Morrison should apologise to Christine Holgate and Australia Post chair should resign: Senate report

Michelle Grattan, University of CanberraThe Senate inquiry into the Christine Holgate affair has declared Scott Morrison, shareholder ministers and the Australia Post board should apologise to the former CEO “for denying her the legal principles of procedural fairness and natural justice”.

The Labor-Greens dominated committee said in scathing findings that Morrison’s “improper threat” in parliament’s question time suggested “a lack of respect for due process”, as well as a “double standard” when contrasted with the procedural principles applied to cabinet members.

Holgate told the ABC on Wednesday night she was “absolutely delighted” by the report and would “graciously accept” a Morrison apology.

But none will be forthcoming.

A government spokesperson said it had “no intention of responding to a politicised report published by a committee controlled by the Labor and Green parties”. The inquiry was chaired by Greens senator Sarah Hanson-Young.

Morrison reacted furiously on October 22 last year, after Holgate revealed to a Senate committee Australia Post had rewarded with Cartier watches four employees who had concluded a highly lucrative 2018 deal. The watches were worth in total nearly $20,000.

Morrison told parliament Holgate had been instructed to stand aside – if she did not want to do that “she can go”.

Holgate resisted standing aside but had little choice but to do so. Soon after, she left Australia Post. She has since been appointed CEO of Global Express, which competes with it.

The government minority on the committee, in a dissenting report, said the inquiry had been a highly politicised exercise. The Coalition senators said they did “not support aspects of the analysis of evidence and many of the recommendations of the majority report”.

They said the claim Holgate was denied procedural fairness and natural justice was contested, with evidence showing different recollections snd interpretations.

The majority report lambasted Australia Post’s chair, Lucio Di Bartolomeo, saying he should resign, and accept responsibility for the organisation’s failings over Holgate. It criticised “the veracity of his evidence provided to the committee, his capacity to defend the independence of Australia Post and the lack of effective robust policies and financial oversight processes in place throughout his tenure”.

But government senators said evidence had highlighted that the chair had sought to work constructively with Holgate when events were moving fast in the media spotlight.

The majority report said evidence suggested “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.”

Holgate’s treatment also was “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.”

The Australia Post board, notably for being heavy with political appointments, also came in for strong rebukes.

The board, “apparently acting on informal instructions from the Minister for Communications [Paul Fletcher], decided that Ms Holgate should be stood aside without being accorded procedural fairness and an opportunity to defend her actions,” the report said.

“The Prime Minister and Shareholder Ministers [Fletcher and then finance minister Mathias Cormann] 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 process by which board members are appointed has compromised the board’s independence from government, the report said.

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 [government businesss enterprises]?” the report said.

It said “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.”

Among its 25 recommendations, the majority report said the Australia Post board should be restructured and include nominees of the parliament, employees and unions, and licensees. Appropriate board independence should be restored.

The Solicitor-General should investigate the legality of the October 22 instruction from shareholder ministers to the board that it should stand aside Holgate during an investigation into the watches’ purchase.

The government should rule out privatising Australia Post or divesting any of its services including parcel delivery. The Senate should oppose any extension of the current temporary regulations, which were put in place for the pandemic.

Pauline Hanson, who pressed for the inquiry and was a participating member (rather than a member of the committee) said in additional comments in the report that the chair should be removed and Morrison, Fletcher and Simon Birmingham (the current finance minister) should “each offer an unqualified apology” to Holgate.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Australia Post’s worst nightmare: Christine Holgate to head delivery rival Global Express

TK Kurikawa/Shutterstock

Paul Alexander, Curtin University“This is the one thing we didn’t want to happen.”

That line – from the satirical British current affairs television program BrassEye – could easily be reverberating through federal government offices this week.

Yesterday the news dropped that Christine Holgate, the Australia Post chief executive pushed so roughly from her job by the Morrison government, has a new job with a rival delivery company.

Holgate resigned last November, after Prime Mnister Scott Morrison told parliament she been told to stand aside over the “optics” of rewarding four senior managers with luxury watches, worth about $20,000 – and “if she doesn’t wish to do that, she can go”.

Now Holgate has gone to a new role as chief executive of parcel-delivery competitor Global Express.

Her appointment, just a week after the expiry of her non-compete clause with Australia Post, is a gift for the new owners of Global Express, a former division of well-known Australian transport company Toll Holdings that has been struggling to find profitability.

