Press conference - Reforms to modernise Australia Post

MICHELLE ROWLAND, MINISTER FOR COMMUNICATIONS: Good morning everyone. Australia Post is a cherished national institution. It services millions of Australians right around the country; be they consumers or businesses, big and small. Around the world, Government-sponsored postal agencies are being challenged. We have seen them decline and we have seen them fail. Australia Post serves an important community function. In some rural and regional areas, it serves not only as the postal service, but also as the general store, the newsagent, and in some cases, providing the only banking facilities that are available. Australia Post has reported a $200 million loss.
 
At the same time, we know that consumer and business habits are changing. Australia Post cannot stand still. It is vitally important that action is taken to ensure that this important national institution is kept strong and viable into the future. To that end, the Albanese Government earlier this year commenced an open consultation with the Australian public about what they wanted to see in a modern postal service. We understand that with the rise of competitors, the gig economy, the changing structure of the market, that Australia Post’s traditional services are under more and more pressure.
 
The market has fundamentally altered. At the same time, we have the unstoppable decline of letters. Postal services continue to be in high demand when it comes to parcels. This is what we have been consulting on, and this is what the Government has taken on board in announcing these regulatory changes today.
 
Australia Post has a wide network. It has many assets, but the most important asset is its people. I commend the Australia Post workforce and Australia Post itself for collaborating to devise a new delivery model, which will see productivity increase, but also respond to those changing consumer and business demands. To that end, I'm announcing today that the Government will make a number of regulatory changes that currently apply to Australia Post. The daily letter service that is currently provided will now become every second day. That is as a result of a new delivery model that enables parcels, express post and the priority letter service to be delivered every day. As a consequence of that frequency change, the speed of the letter service will also be pushed out by one day.

In addition, the priority letter service will also change, with its pricing to be determined in conjunction with consultation with customers. That will also be set out in a revised Statement of Expectations that I expect I will issue in the New Year along with Finance Minister (Katy) Gallagher.

Importantly, there will be no changes to the current floors that apply in relation to the minimum number of retail outlets in Australia, noting that this is overall at 4,000 with at least 2,500 in rural and regional areas. This recognises, again, the importance that this Government places on servicing the needs of rural and regional consumers and businesses.

I commend the Communication Workers Union (CWU), Australia Post and the workforce overall, for collaborating in a way that has enabled a trial of a new delivery model - one that has been widely embraced where it has been undertaken, but also recognises that Australians want a better parcel service. That is where the demand is. Australia Post needs to invest in better models to meet those demands, and also in new technology and other ways in which consumers can be best served.

What I'm announcing today is a direct result of the open, transparent consultation process that has been undertaken - an open and transparent consultation with the workforce and their participation. But also understanding that Australia Post cannot stand still. In order for it to continue to meet the needs of all Australians, it needs to be financially sustainable. That is what these regulatory changes will provide. I'll hand over now to the CEO Paul Graham for some comments.

PAUL GRAHAM, CEO OF AUSTRALIA POST: Thank you, Minister and to begin, I'd like to acknowledge the Darug people, the Traditional Custodians of the lands on which we meet today and pay my respects to Elder's past, present and emerging. I'd also like to acknowledge the Minister of Communications, the Honourable Michelle Rowland, and Shane Murphy, President of the CWU. This is a great day for Australia Post and for everyone at Australia Post as the Minister just expressed. The reform announced today and the Roadmap is a crucial first step in the long-term future modernisation of Australia Post. These reforms will continue to allow us to serve our customers, both in the growing parcel business as well as the maintaining essential mail services. We have to keep priority mail and express mail which will still be delivered every single day as they are now.

