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Environment and Communications Legislation Committee - 14/02/2012 - Estimates - BROADBAND, COMMUNICATIONS AND THE DIGITAL ECONOMY PORTFOLIO - Australian Postal Corporation

Australian Postal Corporation

CHAIR: Welcome, Australia Post. Do you have an opening statement?

Mr Fahour : Thank you. It is a pleasure to be here again, as always. I would like to briefly give the committee an overview of our business position at the halfway point of this financial year.

Senator ABETZ: Mr Chair, on a point of order: do we have a copy of this available for the committee? We have gone through this sometimes before in relation to opening statements. It would just be very helpful if we could have a copy.

Mr Fahour : I do, but it will literally take two minutes, if that is okay. I will be really quick. Very briefly, as promised, at our recent estimates session I said that we are now managing a two-speed business. Our peak period leading up to Christmas really highlighted a widening gulf in the volumes and profitability of our letters business and our parcels business. Due to the systemic shift in society's preference to use digital mail over physical mail, the Australian letter volumes have declined by 6.3 per cent to the half-year point. This takes our letters business backwards to levels not seen since the 1990s. Meanwhile, the parcels volumes have surged, up 10.2 per cent in the first half to a new record level. In December alone, parcel volumes were up 20 per cent on the previous year, driven by the growing number of Australians who did their Christmas shopping online. We delivered three million more parcels in December than we would in an ordinary month.

As part of our Future Ready transformation program, our team are doing everything we can to transfer resources, capital and, most importantly, our people from our loss-making letters business to our profitable retail and parcels business while still meeting the high service standards under our community service obligation. Seizing this opportunity that the digital economy has presented in parcels is absolutely vital for Australia Post's long-term sustainability. If we can do that, it will help us to maintain our nationwide network of local post offices—which, I might add, has increased on this time last year—and it will enable all Australians to enjoy the benefits of online commerce. Senators, I am pleased to report that at the halfway point of this financial year, despite a lacklustre retail trading environment and the systemic shift from physical to digital communication, Australia Post are on track to meet our commercial obligations and all of the performance standards related to our CSO. That concludes my short opening remarks, and I am very happy to answer questions that the committee may have.

CHAIR: Thanks, Mr Fahour.

Senator ABETZ: I have quite a few questions arising from the opening statement, but I will be placing them on notice today given the shortage of time. I want to concentrate on the franchising section of Australia Post. Are there at the moment 27 franchises operating?

Mr Fahour : Senator, I think you asked this question the last time and we have responded accordingly. If you wish to go through these again—

Senator ABETZ: No. Has the number changed since last time.

Ms Corbett : The number is the same.

Senator ABETZ: Are there any multisite operators?

Ms Corbett : In our franchise network we do not have any multisite operators.

Senator ABETZ: There was going to be a franchise advisory council. Has that council or any other representative body been established?

Ms Corbett : We have two representative bodies. Our main representative body is POAA, the Post Office Agents Association. That is our main consultative body. We did actually establish a licensee advisory council a number of years ago. That meets to discuss business development opportunities.

Senator ABETZ: Yes, for licensed post offices. But when the franchise arrangement was first initiated was part of the sale process that a franchise advisory council would be established?

Ms Corbett : Not specifically—a licensee advisory council, which covers our licensed operations as well as our franchise operations. It covers all of our outsource network.

Senator ABETZ: I know that is what it does now, but when Australia Post was busy selling the franchises, were representations made that there would be a specific franchise advisory council?

Ms Corbett : I am happy to take that on notice.

Senator ABETZ: In the negotiations and memoranda of understanding or contracts with the various banks, does Australia Post get an accredited franchise status?

Mr Fahour : We will take that on notice.

Senator ABETZ: Thank you—and whether Australia Post has entered such types of agreements with financial institutions in relation to these matters. Where are negotiations going in terms of the retail transformation agreement mentioned in the Fair Work Agreement 2010 and how, if at all, will that impact on franchises?

Ms Corbett : We have had a number of meetings with our union with regard to the retail services transformation agreement. It will not substantially impact on our licensed post office operations. The whole purpose behind that agreement is our current agreement with our unions was actually established in the early 1990s and under the Fair Work Agreement we really wanted to make sure that our retail network and the capabilities and capacity that we have in it are suitable for the next decade or more. So we are actually in early negotiation stages to set up a joint working party to progress some of the issues that are outlined in the agreement.

