On 25 February 2021, the Senate referred an inquiry into Australia Post to the Environment and Communications References Committee. The genesis of this inquiry can be found in the questions from Senator Kimberley Kitching (Australian Labor Party, VIC) to Ms Christine Holgate during Senate Estimates hearings in October 2020. These questions related to Ms Holgate's purchase of Cartier watches worth almost $20 000 for Australia Post executives as a performance bonus.
The response by the Australian Labor Party (ALP) to the revelations stemming from Senator Kitching's questions, ranged from outrage at Ms Holgate's conduct to calls for her resignation coming from the Leader of the Opposition and union figures. Examples of the nature of the response include:
'Christine Holgate has done the wrong thing. I support her paying a price for that' (the Hon Anthony Albanese MP, 30 October 2020);
'I think her position is untenable' (the Hon Anthony Albanese MP, 30 October 2020);
'I think it's perfectly reasonable that Christine Holgate resign' (the Hon Anthony Albanese MP, 3 November 2020);
'I said this at the time, that this did not pass the muster for any responsible spending' (Ms Michelle Rowland, 3 November 2020);
'The union representing Australia Post workers, the CPSU, is calling for the resignation of Australia Post CEO and investigation into the board' (Community and Public Sector Union media release, 22 October 2020);
'Ms Holgate appears to be living high on the hog' (Senator Kitching, 12 October 2020); and
'unspeakably outrageous rort' opinion piece (Senator Kitching, 16 November 2020).
Subsequently, it appears that the opportunity to criticise the Government, led to a change in rhetoric and this inquiry has become a highly politicised exercise. This has had an impact on many of the recommendations in the majority report and the events leading up to and during the inquiry became a significant distraction to the valuable work of Australia Post.
Liberal and Nationals Senators do not support aspects of the analysis of evidence and many of the recommendations of the majority report. We make the following observations regarding the following recommendations.
Recommendation 1
Australia Post and other Government Business Enterprises are responsible for familiarising themselves with parliamentary processes, and their responsibilities to the Parliament and its committees. Liberal and Nationals Senators support the recommendation and note that the Department of the Prime Minister and Cabinet has published the Government Guidelines for Official Witnesses Before Parliamentary Committees and Related Matters.
The guidelines are designed to assist departmental and agency officials, statutory office holders and the staff of statutory authorities in their dealings with the Parliament. This includes advice on providing written material to a parliamentary committee inquiry, preparing to give evidence as a witness and the procedures associated with public interest immunity claims.
The Department of Finance provides additional advice to Australia Post and other Government Business Enterprises (GBEs), which operate at arms-length from Government, through the Commonwealth Government Business Enterprises – Governance and Oversight Guidelines and other guidance material focussed on advising directors of a GBE of their accountability and governance requirements.
Recommendation 2
The Government has already initiated a Performance Bonus Review into Commonwealth entities. On 12 November 2020, the Prime Minister wrote to the Assistant Minister to the Prime Minister and Cabinet agreeing to a review of existing performance bonus arrangements for Senior Executive Service-level Australian Public Service employees, as well as officials of corporate Commonwealth entities and Commonwealth companies. The interim report was published on 25 March 2021. The Hon. Ben Morton MP, Assistant Minister to the Minister for the Public Service, has agreed to the two recommendations of the interim report.
Recommendation 3
The Government has already instructed the Australia Post Board to review and update Australia Post's internal governance arrangements and financial controls to ensure that they comply with its legislative obligations and reflect public expectations. The Finance Minister also wrote in similar terms to the accountable authorities for other Government entities.
Recommendation 4
The Auditor-General's jurisdiction does not extend to reviews of Ministerial conduct. Neither the Auditor-General Act 1997 nor the Australian Postal Corporation Act 1989 would empower the Auditor-General to undertake such an investigation.
Recommendation 5
The claim that Ms Holgate was denied procedural fairness and natural justice is contested. Evidence to the inquiry was characterised by differing recollections of events and interpretations placed on evidence such as phone records. While disputed by Ms Holgate, the Australia Post Chair made the case based on key email evidence (which regrettably was not initially made available to the committee) that Ms Holgate agreed to temporarily stand aside from her role as chief executive officer, albeit reluctantly, on 22 October 2020. Ms Holgate tendered her letter of resignation from Australia Post on 2 November 2020. On 10 May 2021, it was announced that Ms Holgate would take up the role of Chief Executive Officer with the company Global Express. Ms Holgate and Australia Post have confirmed that the matters surrounding Ms Holgate's departure from Australia Post are now subject to mediation between Ms Holgate and Australia Post.
Recommendation 6
The evidence of the Chair of Australia Post, Mr Lucio Di Bartolomeo, confirmed that the Minister for Communications had asked him to stand Ms Christine Holgate aside. However, despite agreeing, Mr Di Bartolomeo gave evidence this had not been taken as a 'formal direction'.
If a formal direction had been given by the Minister, it would have been given to the Board of Australia Post by the Minister for Communications under section 49 of the Australian Postal Corporation Act 1989. It does not appear that any formal direction under section 49 of the Act was given by the Minister to Australia Post on 22 October 2020.