The other good thing is that people will still see our posties down the streets every single day, but delivering a greater combination of parcels and letters to ensure that we keep jobs sustainable, and also make sure that we put Australia Post on the pathway to sustainable financial results as well. Since 2018, letter volumes have decreased by 800 million. We've seen 800,000 delivery points added to our network, which points to the complexity that we have, but also the reason why we need to drive more efficiency, so that we can ensure that we maintain jobs, at the same time meet the growing demands of our customers, particularly in the parcel business. In the recent cyber weekend, we had 7.4 million parcels lodged with Australia Post - a record for that event - up 3.9% over the same period last year.
 
So, it shows people are still shopping, and clicking with their fingers in great abandon. To try and address this we have worked very closely with the CWU.  As the Minister pointed out, this has been a collaborative effort. From day one, we've been transparent about the challenges that we face. We've also been in really good dialogue around the opportunities that we have in looking at how we can deliver a new model that ensures that we are maintaining jobs for our frontline team members, but at the same time getting those crucial services that the community expects of Australia Post and indeed, demands. This will allow us to focus first on a reliable parcel delivery service and make the necessary investments that we have to make in what is an incredibly competitive environment.

Make no mistake, urgent mail will still be delivered every day. We will continue to support all regions of Australia, and particularly as the Minister stressed, regional and rural Australia. We have a very unique position in the role we play in servicing and providing essential services, including Bank@Post to many of those communities. We will also continue to prioritise vulnerable people and provide concession stamp rates that have been fixed since 2014. Those rates will remain fixed because we appreciate that in this cost of living environment that those people that are most vulnerable - pensioners and others - deserve that relief and therefore we will continue that relief. After decades of discussion literally - there's been eleven inquiries into Australia Post in the last ten years - I'm really happy and pleased to see that in collaboration with the Government, with the Minister's office, the Departments, and with the CWU, we've finally reached a day, where after a decade of looking at the challenges we face, we are now jointly doing something about them. I'd also like to take this opportunity to thank everyone at Australia Post, our frontline team, our Support Centre, and particularly at this peak period of time - this is our busy time! My message to all of you is thank you for your support, thank you for leaning in, to our AP Way and Post 26 Strategy, and particularly for keeping safe in what is a really critical time for us.
 
So, thank you very much, and I'll now pass to Shane Murphy from the CWU.
 
SHANE MURPHY, COMMUNICATIONS WORKERS UNION (CWU) PRESIDENT: Morning everybody. This is the culmination of 12 months of work between Australia Post, the Minister for Communications and the CWU. We commenced the discussion around 12 months ago into the future of Australia Post, where it was flagged to us the future profitability of the outlet and the risk to the community services.
 
We sat down and we faced into the future, and I'm pleased to announce today, along with the Minister and the CEO, Paul Graham, of a new model that has been trialled, tested with our posties at six facilities across the country, where right from the outset it wasn't just us, or our executives at Australia Post, it was the posties at the table developing a new model, getting to a trial site, providing feedback on what their customers were saying during that trial and how they each experienced the work on the job.
 
I'm pleased to announce the success of those trials, and whilst there's still some work to do, the feedback has been overwhelmingly positive from the workforce, or we wouldn't be here today. I'm pleased to support a way forward that will protect every single postal worker, postie's job, that is delivering today will be delivering into the future model for the future.
 
Posties will still deliver letters five days a week. They'll still be delivering letters on half a round. The other half a round will take express post priority, packets and parcels, to ensure, as I said before, our posties face into the future and continually evolve in meeting consumer, customer and business demands.
 
As I said, the feedback's been positive. We're now ready to ride the wave of not only protecting our jobs, but also setting our posties up for delivering what is the future for customers across the country. Whilst we'll still be the Union, and the posties to deliver the last letter in this country, we face a postal service that is seeing an extreme increase in parcels, and then facing into the future with our posties delivering that customer demand.
 
Under the previous attempts to reform Australia Post, it was clear one in four jobs were at risk, there was cuts to services under the previous proposals by the former Government, but what we see here through a collaborative approach between the Federal Government, Australia Post and the Union is a new model. One driven by customers and by workers, one that meets the needs of the consumer, as I said previously, and faces up and sets us up well into the future with the posties who deliver to your communities today, still delivering five days a week for the future. Thank you.
 