Senator ABETZ: I will read the Hansard to see what all that means, but thank you for that. Will franchisees be offered an opportunity to extend their franchise agreements?

Ms Corbett : The franchise agreement is a 10-year agreement. The original terms that they have entered into we will still abide by. We are not moving away from that at all. So at the end of the 10-year fixed term agreement that franchise will then be revalued and then will be reoffered back to the marketplace.

Senator ABETZ: It will be reoffered; you will not just be closing the show down?

Ms Corbett : Our intention is to reoffer it to the marketplace. I think I might have said last time at the Senate hearing we are looking at our entire retail network and making sure our business model, our ownership model and our structures are right for us moving into the future. At this stage it is our intention to continue with the franchise agreement.

Senator ABETZ: I want to move to the Coorparoo franchise. Do you have any details in relation to that?

Ms Corbett : What would you like to know?

Senator ABETZ: I understand it closed last year. What are the circumstances surrounding the closure? I understand there were certain issues surrounding it which have now put a small business person into substantial financial stress.

Ms Corbett : Have you got a specific question with regard to the—

Senator ABETZ: If you do not have specific information, I will put specific questions on notice in relation to that.

Ms Corbett : Yes, I am happy to take the specific questions on notice.

Senator ABETZ: I would like to ask about the appointment of Mr Brendan Fleiter as a new board member. Is it correct that that appointment was made towards the end of last year?

Mr Burke : Yes, that is correct.

Senator ABETZ: How was this board member selected?

Mr Burke : The decision on appointment of board members is a matter for the shareholder ministers. They do, however, have discussions with our chairman.

Senator ABETZ: And the shareholder ministers are Senator Conroy and Senator Wong?

Mr Burke : Correct.

Senator ABETZ: Senator Conroy, can you tell us how we came across Mr Fleiter's name for appointment to the board?

Senator Conroy: The process is that cabinet, after going through proper due diligence, makes an appointment. In terms of individual names, I think this name was suggested by the chair.

Senator ABETZ: Who is the chair?

Senator Conroy: Mr Mortimer.

Senator ABETZ: It just seems to be happy serendipity or coincidence that, when I google 'Volleyball Victoria' I see:

President      Senator Stephen Conroy

Director      Mr. Brendan Fleiter

I then go down and look at 'Volleyball Victoria Staff' and see:

General Manager - Mr Mahamoud Fahour

It just seems a very cosy relationship there. Was there—

Senator Conroy: As I said, the name was brought forward by the chair. I had no discussion with him.

Senator IAN MACDONALD: Is the chair in Volleyball Victoria too?

Senator Conroy: No—that is very funny.

Senator ABETZ: It seems everybody else is!

Senator Conroy: No, Mr Mortimer is a longstanding, well-known businessman who has been chair for many years under both governments. The name came forward via—

Senator ABETZ: So there was no—

Senator Conroy: No. As I said—

Senator ABETZ: It just seems so coincidental that volleyball Australia, in Victoria in particular, is such a hotbed of great Australia Post people.

Senator Conroy: As you know, former senator Chris Schacht is the President of the Australian Volleyball Federation. It has—

Senator ABETZ: Oh, so he will be the next appointment—is that what you are telling us?

Senator Conroy: No, that is not what I am saying.

Senator ABETZ: Good; that is reassuring.

Senator Conroy: But as I said, in the past, as you know, Senator, if I have been involved in an appointment I have put my hand up and said so. I have been criticised by you, Senator Macdonald, but, if you remember, I put my hand up. On this one, Mr Mortimer came forward with the name.

Senator IAN MACDONALD: This guy has to be a personal friend of yours; he sits on a board with you.

Senator Conroy: I think I have attended two meetings in two years.

Senator ABETZ: What about before that?

Senator Conroy: If I have been lucky, I have attended one a year since I became a minister.

Senator IAN MACDONALD: So is he a personal friend of yours?

Senator Conroy: I know him because he is on the board but I met him maybe three or four times prior to him coming on the board of Volleyball Victoria.

Senator IAN MACDONALD: Is this Mr Fahour here as a witness?

