For years, Australia Post has fought the threat of the internet to its core business creatively, making sure it was competitive in the burgeoning parcel business to take advantage of the growth in online shopping, expanding into other service delivery areas to take advantage of its large footprint across the country, and encouraging the junk mail industry, one of the few remaining growth areas in its letter delivery business.
Now, its CEO Ahmed Fahour has revealed, the tipping point has been reached and the company is unlikely to continue to pay a dividend to its owners — taxpayers — given the extent of its losses on its highly regulated letters business.
To survive as a business, Australia Post needs to be deregulated — allowed to charge more for letter delivery, allowed to scale back its delivery services. If there are valid concerns about the need for the maintenance of delivery services, especially in regional areas, let those be the subject of an explicit service obligation and appropriate government funding.
Consideration should also be given to privatising Australia Post. Indeed, Labor should have done that while in government, and then it would have been able to sell a viable business that was still generating a substantial profit. Now the government is left with having to either support an unviable regulated business, or free it up to address the dramatic change in the way Australians communicate. The time for avoiding this decision is over.
Ah yes, let’s privatise Australia Post eh?
Because that Telstra deal sure worked out a treat for the punters.
No doubt, “this time it will be different”.
No thanks.
While privatisation may look good on first glance, if they had privatised AustPost they would now be paying a service obligation subsidy to the privatised body to deliver uneconomical mail.
Either that, or make a politically courageous decision to free AustPost of its service obligations.
And although that seems the obvious way to go, do you think any politician today has that sort of courage?
Perhaps someone could explain the value of such a highly paid CEO under such straightened times.
Yes!
A Crikey editorial that I completely agree with.
Like the milkman, the daily tour of suburbs to deliver post are numbered and a publicly owned business with its servitude to its workforce though union influence and control simply cannot make the adjustment.
This will of course mean that the privatised company will slash redundant services and return to a handsome profit and correspondents to your publication will rage about the evils of private enterprise but when was it ever different?
The future model of mail is free post boxes in commercial centres where you collect it when you visit. It is particularly compelling in rural areas where people regularly go into town for services. Why should your banker expect you to go there to get money but your postal service come to you? Home delivery of groceries is a premium service.
Home delivery of mail is a premium service as well and just like telecommunications, most of the cost is in the last kilometre.
How much has CEO Ahmed Fahour’s ability to alienate Australia Post’s core customers (and staff), accelerated Australia Post to this “tipping point”.
Price increases every six months, some at about 30%, have channelled many of those selling online and sending decent volumes of parcels into the arms of courier companies that were not previously considered. Taking two or three days to deliver local letters which are now sent to a different city to be sorted, undermines confidence in the system, and awarding the CEO massive pay increases while preaching restraint to staff does nothing for staff morale (in this aspect AP is already behaving like a public company).
Kevin, in Regional NSW, and still a small business customer of Australia Post.