ROWLAND: Happy to take questions.
 
JOURNALIST: Minister, on the issue of post offices, can you confirm that no post offices will close as a result of these changes?
 
ROWLAND: There will be no change to the current service standards that apply, which is 4,000 around Australia, 2,500 at least of those being in regional areas. As I'll let the CEO explain, there are situations where we have new areas that are emerging, and they need to be serviced by postal outlets. We have other areas in metro areas that may, for example, be operated by licensed post offices who may wish to hand in their licences, so essentially small businesses. These are decisions that are made by Australia Post as part of its current business arrangements, but I'll let Paul Graham elaborate on that.
 
GRAHAM: Thank you, Minister. As the Minister said, we have our regulatory framework that commits us to 4,000 post offices nationally, 2,500 in regional and rural Australia. It is an organic network, we are adding new post offices as we see new growth suburbs, particularly in Sydney and Melbourne and the outskirts of Brisbane. But we do have two‑thirds of our network covered by licensees, and those licensees due to retirement or other issues may have gone back, and we'll make an assessment at that time. Certainly, we'll make sure we continue to meet our regulatory requirement, but certainly in metropolitan areas we do see some overlap. But we will continue to focus on ensuring that we maintain that regulatory commitment, 4,000 nationally and 2,500 in regional and rural Australia.
 
JOURNALIST: So, people don't need to worry about their local post office box?
 
GRAHAM: Well, no, they do not need to worry about it in terms of current circumstances, I make that commitment, but as I say, it is an organic network and we have openings and closures all the time for lots of different reasons. Leases are terminated by the landlord, people get sick, people decide to retire. What we look to do when that happens is look at that community, understand the services that it has available to it in our postal outlets and either decide to make sure that that service is retained through another post office, or indeed transferred to a post office nearby.
 
JOURNALIST: Can you take us through what it's going to look like with posties delivering more parcels, for the people at home, you’ve said that the round's going to be split half a day. Can you talk us through what it's going to be like for the customer at home?
 
GRAHAM: Yeah, the great thing, as Shane mentioned, is that the customer, the customer will see the postie in their neighbourhood five days a week, and that was a really important aspect. We talked to our frontline team members, and many of them are here today, are really passionate about the service they provided to the community, the connection they have with people. They know who people are, they know the names of the kids, it's a unique situation. We want to make sure we preserve that, and what we will see over time is more parcels being delivered, but with the combination of mail, that clear commitment that priority mail and urgent mail will still be delivered every single day, as it is today. As we said in our press release, the average household receives less than two letters a week, so it makes sense to focus our attention on what is growing, and what our customers are telling us is important to them, and that is our parcel business.
 
JOURNALIST: With that focus on parcels, are we likely to see a reduction in the delivery period of those parcels?
 
GRAHAM: No, in fact we expect, and the reason why we're implementing this logical reform, is to actually improve the service for our parcel business, both in terms of the frequency of being out there five days a week, but also because of what that allows us to do from an efficiency perspective. It helps us re‑design our overall parcel network in conjunction with the mail network, to ensure that our posties have got enough volume, to make sure that they are kept busy - and they like being busy - but also balance that to make sure they're not overloaded. These are small parcels we're talking about, not the larger ones ‑ and we expect to see an enhancement in our parcel service.
 
Indeed, in the six trials that we've run to date, the feedback we've got from the community, when we've surveyed them, they actually believe the parcel service has improved. That's statistically true, but also a lot of it is just the visible sight of the postie in their street delivering more parcels than they've seen in previous times.
 
JOURNALIST: It can't all be done on bikes. Will there be delivery vehicles that posties use for that delivery change?
 