Senator Conroy: It is a different Mr Fahour.

Senator ABETZ: But related?

Senator Conroy: A brother.

Senator IAN MACDONALD: I have written, Mr Fahour, to you about Townsville and you have responded at some length but without addressing the issues. The same gentleman who has approached me had two incidents in a week where it took two weeks for A5 parcels to be sent across Townsville. By the time they got to their destination the customers had demanded replacements because their packages had not arrived. Customers also complained to him that parcels had shown up opened and with items missing. Do you randomly track parcels that appear to have merchandise in them?

Mr Fahour : No.

Senator IAN MACDONALD: You do not?

Mr Fahour : Under the program that we have letters, particularly the letters that you are referring to—

Senator IAN MACDONALD: These are parcels.

Mr Fahour : It depends. Some parcels have trackable numbers on them and some do not. A definition of a 'parcel' is different under different circumstances—if it weighs less than certain amount; if the product that they bought was an item that was trackable versus non-trackable. It depends on which particular product you are referring to.

Senator IAN MACDONALD: These are ordinary postal deliveries which this online trader based in Townsville sends out all over—but mainly the north. He has regular experience in parcels taking two weeks to get from one side of Townsville to the another. Townsville is a big city, but it does not take two weeks. There are regular reports of parcels being opened and items missing and having to be replaced. You have given me some statistics in your response to my letter, but do you keep statistics on the parcels that actually go missing?

Mr Fahour : We will take that particular aspect on notice, but what I would say to you is that—

Senator IAN MACDONALD: Do you keep statistics?

Mr Fahour : Of course we keep statistics. In answer to the first part of your question, we met our community service obligation and all our statistics in Queensland—not just nationwide—were completely met. Out of the 20 million items that we move each day and the five billion items that we move each year, there will undoubtedly be some items that get lost in the system. Any item that gets lost has a serious amount of attention brought to it. We have an incredible track record as an organisation of delivering year after year after year on our service standards.

I think our people do an amazing job, no matter what the circumstances are, no matter what the situation or the environment, in delivering those on time and in a manner that is consistent with our service standards. Occasionally do some things go missing and get lost? Yes, is the answer. Do we keep statistics of those? Yes, is the answer. And if we are at fault, do we look after the customer? Yes, we do.

Senator IAN MACDONALD: No, you do not.

Mr Fahour : Where we are at fault we absolutely say to the customer, 'We're at fault. This was our fault'—if we conceive it was our fault—and we absolutely apologise to the customer. If there is a financial recompense, where it is a parcel package and then there is insurance associated with that, of course we pay our obligations on time and in full.

Senator IAN MACDONALD: These are not very valuable items—$5, $15, $20, $25 and $30.

Senator FISHER: They have sentimental value, though.

Senator IAN MACDONALD: Well, they are items being purchased and they go missing. My constituent has given the details. I hear what you say, but he would not agree with you. Perhaps 95 per cent of his stuff does get there, but what about the other five per cent? Are you telling me that, for all of those that go missing, he can claim financial costs back from Australia Post?

Mr Fahour : Let me just correct a statistic. The statistic you are quoting is our on-time delivery performance, not what arrives to the customer. The actual arrival rate is in excess of 99 per cent. So let me just say from the outset that the vast, vast majority of items that never, ever make it is an insignificant—

Senator IAN MACDONALD: Insignificant to Australia Post.

Mr Fahour : statistic.

Senator IAN MACDONALD: Not insignificant to this customer.

Mr Fahour : If you do not mind, let me just finish my answer. It is an insignificant amount and therefore the great majority do. Where instances occur where the items do not make it, it is a huge issue for us and a huge issue for the customer, and we will go to all lengths and breadths to find the item and return to its proper owner—and I am pleased to say that, in the majority of cases, we do.

Senator IAN MACDONALD: Thank you, Mr Fahour. I will publish this response and give it to my constituent and get him to get you to track all the ones that go missing.

CHAIR: Senator Macdonald, I understand Mr Fahour is still answering the question.

Mr Fahour : As to the second part of the question, I think is very important to correct the record. We do not give financial recompense on every situation because the product that is brought reflects the price that they pay. Some products that are bought have insurance attached to them. So if these items are valuable, the customer should—and in most cases people do—buy the necessary product and insurance that provides them with the ability to get financial recompense.

