Postman Pat
The great public debate about what to do with the post office has begun. There will be many twists and turns before we know the final outcome but one thing is already clear: it will be vital to keep the staff on board every step of the way. At the end of the exercise we want to have an organisation of committed professionals running a world class outfit. Early indications are there could be problems.
We have come to the present crossroads because of a sharp deterioration in the post office’s financial position starting in 2017-18. A loss of over $100 million that year was quickly followed by one of over $200 million, then a third of over $300 million in successive years. Total losses over the past eight years ran to $2.9 billion, and the organisation has just received a substantial capital injection to cover the expense of maintaining operations for the next three years while a review is conducted to consider options for the long term.
It is all a far cry from the heady days of 1995 when the post office was made into a trading fund. That means it enjoyed more flexibility in business matters but had more responsibility for its overall financial situation. The sudden swerve to substantial losses does not mean the original decision on trading fund status was wrong, but it is rather a reflection of the enormous changes in the operating environment in recent years. Mail volumes everywhere have collapsed as people switch to email and other forms of electronic communication. Why bother with a long letter from home to a child studying overseas when you can make a free call on your mobile phone and see each other in the process?
And the situation is still changing. In the past the post office could count on substantial additional revenue from philatelic sales to offset shortfalls in other areas. But in the era of screens and electronic games, do children still collect stamps with the same fervour of previous eras? Will this funding stream also start to fade in time?
Options being floated for the future include wholesale privatisation, corporatisation or reversion to normal government department status.
Notwithstanding the success of private courier firms in operating profitable businesses conveying small parcels and important documentation, I am not sure writing the government completely out of the script on postal services would ever be politically acceptable. For one thing there is a need to maintain relationships with other postal jurisdictions and that is really a matter for government.
Which leaves us with corporatisation (basically the same as the present trading fund format) or standard government department mode. Whichever way we go, there is going to be a requirement for a measure of taxpayer support, either to reflect the public service aspect of the corporation’s work, or standard expenditure estimates for a government department. Regardless, it will be incumbent to consider all practicable means of running the services in as commercially sensible way as follows. In simple terms, that means cutting expenditure and/or boosting revenue, most likely a combination of the two.
Given that a full 65 per cent of post office expenditure is staff costs, any meaningful reduction will require cuts in the number of staff. In very simple terms, that will mean closing some of the existing post offices, starting with those that are poorly patronised. That will not be popular with the public but it will have to be done. It is not the consequential rental savings that will be critical (though these would of course be welcome) but rather the cost of manning a full-service outpost.
In essence a postal operation comprises four elements: selling stamps to pay for future service; conveying posted envelopes from a secure post-box safely to a sorting office; carefully sorting the mail; delivering the sorted mail safely to addressees. Steps two to four need to be executed by vetted, reliable staff. Anybody can sell the stamps. So in future most stamps should be sold via self-service vending machines or convenience store outlets. Only a few should be sold at fully-manned post offices, and the number of these should be reduced to a bare minimum.
Another way to sharply improve post office finances is to charge appropriately for the services. $2.40 for local letter delivery is far below the actual cost. Moving fairly quickly and steadily to $5 with annual reviews thereafter would be a reasonable approach without causing serious social damage.
A programme along these lines would gradually restore the post office to financial health and reduce the burden on taxpayers of maintaining a reasonable service. But the staff implications would be sensitive and require careful handling. Any reduction in overall numbers should be achieved by natural wastage possibly supplemented by a voluntary redundancy scheme. The staff side should be fully informed of the administration’s plans once formulated. Implementation would require mutual trust.
In this context a recent episode sets an unfortunate example. A number of officers had apparently been recruited on the understanding that upon successful completion of probation they would become permanent civil servants. It has now been reported that instead they will be offered a limited term contract with no guarantee of permanent status later.
In my view, the possible small saving in cost of this manoeuvre is not worth the loss of trust. It might be legal, but it does not seem honourable. Is it what a good employer would do?