Australia Post —
the privatisation by stealth of a vital public service

Bob Briton

The ongoing dispute between Australia Post and its workforce over 
a new Enterprise Bargaining Agreement has brought two important 
features of the country's postal service to the attention of the 
public. One is that the government-owned corporation is miserly, 
head-kicking, anti-union employer. Australia Post is a winner in 
the recent past of the Workers Online Tony Award for being the 
country's worst boss. Its performance during negotiations with 
the Communications, Electrical, Electronics, Plumbing and Allied 
Services Union (CEPU) over a number of modest claims for a pay 
increase and job security has certainly cemented its 
reputation.

The other controversy relates to plans by Australia Post to 
"franchise" 150 retail outlets to private operators. The CEPU is 
concerned that the small business people will try to trim costs 
by stitching about 600 former Australia Post staff into inferior, 
non-union Australian Workplace Agreements. Postal workers are 
also protesting that the plan carries on the Federal Government 
agenda of privatising the service by stealth — allowing more and 
more functions of Australia Post to be taken over by private 
enterprise until only the husk of the institution remains.

While the determination of the CEPU and public concern may yet 
derail the franchising moves, the more drawn out process of 
selling off of Australia Post is still undoubtedly the preferred 
strategy. According to neo-liberal observers, it is no longer 
essential to keep Australia Post in government hands. The 
functions it carries out could be done by private companies and 
pull in some nice private profits. It is largely a labour 
intensive enterprise — a "natural" candidate for capitalists, 
big and small, to go hard at their "screw the worker" brand of 
magic.

The problem for the privatisation advocates is that postal 
services are an essential service, basic to our sense of 
community. For years Australia Post has subsidised its operations 
in rural and remote areas with income generated in more populated 
centres. Most people see this as logical, that affordable postal 
services are a basic right for all Australians. Business 
interests, however, see this arrangement — known as cross-
subsidisation — as an obstacle to maximising profits. If people 
are determined to subsidise services to the bush — the 
"Community Service Obligation" in the Australia Post Charter — 
let the Federal Government make a separate budget allocation for 
that purpose and then make Australia Post compete like every 
other carrier in a totally deregulated market, they argue.

This issue is now the backdrop to every struggle within Australia 
Post and to every discussion about the future of the service. 
Capital is aware of the ideological importance of its contest 
with the public interest and is using its heavy guns. These 
include "trade" agreements being made by the government such as 
the General Agreement on Trade in Services (GATS) of the World 
Trade Organisation (WTO) and, of course, the Free Trade Agreement 
(FTA) with the United States.

Some history

A lot changed from the time Australia's first post office opened 
in George Street, Sydney in 1809 to the days when the Post Master 
General's Department carried on post and telecommunications 
throughout the country. However, in terms of guiding principles 
the biggest changes have come about in much more recent times.

Australia Post was corporatised in 1989. As late as 1985 the 
service's first objective was "to operate Australia's postal 
services so as to best meet the social, industrial and commercial 
needs of the Australian people". In last year's annual report, 
anything resembling this pledge had slipped down the page. The 
corporation introduces itself this way nowadays:

Our Business

"Australia Post is a Government Business Enterprise (GBE) 
operating under the Australian Postal Corporation Act 1989. The 
Corporation is self-funding and makes the best use of its assets 
and resources in order to earn profits to reinvest in the 
business."

Aside from a commitment to maximise returns to private investors, 
Australia Post talks the same language as Coca Cola Amatil, News 
Corporation and the rest. The people at the top of Australia Post 
are no strangers to the booster's mindset. Managing Director 
Graeme John is Australia's highest paid "public servant" ($1.88 
million last year), a former player and coach at South Melbourne 
and a member of the Business Council of Australia.

Chairman Linda Nichols has the standard sort of qualifications to 
be on the board of directors. She is Deputy Chairman of private 
health provider Healthscope, a director of the St George Bank and 
Sigma Pharmaceutical Group and an advisor to financial services 
outfit Goldman Sachs.

It would be interesting to ask these people to talk about the 
relative merits of public and private enterprise without 
resorting to doublespeak. In any case — and in the meantime — 
Australia Post is still a challenge involving the control of lots 
of money. Last year Australia Post recorded a pre-tax profit of 
$462 million on total revenue of $3.97 billion. These figures are 
up on the previous year and represent a return on investment of a 
nice fat 11.6 per cent.

In the past 10 years Australia Post has returned a whopping $3.44 
billion to government coffers and under the Act of 1989 the 
corporation has to pay all federal and state taxes and charges. 
Australia Post is estimated to be worth between $4.2 billion and 
$6.18 billion.

