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Discussion paper argues against privatisation of Australia Post

The enormous cost of the government’s response to the coronavirus pandemic, including $70 billion for JobKeeper, $14 billion for JobSeeker and months of free childcare, could revive politicians’ interest in privatising the national delivery service, a progressive think tank fears.

On Tuesday, the progressive think tank Per Capita published a discussion paper on behalf of the Communications, Electrical and Plumbing Union of Australia (CEPU) arguing to keep Australia Post in public ownership.

“We’re preemptively saying this is something they shouldn’t consider,” Emma Dawson, the executive director of Per Capita, told Inside Retail.

While there has not been any indication of recent efforts to privatise Australia Post, Dawson noted that the government has not ruled it out, and she is worried the temporary relaxation of letter delivery standards, which the Federal Government approved in April amidst the Covid-19-fuelled parcel boom, could be the first step towards “softening the business up” for privatisation.

“Removing those [obligations that are loss-making] would make it more attractive for a private operator,” she explained. “They most recently sold Medibank Private. This could be the next business enterprise they seek to offload.”

Australia Post was established as a Government Business Enterprise in 1989, and has only recorded a financial loss once in the last 35 years. That was in FY15 when its reserved letters service was hit by a severe decline related to the widespread uptake of email.

The service has been largely successful in adapting to digital disruption, and it generated nearly $7 billion in revenue in FY19, with before tax profits of $4.1 million.

Privatising Australia Post would have a detrimental effect on small and medium businesses and households in rural areas, according to Dawson, who was the principal policy adviser on Australia Post in the Rudd and Gillard governments for 3.5 years.

“A private business wouldn’t be obligated to have legislated delivery times and rates to ensure people in rural and remote Australia aren’t paying exorbitant fees,” she said.

These requirements, set out in the Australian Postal Corporation Act 1989, currently only apply to Australia Post’s reserve letter service, but Per Capita thinks there should actually be a similar standard for parcels.

“We want to see a universal parcel obligation that would stipulate the standardisation of service across the country,” Dawson said.

In addition, Per Capita believes the sale value of Australia Post would be around $5 billion. Taking into account the average $47.7 million dividend the service has returned to the Federal Government each year over the past four years, the $5.6 billion in taxes and charges returned to the ATO between 2008 and 2019 and the impact on the local goods and services economy through the wages it pays, a one-off sale would be short-sighted, the think tank believes.

Australia Post indirectly employs around 80,000 people across three core areas: letters and associated services, parcels and logistics and retail merchandise and agency services. It directly employs around 30,000 people, 10,000 of them as “posties”.

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