If anyone can help turn around Global Express’s fortunes in Australia’s parcel-delivery market, Holgate can. Doing so will cost Australia Post, and Australian taxpayers.

A direct competitor

Until last month Global Express was one of three divisions of Toll Group, the Australian transport company that began in Newcastle in 1888. Its business has involved express parcel, freight delivery and domestic forwarding services in Australia, and transport and contract logistics services in New Zealand.

Toll Group was taken over in 2015 by Japan Post Holdings, the publicly traded company that runs Japan’s postal service. The acquisition was part of Japan Post’s strategy to diversify into global parcel deliveries. It proved less successful than the owner hoped, however, and in April the sale of Global Express to Australian private equity company Allegro Funds was announced.

Private equity firms have a reputation for quickly improving company bottom lines by ruthlessly cutting costs and focusing on the most profitable parts of the market.

In the case of Global Express – which has trucks, planes, depots and other infrastructure worth an estimated A$1 billion – this will almost certainly mean identifying the most lucrative parts of the parcel delivery market.

This is a market in which it competes head-on with Australia Post, relying on similar logistics and delivery infrastructures. It is a market Holgate knows very well. Arguably no one in Australia knows it better.

Cherry-picking parcels

Parcel delivery was a key area of concern for Holgate after she became Australia Post’s first female chief executive in 2017. It became even more crucial in 2020,
as the COVID pandemic and lockdowns led to massive surges in online shopping and thus parcel deliveries.

Holgate saw the opportunity to pivot more of Australia Post’s massive logistics processes – tied up with delivering dwindling numbers of letters – to the surging parcel delivery game.

Read more:
COVID hands Australia Post opportunity to end daily delivery

All seemed on track for Australia Post to grow and prosper with Holgate at its head. Then it came unstuck due to the federal government’s political reaction to the news Holgate in 2018 authorised the luxury watches gifts as a reward to four senior executives who secured a deal worth a reported A$220 million.

The view widely held in the industry is that the bonuses were within the normal operation practices of a commercial enterprise. Indeed, if the executives rewarded the watches had been given a cash bonus instead, it probably would never have become an issue and Holgate would still be Australia Post’s chief executive.

Now Holgate takes everything she knows about parcel delivery market, and her demonstrable ability in growing businesses, to Global Express.

Read more:
Vital Signs: Christine Holgate’s ‘principal’ error was applying corporate logic to Australia Post

Bad news for taxpayers

At Global Express, Holgate won’t have have to worry about a public service obligation to deliver mail to every postal address in Australia. She can say “no” to any unprofitable market segment. She can cherry-pick the most desirable business from Australia Post.

Nor will she have to worry about her board chairman taking her to task over luxury watches, or being excoriated in parliament.

It’s “game on” in the parcels business. Which is bad news for Australia Post, and ultimately Australian taxpayers.The Conversation

Paul Alexander, Adjunct Reseach Fellow (Supply Chains), Curtin University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Grattan on Friday: Christine Holgate gets her own bully pulpit – and uses it to effect

Michelle Grattan, University of CanberraQueensland Nationals Senator Matt Canavan, juggling a couple of committee engagements, hadn’t planned to attend Tuesday’s hearing at which former Australia Post CEO Christine Holgate appeared.

But party elder Ron Boswell was insistent, telling Canavan he must be there, in the room, fighting for Australia Post’s small business licensees.

Boswell, himself a former senator, retains one of the best political “noses” in the business. He’d spoken to Canavan soon after the Holgate affair blew up last October, warning the issue was trouble and needed to be fixed.

Canavan was initially sceptical, thinking people would react against the Cartier watches she’d given four executives as a reward for a deal with banks to shore up Post’s licensee network.

But he’s come round to Boswell’s thinking.

The government has been somewhat dismissive of the campaign the licensees have waged in support of Holgate.

But Canavan judges the many small post office businesses in regional areas could pack quite a punch in next year’s election campaign if they chose. And in these areas in Queensland the Nationals are competing with One Nation.

At Tuesday’s hearing, Canavan wasn’t backward. It was he who put to Post’s chairman Lucio Di Bartolomeo the pointed question: “Given that, as you say, Miss Holgate has a lot of support amongst your employees and important clients and suppliers, and given that Miss Holgate this morning has called for your resignation, would it not be better for Australia Post if you were to leave now, as well?” It was a reasonable proposition, but the chairman said he wasn’t going anywhere.

What has been notable, as Holgate lashed out at Prime Minister Scott Morrison for “bullying” her with his parliamentary tirade and Di Bartolomeo for not backing her, is the breadth of her constituency of support. It includes business figures and respected financial journalists, as well as the licensees.