Recommendation 7
The suggestion that the Australia Post Board is not independent was not supported by evidence or precedence.
Independent directors are not members of management and are free of any business or other relationship that could materially interfere with – or could reasonably be perceived to interfere with – the independent exercise of their judgement. Board members are required to complete a Private Interests Declaration to identify any private, business, and financial interests that might conflict with their duties.
While the Board did have Directors who had been associated with the Liberal Party in former careers, previous political involvement does not preclude a post political career for competent individuals from any political party. Previous members of Parliament are employed by the private sector in areas as diverse as the minerals sector to communications, often in governance roles such as Boards. Precedence highlights that the composition of the Australia Post Board has also included Directors appointed by, or affiliated with former Labor Governments:
Mr John Stanhope AO, former Chair, appointed by the Hon Stephen Conroy from November 2012;
Ms Trish White appointed in July 2010. From 1994, spent 16 years as a Labor MP in South Australia and was a Senior Cabinet Minister in the Rann Government; and
Mr Bill Mansfield served from October 2008 and was Assistant Secretary of the Australian Council of Trade Unions.
Recommendation 8
Directors of the Australia Post Board are appointed by the Governor-General on the nomination of the Shareholder Ministers. This approach has been consistently taken by Australian Governments since 1989.
The recommended approach would also be inconsistent with the arrangements that exist for other Government Business Enterprises (GBE). GBE Boards require members selected on skill in corporate governance, public administration and/or the relevant commercial industry fields in which each GBE operates. It would be contrary to that requirement if members were appointed solely on representative grounds.
Recommendation 9
An independent review of the performance of the Board is conducted every two years, while an internal review is conducted in the intervening years. Each Committee of the Board undertakes an annual self-assessment of their performance against the requirements of its Charter and provides that information to the Board.
Post-separation arrangements are common for senior executives from both Government and the private sector. There are many benchmarks that Australia Post could use to evaluate its own policies rather than diverting the resources of the ANAO. Potential audits are matters for the ANAO to consider.
Recommendation 10
In addition to measures outlined in comments on Recommendation 9, the Australia Post Board already annually reviews its performance, including its performance against the requirements of its Charters, and of individual Directors. While the Board could include relevant details in the annual report, such self-disclosure does not provide as much independent scrutiny as Senate Estimates already provides.
Recommendation 11
Directors of the Australia Post Board are appointed by the Governor-General on the nomination of the Shareholder Ministers. Comments on Recommendation 8 are also relevant.
Recommendation 12
See comments to Recommendations 7 and 8.
Recommendation 13
The purchase of the watches by Ms Holgate occurred in November 2018, when Mr Stanhope was the Chair of Australia Post.
Mr Di Bartolomeo was appointed Chair of Australia Post in November 2019.
Evidence to the Committee highlighted that the current Chair sought to work in a constructive manner with Ms Holgate during what was a fast-moving sequence of events being played out in the spotlight of the media.
Recommendation 14
The Australian Government Cost-Recovery policy requires not just bare cost‑recovery as default charging practice by GBEs, but commercial pricing (i.e. including contribution to profit).
The Bank@Post deal significantly improved the profitability of Licensed Post Offices (LPOs), particularly in non-metropolitan areas. The importance of the Bank@Post deal was acknowledged by the Hon Michael Ronaldson, Non-Executive Director of Australia Post, in his evidence to the committee, stating that Australia Post wants to expand and extend, and not reduce financial services offered through the Bank@Post deal.
While Liberal and Nationals Senators agree with the sentiment of the recommendation—given that the big four banks have left many rural and regional communities without branch services—Liberal and Nationals Senators do not support the recommendation for a direct intervention into the commercial arrangements between Authorised Deposit-Taking Institution (ADIs) and Australia Post via regulation.
Liberal and Nationals Senators note that the Community Service Obligations (CSOs) set out in section 27 of the Australian Postal Corporation Act 1989 require that in respect to core business such as letter delivery:
the service be available at a single uniform rate within Australia for standard letters;
the service be reasonably accessible to all Australians wherever they reside; and
the performance standards for the service reasonably meet the social, industrial, and commercial needs of the community.
Parcels and financial services are now core Australia Post services, particularly for rural and regional communities. Consideration should be given to whether the scope of the CSO should be expanded and the optimal model for cost recovery that provides equity for communities and sustainability for LPOs, Australia Post and ADIs. Comments to Recommendation 19 are also relevant.
Recommendation 16
The Boston Consulting Group (BCG) Report is subject to a Public Interest Immunity claim. This process exists in recognition that the Executive has the right to maintain the confidentiality of some information and advice it has received. The financially sensitive information in the BCG report is a good example in a competitive market. However, in light of the lack of clarity and perceived risk caused by not releasing the report, in future it may be helpful for the Government to consider a publicly releasable version of such a report or an expedited Government response to address concerns created for licensees, staff and the community.
