18 Feb 2011

Australia Post Goes Postal

By Roelof Smilde and Evan Jones
The closure of Glebe Post Office against unanimous community opposition shows what can go wrong when governments privatise services, write Roelof Smilde and Evan Jones

5pm on Friday, 4 February 2011. The Glebe Post Office closes its doors, not for the weekend as usual, but for good. The same thing happens across town in Woollahra. Just another small step in the march of progress?

What happened to public service and the social contract? It has been replaced by a vacuum overseen by a monopoly company run on private sector imperatives.The government collects its dividends as an absentee landlord.

There are other significant dates.

The Glebe Post Office was opened on 8 January 1886, providing the growing community with a crucial landmark of its suburban identity. Many local residents were amazed to find out about the imminent closure of their Post Office in the Daily Telegraph on 19 December 2010. An action committee, Post Office Group Action (POGA), was formed by interested parties but no information was forthcoming from Australia Post or government ministers until well into the new year.

In 1975, postal services and telecommunications were split out of the Postmaster-General's Department. On 1 January 1989 was born the corporatised Australian Postal Corporation. Before that, Australian postal services were run by the government in buildings owned by the government and paid for by Australian taxes. From 1989 the postal services were run by a private corporation which used those same buildings given to them by the government. Several buildings were sold to private interests to boost the corporation's bottom line. The Glebe PO building was sold in December 1990 for $1.36 million and the Australian Postal Corporation (AP) paid the private owners commercial rates for ongoing rental.

AP is a hybrid entity. It is a corporation with a legislated monopoly on certain types of letters; it has a board appointed by the Federal Minister for Communications; it has a mandate to provide "reasonable access" for all Australians in a minimum of 4000 postal outlets around the country; and it has only one shareholder, the federal Government. It is required to meet its own costs, to seek to achieve commercial "best practice" and to pay its sole shareholder an annual dividend.

The Australian Postal Corporation Act offers little regarding accountability, save for an attenuated Community Service Obligations section. The relevant section requires that AP ensures that "in view of the social importance of the letter service, the service is reasonably accessible to all people in Australia on an equitable basis". AP is currently in breach of this requirement.

Moreover, AP is a Government Business Enterprise (GBE), subject to additional regulation. There are seven GBEs, the other six being the Australian Submarine Corporation, the Australian Government Solicitor, Rail Track, Defence Housing, Medibank Private and the National Broadband Network. All have the same basic structure with the federal Government being the only shareholder. All come under a set of provisions known as Governance Arrangements for GBEs. These arrangements give disgruntled members of the public plenty of avenues for complaint.

Each of these entities has two Shareholder Ministers — in all cases the Minister for Finance (presently Penny Wong) and the other the relevant Minister for the area in which the business is operating. In the case of AP that is Communications, Stephen Conroy, who also has oversight of the NBN.

GBEs are prescribed in regulations under the Commonwealth Authorities and Companies Act 1997. According to the Government Business Advice Branch of the Department of Finance and Deregulation:

"The governance regime in place for GBEs is a transparent and effective mechanism to enable active oversight and enhanced accountability of GBEs."

The "guiding principles" of governance arrangements include: Shareholder Ministers exercising strategic control consistent with their accountability to the Parliament and the public; GBEs and their officers maintaining the highest standards of integrity, accountability and responsibility and information being produced for the shareholder and the community according to the highest standards.

In addition, the GBE governance framework dictates that a publicly available joint Statement of Corporate Intent (SCI) be produced by the board of the GBE and the Shareholder Ministers. In general the regulations allocate substantial responsibilities and capacity for action to the Shareholder Ministers.

Even so, trying just to get a date for the proposed closure from AP was like pulling molars. At one point, POGA got an automated message that the Post Office had closed on 31 December. Eventually post box holders were told of the closure but assured that the boxes would stay where they were — merely because there is no room for them at the closest post office at the Broadway Shopping Centre.

Local activism grew in line with local anger.

A petition was organised; posters and leaflets were distributed widely, and people were urged to voice their protest and write to both Stephen Conroy and Penny Wong. By the time the rally organised by POGA was held on 20 January, the petition had 4500 signatures.

Two Labor ministers, one federal (Tanya Plibersek) and one State (Verity Firth), the Lord Mayor and a prominent Labor City of Sydney councillor attended the rally and called for the Post Office to remain open. Senior Labor figure Senator John Faulkner urged Conroy to intervene, as did minister Peter Garrett when he learned that Kensington Post Office in his electorate was under threat.