Senator IAN MACDONALD: I am talking about ordinary postal things, not your yellow envelopes or registered mail, just ordinary mail. And they are items that are $5, $10, $15 and $35. One or two missing? So what. But there is a systematic or systemic loss in the Townsville region, a systemic delay. What I am really asking you is: do you keep statistics? You said: yes. Can you tell me, and I will accept this on notice, customers complaints received last year for articles going missing—

Mr Fahour : In Townsville?

Senator IAN MACDONALD: In Queensland and in Townsville, if you have those. You told me that the on-time stats for the Townsville to Brisbane delivery are two per cent below the national average. Is there an explanation for that? Perhaps you could take that on notice. Could you also give me the delivery-on-time figures for Townsville to Brisbane for the year 2010-11? And do you have sample results from one region to another? The instance I would like to know about is Townsville to Mackay rather than Townsville to Brisbane.

Mr Fahour : We will get those to you, as you wish.

Senator IAN MACDONALD: Thank you for your answers about the PO boxes at a place, in the Marian area, called Nabilla . You tell me that you are going to have a poll of the 800 residents. The last poll was taken in 1996. If the poll shows that small community of 800 wants a delivery service, how long before it would be implemented? Do you have a rough estimate?

Mr Burke : I can take that on notice but I suggest it would be a couple of weeks. Once we can identify the appropriate contractor and once we can ensure that the residents have an appropriate receptacle for the parcel to be delivered to. But I will clarify that in writing for you.

Senator IAN MACDONALD: Good. I take it you have agreed to do the poll. Perhaps on notice you could tell me when that is likely to happen.

Mr Burke : Absolutely.

Senator IAN MACDONALD: A post office was shut at Innot Hot Springs, up on the western Atherton Tablelands. I suspect you may not have this in front of you but could you indicate to me—perhaps on notice—the reason it was closed, what options have been offered to those who used that post office, whether there are post office boxes available and what the closest post office now is for those people?

Mr Burke : We will do that for you.

Senator IAN MACDONALD: Minister, I would hope that at your next volleyball meeting you and the director and Mr Fahour's brother could talk about Rockhampton. You have both, Minister and Mr Fahour, answered in some detail, for which I thank you. But you keep avoiding the basic question that if this were not a government business enterprise the council would have shut it down ages ago, as it clearly indicated it would. I asked the minister in my last letter whether it is still the policy of the government, as it used to be, that whilst government business enterprises are not obliged by law to follow local town planning arrangements, the government requires them to do this as a matter of being a good citizen. Minister, is that still the government's policy?

Senator Conroy: Did you know, Senator McKenzie is a science teacher? You should spend more time with her. Sorry, Senator MacDonald, could you repeat your question?

Senator IAN MACDONALD: You did not hear me?

Senator Conroy: You were talking about having sent me a letter.

Senator IAN MACDONALD: You and Mr Fahour avoid the basic question I ask you in my letters; that is, it used to be the case that for government business enterprises, although they are by law not required to abide by council planning requirements, the government has always insisted that as good citizens they should follow those town planning and other regulatory requirements of local authorities. I am asking you, Minister: is the policy still there for the government—

Senator Conroy: No, you are asking me to comment on past practice or past policy.

Senator IAN MACDONALD: No, I am asking you: is it still the case?

Senator Conroy: No. What I will do is I will take on notice to establish the point you make, which is that past policy has been X. Before I say, 'We are going to do what we have done in the past,' I would just like to ascertain whether or not what you describe as past policies is actually the past policies.

Senator IAN MACDONALD: That is fine. That is good. But, Minister, my real question is: regardless of past practice, does the government require government business enterprises, who are legally not subject to local council bylaws or regulations and planning laws—

Senator Conroy: I think if you look at the history of government enterprises—and what I am more familiar with off the top of my head is Telstra when it was a government business enterprise, and, like many government business enterprises, they are exempt from certain council restrictions—

Senator IAN MACDONALD: They are.

CHAIR: Can I just indicate, Senator Macdonald, that I have to wrap up on this.

Senator Conroy: So the deployment of telecommunications networks as an example, Telstra—

Senator IAN MACDONALD: I am asking about Australia Post, Minister.