Read more:
View from The Hill: Christine Holgate presents a compelling story of Morrison’s bullying

With her claim gender was a factor in how she was treated, and the suffragette-white attire, she has now astutely tapped into the new women’s movement that’s arisen off the back of the Brittany Higgins issue. In doing this, she’s hit Morrison where he’s particularly vulnerable.

Politically, her advocates stretch from Greens Senator Sarah Hanson-Young to One Nation’s Pauline Hanson, who was the moving force behind the Senate inquiry.

The bedfellows might be somewhat uncomfortable with each other, but it’s a big bed.

The week left Morrison and the government on the ropes over Holgate’s treatment. References to “luxury watches” have lost much of their shock value.

The government can only hope the issue will simply fade with time, as issues do. Except that those small business operators mightn’t forget.

There’s an interesting contrast in how Morrison is currently dealing with Higgins, who alleges she was raped by a colleague in a minister’s office, and with Holgate.

The PM has reaffirmed he plans to meet Higgins. She’s indicated she’s not keen on re-entering Parliament House, so he’s willing to arrange another venue. He says he’s looking forward to hearing what she has to say.

Holgate, who wants an apology from Morrison, this week asked him to call her.

But he rejected that as unnecessary. Outstanding issues are between her and the Post board, he said. That may be true. By the same token, not to make the gesture is discourteous, at the least.

Remember, this was an executive who performed extremely well at Australia Post and who came out of the inquiry into the watches affair with only minor points against her.

Neither Morrison nor the two Australia Post shareholder ministers (Communications Minister Paul Fletcher and then Finance Minister Mathias Cormann) spoke directly to Holgate on October 22, the day Morrison excoriated her in Parliament.

Again, they would say that was a matter for the chairman, and again, they would be technically right. But given the stakes, wouldn’t one have thought Fletcher, in particular, might have sought to make direct contact?

Holgate’s appearance at the Senate inquiry not only gave a detailed insight into the behind-the-scenes events of that October day, but also revealed some of the arguments that had been going on about the future of Australia Post.

She produced part of a review by consultants BCG the government had commissioned, that canvassed cost-cutting measures and the possible sale of Post’s parcel section. She and the management team had pushed back against cutting services and jobs, and opposed divestiture.

So before the watches affair, the government was already – to a greater or lesser extent – irritated by the forceful head of this government business enterprise that some Liberals would like to see part or even fully privatised.

As speculation grew after her evidence about the BCG report, Fletcher on Wednesday said the government had no plans to sell off the parcels service – which performed strongly over the pandemic.

Anyway, probably any attempt to do so would run into vigorous resistance from the Nationals.

Read more:
Politics with Michelle Grattan: Matt Canavan on Holgate, Di Bartolomeo, and John Andersen

The government hasn’t released the BCG report. Obviously it canvasses important issues about the business and should be in the public domain.

But who is surprised? It is of a piece with this government’s penchant for secrecy, if it can get away with it (not that it’s alone among governments here).

It even tried to hold back the report into Holgate and the watches, until public pressure made that untenable.

Further afield, among the advantages, from the government’s point of view, of the national cabinet is that much more can be kept “in confidence” than in the old Council of Australian Governments days.

Crossbench senator Rex Patrick has a “test case” in the Administrative Appeals Tribunal for the release of minutes from the national cabinet, which has been crucial in the pandemic decision-making process. Patrick says he “wants to expose the government’s secrecy overreach and to open the document vault for others to look in and see”.

Morrison this week talked about how Australia Post must be accountable. But his government likes to minimise the extent of its own accountability, especially when awkward issues surface.

It is worth remembering that if we didn’t have Senate inquiries like the Holgate one we would get even less information.

Read more:
If bullying can happen to Christine Holgate at the highest level, then what happens to other women at work?

Question time, at least in the House of Representatives, has become almost useless as a means of holding the government to account. There is a report imminent from a House committee about how to improve it, but you’d have to be an optimist to see a prospect of qualitative change.

But the Senate committee on COVID, the inquiry into the Holgate affair, and regular estimates hearings on a range of issues, have forced some transparency and accountability.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

View from The Hill: Christine Holgate presents a compelling story of Morrison’s bullying

Michelle Grattan, University of CanberraA wronged woman with a razor-sharp mind and meticulous records is a dangerous creature.