There was no evidence of any concern for the issue in the responses from either Senators Wong or Conroy. Senator Wong's office replied that it was no good writing to them because it was Conroy's business and they merely passed the messages on to his office.

In Conroy's case there was a long silence and then, with just two days to go before the Post Office closed, he said he would not intervene because there was no precedent for it and suggested that it was something that the local member should handle. That local member happened to be Cabinet Minister Tanya Plibersek who had spoken at the rally and who had written to Conroy asking him to intervene!

The very creation of the National Broadband Network by Senator Conroy acknowledges that the telecommunications model, rooted in a wayward privatised vertically-integrated Telstra, is bust. It's a small step for Conroy to acknowledge that the corporatised postal services model is also bust. It is time for him to meet the statutory requirement that "Shareholder Ministers ... exercise strategic control consistent with their accountability to the Parliament and the public".

Furthermore, the closure of iconic and busy post offices demonstrates lack of foresight even on commercial grounds. In this instance, the population in and around Glebe is set to expand by some 7000 in the next few years.

AP claims that the 27 post offices to be closed are unviable and that they threaten the profitability of the organisation. Given that AP runs some 4400 postal outlets, the claim is very hard to believe. The bigger issue is one of information and of accountability to the community. AP has not produced the figures and has not made its case clear. When requests are made, spokespersons refuse with the insolence of private corporations.

The big hurdle facing the community is that the relevant minister decline to deliver on the legislated duties of their portfolios. Are we to accept the proposition that governments themselves have become corporatised and unresponsive to the communities they are supposed to represent?

The thousands of people who have been trying to save their post offices from closure do not accept that proposition for a moment. We want full disclosure. We want everything put on the table and thrashed out in public before any significant decisions are taken. We want those post offices in suburbs like Woollahra, Glebe and Turramurra reopened and those offices in threatened suburbs like Kensington, and dozens of others, removed from danger. We want a mechanism put in place which gives the community its rightful say in whatever is proposed by way of changes to essential services and all those similar concerns that lie at the heart of the way that society works.

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David Grayling
Posted Friday, February 18, 2011 - 13:06

After reading this article, my view of the Post Office will never be the same!

I thought it was just a place to buy a stamp or post a letter or pay a bill or pass the time of day.

Little did I know that it was "...a hybrid entity. It is a corporation with a legislated monopoly on certain types of letters; it has a board appointed by the Federal Minister for Communications; it has a mandate to provide "reasonable access" for all Australians in a minimum of 4000 postal outlets around the country; and it has only one shareholder, the federal Government."

Blimey! Only one shareholder. That's a monolopoly, isn't it? Aren't they illegal like keeping dingoes is?

This world is getting too complicated for me. I liked it better when the stagecoach rattled by. But Gawd, it sure raised the dust!


David Skidmore
Posted Friday, February 18, 2011 - 13:22

We have bank and credit union branches shutting up shop and the consumer is told that post offices can be used to submit cheques or cash deposits. And now that option is going. Terrific.

Now, I'm all for on-line services but sometimes you need to talk to an actual human being. Apparently that's too much to ask.

Dr Dog
Posted Friday, February 18, 2011 - 15:37

The consequences of our rush toward economic rationalism continue to bite long after the decision makers who sold their soul to corporate values have fled the scene, no doubt with a fat superannuation and a seat on the board of the mutant entities they helped create. Jerks.

Sadly even when it they were forced to become some sort of pseudo shop the Post Office could offer nothing but row upon row of horrible tat. The Glebe Post office could have contained an internet cafe, providing a comprehensive communications hub for the many international travellers in Glebe. Further funds could have been received from coffee affectionados like our author, Mr Smilde, who has been observed swilling as many as five or six of these beverages before noon.

In a brutal stampede away from international socialism it seems to have become acceptable to sell off, give away or fuck up everything we own. Have we learnt from our experiences with Australia Post, Railcorp, tunnels, freeways? Not at all, in fact we continue to compound the error by flogging electricity and water infrastructure.

Where are the promised efficiencies? Where are the improved services? Who is reaping the financial rewards of these decisions? It sure ain't the public. When did we decide to let the greedheads win?