Senator Conroy: I am going to the point of view saying 'past policy'. Telstra in the past were able to lay out their HFC cable, but councils were able to stop Optus laying out their HFC cable because Optus was not a government instrumentality. So I am not sure that what you describe as the policy for GBEs is quite what you—

Senator IAN MACDONALD: Forget about it! Do you require Australia Post to follow council regulations, even though they are not at law required to?

Senator Conroy: We expect them to follow the law.

CHAIR: Senator Williams.

Senator WILLIAMS: Thank you, Chair. Mr Fahour, I will go back to where I was some months ago. Last October in estimates I raised the plight of the post offices at Bundarra and Attunga in New England of New South Wales. Since then Australia Post has negotiated with Mrs Garrad at Bundarra Post Office to stay open for another six months, and I believe at Attunga the owner has come back to operate the post office. So I thank you for your continued support there. But with Bundarra it will be a battle to make it a success and I have encouraged locals to support the business. I presume any stationery or merchandise that Bundarra Post Office stocks the owner would have to pay for that stock on delivery. Is that the case?

Ms Corbett : Yes, that is the case.

Senator WILLIAMS: As part of its efforts to make this business viable, would you ever consider, at least for a six-month trial period, offering stationery on consignment so that then Mrs Garrad would pay for that stock once she has sold them? Would that be possible?

Ms Corbett : We are in active discussions at a local area basis with Mrs Garrad. S am happy to take it on notice and see where those discussions have got to. But certainly it is in Australia Post's best interests, as it is in the individual licensee's interest, to ensure sustainability. So we are happy to look at a number of opportunities to do so.

Senator WILLIAMS: If she had a small stock—I would not expect her to stock it up to the hilt—of what the local community would want it would save her having to pay the cash for it and, like any consignment stock agreement, was they were sold she could pay for them. That might be of assistance.

Ms Corbett : It is also important to note that for our licensees we also have charge or credit account arrangements to help with that immediate cashflow implication of any stock purchases.

Senator WILLIAMS: Have you had any indication of how the Bundarra Post Office is performing over the last month or two? Have we seen an improvement?

Ms Corbett : I do not have any specific examples since it has changed its operation over the last couple of months.

Senator WILLIAMS: Looking at the worst case scenario and the post office at Bundarra closes down, and bearing in mind you have had very little interest from other businesses to take the post office agency on, would that mean that the locals would have to use Inverell Post Office 50 kilometres away, and the mail contractors would have to travel there to pick up the mail? If Bundarra did close, would be contractors have to travel to Inverell 50 kilometres to pick up the mail to distribute it out to the roads and the farms? Would the locals in Bundarra then have to do all the post work collections, postage et cetera in the Inverell?

Ms Corbett : I think you would see when you looked through the history that in working with our community postal agents and with our licensees a closure of an outlet is a last resort. We do a lot of extensive local consultation with the community. We literally doorknock on every house and every business in the area before we have to make those kinds of decisions. There are a lot of other opportunities to explore at Bundarra before we are at that example. We have numerous examples right around the country where we talk to communities and collectively and together we come up with an arrangement that suits and supports that business and those contractors staying in those towns.

Senator WILLIAMS: Some of Mrs Garrad did have to close the post office, you are confident there would be a local outlet there somewhere in Bundarra, just being a small community?

Ms Corbett : We make sure we exhaust all efforts, and that is really extensive.

Senator WILLIAMS: If that is not achieved then they would have to make Inverell, the nearest town, their base, I would imagine.

Ms Corbett : That is what we discuss with the community. But, as I said, there is a long way to go before we have to reach that conclusion.

Senator WILLIAMS: Goodo. When is the final review scheduled?

Ms Corbett : I am happy to take that on notice.

Senator WILLIAMS: Goodo. Finally, I just want to thank you for responding so quickly to my complaint about the distribution of my survey in September last year, when I did a thing around New England. Thank you for your kind offer.

Mr Fahour : Senator, if I may say something. I think this is where constructive work can occur. I hope you would acknowledge—

Senator WILLIAMS: The National Party is all about that.

Senator Conroy: You speak with forked tongue, Senator Williams, in my experience!

Senator WILLIAMS: I thought I would get a comment from the minister. Continue, Mr Fahour.