Recommendation 17
Liberal and Nationals Senators reject privatisation in whole or in part of Australia Post. The Minister for Communications has already publicly stated that the Government has no intention of partially or fully privatising Australia Post. The Treasurer has also publicly ruled out privatisation.
Recommendation 18
The Commonwealth Procurement Rules exempt GBEs so that they can act competitively, including by allowing them to direct source for large contracts without the cost and delay of formal tender processes, where that is the most efficient way to secure best terms and generate returns.
Recommendation 19
Parcel services
As a GBE, Australia Post is required under the Australian Postal Corporation Act 1989 to balance its commercial obligations with its community service obligations. Given the significance and growth of the parcel service (financially and socially) to Australia Post and its customers, it may also be worth exploring avenues to ensure parcels are a core business of Australia Post. As per comments on Recommendation 17, the Liberal and Nationals Government is not supportive of Australia Post being privatised. This is a longstanding position of the Nationals which is supported by the Liberal and Nationals Government.
Liberal and Nationals Senators recommend Australia Post should investigate and implement business models that maintain or increase the number of LPOs in regional, rural and remote areas, and that further enhance the delivery of Australia Post services in these communities through the consideration of changes to the Community Service Obligations.
Doing so will secure the financial viability and ongoing sustainability for the LPOs, their licensees and employees, with subsequent benefits flowing to the communities that are reliant on access to the services offered by Australia Post.
Given the significance and growth of the parcel service, legislative amendments should be made to incorporate the parcel service as a core‑business of Australia Post, and performance regulations and standards should be implemented to support this.
Mr Di Bartolomeo gave evidence that 'Parcels is our core business today. Certainly, our regulatory environment puts letters front and centre'. The incorporation of parcels as core business was supported by Australia Post Non-Executive Director, Mr Tony Nutt AO, and Mr Miguel Carrasco, Managing Director of BCG, in evidence to the committee.
Incorporating the parcels service as core business of the organisation would be a concrete demonstration of the commitment of the Government and Australia Post to not privatise or divest elements of the business. In line with comments on Recommendation 14, the Government could consider how to modernise Australia Post's CSOs and performance standards in line with the changing service demands.
Liberal and Nationals Senators recommend that the Government should consider amending the Australian Postal Corporation Act 1989, associated regulations, and Australia Post's Community Service Obligations and performance standards to include parcels as a core business of the organisation while maintaining affordable and equitable service delivery for all Australians, particularly those in regional, rural and remote areas.
Perishable foods
During the inquiry, Nationals senators raised the issue of the decision by Australia Post to cease delivery of perishable foods by 30 June 2021. Businesses in regional, rural, and remote Australia will be severely impacted if Australia Post stops delivering perishable foods. The lack of consultation by Australia Post with affected stakeholders and LPOs was extremely disappointing and highlighted further evidence of poor consultation practices raised by witnesses during the inquiry.
Australia Post renounced the decision to cease delivery of perishable foods by 30 June 2021 and formed a consultative group led by the Small Business Ombudsman.
In evidence, Mr Rodney Boys, Acting Group Chief Executive Officer and Managing Director (CEO) of Australia Post, stated that the decision to cease perishable food deliveries occurred when '…we realised that it was a complex regulatory environment that we had to work through – in both origin and sending'.
With the importance of perishable food delivery not just to small primary producer and food businesses, but to their customers who purchase these products, prompt action should be taken by Australia Post in conjunction with the Australian and state and territory governments to revise regulations pertaining to perishable food delivery.
Liberal and Nationals Senators recommend that the Australian Government in collaboration with state and territory governments, and Australia Post should seek to address regulatory issues affecting the ability for perishable foods to be delivered so that the service can be continued indefinitely.
Recommendation 20
See comments on Recommendation 16.
Recommendations 21 and 22
Regulatory relief was sought by Ms Holgate (as CEO of Australia Post) from the Government on 31 March 2020.
On 21 April 2020, the Government announced temporary regulatory relief to assist Australia Post to continue providing important postal services for all Australians during the COVID-19 pandemic. The changes took effect on 16 May 2020 and will end on 30 June 2021.
Recommendation 24
The classification of metropolitan, rural, and remote classifications is embedded in Australia Post's performance standard regulations. The classification document is the publication titled Rural, Remote and Metropolitan Areas Classification 1991 Census Edition, prepared by the Department of Primary Industries and Energy and the Department of Human Services and Health in November 1994 (based on 1991 Census data).
As metropolitan, rural and remote classifications do not necessarily align with the geographic realities of the boundaries that denote regional, rural and remote communities of interest, the appropriateness of the classification embedded in Australia Post's performance standard regulations should be reviewed to ascertain whether the underlying application of the 1991 Census data remains fit for purpose.
If such a review is not completed, Liberal and Nationals Senators recommend that the Government consider amending the performance standard regulations to exclude regional capitals that have a population of more than 100 000 from the definition of 'metropolitan'.
Senator the Hon David Fawcett
Deputy Chair
Senator the Hon Bridget McKenzie
Senator for Victoria