GRAHAM: We have a broad range of different assets that we use. We use bicycles, we use motorbikes, we've got our electric delivery vehicles- more than 4,800 on the streets across Australia - we do have small vans; but the key focus for our posties is continuing walking rounds, continuing their bike rounds, both motorbike and bicycle, as well as our EDVs. This is the heart and soul of our delivery business and therefore if we're able to give them more volume to ensure that we meet the needs of the community – it's critical – and we'll continue to evolve the delivery methods as times change. But I don't see any change in that current methodology for quite some time.
 
MURPHY: I'll just jump in to just clarify, just on the community, what it will look like for them on a daily basis. As you said, five days a week delivery, one postie, one round, so still see the same lady or gentleman in the street. Half their run will be priority letters, packets and parcels and mail, and the other half is just packets, parcels, priority letters. They'll see them every day, they'll see letters delivered every day to half the round, including the priority letters in that part of the run, including the parcels, and on the other half of the run it will be the priority letters and express post parcels.
 
That is the model, that's what's been trialled at six facilities. The feedback, as I said previously, both for consumers that have been engaging in these communities out here, and from our posties, the feedback has been very positive.
 
What I can say, and some of our posties behind us could comment, customers aren't out there waiting for their letter at their letter box. Those days have gone, they've been gone for some time. It's really been pragmatic to face into the future, but when you see a customer running out with a smile on their face to collect their parcels, that's what our members see, that's what our members report back every day. And hence, what this model does, is improve productivity and allows our posties to deliver more in the same amount of time.
 
MURPHY: It's a win for taxpayers, it's a win for our members, and the posties, and it's a win for Australia Post.
 
JOURNALIST: Sorry- can you just talk me through the details of the trial? Which area was it; how many customers roughly were involved and how long was the trial?
 
MURPHY: If I started out back in May, we commenced a trial in Hornsby catchment, which is about 28,000 customers in that area for a three‑month period. We progressed on feedback from those posties where it was positive, they said to us they would never go back to the old way they delivered, "Leave us the way it is".
 
We then set an agreement with Australia Post to allow a further trial site in each State. We then went to a larger site in each of these States here in Nepean and there's about 110 posties serving the community out here, the whole community's involved in this trial.
 
The same at Camden Park in South Australia or Butler in Western Australia, Cranbourne in Victoria, and Greendale in Queensland. All of these sites are the trial starts. All of the customers have been providing feedback to our posties and Australia Post. As I said, from all aspects of community, posties, and for the jobs of the future, there's never been a better outcome.
 
JOURNALIST: The company's posted a $200 million loss [indistinct] getting out of that hole and making it more productive, are you confident that this will do that?
 
GRAHAM: Well this on its own won't do that. We did the first phase of reform and it was very, very welcome. It's a long overdue discussion [indistinct] finally doing something about it. It's one of a number of things that will get us to a sustainable future. We do believe that there are additional reviews that are required as we see the full decline of mail.
 
There's also a lot that we can do as Australia Post, and we are driving that through our Post 26 Strategy. Our goal is absolutely to be a sustainable enterprise financially and also to make sure that we continue to retain good jobs for our frontline team members and continue delivering what are, as Shane and the Minister announced, ever‑changing needs from our customers and community.
 
SPEAKER: Last question, guys.
 
JOURNALIST: How has this change been communicated to older Australians who have received letters every day in the past?
 
GRAHAM: Well, the thing is, that they have not received letters every day because the average community, and the average household receives less than two letters a week.
 
We always take into account all our stakeholders, including people who are elderly or who may through habit over many years, as Shane said, been standing there at the post box. All I can say to them these days, is that you're not getting a letter every day.
 
We have to change with the times, as the Minister said, the world is moving fast in terms of e‑commerce and customers' expectations, digitisation and compared to the way we were ten years ago, we've all seen dramatic changes. We need to move with those times, both in terms of the services we provide, but also the flexibility we have in our network to meet those customer needs. We take into account all stakeholders. Those customers that have an urgent letter, it will still be received on a daily basis, but as I say invariably more and more households are receiving less and less letters.
 
SPEAKER: Thanks everyone.