It’s time to fix postal services for the long run

The Government should do more than approve interim measures to stem the losses at Australia Post. An independent inquiry should be charged with taking stock of the long term needs for post and parcel services and building the case for lasting reform.

Opinion piece by Jack Archer, Deputy CEO of the Regional Australia Institute 

The letter is in its death throes. Most letters are now sent by business and government, many under legislative or regulatory requirement.

For business and government this is a costly exercise and it is about to get more costly. It doesn’t really make sense to maintain these laws with increasing costs to prop up the Australia Post business. There are potentially large savings for the economy if requirements can be changed to allow for electronic delivery.

In contrast, on China’s most celebrated annual online shopping day, Double 11, Alibaba’s online shopping platform Tmall sold over AUD $11 billion in products from 168 countries.  Parcel services are essential to the burgeoning online shopping trade and Australia’s potential to realise its ‘Asian Century’.

Australia Post should be reformed to enable Australia to take better advantage of the digital age. It will also have an on‑going role in providing equitable access to necessary postal services across Australia at no cost to the taxpayer. The current monopoly over post may or may not need to be part of policy settings in the longer term.

Increasing the cost of a stamp or reducing the frequency of delivery is not a long term solution to this issue.  Upping the price of a stamp may stem the immediate losses. However, high cost stamps and fewer deliveries are likely to only accelerate the move away from letters.

There are three core issues in finding a longer term solution that an inquiry should consider.

The most substantive policy issue is the future of essential communications in regional areas where the private sector will not provide a service or will only do so while charging prohibitive costs. The NBN will help to reduce the scale of this need, but a reasonable cost parcel and post service must be available to every Australian.

It is also likely to be in our interests to give every Australian entrepreneur a shot at Tmall’s billions. Examples of smart regional businesses like the extremely successful Birdsnest in Cooma demonstrate that online shopping platforms, combined with smart regional entrepreneurs can change the game for regional communities.

With communications changing so rapidly, the real need for subsidised post and parcel in regional Australia is not clear. If the price of post rises and delivery becomes infrequent, players other than Australia Post may be able to competitively service larger parts of the nation. As a result the longer term need for subsidised regional services is probably less than we think, but the need that’s left is very important to the future of many communities.

The second substantive issue is the transition for the Australia Post network. Australia Post franchisees and employees are most directly exposed to the consequences of change. Any reform of postal services needs a transition strategy that provides certainty for people whose livelihoods will be directly affected by change.

It’s also the small rural and remote communities in Regional Australia, where the Post Office is at the heart of the local business district, that could feel a very significant impact from changes to Australia Post. The 4400 strong retail network of Australia Post is a national asset and we need to be open to the best ways to repurpose this asset in the digital age.

Using this network as a vehicle for making government services more accessible across Australia is one option that has been floated but not resolved. There will be other options that could be explored by an inquiry in consultation with Australia Post.

Australia Post’s future viability as a government business is the third issue. As a well led business, it should be able to find a way through the change process if we resolve the first two issues in a sensible way.

Some will use the debate as a platform for pushing the privatisation of Australia Post. However, the experience with Telstra and the multi‑billion dollar payments required for the NBN project should give us reason to be cautious on this issue in the near term.

This week, Australia Post has put forward reasonable proposals to kick the can down the road and cover their immediate losses.

Kick the can if we have to, but let’s lift also our eyes to the long game as we swing our leg.