Mr Fahour : I was just going to say on a very serious matter—this Bundarra Post Office—as you know, it is really, really, really difficult in a lot of regional and rural communities to make these entities viable.

Senator WILLIAMS: Yes.

Mr Fahour : I think this is where we have gone, I hope you would acknowledge, significantly over and above the call of duty to try to find a way to look after communities. This is an example where we have worked over a few of those things. It just shows that if things are done in a positive, constructive way, we can still be viable but look after as many communities as we can. I hope you would at least acknowledge that this as one of the good examples of people working together in a good way.

Senator WILLIAMS: I do appreciate that. In the little towns, look, the post office is the heart of the town; if the post office goes, what is left?

Senator FISHER: Mr Fahour, unfortunately I have some further questions about misdelivery or nondelivery, particularly in my home state of South Australia. I have been contacted by constituents in the Adelaide metropolitan area and also in Glenelg, so the federal electorates of Adelaide and Hindmarsh. In terms of the constituents that have contacted me they are apartment dwellers. So going back to your statistics, firstly, do you keep statistics on the number of complaints? You have indicated to Senator MacDonald that you do—the number of complaints et cetera. Are those statistics particular to each Australia Post outlet?

Mr Fahour : No, they are not. We keep statistics in a whole bunch of different ways. What I can say is that we do cut and dice it. Some relate to areas, zones; some are related to individuals and so forth. But if you would like to let us know exactly what you are interested in in the Adelaide area of course we would be absolutely delighted to give you on notice the information as best we have it without recreating a lot of past work. But what we do collect we would be happy to cut and dice it in a way that would try as best as possible to answer your question.

Senator FISHER: Can I ask you there, though, what reassurance do you have—there are rogues in every gallery—

Senator Conroy: How true.

Senator FISHER: Indeed. I can talk. What reassurance do you have through your systems that you do not have some rogues in some particular Australia Post outlets if you are not keeping your statistics in any way geared to particular outlets?

Mr Fahour : We have a range of processes in our organisation to do checks and balances to make sure that the information that we have and how we manage our organisation is done in such a way that we do not caught out with those. I would call it our three lines of defence. It is quite a rigid risk management policy. The first line of defence is what we call our own staff and the governance procedures inside the retail organisation with regional managers and checks and balances around those statistics. The second line of defence, which is very important, is what we call an internal risk and assurance area. We have several people within that. We have an audit function, a corporate security function of people who separately will do checks, random sampling and reviews on a systematic basis to ensure we are collecting the necessary information and that that information is valid. On top of all of that, we have the third line of defence, which is very important, which is our external audit processes around our server statistics and also our community service obligations and the general—

Senator FISHER: All right, thank you, Mr Fahour.

CHAIR: Please, let Mr Fahour finish.

Mr Fahour : Senator it is a very important question that you ask and I think it deserves a full and proper answer because in governing an organisation you have to have layers—

Senator FISHER: Finish the answer, Mr Fahour.

CHAIR: Senator Fisher, please allow Mr Fahour to finish the answer.

Mr Fahour : These three lines of defence give us comfort and confidence that the statistics you are seeing in the measurements are working.

Senator FISHER: So in answer to Senator Macdonald, I think you indicated that arrival rates were better than 90 per cent. Was that of parcels?

Mr Fahour : No. What I indicated was that our performance statistics which would be measured on an annual basis, which the senator mentioned, for the specific area he was asking for, which is Queensland, was the 95 per cent number for the year 2010-11. He asked me for the year 2010-11 whether I could give him some other statistics. We would be happy to also give you the Adelaide ones, if you would like them.

Senator FISHER: Yes, please. I will come to you with this particular circumstance, after the event, but suffice to say it involves misdelivery of mail and parcels to apartment recipients. It involves people not getting a first notice of a parcel, people getting a final notice of a parcel when they have not had the first notice, people have a final notice delivered to them after the goods have already been returned, in this case to an address in Melbourne, and it involves, in the case of one particular constituent, the goods never been recovered—the first was overseas registered mail from Thai Airways and the second was a book from Melbourne—and no apology, to refer to your earlier answer, ever having been given to the constituent. My question in those circumstances is: when a parcel is allegedly not delivered and the recipient complains about it, is it correct that only the sender of parcel can lodge the complaint and, if so, why?

