Licensed Post Offices (LPOs) provide important services especially in regional towns. Unfortunately, they’ve been overlooked in a number of the changes to the way Australia Post operates.
Transcript
[Malcolm Roberts]
Thank you chair. And thank you all for attending today. Is Australia Post considering selling off its profitable parcel post business? And please advise what discussions, reviews and planning has and will occur in relation to the parcel post business?
Senator, that would be a matter for government. So we’ll have to defer to…
[Lucio Di Bartolomeo]
If I could just respond from the chair’s and board’s perspective. There has been no discussion, no plans, no undertakings to prioritise any aspects of Australia Post business. Certainly in the time that I’ve been there. And while we’re on that time, Can I correct the figure that I gave earlier? I was appointed on the 22nd of November not the 14th of November.
[Woman]
Thank you.
[Lucio Di Bartolomeo]
The 14th was the date that the press release was put out. I apologise for that.
[Malcolm Roberts]
So you can rule out that there’ll be a sale of the parcel post?
[Lucio Di Bartolomeo]
Correct. Correct.
I mean, I…
[Woman]
So can I.
[Malcolm Roberts]
Thank you.
Does Australia Post consider it has a responsibility to provide a possible, a profitable business model for licensees of community post offices?
[Lucio Di Bartolomeo]
We certainly believe we have a responsibility to maintain viable partners in all the business that we undertake. Both at the contractor level and at the LPO level, yes.
[Malcolm Roberts]
So you will look at their services through their eyes.
[Lucio Di Bartolomeo]
Absolutely.
[Malcolm Roberts]
The chair of Australia Post commissioned a review by the Boston Consulting Group to inform the board and the CEO. Why were the most heavily invested stakeholder group, the licensees, not engaged and or included in the sharing of the outcomes, recommendations for that review.
[Lucio Di Bartolomeo]
Senator, if I could just correct one point. The Australia Post board did not engage BCG. This was an independent investigation by our shareholders, shareholder ministers and we supported the investigation. But we did not engage nor ultimately conclude any position on that review.
[Malcolm Roberts]
From whom do I request to get a copy? Because it’s been out since I guess… Sorry.
[Woman]
We’ve already taken public interest immunity on that report, Senator Roberts. The cabinet’s explicitly considered the executive summary of their BCG report. The full report though, as a usual practise, was also available to cabinet and I consider by a number of ministers. But the report’s expected to be given further cabinet consideration in the context of ensuring that Australia Post has a sustainable future.
[Malcolm Roberts]
Could you please advise the status and next steps being taken by Australia Post with licenced post offices, LPOs, to progress payment reforms.
[Lucio Di Bartolomeo]
Senator, thank you very much for the question. I may just defer to Ms. Sheffield, who heads up our community and consumer area and ask her to come to the desk. And outline we are about to kick off on the payment review process . So, Ms. Sheffield.
[Nicole Sheffield]
Thank you Mr. Boys. Thank you, Senator. Nicole Sheffield executive general manager, community and consumer. Thank you Senator for that question. We work very closely with our licensees, our licensee partners and associations. The payment reform itself, we have had one consultation with LPOG. And we have a first consultation with POAAL, the other group later this week. Once we understand the principles and agree what are the areas that we will be looking at, then we we’ll make for some recommendations. And start working that including, as per the first lot of payment reform, looking at those payments per outlet. Because when you have so many outlets, 2,580, there are a lot of impacts. So when you make any changes to payments there’s going to be some impacts that we want to make sure that we understand across the entire network. So that requires a lot of modelling, a lot of consultation. As you know, the first payment reform was very successful and introduced $50 million worth of extra payments in the last two years to licensees. And that was all about ensuring that they were paid for parcels and for scanning. The second lot of payment reform is going to focus on community representation, and the very important role that they play in that. But also looking at our identity services and financial services. I feel very confident that before the end of this financial year we should have some really good parameters to move forward.
[Malcolm Roberts]
So it has a budget. Thank you for that. And it’ll save me, giving my preamble for the next question. Has a budget allocation been made for phase two reform implementation, which we understand is expected to begin shortly. And what is the budget allocation for phase two? When do you anticipate it will be commenced and then implemented?
[Nicole Sheffield]
So budgets at the moment have not been concluded for next financial year. So we’re in the process of discussing within the organisation, all of that. But I can tell you confidently Senator, there will be budget allocation. We’ve been discussing this and just like anything we will put aside the required amounts. And that’s part of the reason we’ve started the discussion so early this year to make sure that we allocate the appropriate amount.
[Malcolm Roberts]
And that would come with extensive consultation with the LPOs?
[Nicole Sheffield]
Absolutely.
[Malcolm Roberts]
Okay. In order to achieve sustainability for LPOs, does the significant change in volume between letters and parcel post require a review of the financial relationship between licence, with licenced post offices. Especially if, yeah, that’s all I need to say.
[Nicole Sheffield]
Yeah. Look, we’re always ensuring the viability of our licenced post office partners. We know how important they are for us to deliver our community service obligation. But actually they’re, you know, the face to our community to regional and rural Australia. Their viability is critical. And just as we’ve seen, COVID has created an e-commerce boom that none of us expected. We hoped, but none of us expected that it’s changed the financial model completely for our post offices. Because all of a sudden their revenue drivers are significantly more coming from parcels than we’ve ever seen. And so it really is constantly working with them looking at what products, services they are offering to their communities. What arrangements that we have, what opportunities we can have to introduce new products and services that will drive transactions and foot traffic for them. And I think it’s something that we’ll just constantly need to be looking at and working with them to look at what we can do to grow.
