occasions prior to Question Time, verbally instructed the Chair of Australia Post that the Australian Government (government) wanted Ms Holgate stood aside, but Ms Holgate had refused these demands.
Notably, similar scandals around the same time involving high ranking public officials—such as the exorbitant taxation expenses of the Chair of the Australian Securities and Investments Commission, and the hugely inflated purchase price of the 'Leppington Triangle'—were not accompanied by unreasonable and ill-informed ultimatums in the most public of forums.
Lack of procedural fairness
The Australia Post Board, apparently acting on informal instructions from the Minister for Communications, decided that Ms Holgate should be stood aside without being afforded procedural fairness and an opportunity to defend her actions. The intense public scrutiny and lack of support from Australia Post resulted in Ms Holgate starting 22 October 2020 as one of the most influential women in Australian business and a successful and popular CEO, and ending the day disgraced and humiliated, hiding from reporters and feeling suicidal. It is undeniable that the Board and the government (including the Shareholder Ministers and the Prime Minister) abandoned Ms Holgate to suffer immeasurably and ultimately to tender her resignation only ten days later.
Phone records, Board's minutes and the timing of statements released by the Shareholder Ministers and Australia Post provide strong circumstantial evidence to support Ms Holgate's assertion that she did not agree to stand aside. It is disingenuous to suggest that Ms Holgate chose to stand aside, or that her later resignation was anything other than inevitable, given the pressures she faced from the government, the Board and the unrelenting gaze of the media.
An apology to Ms Holgate
Given the central role of the Prime Minister in this matter, the committee believes that the Prime Minister should apologise to Ms Holgate for his improper threat in Question Time that she should 'stand aside or go'. Indeed, this intervention by the Prime Minster suggests a lack of respect for due process and procedural fairness as well as a concerning double standard when contrasted with the standards of conduct and procedural principles applied to members of the Cabinet. The evidence suggests there is a culture operating outside the legislated framework that results in so‐called 'independent' government agencies being controlled by ministers and their advisers through informal directions in a completely unaccountable manner. This is yet further evidence of why a robust Federal Integrity Commission is required.
The treatment of Ms Holgate is indicative of a wider pattern of behaviour towards women in workplaces, including Parliament. As both an employer and legislator of workplace laws, the Australian Government must set an example. Its practices must be beyond reproach and it can no longer treat women, and workers more generally, as if they are disposable.
Failings of the Board and Chair
Whether the Board complied with its statutory obligations also needs further examination. The Australian Postal Corporations Act 1989 clearly designates the Board—not the Shareholder Ministers—as the responsible authority in any action to remove or stand down the Managing Director. There is no doubt the Prime Minister and Shareholder Ministers created a very public expectation that Ms Holgate would be stood aside, to which the Board dutifully acquiesced. This pressure appears to have led the Board to breach its duties under the Act, standing Ms Holgate aside without any evidence that she had acted improperly.
The subsequent investigation into the purchase of the watches cleared Ms Holgate of any 'dishonesty, fraud, corruption or intentional misuse of Australia Post funds', and admonished the Board for failing to have adequate policies in place. The outcome of this investigation highlights recurring governance issues and oversight failures of the Board and, more broadly, concerns regarding the appointment of political apparatchiks to the boards of government business enterprises (GBE). In this case, the Board has neither taken responsibility nor been held to account for its failures in the Holgate matter, despite its accountability under the relevant Act and guidelines.
The process through which board appointments are made to Australia Post, and no doubt other GBEs, has compromised its independence from government and undermined its ability to implement effective processes and make decisions free from undue political influence. This situation significantly risks the Board's ability to oversee Australia Post's strategic direction in the best interest of its individual and business customers, and of its employees, licensees and contractors.
More broadly, the Holgate matter has focused attention on the sheer magnitude of bonuses and incentives paid to executives, senior managers and other highly paid staff across the Commonwealth. If the purchase of $20 000 worth of watches for senior executives fails the 'pub test', what does the Australian public think of the tens of millions of dollars that are given in bonuses each year to highly paid staff at Australia Post, in government departments, and at other GBEs?
Finally, a comparison of other events during that period puts in stark perspective the inconsistent treatment of public officials by this government when faced with a scandal. On one hand, the high performing CEO of Australia Post was effectively forced to resign over the purchase of $20 000 worth of watches for securing a deal worth more than $200 million in revenue to the organisation. On the other hand, there appears to have been no action taken against the responsible public servants involved in the purchase of the 'Leppington Triangle' for $30 million of public funds, ten times more than the land's market value.