Especially when delivering a counter punch to a prime minister who’d denounced her in the bully pulpit of parliament when he was ill-informed, angry and driven by short-term politics rather than balanced judgement.

Former Australia Post CEO Christine Holgate, appearing before a Senate inquiry on Tuesday, inflicted a serious blow on Scott Morrison and left Australia Post chair Lucio Di Bartolomeo badly wounded.

She followed this with a Tuesday night interview on the ABC’s 7.30 in which she gave Morrison another blast, describing his attack on her as an “utter disgrace” and “one of the worst acts of bullying” she’d ever seen. She urged him to call her and apologise.

Holgate’s evidence, and that of Di Bartolomeo who followed her, revealed a chain of events in which she was not accorded any reasonable degree of fairness.

What happened after Holgate’s October 22 revelation (responding to a Labor question) at a Senate estimates hearing that four Post employees received Cartier watches as rewards for a big deal was a combination of over-reaction and weakness.

Morrison that afternoon raged in question time that Holgate had been instructed to stand aside, saying if she didn’t wish to, “she can go”.

Before and after his rant, two men – Communications Minister Paul Fletcher and Di Bartolomeo – lacked the spine to stand up for her or, indeed, to follow a formal process.

Holgate told the Senate inquiry she had lost her job “because I was humiliated by our prime minister for committing no offence and then bullied by my own chairman”, who “unlawfully stood me down at the public direction of the prime minister. This made my leadership at Australia Post untenable and seriously threatened my health.” She said she became suicidal.

She was in a land of political and media hell not unfamiliar to some politicians but foreign to most business leaders.

The senators’ forensic examination of her downfall is coinciding with debates about both workplace behaviour and sexism, and Holgate (who dressed in a suffragette-white jacket) is putting her experiences in those contexts.

“I do not want what happened to me to happen to any individual ever again in any workplace,” she said.

Asked by Labor’s Kim Carr to what extent her treatment was a question of gender and to what extent one of politics, she said:

Senator, it’s a very hard question for me to answer […] but I think it would be fair to say I’ve never seen a media article comment about a male politician’s watch [there was much interest in the extremely expensive watch she wore at Senate estimates], and yet I was depicted as a prostitute for making those comments, humiliated.

I have never seen any male public servant depicted in that way. So do I believe it’s partially a gender issue? You’re absolutely right I do.

But do I believe the real problem here is bullying and harassment and abuse of power? You’re absolutely right I do.

That abuse of power started in the early afternoon of October 22, after the watches revelation and before Morrison’s outburst in question time.

Fletcher spoke twice to Di Bartolomeo. Fletcher told him there would be a review and “he wanted us to look at standing Christine down”.

Di Bartolomeo, by his own account, initially questioned whether standing her aside was necessary, but Fletcher insisted.

“I queried whether that was what he really wanted. He said, ‘Look, I am going to come back to you,’” which he did in the second call.

Holgate resisted standing aside, wanting instead to go on leave briefly. Di Bartolomeo took the matter to a hastily convened late afternoon meeting of the Australia Post Board. The board said she should stand aside, and made threatening noises about the consequences if she did not do so.

While Morrison told parliament Holgate had been “instructed” to stand aside, Di Bartolomeo said he had not taken Fletcher’s words as a “direction”.

Why would that be? Because if Fletcher, as one of the two shareholder ministers in Australia Post, had issued a “direction”, he would have had to go through a set process.

Fletcher, in his two pre-question time conversations with Di Bartolomeo, apparently didn’t mention whatever Morrison had said to him. We can presume the PM already had steam coming out of his ears.

A tough minister would have said to his PM, “Let’s say we will have the watches affair looked into and leave it at that for the moment.”

A Post chairman with gumption would have pushed back hard on the standing aside issue, either warning it would invite trouble or, if necessary, saying he wanted the minister to issue a formal direction.

Di Bartolomeo on Tuesday praised Holgate’s record as CEO and said she was “treated abysmally”, although he insisted “the board and management did the right thing by her”.

Yet, he handled the situation poorly on the first day, and no better in later days. His behaviour may not have been as black as Holgate paints it, but at every point he took the line of least resistance to government pressure.

A board that had backbone would have said, “Let’s all sleep on it, and assess the ‘stand aside’ demand when we’ve got the facts in perspective”.

None of them – minister, chairman, board – did these things.

The part played by one board member, however, did show concern for Holgate.

As she drove back to Sydney, increasingly upset and agitated, she had conversations with Tony Nutt, who advised her on her handling of the situation and on a potential statement.