Posted Saturday, February 19, 2011 - 15:02

Well I have a schizophrenic reaction to all this: a) try living in country town of 2500 people. AusPost moved the mail sorting business to a new regional sorting centre, the licensee then could make any money and our nearest post office is now 20 k away. Thankfully community volunteers run a service so that we can pick up parcels from the local showground office, but we sure can't post anything unless we already have the stamps etc. Interestingly the other local (20k in another direction) post agent says his fees for parcel collection haven't thanked in 8 years, and fees are based on volumes calculated in February - the shortest month with least turnover, especially following the christmas new year hype and with no critical business cycles for organisations like the tax office to drive volumes. So the GBE model has its problems, especially when the only real interest of the government is in minimising price rises overall rather than in smaller communities who lose out on services.

b) On the other hand- some of this commentary is profoundly ill informed. strategic guidance from a minister is not about whether to keep a particular place open - indeed we all need to be protected from ministers pork barreling in this way. Strategic guidance MIGHT be indicating the balance to be obtained between levels of accessibility Vs cost efficiency, for example. But to think that a post office in Glebe (or anywhere else) is a strategic question is astounding. Similarly, having no conception of Australia Post as a government owned business with a partial monopoly is an amazing piece of ignorance- what did you think it was?

c) and I guess we can't be hypocrits - all of us are using more elctonic media and communications, so it is hardly surprising that an institution created to service of a needs of the 18th and 19th centuries might be under commercial pressure- but what we need is a debate and involvement from political and community leaders in setting the standards for minimum services in the interest of community viability and capacity for economic and social participation.

Posted Monday, February 21, 2011 - 13:56

Has the postal service assessed the needs and opportunities that exist in Glebe, Kensington and other suburbs? If the customer base is dwindling, perhaps their research needs to extend to people not currently waiting in their queues. That's where the opportunity is.

What we need are businesses, be they government run or otherwise, that respond to the changing environments and needs of customers instead of just throwing in the towel, crying poor and walking away when its all too late.

This user is a New Matilda supporter. lyndy
Posted Monday, February 21, 2011 - 14:15

I still think the main question is whether post offices are to be seen, as I do, as a community, essential service and as such, the profit model should not rule supreme.

Post Office assets- such as the buildings they were housed in, should never have been sold off to private ownership and this should have been entered into by way of contracts when Australia Post was flogged off and privatised- in a certain era of Labor dementia. Dementia is worsening.

It has been the high rents to these private owners of the real estate that has helped produce lower profits- the argument for their current demise. As if to ensure their demise ( Glebe and Woollahra were not franchised to a private operator but still run -badly- by Australia Post), and in order to get the highest possible price for the agency, they agreed to pay above average rents so as to attract a high price for the sale of the building, thus ensuring profit loss. The government was all too well aware of what this all would lead to.

Both post offices were often crowded and busy- definately not lacking patronage but their high rents were bruising to any business model. Woollahra's Post Office building was sold off soon after Glebe's was.

The lack of any concern by the relevant minister, Stephen Conroy, who does have the power to intervene, shows what contempt he has for the community. All responses to letters of outrage were met with stock responses...'it's not my dept's responsibility, it is Australia Post's (...don't blame me).

But, Mr Conroy, we do.

Posted Monday, February 21, 2011 - 22:42

Great article. The things most of us don't know about our own country! Finally I understand why our PO's are filled with junk they are trying to sell us. And I thought Australia Post was a publicly-owned utility! Looks like it is, but, well, it isn't at the same time.

Is it really possible to be a little bit pregnant? Can a service be run by a private corporation, and still be owned by the government? It fair makes your head spin to think about it!

And the only reasonable conclusion is, the whole setup is preposterous nonsense. Either a service, like the post, is provided and managed by the government, or they may as well throw the doors open and let any private entrepreneur have a go at it. Like telephones.

The saddest part is, because it happened in 1989, we can't blame Kohn Howard. It was the other fellers.

Posted Monday, February 21, 2011 - 22:43

Oops I meant John. But Kohn is appropriate too, in a way.

David Skidmore
Posted Tuesday, February 22, 2011 - 11:09

Australia Post is also condemning many people to travel a hell of a lot further for their Andre Rieu cds.

Posted Friday, March 25, 2011 - 09:34

Post Offices are more than stamps and letters. For many people, including the elderly, travellers and people without ready access to a Bank or the Internet, a Post Office is where they pay their bills and perform some Banking services.

If trends in other businesses - banks and Governments, for example, continue, ie; putting access to their services online, Post Offices into the future will be MORE essential for aging communities.

Last words.

I thought, as a taxpayer and citizen of Australia, I owned a stake in public assets like Australia Post.

I did not receive a piece of paper asking me for permission to sell my stake, as is the constitutional requirement. (written referendum to sell public assets).