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ENVIRONMENT, COMMUNICATION, INFORMATION TECHNOLOGY AND THE ARTS - 08/05/2000 - Postal Services Legislation Amendment Bill 2000

CHAIR —I welcome the representatives of AUSDOC to the table. The committee has before it submission No. 19, which it has authorised to be published. Do you have any additions or alterations you wish to make to your submission?

Mr Barry —I have an addendum. That document comprises the opening statement I intend to make and it includes an additional point to our submission right at the end. But I thought for ease of reference I would give you the whole document and it could be included with our submission.

CHAIR —I appreciate that.

Mr Barry —The bold print at the end is the additional point that we make, but I will get to that.

CHAIR —Would you like to make an opening statement?

Mr Barry —Yes, thank you. You have our submission before you, and I do not intend going through that earlier submission but to speak to it. AUSDOC is a significant Australian public company with strong domestic earnings and good overseas earnings. It provides a series of highly relevant business related services and has built a modest but important competitive offering as an alternative to Australia Post. It has achieved this position within a highly restrictive legislative framework. AUSDOC owns the DX document exchange business. The DX is an alternative postal provider with a specific focus on the business-to-business mail sector. The DX operates a mail exchange system between its members or clients.

AUSDOC is committed to providing relevant mail delivery services to the business community. The relevance of our current service offering is increasingly being challenged by clients as other forms of messaging are encroaching upon traditional mail, and our ability to broaden our network of delivery points is restricted. AUSDOC endorses the proposed changes to the postal act but considers these changes to be modest. AUSDOC is committed to broadening its services to the business mail sector within the framework of the proposed legislative changes. AUSDOC represents one of the few viable domestic operators capable of providing a competitive platform to Australia Post, but to do so these changes must be implemented.

Communication and messaging networks are changing rapidly. It is incumbent upon government to put in place an appropriate competitive framework to ensure Australia Post meets the market's needs but gives the opportunity for other service providers to meet needs not met by Australia Post. AUSDOC seeks a framework that endorses competition. Specifically, AUSDOC believes the proposed changes will lead to a modest opening of the postal marketplace. AUSDOC believes the changes will create the opportunity for a better service delivery option for business mail generators. With these changes, the ability for AUSDOC to be relevant to its client base will be assured. AUSDOC is in favour of continued postal reregulation and, as such, AUSDOC commends this committee to support the Postal Services Legislation Amendment Bill 2000.

AUSDOC believes that the proposed changes to Australia Post's operating environment do not diminish its capacity to maintain or indeed increase its community service obligations. The bill before you for consideration is quite simply a continuation of the reforms introduced by various governments since the inception of the Post and Telegraph Act 1901, and today AUSDOC sees continued reregulation as fundamental. Irrespective of the growth in the number of physical mail articles over the last decade, the physical mail share of the communications market will, in our view, continue to shrink. The speed and nature of the growth of indirect competition—that is, electronic communication—is continually taking market share at a rapid rate. DX, like Australia Post, is subject to this competition. This is arguably the real threat to Australia Post—not competition from other postal providers. Our DX members are questioning the value of their membership when they need to attend our exchanges twice a day to receive and deliver their mail. This questioning is more constant and louder due to the growing electronic messaging revolution. Consequently, there is an erosion of the volumes of physical mail that our customers are taking to and from our exchanges.

If the amendments do not proceed, we believe it is critical for this committee to extend the rights of document exchange providers to deliver mail on behalf of their members to street addresses. Without this right, the relevance of Australian Document Exchange to its members will erode quickly and will continue to erode at a more rapid rate as there is greater acceptance of electronic communication. Without this right, AUSDOC will be unable to deliver a range of services that is expansive enough to be appealing and to compete with Australia Post, and, as a consequence, another form of competition, albeit modest, will cease to exist.

In summing up, AUSDOC supports the Postal Services Legislation Amendment Bill. However, should it not be passed, we request you to allow Document Exchange providers to street-deliver mail on behalf of their members at a rate that offers no commercial disadvantage to us or Australia Post but provides a basis of choice to members of the Document Exchange.

CHAIR —I am interested in your comments about the development of electronic information exchange. Obviously, that is going to have a huge impact on many things, not least of which being the kind of business you have. I suppose you will always need a physical document signed in ink for legal purposes, will you not? What is the weight of the average document you deliver? Is it above or below the 50-gram limit?

Mr Barry —I would have to ask my colleague.

Mr Reilly —The average weight of documents that go through our exchange is around 35 grams. We have a much higher average weight than Australia Post because there are a lot of legal documents, as you identified.

CHAIR —So it falls within the reserved area?

