postal environment worldwide is experiencing rapid and significant change. In
Australia, the substitution of digital communications for letters is now so
pervasive that Australia Post is reporting escalating losses in its letter
the same time, Australia Post is required to maintain its community service
obligations. The losses incurred by Australia Post in meeting these obligations
in the face of declining mail volumes have had a detrimental impact on
Australia Post's financial performance. In the second half of the 2013–14
financial year, Australia Post reported a net loss for the first time in its
committee believes the future of postal services in Australia is at a
crossroads. As a consequence, there are a number of significant and
far-reaching issues that need to be addressed. These include the type and scale
of the postal network that can be sustained into the future, the funding options
available to maintain the network, and how, and to what extent, the current
community service obligations can be preserved.
this context, it must be recognised that Australia Post is not a private
business; its shareholders are the entire Australian community and the postal
network is woven through the fabric of Australian life. Significant changes to
Australia Post and its network will have a commensurate effect.
committee is concerned that Australia Post is making changes without involving
stakeholders and considers that this has contributed to the growing divide
between the various stakeholders and Australia Post. This divide is
particularly evident in the dysfunctional relationship between Australia Post
and licensees who provided evidence to this inquiry. The committee
therefore believes that the rebuilding of this relationship is fundamental so
that constructive negotiations are able to occur and the smooth transition to
the 'new' postal network can be achieved.
committee has therefore recommended that the Minister for Communications form a
formal postal network strategy group that engages all stakeholders in the
development of a comprehensive strategy to inform changes to the Australian
postal network in the face of emerging challenges.
addition, the committee considers that a broad community consultation program
should be implemented.
committee believes that one of the most fundamental responsibilities of
Australia Post is to supply a letter service in Australia which is reasonably
accessible to all people in Australia on an equitable basis wherever they may
reside or operate a business.
obligation is delivered via a broad network of Australia Post Offices, Licensed
Post Offices (LPOs), Community Postal Agencies and Australia Post franchises.
The LPOs and Community Postal Agencies account for approximately 80 per cent of
the postal retail network (over 90 per cent in rural and regional areas).
10. A number of LPOs and
Community Postal Agencies have indicated their operations are unsustainable
under existing arrangements. Many stated that they would have to close because
their financial viability is being threatened by the under-recovery of the
costs of providing services required by Australia Post.
11. Given the significance of
the postal network, the closure of a large number of LPOs will significantly
impact upon Australia Post's ability to deliver its community service
12. The committee heard from a
number of witnesses and submitters that Australia Post has used its monopoly
position to influence payments. Evidence given by many of the LPOs suggested
that Australia Post had been aggressive in using its market power, for example,
slower-than-CPI increases in postal service payments. LPOs stated the lack of
competition and the refusal of Australia Post to negotiate with any
representative body excepting POAAL had further impacted on their financial
13. The committee further
considers that there is now a significantly different postal environment from
that existing at the time when the standard LPO Agreement was established and
when many licensees originally negotiated their service agreements with
Australia Post. The committee believes this should be recognised.
14. The committee has
therefore recommended that, at the request of any recognised association, Australia
Post be required to renegotiate the terms and conditions of an LPO Agreement.
15. There were additional
concerns that the changes in the work activities of LPOs have resulted in
payments not reflecting the work undertaken. In particular, the increase in
parcel post was noted.
16. The committee has
recommended that the Minister for Communications, as a matter of urgency,
commission an independent audit of the activities undertaken by the LPO
network, specifically to determine the validity of claims made by licensees that
payments made under the LPO Agreement are not fair and reasonable.
17. The committee has further
recommended that, where a payment is found to be not fair and reasonable, a
study should be conducted to determine what an appropriate payment rate should
18. The committee acknowledges
that there are a wide range of factors currently influencing the financial
performance of Australia Post, in addition to declining mail volumes. Such
impacts include the costs of meeting community service obligations, the cost of
the Reserved Service, increased mail delivery points, international inward
mail, the adequacy of the Basic Postage Rate (BPR) and the cost of the legacy
19. The committee understands
that all of the influencing factors will require changes to Australia Post's
operations and the broader postal network. However, in the case of the legacy
superannuation liability of Australia Post, the committee was concerned at the
suggestion by Australia Post that LPOs should be absorbing some of this
20. In evidence provided by
Australia Post it was stated that superannuation 'will need to be taken into
consideration when making any additional payments to licensees'. The committee
considers that superannuation and the consequential liabilities rest entirely
with Australia Post and licensees should in no way be impacted by the decision
of Australia Post in this regard.
21. The committee received
representations from licensees concerned that Australia Post was engaging in
predatory behaviour that conflicted with Australia Post's obligation to 'use
its best efforts to maximise sales of Products and Services to the mutual
benefit of the Licensee and Australia Post'.
22. The committee is concerned
that Australia Post may be using its monopoly position as an unfair advantage
in competition with licensees.
23. With regard to the Australia
Post franchisee network, the committee heard evidence that Australia Post made
assurances to franchisees that have never eventuated, and that Australia Post
was in possession of relevant information in this regard that was not divulged
to prospective franchisees. As a result the value of the assets of the
franchises has been significantly devalued.
24. The committee
recommends that Australia Post take into account the impact on the value of the
franchises of its inability to deliver the promised opportunities when
negotiating the current value of franchises.
25. The committee recognises the
difficulties that are currently being faced by all stakeholders in the
Australian postal network and believes that a transparent and consultative
approach is necessary to enable a transition to a postal system that meets the
demands of the future.
26. The committee also comments
that the aim of the inquiry was to identify problems and canvass solutions in
relation to both Australia Post and the LPO network. However, it appears to the
committee that the negative publicity surrounding the inquiry has accelerated
and exacerbated the decline in the value of LPOs.
27. The committee considers it
is therefore extremely important that negotiations about the future model for
the delivery of postal services in Australia and the network through which they
will be delivered are undertaken in a calm and considered way.
Navigation: Previous Page | Contents | Next Page