Speaking about what happened to her, Holgate said in her evidence that Nutt, a former adviser to John Howard and a former Liberal party director, told her, “Christine, you need to understand it was the prime minister”.

While the full context of the reference is not entirely clear, Nutt had summed it up in one line.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Why would Australia Post go out of its way to deliver Pauline Hanson’s stubby holders?

Lukas Coch/AAP

Carl Rhodes, University of Technology Sydney

Back in July, One Nation leader Pauline Hanson appeared in her then-regular spot on Channel Nine’s Today program.

During a discussion about the hard lockdown of Melbourne’s public housing towers Hanson said:

A lot of these people are from non-English speaking backgrounds, probably English as their second language, who haven’t adhered to the rules of social distancing

Hanson added “a lot of them are drug addicts,” and “alcoholics” before noting if people were from “war torn countries” they “know what it’s like to be in tough conditions”.

The comments – and the way Channel Nine presented them – caused a storm of controversy. And Hanson lost her regular spot on the program.

But the episode didn’t stop there. Hanson then sent a gift to each of the residents of one of the towers in North Melbourne.

Read more:
When The Today Show gave Pauline Hanson a megaphone, it diminished Australia’s social capital

What is even more perplexing, the head of Australia Post reportedly intervened to make sure Hanson’s mail was delivered to their intended recipients.

Hanson’s ‘gift’

For $A7 you can buy your very own branded stubby holder from the One Nation website.

Featuring Hanson’s image against a sunset orange background it is emblazoned with the words: “I’ve got the guts to say what you’re thinking”.

These were the stubby holders sent to the tower’s residents, which came with a note saying “no hard feelings”.

It’s difficult to imagine what kind of reasoning was behind this “gift”.

To their credit, the people managing deliveries to the tower discovered what was in the parcels, each addressed only “to the householder”. Fearing, quite reasonably, the deliveries would inflame an “emotional tinder box”, the deliveries were withheld.

Australia Post gets involved

If one’s political suspicion was roused by the stubby holder stunt, things became even more unbelievable when Australia Post chief executive Christina Holgate, was implicated in trying to make sure the parcels were delivered.

On hearing the people managing the locked down tower had intercepted the deliveries, Holgate’s legal counsel reportedly sent a threatening email to Melbourne City Council.

The Age and The Sydney Morning Herald, who saw the email, reported it gave Melbourne City Council five hours to deliver the parcels, or said police might be notified.

Australia Post under pressure

Holgate has come under additional scrutiny of late. Australia Post has been breaking delivery records during the pandemic. But has also faced concerns about delays and service cuts.

Read more:
You’ve got (less) mail: COVID-19 hands Australia Post a golden opportunity to end daily letter delivery

Holgate is the highest paid public servant in the country, earning more than $2.5 million in pay and bonuses in the 2018-2019 financial year.

Australia Post CEO Christine Holgate at a Senate inquiry
Australia Post head Christine Holgate is the highest paid public servant in Australia.
Mick Tsikas/AAP

OK, CEOs earn a lot. But at a time when Australia Post is asking staff to work extra hours and use their own cars to deliver a backlog of parcels, its executives have still been eyeing up huge bonuses.

Following a heated debate, they will not have bonuses for 2020. But there is still a pool of more than $825,000 in payments coming from 2019.

Corporate politics

It is difficult to understand why Australia Post got involved in the stubby holder saga. Why would it want to stand up for a political stunt aimed at people in a hard lockdown?

Several media outlets have been quick to point out that at the time, One Nation senators were considering whether to support overturning a temporary relaxation of postal delivery rules.

Postie on a motorbike
Parcel deliveries have skyrocketed during COVID.
Australia Post

Back in April, Australia Post’s regulatory requirements were adjusted due to COVID-19, allowing them to focus on parcel rather than letter delivery. The changes, backed by Australia Post, are due to end in June 2021.

This was a political hot potato, with the two major parties taking opposite sides and Labor pushing to “disallow” the changes in the Senate, amid union concerns about job losses.

More than a storm in a stubby holder

In a statement, Australia Post said Holgate did not personally intervene in the stubby holder deliveries.

“Australia Post confirms that Ms Holgate did not speak to Senator Hanson or One Nation on this matter, nor did she threaten Melbourne City Council.”

Australia Post’s response has been to justify their actions purely on their legal obligation to prevent interference with the mail. No politics at play here, they claim, they were just doing their job.