Mr Reilly —Yes, but the document exchange is an exception to the reserve services, so approximately 40 million items of mail go through our service annually throughout Australia.

CHAIR —You imply that you do not think the rate of reform or liberalisation of the postal industry is fast enough. What ideally would you like to see?

Mr Barry —We regard the reform as being modest, but we find it an acceptable rate. If it was at a greater rate, we would not object to that, but we are happy with these proposed amendments and are not saying that it should be at a greater rate.

CHAIR —Where would you like to get to though, given the evidence we heard before lunch that not very many other competitors would come into the field anyway because Australia Post is so efficient?

Mr Barry —To a very minor extent, we are already in competition with Australia Post. Mention was made before of perhaps overseas corporations coming into Australia. We are in a different category—we are already here. In fact, probably we are one of the few significant domestic competitors in the market, small though we may be.

CHAIR —So really you just want to open it up for your own particular niche, in effect.

Mr Barry —Correct. We are primarily interested in the business mail market and we want to be able to expand the offering which we make to our business clients in order to accommodate their requirements.

Senator MARK BISHOP —Could you briefly describe your operaitons, how they work?

Mr Barry —It is described in some detail in our initial submission. Basically, a document exchange comprises a centre where each of the members has a box and a member can go to his or her box, collect mail from that box and put mail in other members' boxes. You might have all the members going in the morning to make a delivery and at the same time pick up what has been left for them—that is in its own simplistic form. Then you have the movement of documents from that document exchange which the members use to another document exchange where a similar process would apply.

Senator MARK BISHOP —How many network document exchange centres do you have around Australia?

Mr Barry —Approximately 630 document exchanges. I think that is the figure mentioned in our submission at page 1. It is 650 document exchange centres, with 200 of these located in rural Australia.

Senator MARK BISHOP —Is your market basically specialist or niche areas?

Mr Barry —Our market is mainly business. Professionals comprise a large part of the market. This whole document exchange operation, as is mentioned in the document, was commenced by a lawyer in Sydney in the 1970s and was restricted to lawyers, and it has expanded since then from the legal fraternity to the accounting fraternity to travel agents and anyone else who felt there was benefit in membership.

Senator MARK BISHOP —You would be aware that the access provisions in the bill apply to any postal provider, so by definition that applies potentially to your business.

Mr Barry —Yes.

Senator MARK BISHOP —If your network was declared by the ACCC under this bill, would you be prepared to offer access to Australia Post to your network? Would that be a problem to you?

Mr Reilly —We would have no difficulty with that as long as the terms were reasonable and equivalent to access regimes for us to get into Australia Post's network.

Senator MARK BISHOP —So are you saying on commercially negotiated terms or on terms that might be imposed on you by the ACCC? The bill provides power to the ACCC to arbitrate.

Mr Reilly —They would have that power if this legislation goes through as is. Naturally, the starting point would be to negotiate a commercially sound arrangement. If that is not successfully achieved then the ACCC could act as arbitrator, yes.

Senator MARK BISHOP —Would you be prepared to have the ACCC arbitrate those access prices, if you and Australia Post or you and other customers could not agree?

Mr Reilly —If that was a regime that was consistent for all postal providers, we would have no difficulty complying with that.

Senator BOURNE —My question is similar to the chairman's. Are you looking at directions in which to take your DX network that accommodate electronic mail and where the technology is going in the future?

Mr Barry —We are not at the moment going down that track. That is always an option, but we are not at the moment.

Senator BOURNE —It just strikes me that Australia Post is about to lose a lot of business to the same thing—

Mr Barry —We are in the same position as Australia Post in that regard. I might say that some years ago we did look at doing that but we did not progress it.

Senator BOURNE —You might be interested in completely different builds like the digital regimes coming up. I think there are going to be areas that people can look at to take very different businesses along those sorts of lines.

Mr Reilly —If I could make a quick comment, as much as the electronic age is eating into business to business communication, certainly in the sector of the market that we are positioned in, which is business to business, we are having a greater impact from electronic mail than the mix of Australia Post's business, where in fact, as evidenced by the Major Mail Users of Australia's comments, a large volume of the mail that they direct into Australia Post is direct mail, and that is a rapidly growing area of the market. So there is a blend that Australia Post enjoys that AUSDOC is not enjoying at the same level.

CHAIR —As there are no further questions, thank you for your appearance. Your submission really explains quite well what you do. Thank you for your opening statement, which we now have a copy of. Your additional suggestion will be borne in mind. Thank you very much for appearing today.

Mr Barry —Thank you very much for the opportunity of making a presentation.

[2.20 p.m.]