Senator John Cherry
Portfolio: Communications
| Dated: 12 May 2004
Location: Parliament House - Canberra
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Senator John Cherry speaks to the Postal Services Legislation Amendment Bill 2003: Second reading |
POSTAL SERVICES LEGISLATION AMENDMENT BILL 2003: Second Reading
Senator CHERRY (Queensland) (9.49 a.m.) The Postal Services Legislation Amendment Bill 2003 makes amendments to the Australian Postal Corporation Act 1989 to do a number of things. It shifts responsibility from the Auditor-General and provides the Australian Communications Authority with responsibility for the oversight of, and reporting on, Australia Post's supply of postal services. It requires the ACCC to make record-keeping rules for Australia Post and to inquire into disputes in relation to the terms and conditions of Australia Post's bulk interconnection services. It makes changes to Australia Post's reserved services in relation to document exchange and aggregation. The bill is a very distant relative of the Postal Services Legislation Amendment Bill 2000, which proposed more extensive deregulation of the postal service industry and which the Democrats emphatically opposed. While this bill is much less wide reaching and less ideologically driven than the previous bill, we will not be supporting all of the provisions in this bill either.
In one of its first key areas, the bill aims to shift to the Australian Communications Authority responsibility for the monitoring of, and reporting on, the supply of postal services. The authority would be required to measure Australia Post's performance against prescribed performance standards, a job currently undertaken by the Auditor-General. It would be required to calculate the cost to Australia Post of carrying out community service obligations which are currently performed by Post, based on a model developed by the government. It would be required to monitor and report to the minister on specific matters relating to Australia Post's supply of postal servicesan activity not currently performed by anybody at all.
The government has argued that, as Australia Post retains a monopoly over the delivery of reserved letters and there is no impetus of competition to drive improvements in the delivery of services, the involvement of the authority is therefore needed to drive improvements in the delivery of the services provided by Australia Post. But the government has never demonstrated that any tangible benefits would flow to the community from such deregulation. It has at best asserted that increased competition will improve the postal services industry, but it has not actually proven that that will occur. The Democrats are very cynical about the claims of competition policy. We have had too much experience with deregulation and competition policy having adverse effects to believe assertions any more.
The Democrats do not share the government's concerns regarding the need for competition in postal services. Australia Post is already one of the most efficient postal services in the world. It provides an excellent level of service at a uniform rate to all Australians, regardless of where they live, across this country. Its level of customer satisfaction is among the highest of any Australian company. It is in an enviable position in comparison with the private sector. In areas with dubious telephone reception, banks that have closed and state government services that are being withdrawn, Australia Post services still operate.
The government has also argued that the involvement of the authority is necessary to establish a consumer complaints mechanism. But, again, the government has failed to provide any data to demonstrate that need. There already exist two separate consumer complaints mechanisms: one through the Commonwealth Ombudsman and the other through Australia Post itself. The Ombudsman's dispute mechanism assists consumers to settle their differences with suppliers of goods and services informally and quickly and operates as such for a further 14 government departments, including the tax office. In its most recent annual report, the office of the Commonwealth Ombudsman talked about Australia Post. It stated:
The total number of complaints received this year was 1,082, compared to 1,060 in 2000-01 and the 2001-02 total of 896 ...
To put some perspective to these figures, every day of the year, Australia Post moves in excess of 18 million articles (this figure reaches 50 million in the days prior to Christmas). The proportion of complaints received by the Ombudsman is therefore a small percentage of the total number of transactions undertaken by Australia Post.
Much of the reason for this can be attributed to the generally high level of service that Australia Post provides to its customers and its own effective handling of complaints by its Customer Contact Centres in each State.
In addition to the Ombudsman, complaints can be made to Australia Post itself through its customer service centres within each state, either via a 131 telephone number or via the Internet. Of the estimated four million customer contacts a year, Australia Post estimates that less than five per cent are customer complaints, the majority of which are resolved in a timely manner. All complaints are lodged on a database and can be easily accessed for crosschecking and follow-up. Indeed, Australia Post's complaints mechanism has been praised by the Ombudsman. On page 139 of the Commonwealth Ombudsman's 2001-02 annual report, the Ombudsman refers to the outcomes of a review by the office of the operations of Australia Post customer care centres. The report says:
... my office ... confirmed a higher degree of commitment and support to effective complaint handling by management of Australia Post.
Not only does the Ombudsman's office believe that the number of complaints is small but it also believes that Australia Post has an effective complaints handling procedure. The Democrats, as a result, can see no particular reason to argue for a multimillion dollar extra impost for the Communications Authority to handle that complaints mechanism for Australia Post. It is simply not needed.
The government also argues that the ACA is a more appropriate body than the Auditor-General to monitor postal services, as the ACA is the regulator of telecommunications and radio communications. However, the Democrats share the concern expressed at various times by the opposition that the efficiency and the effectiveness of the ACA's role in monitoring telecommunications are actually open for doubt. We would like to see improvements to how the ACA performs that role before we would support any consideration of the ACA's role being expanded, whether it be into postal or broadcasting roles. We certainly believe that the Auditor-General performs a very good monitoring role at present at a much lower cost than what it would cost the ACA to do it, as proposed by this bill.
