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Good mail on privatisation

By Mikayla Novak - posted Friday, 26 October 2012


The Gillard government has urged states to sell their electricity assets, but at the same time has left privatisation of its own assets off the reform table.

While the general public impression may be that all the federal government's 'family silver' has been sold off, the privatisation lull since the early 2000s has meant some entities which would be more efficiently operated in private hands remain firmly under government control.

One of the remaining candidates for privatisation is Australia Post.

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In similar fashion to government postal services in other countries, Australia Post is being squeezed in regard to both the revenue and cost aspects of its operations.

Technological developments such as the internet and mobile phones have meant that the use of letters as a mode of communication has waned significantly, eating away at a traditional source of revenue for Australia Post.

The latest figures show that Australia Post has lost about $91 million through the exclusive 'reserve service' requirement imposed by the government to deliver letters within Australia and from overseas to Australian addresses.

The organisation is also labour intensive, which is not altogether surprising given another regulatory requirement by government that it physically provides weekday deliveries to most Australians, and maintains 4,000 odd postal outlets including a mandatory share in rural and regional areas.

But with its highly unionised workforce prone to strike action opportunities to use labour-saving technologies, such as vending machines for standard letters or Express Post envelopes, have not been fully exploited.

Australia Post appears to be holding its own in the competitive market for parcel deliveries, thanks to a boom in online retailing not of its own making, however its responses to the fall in letters have starkly illustrated that it remains an inefficient, unresponsive government entity.

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Very soon Australia Post will party like it's 1996 because it will launch, wait for it, a 'Digital Mailbox' service in which people receive email, pay bills and store documents in one online location.

Even those with a cursory knowledge of the internet know that Hotmail (which was launched in 1996), banks, telephone companies and other private concerns already provide such services, raising questions about the inherent wisdom of a government-owned entity duplicating that which already exists.

There has also been speculation in recent years that Australia Post wish to move more deeply into the financial services arena, a field in which governments in the past have had poor management records.

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About the Author

Mikayla Novak is a Research Fellow with the Institute of Public Affairs. She has previously worked for Commonwealth and State public sector agencies, including the Commonwealth Treasury and Productivity Commission. Mikayla was also previously advisor to the Queensland Chamber of Commerce and Industry. Her opinion pieces have been published in The Australian, Australian Financial Review, The Age, and The Courier-Mail, on issues ranging from state public finances to social services reform.

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Creative Commons LicenseThis work is licensed under a Creative Commons License.

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