Australia Post does not have any bothersome obligation to be an 
"employer of last resort" to help soak up unemployment or give 
school leavers a chance. In fact, Australia Post has reduced its 
workforce since corporatisation from 46,490 in 1989 to 35,427 
full-time and part-time staff last year. Despite achieving 
productivity increases of 23.3 per cent in just the past five 
years, the pressure is still on for further staff cuts and for 
the greater use of casual workers.

With figures like these you can begin to see why Australia Post 
is a candidate for privatisation by hook or by crook. The 
phenomenon is not restricted to Australia. Prime Minister Koizumi 
of Japan is rumoured to be toying with the idea of selling off 
that country's postal services. It has already happened in the 
US, Germany and the Netherlands. The results have been negative 
for workers in those countries and it is important to note that 
it is dearer to post a letter in all those countries in spite of 
the smaller logistical challenges.

1997 — the year the debate heated up

In recent decades Australia Post has experienced a number of 
challenges to its position. In 1982, the Bradley Committee of 
Inquiry put forward a recommendation that was subsequently 
adopted to break up the letter carrying monopoly of Australia 
Post. Competitors could carry letters but would be required to 
charge at 10 times the standard letter rate.

In 1994, the weight of a standard letter was reduced from 500 
grams to 250 grams and the minimum charge for a standard letter 
(then 45c and currently set at 50c) reduced to four times the 
Australia Post charge. Other carriers were allowed to carry 
outgoing international letters in 1994. Further discounts were 
given to customers with bulk pre-sorted mail. They were able to 
"interconnect" — i.e. arrange their own transport for the mail 
to designated mail centres — for further cost reductions.

In 1997 the Federal Government's National Competition Council 
(NCC) was asked to wave its deregulating, privatising wand over 
the Australian Postal Corporation Act. In the end, the NCC's 
report of February 1998 argued rather disingenuously that 
Australia Post should stay in public ownership and that it should 
continue with its Universal Service Obligation (USO) to deliver a 
standard letter at a fixed price throughout Australia and its 
Community Services Obligation (CSO) to provide mail facilities to 
the bush.

Its private competitors would be under no such obligation to 
provide universal or fixed price services. Because of this its 
recommendations concerning these obligations would have 
effectively killed off Australia Post as a public institution. To 
be sure the message was clear, it suggested 2005 as the year that 
Australia Post's official postal service status as the provider 
of a universal service should be reviewed.

For the time being, the NCC recommended that Australia Post's USO 
should be restricted to household letters only. Even for this 
mail, competitors would only be required to charge two times the 
standard letter rate. Inward international mail would be open to 
full competition. Australia Post would no longer be able to 
cross-subsidise services to remote and regional areas from other 
income sources. The CSO would have to be funded from a separate 
allocation from the Federal Budget — a method that would ensure 
that these services would join the queue of beggars outside the 
Treasurer's door.

And, of course, Australia Post would have to provide access to 
its infrastructure (such as the processing centres, GPO and other 
Post Office boxes, mail holding and bulk lodgement facilities 
paid for by workers' taxes) to its competitors on terms approved 
by the pro-business Australian Competition and Con-sumer 
Commission (ACCC). There are strong similarities with the 
treatment of Telstra which has had to give its competitors access 
to its infrastructure.

All in all, the NCC report recommended everything that Australia 
Post's competitors could have dreamed of.

Even though subsequent attempts by the Federal Government to 
implement the NCC recommendations — with the Postal Services 
Amendment Bill — have been defeated in the Senate, the 
ideological blowtorch is still being applied to Australia Post. 
The Australian Financial Review has semi-regular pieces urging 
the further "opening up" of Australia Post to competition and 
there has been a stream of reports from think tanks, business 
organisations and academics calling for the full privatisation of 
the postal service.

One of these papers, by Terry Black and Susan Black for the 
Centre for Independent Studies, even enlisted Aristotle in the 
debate: "What is common to many is taken least care of, for all 
men have greater regard for what is their own than for what they 
possess in common with others."

Left out or distorted in most of these lopsided treatments of the 
issues is the fact that Australia Post is no longer the truly 
public enterprise giant that the post office once was.

A haven for private profit takers

"Eighty-five per cent of Australia Post's revenue now comes from 
fully contestable [meaning areas open to private competitors — 
Ed] services — only 15 per cent is from the regulated standard 
letter", shadow Communications Minister Lindsay Tanner told the 
press last October.

This figure only begins to tell the story of how private 
operators have moved in on the postal service. For example, while 
licensed agencies of the post office date back to colonial times 
most post offices were public property until historically recent 
times. However, the ownership and running of most of Australia's 
post offices has undergone a major change in recent decades.

The names in the annual reports may have changed but the fact 
remains that the number Australia Post (now "corporate") owned 
post offices has slumped from 1395 in 1984 to 872 last year. More 
and more, Australia Post's obligation to maintain a network of 
outlets has been met by privately run licensed post offices 
(LPOs). There are now 2981 of these throughout Australia. 
Australia Post has proposed buying back 100 of these but only to 
kick-start plans to have a network of privately run franchises!