The Democrats are very concerned by the whole issue of the cost of this ACA monitoring role. The inquiry into this bill heard that the initial cost could be around $2 million and ongoing costs would be around $2.5 million a year, levied from Australia Post on an ongoing basis. We are concerned that this cost would affect Australia Post's profit and, ultimately, the level of return to shareholders in the form of income tax or dividends.
There are two questions that need to be asked as a result of all this: is the problem as articulated by the government significant enough that the costs are justified and will the potential benefits outweigh those costs? In our view, the answer to both these questions is a clear and emphatic no. The Democrats will not be supporting the government provisions relating to the Australian Communications Authority's role and will support Labor's amendments to expand the proposed monitoring and reporting activities as part of the Auditor-General's role.
The second area of amendments to this bill relates to the expanding role for the ACCC. Currently, the postal act provides for the ACCC to inquire into disputes about the rate of reduction offered by Australia Post to its bulk mail customers. The bill aims to broaden the scope of the ACCC's power to inquire. The Bills Digest notes that, since the introduction of these measures in 1994, the ACCC has been notified of no such disputesnone whatsoever in 10 years. We certainly question the necessity to expand these powers further, given that they have not been used. However, I do concede that this provision is broadly consistent with other legislation under which the ACCC operates and therefore we will not be opposing the amendment, although we are not convinced that it is absolutely necessary either.
The bill also provides for the ACCC to make record-keeping rules for Australia Post. The reason for this amendment is, as I understand it, because concerns have been raised in the past that Australia Post competes unfairly by cross-subsidising its competitive services with revenue from its reserved services. The National Competition Council examined this issue in 1998 and found no evidence to support these claims. But the council did recommend that there be a requirement for detailed independent auditing and accounting information to provide transparency of this financial relationship to avoid any further concern being raised. It is estimated that this particular role will cost the ACCC about $600,000 a year. Again, we have concerns about the cost benefit trade-off, especially given that to date no evidence has been found that cross-subsidising is occurring between Australia Post reserved and competitive services. Australia Post has assured us that the cost and accounting requirements of this measure will not affect postal licensees and that they are reasonably comfortable with what is being proposed, so from that point of view we will not be opposing these amendments either.
The final area of this bill relates to changes to Australia Post reserved services in relation to document exchange and aggregation services. The Democrats believe that the amendments will not lead to a further erosion of reserved services but merely permit an activity within a broad service provided by mail aggregation and document exchange service providers which Australia Post currently does not participate in, namely the picking up and delivering of reserved mail from the service provider to the customer. The core service provided by mail aggregation and document exchange providers does not change. It seems to me rather silly that a mail aggregation service provider can legally accept from a customer, aggregate and transfer reserved mail to Australia Post but cannot pick it up from the customer. I do not see how allowing mail aggregation service providers to pick up the bulk mail will change in any way their core business or take business away from Australia Post. Surely, Australia Post should not be expected to pick up the bulk mail from a customer and drop it off to a mail aggregation service provider.
Similarly, with document exchange provision, document exchange service providers can legally transfer reserved mail and documents between document exchange service providers, can accept certain reserved mail and documents from customers and can pick up documents but cannot pick up the reserved mail from customers. Again, this seems an anomaly rather than a major expansion of services. I am a little surprised that Labor is opposing these amendments, given that it was Labor in 1984 that initially excluded these document exchange services from Australia Post's reserved services. I understand that Labor's changes from 1994 have not negatively impacted on Australia Post's performance. Indeed, Australia Post made a record profit in the three years after the changes.
In the Senate inquiry into this bill, the Communications, Electrical and Plumbing Union raised concerns that the changes in the profitable sections of the postal market may lead to major growth in the activities of alternative providers competing against Australia Post and would undermine the financial foundation of the reserved service operation. Australia Post has expressed, both publicly and privately, that they are not concerned with this particular provision and that the proposed changes will not have a negative effect on their bottom line. In correspondence with my office, Australia Post have stated:
Aggregation is of benefit to Australia Post, because it provides Post with more mail that can be processed more efficiently and for significantly less cost. The revenue reduction is more than outweighed by the associated cost savings. Australia Post has confirmed that the aggregation amendment in the Postal Services Legislation Amendment Bill 2003 will not have any negative impact on its bottom line profit.
Australia Post believes that the inclusion of safeguards in this bill with respect to document exchange services will prevent the expansion of these services into the Australia Post core market. I note that a number of safeguards have been included in the bill as it stands. But we are proposing to pick up the further recommendation from the Senate inquiry to include a mechanism to tighten up the penalties for breaches of reserved services. Currently, section 31 of the Australian Postal Corporation Act provides:
Where a person has engaged, or is proposing to engage, in conduct that involves ... an infringement of Australia Post's ... reserved services, Australia Post may apply to the Federal Court for relief.
It further provides:
The relief that may be granted includes an injunction and, at the option of Australia Post, either damages or an account of profits.
However, we believe that a penalty provision will act as a further deterrent and we will be moving such an amendment, based on a similar provision that exists in the Telecommunications Act. I reserve my further comments for the committee stage.
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