It's not about the watches: is Australia Post a commercial operation or a public service?
The biggest public relation misstep in Christine Holgate’s leadership of Australia Post was not the decision to hand out expensive watches to senior executives, or the embarrassing revelation that the gifts cost nearly twice as much as was first claimed. It was her statement to the Senate that she had not used taxpayers’ money to buy the watches, since Australia Post was a commercial organisation.
This statement would be odd even if it were made in relation to the shareholders of a private corporation – after all, the company’s money ultimately belongs to them. When applied to a statutory corporation like Australia Post, it created a firestorm. Apparently, even Scott Morrison, not previously known as a staunch defender of public ownership, was furious.
Clearly, the claim that Australia Post should be a commercial organisation, with no obligations to the Australian public beyond those imposed by law is not a popular one. But how should Australia Post be organised? And what is a statutory corporation anyway?
To answer the second question first, it’s worth recalling the history that gave rise to Australia Post. Until 1975, postal and telecommunications services were provided directly by the government, under the postmaster-general’s department (PMG). The Whitlam government abolished the PMG and replaced it with two statutory authorities, Telecom Australia and the Australian Postal Corporation (which operated as Australia Post).
The statutory authority model, used at the state level for electricity, water, housing and a range of infrastructure services was highly successful for most of the 20th century. Statutory authorities operated with boards that were independent of direct political control and which were selected to represent a broad range of community interests, including employees and consumers. They were generally expected to cover their own operating costs and earn sufficient returns to finance new investment.
The reform wave that began in the 1980s included an assault on the statutory authority model, motivated by the belief that all market services should be provided by private companies. The reform process typically involved a series of steps, beginning with corporatisation, then partial and finally complete privatisation.
Telecom Australia went through all these stages, being corporatised as Telstra and then privatised. The result was such a disaster that the government was forced to re-enter the telecommunications market with the NBN, paying billions to the company it had sold off only a few years before for access to assets built almost entirely under public ownership.
By contrast, Australia Post was set up as a statutory corporation, a status intermediate between that of a statutory authority and a for-profit corporation set up under the Corporations Act. Statutory corporations retain some of the requirements for public accountability associated with statutory authorities.
For example, the Australian Postal Corporations Act (section 73) specifies that the board of directors must:
include a person who the Minister, after consultations with representatives of industrial organisations representing employees, is satisfied has an appropriate understanding of the interests of employees.
Looking at the set of party hacks and finance sector professionals who make up the Australia Post, it is hard to imagine who is supposed to fill this role. Perhaps Tony Nutt’s years of service as an employee of the Liberal party is supposed to give him an appreciation of the interests of posties and mail sorters.
The advocates of privatisation have repeatedly failed in attempts to sell off Australia Post. The next best thing is to turn it into a quasi-private corporation, with lavish provision for its senior managers and an expensive lobbying effort aimed at securing favourable treatment from its public owners. The claim is that the rewards for the public will more than offset the costs.
The transaction that brought Holgate undone is an illustration of the weakness of this claim. The deal involved securing annual payments from major banks in return for Australia Post’s provision of banking services in areas the banks themselves had abandoned. The extra money was a lifesaver for post office operators, who have given Holgate their enthusiastic backing as a result.
But as the Commonwealth Bank pointed out in announcing the deal, it was merely a continuation of an arrangement that dated back more than 100 years. For most of this long period, the Commonwealth Bank and Australia Post were publicly owned, and the idea that they could withdraw services from large parts of Australia was unthinkable. Similarly unthinkable would be a suggestion that renewing the arrangement on a regular basis, or arranging the financial transfers necessary to balance the books, was an achievement deserving of a luxury watch, on top of a million-dollar salary.
The Australian public has long since seen through the claims made for privatisation, even if the financial and corporate sectors (the real “inner city elites”) continue to push the ideas of competition and choice. Australians want basic services to be delivered cheaply and reliably, by organisations set up to serve the public, rather than to maximise profits.
The statutory authority model, under which most of the infrastructure on which we now rely was built, is the best way to achieve this.