As for Hanson, she was unconcerned, describing the whole thing as a “storm in a stubby cooler”.

Read more:
Melbourne tower lockdowns unfairly target already vulnerable public housing residents

But nobody said anything about the well-being of residents of the towers, who were the target of this terrible exercise in populist publicity.

Those residents, many of them vulnerable, were treated as collateral damage in this episode.

It doesn’t take a lot of guts to say Australia should expect much more from its politicians, its business leaders and major service providers.The Conversation

Carl Rhodes, Professor of Organization Studies, University of Technology Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

You’ve got (less) mail: COVID-19 hands Australia Post a golden opportunity to end daily letter delivery


Paul Alexander, Curtin University

Australia Post delivered more than 3.3 billion items last financial year. That’s almost 14 million deliveries a day (not counting weekends and public holidays).

Its 2019 annual report itemises the massive logistical network required: 15,037 street post boxes, 4,343 post offices, 461 sorting and distribution facilities, 4,845 delivery vans, 2,600 trucks, six airline freighters, rail assets, and 8,992 motorbikes and electric delivery vehicles.

Letters and parcels move in “waves” to 12.1 million addresses daily. Federally legislated service standards oblige Australia Post to deliver a letter within the country in no more than four days at a fixed rate (currently A$1.10). And to do so every week day to 98% of all delivery points.

Or at least Australia Post did so until late April. That’s when the federal government granted a temporary suspension of the services standards, allowing it to deliver letters every second business day in metropolitan areas.

The rationale was to enable Australia Post to divert resources from letter delivery – the part of its business in decline for at least a decade – to the booming demand for parcel delivery driven by COVID-19.

Read more:
COVID-19 has changed the future of retail: there’s plenty more automation in store

In May, with support from the Senate crossbench, the government passed amendments extending the suspension to June 2021.

That move is not universally supported. Unions fear postal workers will lose jobs. Federal opposition leader Anthony Albanese has signalled Labor Party support for a Senate motion to overturn the changes.

These cuts are to jobs, these cuts are to services that are absolutely essential […] In particular, older Australians really rely upon their postal services.

It’s true Australia Post provides an indispensable service. But its revenues tell a story of people relying on postal services less and less.

Lost letters

The decline of the letter business over the past decade has been relentless.

In 2009 Australia Post made a profit before interest and income tax of A$384.5 million. Of this its letter business generated A$52 million. Parcels and logistics made A$187 million. Other business (such as agency services and merchandise) made about A$146 million.

In 2019 its net profit was down to a razor-thin A$41 million. Profit before interest and tax for its non-letters businesses was almost A$259 million. Its letters business lost almost A$192 million.

Australia Post can still make profits delivering letters in major cities and regional centres, where population density is high and distances short. But not in in rural areas, where per-delivery costs skyrocket. Its commercial competitors, meanwhile, can cherry-pick the most lucrative market segments and avoid the loss-making ones.

Parsing parcels

Australia Post has long yearned to be freed from its obligation to deliver letters daily. In 2015 then chief executive Ahmed Fahour declared letter posting “in terminal and structural decline” and that Australia Post “is a parcels company more than a letters company”.

In March, current chief executive Christine Holgate told a Senate estimates committee:

Our most significant challenge is managing the tipping point of that transformation from letters for our delivery network, which is about 70% of our costs, which is actually now in need really of a significant transformation.

The cost of delivering a $1.10 letter is not much less than a $10 parcel. It makes no commercial sense to utilise resources on loss-making activities at the expense of profitable ones.

Read more:
Delivery workers are now essential. They deserve the rights of other employees

But Australia Post is not just another corporation. Profits are not its only measure of success. It is owned by the nation. Its services are essential, particularly to rural communities.

Fingal Post Office, in north-east Tasmania.

At this time, a strong case can be made it is a better social service to ensure timely parcel delivery.

In the longer term, the issue for policy makers is whether the social good is best served by keeping Australia Post to its historical obligations, or allowing it to meet burgeoning parcel demand and return a bigger dividend to the federal government to help fund other public services.

Read more:
Australia Post can’t turn back. Here’s why

While opinions will vary, the numbers make a compelling case. They show a mail delivery system designed before the advent of the internet doesn’t need to be daily any more – just as the telephone last century helped end the importance of mail being delivered twice a day.The Conversation

Paul Alexander, Associate Professor, Network analysis, Procurement,Supply Chains, Curtin University

This article is republished from The Conversation under a Creative Commons license. Read the original article.