In July 1995, Australia Post established a Property Division "to 
contribute to bottom line performance of Post's property 
portfolio", as the annual report put it. That year it sold off 
$23.2 million worth of "surplus or under-performing properties" 
and has continued to sell of its property to this day. Since 
1995, the number of buildings owned by Australia Post in its 
"property portfolio" has gone down from 982 to 554 last year. The 
number leased has increased from 630 to 741 in the same period. 
The trend in all this is away from being a public asset owner.

Private contractors

Australia Post's deliveries are more and more the preserve of 
private contractors. As long ago as 1997, Australia Post revealed 
to the NCC that it hired 4741 mail contractors within its 
networks. In 1985, the services of these contractors cost just 
under $93 million. By 1995/96, that figure had blown out to 
$208.4 million. More recent annual reports do not even bother 
listing this as a separate item. Neither do they show the number 
of vehicles — trucks, vans, sedans, bicycles, etc. — that 
Australia Post has in its fleet. As a general rule, the older the 
corporation's annual report, the more frank and open it is.

Australian Air Express — part of Australia Post's venture into 
logistics in November 2000 — is actually a 50/50 joint venture 
with Qantas. Last year it again went halves with Qantas in the 
$750 million purchase of Star Track Express freight logistics 
group.

It is worth recalling that Qantas is no longer Australia's 
national airline but a private corporation whose largest 
shareholder is now (privately owned) British Airways. Australia 
Post also has 50 per cent joint ventures with iPrint Corporate 
Pty Ltd for printing services and Decipha Pty Ltd for mailroom 
and electronic document imaging solutions.

For some time the effect of bank closures in the bush has been 
mitigated by the presence in these communities of agencies 
offering bill paying and other financial services. These services 
have also been a steadily rising source of revenue for Australia 
Post and have helped compensate to some extent for the declining 
importance of the letter in the message sending market. However, 
Australia Post's charter obligations do not include the provision 
of these services and, consequently, their continued existence in 
the bush is far from assured.

The funds for the establishment of these centres in more remote 
areas comes from a $70 million pot of federal money called the 
Rural Transaction Scheme, which is due for review in June. 
Operators pay $122 a month rental for the equipment and 43 cents 
per transaction to Australia Post. So long as the number of 
transaction per year does not fall below 10,000, the facility is 
relatively secure. If not Australia-wide, the range of financial 
services available through Australia Post has expanded 
significantly. Finance capital calls on the network's services to 
collect all sorts of payments. Last year the US-based Citibank 
started collecting a $2 fee every time its customers pay a credit 
card bill in person in cash via the only means available to them 
— at the post office.

"The government has no business in business"

Over the years, a process has been taking place in which many of 
the services once the reserve of Australia Post have been 
encroached upon by privately run firms. The remaining services 
live in such close symbiosis with the private sector that the 
consumer would be hard pressed to know where the role of 
Australia Post stops and the private sector starts.

This development has, no doubt, warmed the hearts of recent 
federal governments and managements at Australia Post. The end 
game for the privatisers could come if ever Australia Post were 
to lose its still unique role under its Community Service 
Obligation. If this were to be funded from a distinct 
Commonwealth budget allocation, rather than from cross-
subsidisation, the cry would go up that the private sector could 
just as easily use those funds to provide services to the bush.

Australia Post management — with its corporate mindset in 
considering business questions and in its dealings with its 
workers — will have assisted the privatisers, the ones that say 
"the government has no business in business". The privatisation 
proposal is always just below the legislative surface. Last 
October, Australia Post's Manager for External Relations let the 
cat out of the bag while he was talking to Sydney's Daily 
Telegraph about the intentions of the Federal Government:

"If they can get the rest of Telstra away, and if that was 
successful, then maybe they would look at us again."

This must not be allowed to happen. The CEPU has estimated that a 
deregulated (and then privatised) postal service would threaten 
15,000 jobs in Australia Post. Services to people in rural and 
remote areas would be decimated. While the government might say 
that it would guarantee the universal standard letter service, if 
their previous attempts at legislation are a guide, they would 
dodge the questions as to how far a member of the public would 
have to travel to post a letter or how regularly they could 
expect a delivery.

Rural services hanging by a thread now would be subjected to a 
combination of budget constraints and market forces. And 
government revenues needed to fund health, education and other 
essential public services would have to do without regular annual 
contributions of the order of last year's $462 million from the 
postal service's profits.

It is time to insist on a change in the direction of change in 
Australia Post. The CEPU's current EBA 6 campaign should get the 
whole-hearted support of the labour movement. A call for an 
extension of Australia Post present Community Service Obligation 
to include parcel delivery to remote areas could be a good start 
in a campaign to claw back public control of this vital service.