The future of Australia Post
Australia Post is a trusted and valued national institution that provides a variety of essential services to millions of Australians and is a major employer of Australians all around the country. In many areas, the local post office and postal workers are part of the economic and social fabric and can be a linchpin for community engagement. This is particularly true in rural and regional areas and for those Australians suffering social isolation and adversity, as has been seen during the recent bushfires and in the ongoing pandemic.
In particular, the services provided by Bank@Post are a lifeline in many regional and rural communities, where high street banks have closed branches and where residents heavily rely on the local post office to conduct their banking activities. Given Bank@Post is an essential service in these areas, the committee considers that the renewal of agreements with banks to continue this service should be a priority for Australia Post.
As a GBE, Australia Post is operated on a commercial basis but is owned by the Australian public. Postal services are regulated and subject to Community Service Obligations. These obligations ensure fair and equitable access to postal services regardless of where Australians reside.
However, the rise of affordable online and mobile communication technologies is steadily reducing the volume of letters posted, meaning Australia Post must continue to improve productivity and innovate to remain sustainable. Without careful oversight and management, the organisation may not be profitable in the future. That said, there are profitable parts of the Australia Post business, such as parcel delivery, and financial and other services, that have significant growth potential and the ability to keep Australia Post financially sustainable.
The secret Boston Consulting Group report
Recognising these challenges and opportunities, the Shareholder Minsters and Board have regularly investigated future possibilities for the Australia Post business model. To this end, in mid-2019 the Shareholder Ministers engaged Boston Consulting Group (BCG) to undertake a strategic review. The resulting report was provided to the Shareholder Ministers on 21 February 2020 but has never been publicly released.
Despite repeated requests, the government has refused to release the Final Report. However, the committee has obtained two BCG Steering Committee papers from December 2019; a presentation given by BCG to the Board on 20 February 2020 and an executive summary of the 'Final Draft' dated 21 February 2020. From these sources, the committee understands that the BCG review examined options for reduced delivery services, rationalising post office locations in metropolitan centres and the privatisation of the profitable Parcels business. The secret BCG report was provided to the government and the Australia Post Board more than 12 months ago, but it has never been shared with the effective owners of Australia Post, the Australian people.
With the onset of the COVID-19 pandemic and the subsequent significant increase in demand for parcel services, the Board sought a temporary change to some of the Community Service Obligations and performance standards. The government provided regulatory relief from 1 July 2020 to 30 June 2021 which, among other things, allowed Australia Post to implement the Alternative Delivery Model in metropolitan areas, suspend the regulated priority mail service and extend the maximum delivery times for regular interstate letters. In effect, many of the proposals put forward by the BCG review were able to be trialled under the guise of Australia Post's response to COVID-19.
Various stakeholders suggested that the temporary regulations have led to poorer services and significant uncertainty over the future of Australia Post for its employees. Despite the government's promise that the reduction in service levels would only apply to metropolitan areas, Australia Post relies on a classification scheme from the 1990s that classes regional centres with populations of greater than 100 000 people as 'metropolitan', capturing towns like Bendigo, Cessnock and the Hunter Valley.
Despite committing to consult widely on any future regulatory changes, key stakeholders have reported that the government and Australia Post have only undertaken limited consultation, such as seeking the unions' support for the extension of the temporary regulations beyond 30 June 2021. It has not consulted with licensed post office holders, affected industries, or the Australian public more broadly. The committee is deeply concerned that the Australia Post Board and government might seek to entrench lower Community Service Obligations and performance standards for postal services in Australia without adequate consultation and appropriate parliamentary oversight. Accordingly, the committee considers that the temporary regulations altering Community Service Obligations and performance standards for Australia Post services should not be extended beyond 30 June 2021.
Further, it is concerning that neither the government nor any Board members ruled out the privatisation of the most profitable parts of the Australia Post business at any time from the finalisation of the BCG review in February 2020 until there was active questioning of the matter in May 2021 as part of this inquiry. Despite Board members telling the committee that privatisation was never discussed, it seems highly doubtful to the committee that the Board did not discuss this important recommendation from the BCG review at any time during the previous 15 months—especially as the Minister for Finance in March 2020 actively encouraged the Board to 'take into account' the BCG proposals in the upcoming corporate plan process.
Having been stacked with political appointments, the Australia Post Board appears to be implementing a government-driven agenda to reduce service standards without appropriate consultation and transparency. Accordingly, the committee believes that the government should release the BCG review in full, along with any additional work undertaken by BCG as part of the evaluation of the temporary regulations under COVID-19. Finally, the committee considers the government should secure the future of Australia Post by categorically ruling out the privatisation of any part of the Australia Post business.