In the last decade there have been several reviews that have considered the challenges facing Australia Post and its future role, as well as Senate scrutiny of Australia Post's activities and relevant legislation.
All of these have some relevance to this inquiry, given the debate over the future of Australia Post and its service to regional and rural Australia, which is discussed in Chapters 9 and 10 of this report.
However, where some reports have been discussed in detail in the main report, contextual information on others has been provided in this appendix, which will be discussed in turn:
Boston Consulting Group (BCG): Australian and International Postal Services Overview Background Report, commissioned by the Commonwealth (2014) (BCG Overview Report);
Deloitte Access Economics (Deloitte): Economic and Social Value of Australia Post (2018), which was commissioned by Australia Post (Deloitte Review); and
PricewaterhouseCoopers (PwC): Australia Post Strategic Review (2018), commissioned by Australia Post (PwC Strategic Review).
Further to this, Senate committees have also examined the following matters:
Senate Environment and Communications Legislation Committee (the Legislation Committee), Performance, importance and role of Australia Post in Australian communities and its operations in relation to licensed post offices (LPO Report 2013); and
consideration of the temporary regulations by the Senate Standing Committee for the Scrutiny of Delegated Legislation (the Delegated Legislation Committee) (2020).
Boston Consulting Group: Australian and International Postal Services Overview Background Report (2014)
The government engaged BCG to undertake an 'expert assessment of an internal review by Australia Post of its letters business', which was handed to government in June 2014. This report did not contain recommendations but set out the type of reforms undertaken by postal corporations internationally to address global trends in mail volumes.
Among other findings, BCG suggested that the losses from declining letter volumes could be more serious than estimated in Australia Post forecasts:
…BCG expects that escalating letters losses will soon overwhelm parcel profits. This will result in losses at an enterprise level as early as FY14/15. Although additional efficiency savings might defer losses for 1-2 years, time is required to implement reforms. Even if reforms commenced now they will take years to yield the full financial benefit. BCG does not believe it is either feasible or desirable to rely on the profits of the growing, competitive parcels business, or the profits of other businesses
(e.g. government service delivery through Australia Post's retail outlets), to fund the losses of the declining letters monopoly.
The BCG report noted that these trends were global and set out the general types of reform undertaken by postal corporations internationally:
Responses by international postal operators have drawn on a mix of three types of levers–used to differing extents and in different combinations depending on the circumstances:
Price, including the price differential between products;
Service, including speed, frequency and delivery location; and
Operating model, including processing model, acceptance model, labour model; and indirect costs.
Deloitte Access Economics: Economic and Social Value of Australia Post (2018)
The Deloitte review considered the future of Australia Post, given trends in declining letter volumes, and the transformation of communities and the business sector from the growing prevalence of online communications and transactions. It noted the 'economic, business, consumer and social value' of Australia Post, to determine its significance and potential future role. It concluded that:
Despite the perception that Australia Post's relevance is declining in an increasingly digital age, this report finds that it continues to play an important economic and social role. This is not simply about letter revenue being replaced by parcel revenue, but also the role of Australia Post's retail network of post offices in local communities. For many Australians, Australia Post and its retail network are synonymous – people use the network for delivery, financial and other services, and even if they do not frequently visit the post office, its existence is valued for equity and access considerations.
Moreover, the report suggested that Australia Post's 'brand and trusted role in local communities' had potential to deliver useful services and value for individuals and businesses, including in regional and remote areas:
This report finds that only a minority of Australians believe that post offices are irrelevant in today's society despite the increasing availability of digital substitutes, and many people still use their services because of convenience or limited alternative options. These findings suggest that Australia Post's operations will continue to support the everyday activities of Australian individuals and businesses, even as the form of this support evolves to better complement the use of digital platforms and transactions.
Furthermore, in this increasingly digital world, it is important that in‑person services remain available as an option to Australians who are unable to readily access the internet. Australia Post's national network of post offices, which have a more significant presence in the regional and remote parts of Australia than many other businesses and industries, means that it can meet the needs to these cohorts who prefer to transact in person. Delivering accessibility and equity in the provision of these core services will remain an important part of Australia Post's future role.
PricewaterhouseCoopers: Australia Post Strategic Review (2018)
Australia Post commissioned PwC to undertake a strategic review, which was provided to shareholder departments on 25 May 2018. In answers to questions on notice, the Department of Finance (Finance) stated that:
It contains information that is commercially sensitive and its disclosure could jeopardise Australia Post's commercial operations. Requests regarding the disclosure of the contents of this report should be directed to Australia Post as owner of this information.
The PwC Strategic Review has not been made public. However, in April 2020 Nine papers obtained a leaked copy and reported:
Australia Post considered slashing letter deliveries to just once a week and replacing full-service post offices with 'automated kiosks', with the company's own financial projections showing it could lose more than $400 million next year.
The forecasts, contained in a confidential strategic review dated May 2018 and obtained by The Sydney Morning Herald and The Age, note an analysis by consulting firm PwC found 'without significant transformation, Australia Post faces a transition into loss as early as , escalating to a loss of $426 million by 2021'.
This report also noted a number of other potential recommendations, including changes to legislated rules to:
increase delivery times for regular letters by up to three days (marked 'not recommended at this time'), for savings of up to $184 million per annum but which would dramatically increase post delays in regional and rural areas;
allow post boxes to not be cleared on Sundays, potentially saving $7.4 million per annum; and
reduce the number of mandated retail outlets to downsize the Australia Post network (there must be at least 4000 outlets in the current rules, with at least half in regional and rural areas), so as to allow an expansion in metro services and replacing 'full-service locations to small-footprint automated kiosks with parcel lockers'.
