Democrat Senators' Report
The Postal Services
Legislation Amendment Bill 2000 appears to be a purely ideological exercise
that reflects the Government’s fascination with applying competition principles
in all circumstances, regardless of any demonstrable merit.
There is a great deal that might
be lost through further deregulation of the postal services industry and very
little, if anything, that might be gained.
In this light, the Australian
Democrats reject the Committee’s recommendation that the Bill be accepted.
The Government has never
demonstrated that tangible benefits to the Australian community will flow from
the proposed deregulation. They have at best asserted that increased competition
will increase the efficiency of the postal services industry. Indeed, even the
Financial Impact statement contained in the Explanatory Memorandum to
the Bill, which might be expected to suggest some benefit emerging from the
policy, states only that “[i]t is not possible to quantify the costs and
benefits to participants in the postal industry from the reduction in the
reserved services and the postal services access regime.”[1]
In fact, Australia Post is
already one of the most efficient postal services in the world. It provides an
excellent level of service at a uniform rate to Australians regardless of the
breadth of their dispersal across a continental landmass. Its level of customer
satisfaction is among the highest of Australian companies. As numerous
submissions to this inquiry have indicated, this level of service is
potentially threatened by the proposals contained in this Bill.
Australia Post maintains a
network of more than 4,400 postal outlets throughout Australia,[2]
ensuring that 98% of households receive mail deliveries five days each week,
and that 99.7% of rural and remote households receive mail deliveries at least
twice a week.[3]
It provides a letter service throughout Australia at a uniform rate that has
remained fixed since 1992. It maintains a competitive parcel service and
provides financial and other services through many of its postal outlets. In
areas with dubious telephone reception and closed banks, the postal service
remains.
Australians have come to expect
and rely upon these services, which are built upon a principle of equitable
access to communications. It must be a fundamental principle of any legislation
affecting postal services in Australia that they not be jeopardised.
In the case of the current
legislation, we have only the bald assertions of the Minister and heavily
qualified assurances from Australia Post that there will be no decline in
services or closures of postal outlets.
Instead, the strongest evidence
presented to the inquiry tended to suggest that there are no guarantees that
postal services will be unaffected. This is of particular concern to
Australians living in rural, regional and remote areas whose access to the
postal network is cross-subsidised by the high volume metropolitan mail routes.
Indeed, Australia Post’s assurances sat uncomfortably with much of their
testimony, and under questioning they acknowledged significant uncertainties
about the effects of the various aspects of the proposed deregulation on their
revenues, and consequently on their ability to maintain service levels.
At the heart of the Bill are two
key changes, both of which have the potential to undermine the viability of
Australia Post and thus its services: the substantial deregulation of Australia
Post’s reserve services; and the introduction of an ACCC-administered regime to
provide competitors with access to Australia Post’s network.
The proposed reduction of
Australia Post’s reserved services will permit price competition from
alternative carriers on letters over 50g and permit competitors to carry
letters weighing less than 50g so long as they charge the same rate as
Australia Post. Additionally, competitors will be able to carry inbound
international mail.
While these changes would appear
to preserve the reserved services through which Australia Post funds its
Community Service Obligations (CSO), they are in fact open to a number of
circumvention techniques. For example, it was demonstrated that the insertion
of a small quantity of additional advertising material into a standard letter
would an envelope to be “bulked up” to more than 50g, placing it in the realms
of open price competition.[4]
Moreover, while the additional material would increase the cost of the letter,
it seems plausible that the ability to extract cheaper delivery prices by
bulking up might act as an incentive to major mail users to actively sell
access to space in their envelopes to other advertisers as a means of covering
the costs of the bulking up.
Similarly, the deregulation of
incoming international mail opens up the possibility of “remailing”, where mail
is generated cheaply off-shore and delivered cheaply as incoming international
mail.[5]
While the Bill contains provisions to prevent this practice, the Committee
heard evidence that those provisions place the onus on Australia Post to prove
wrong-doing, and are thus likely to be largely ineffective. We acknowledge that
the Committee’s second recommendation, which deals with the off-shore mailing
of domestic mail, attempts to address this problem within the framework of the
proposed legislation.
The second threat to Australia
Post’s ability to effectively fund its CSO flows from the introduction of an
ACCC-administered access regime. As Australia Post indicated, the impact of
this regime on their revenue is an area of uncertainty, as it is entirely
dependent upon the precise price reduction imposed upon them by the ACCC.
However, it has the potential to impact substantially upon them, as a one cent
reduction in their bulk mail rate is expected to translate into an annual
revenue loss of between $25 million and $30 million.[6]
Under direct questioning, Australia Post were not willing to express any
confidence that the ACCC would impose conditions that would not significantly
disadvantage them.[7]
Further, the Communications Electrical Plumbing Union (CEPU) pointed to
evidence from Sweden that the introduction on an access regime of this kind led
to substantial confusion and problems administering aspects of the postal
delivery system.[8]
The Committee’s seventh amendment attempts to address the problems of the
access regime, but does not remove the capacity of the ACCC to force upon
Australia Post prices that fail to sufficiently account for their CSO.
In its inquiry, the Committee
payed particular attention to the details of Australia Post’s CSO. Currently,
the CSO extends only to a letter service. Witnesses from groups including the
National Farmers Federation, The Country Women’s Association and the Isolated
Children’s Parents Association suggested that it should be expanded to cover
small parcel services, the delivery of educational materials to remote areas
and some banking and financial services. The Australian Democrats have called
for such an expansion of the CSO in the past, and we find it both interesting
and heartening that the Committee’s report recommends the adoption or
consideration of such suggestions. Expansions to Australia Post’s CSO of this
kind should be introduced into legislation. It is unfortunate that this flawed
Bill is not the appropriate vehicle for doing so.
The Australian Democrats note
that the Committee’s fourth recommendation is for the inclusion of rural and
remote licensed post offices within the Government’s Rural Transaction Centres
Scheme. We are at a total loss to understand why the Government is proceeding
with this scheme, which is attempting to erect a new rural services network,
when the Australia Post network already exists. Rather than committing funds to
duplicating the services of the postal network, it would substantially more
sensible, not to mention cost-effective, for the Government to expand the scope
of the postal network’s services.
The Bill seeks to convert
Australia Post to a Corporations Law company with 400 shares. The Australian
Democrats have long maintained that the deregulation contained within this
legislation represents a form of stealthy privatisation. This provision does
little reassure us, as it would appear only to serve the purpose of putting in
place the necessary administrative steps for the later sale of some or all of
those shares.
Finally, we note the evidence
given by AUSDOC that the business mail market has already begun to decline as
the result of electronic mail. While Australia Post stated that they were
operating on an assumption of a growing mail market, they also acknowledged
that it is simply a matter of time before the explosive popularity of email
begins to eat into consumer mail markets. It strikes the Australian Democrats
as particularly foolish to attempt to dilute the mail market at a point in history
when physical mail’s decline is already visible on the horizon.
Senator
Andrew Bartlett
Senator for
QLD
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