Regarding this commentary on the unpublished PwC findings, Australia Post suggested that 'any assumptions made at that point in time would now be comprehensively outdated'.
However, Australia Post confirmed that some of these proposals had been canvassed in PwC recommendations, informing the Legislation Committee that the review had 'identified a number of strategic options for consideration in the interests of preserving Australia Post's financial sustainability', including:
seeking a temporary government subsidy for meeting the Community Service Obligations (CSOs) in rural, regional and remote areas;
simplifying and modernising the regulatory framework, including performance standards; and
making delivery times longer for regular letters by three days.
Senate inquiry into Licensed Post Offices (2013)
In 2013, the Legislation Committee undertook an inquiry into the Performance, importance and role of Australia Post in Australian communities and its operations in relation to licensed post offices (LPO inquiry), which raised concerns about the then-arrangements for LPOs, particularly in regional and rural communities.
Many witnesses to the LPO inquiry highlighted that post offices have a central role in the community and economic life of many of these non-metropolitan communities, particularly where banks, government services and offices had been closed or moved to cities or regional centres. In conclusion, the committee noted:
In small remote, rural and regional communities, the postal network provides essential services for communities. This is particularly the case where other facilities are no longer available with the additional services provided by post offices, such as banking and account payments, ensuring that community life can continue. This is of great importance in areas where public transport is limited, where major towns are some distance away and where internet services are unreliable. The post office also provides invaluable services for individuals who cannot afford computer access or have difficulty using electronic means of communication.
Regarding LPOs, the Legislation Committee received much evidence about areas where the arrangements between Australia Post and licensees could be improved, including fees, payments, competitive practices and a range of other issues. The committee noted that Australia Post had conceded that there may be opportunities to reassess LPO agreements for 'a mutually beneficial outcome' and recommended:
…that the Minister for Communications, as a matter of urgency, commission an independent audit of the activities undertaken by the Licensed Post Office network specifically to determine the validity of claims made by licensees that payments made under the LPO Agreement are not fair or reasonable.
The committee recommends that where a payment is found to be not fair or reasonable, that a study should be conducted to determine what an appropriate payment rate should be.
Consideration by the Scrutiny of Delegated Legislation Committee
The Delegated Legislation Committee considered the temporary regulations in mid-2020. This included writing to Minister Fletcher to seek more information on whether consultation had been adequate in developing the regulations, particularly if the views of stakeholders had been sought including with:
…other persons and entities likely to be affected by the measures, including employees of Australia Post and their representatives, and persons and entities that regularly utilise postal services.
Minister Fletcher responded to this query by noting that 'given the urgency and unprecedented circumstances [of COVID-19], broader public consultation was not possible'. He noted that the regulatory changes were temporary and would be assessed by the end of 2020, and that any extension would only be implemented following extensive consultation:
Reflecting the unprecedented circumstances, the Government made the changes time limited, they are in effect until 30 June 2021. The effect of these temporary arrangements will be assessed before the end of the year to determine if it is necessary for them to stay in place for the full period. Any extension of the temporary relief measures would only be implemented after consultations with all relevant parties have been undertaken, and it would also be subject to a new disallowance period enabling Parliamentary oversight, as is appropriate.
The Delegated Legislation Committee sought further detail from the minister on this consultation, including seeking more information on:
…the type, scope and nature of consultation undertaken in the drafting of the instrument with the following persons likely to be affected by the instrument:
customers of Australia Post, including small and large business customers;
Australia Post licensees;
employees of Australia Post and their representatives; and
other Australia Post stakeholders (e.g. through the Australia Post Stakeholder Council);
whether any further consultation will be conducted in relation to this instrument, noting that it is intended that the measures will continue to be in force until at least 30 June 2021;
the nature of consultation that will be undertaken in relation to plans to extend the duration of the instrument or the measures it contains; and
whether the exemption granted by the Prime Minister from the need to complete a regulatory impact analysis for measures made in response to COVID-19 influenced the type, nature and scope of consultation undertaken in relation to the instrument.
The minister provided more information about the government's commitment to review the temporary regulation by the end of 2020:
The Amending Regulations end on 30 June 2021 and will be reviewed later this year  to determine if they remain in place for the full period. The Government review will examine:
letter and parcel volumes and delivery speeds, including whether Australia Post has met its prescribed performance standards under the relief;
community and business feedback to determine whether Australia Post is meeting the needs of the community and businesses during the
the impact on the Australia Post workforce; and
other dependencies, such as developments in the aviation sector.
The Government will consider the views of stakeholders as part of the review, including the Australia Post workforce, Licenced Post Office franchisees, large and small businesses, and the print industry. I will write directly to representatives of these sectors seeking their views.
Australia Post will continue to consult over the coming months with both the community and businesses on the temporary changes and report to the Government on the responses received.
Minister Fletcher also commented that the government had 'no plan to extend the temporary relief', and would only do so following 'consultations with all relevant parties' and a 'new disallowance period enabling parliamentary oversight'.
In later correspondence to the Delegated Legislation Committee, Minister Fletcher outlined the consultation he had undertaken: writing to 33 stakeholders, including unions, LPO franchisees, large and small businesses, and the print industry. He also committed to providing updates on the progress of consultation, including any concerns raised or actions taken as a result.