Mr Fahour : I will take part of your question on notice and I will answer part of it. As I mentioned earlier to Senator Macdonald, in excess of 99 per cent of all parcels end up where they are supposed to end up. Very unfortunately and very occasionally some are lost in the system where we handle 20 million items every day. To the extent that we discover we have misplaced a parcel, despite the good intention of all people, then I would expect as a bare minimum an apology and sometimes you will find that we make financial good even though we have no obligation to. I will come back to you, Senator, in answering the other question, and lay out for you the process of who can complain, the way that we get documentation about the sender and the process in following up on that question.

Senator FISHER: So do you require the sender to complain or not?

CHAIR: Senator Fisher—

Senator FISHER: Mr Fahour has not answered my question.

Mr Fahour : We will take it on notice and we will come back to you.

CHAIR: That is it. You asked for five minutes, Senator Fisher. You got 10 minutes and it is still not good enough! So I really do not know when I can come to an arrangement with you.

Mr Fahour, you have had some good feedback from Senator Williams in terms of the work that you have done. Senator Williams was concentrating on that small regional outlet, but at the other end of the spectrum you have these super stores. Can you just indicate how they are beginning to operate. I do not know if there is a super store in the western suburbs of Sydney or up in the Blue Mountains area. I am interested to know.

Mr Fahour : Thank you very much for saying that. We at Australia Post have embarked on a very important growth program. Part of it is to grow the services in the commercial business, whether it be in our retail stores or our wonderful parcel services. I have to say that one of the really proud moments that we had late last year was the huge expansion of a super store in the Brisbane GPO. I have been accused of being a Melbourne-phile so the fact that our first super store was in Brisbane was fantastic. I will have my executive responsible for that, Christine Corbett, talk to you about these super stores. I can say one thing to you: by June you will see around 30 of these super stores. There is one in all of the major areas including in Sydney and in Melbourne.

Senator Conroy: You should go and see them, Senator Fisher.

Mr Fahour : They are terrific and they provide a range of services to the community. I will get Christine to elaborate on the super store and what you can expect in your local neighbourhood.

Ms Corbett : Thank you. Briefly, the super store concept is really all about Australia Post increasing the access, convenience and choice for customers in how they do business. So we know our customers' channel preferences are changing, and they are doing more with us on line. So our stores are trying to change to accommodate that.

Within our super stores we will have six zones specifically dedicated for our small business customers and our consumers. So the first innovative thing we have done is introduce some self-service technology. This is technology where customers can choose to go to the normal counter or go to machines to pay a bill using cash or credit card, or access a parcel. That gives customers a choice and helps alleviate some of the queue waiting times and frees up our staff.

CHAIR: So if it is anything like Kmart you will have five staff looking after four machines.

Ms Corbett : No; for us it is different. We have some of the machines in but importantly for us we are increasing the services that we offer through our post offices. That frees up our counter staff to spend more time with customers who need face-to-face service. That is the first zone.

The second zone that we have introduced is our online essentials zone. That is really the place that people come to do some of their online shopping, to buy the packaging that they might need and to access online information, whether it be postcodes or postal charge rates. We have now got a foreign currency converter for people travelling. That is in the online essentials zone.

We have extended our counter operations and widened the counters. We have done different things there and also introduced some digital media screens, because we had some feedback from customers that they were not aware of the breadth of services that we offer in our post offices.

The fourth zone is our financial and identity services zone. That is a seated area, where customers can come to ask for those transactions that take longer than just buying a stamp or paying a bill.

The fifth area is a really exciting area that we have gone into. It is our travel area. We have entered into a joint arrangement with American Express where we are going to have some American Express store-in-stores at 200 locations across the country. That is really us being a one-stop shop for travel. People are coming in to us for their passport applications. Now they can come in for foreign currency and travel insurance as well.

The last zone is our 24-7 zone. Again, that is really specifically to try to cater for the growth in online shopping. That will give customers access to a post office at any time of the day or night that they need. There will be vending machines in there as well as our self-service technology and, importantly, our parcel smart lockers we are trialling at the Brisbane GPO. So it is a very exciting innovative time for us in our superstore concept.

CHAIR: That sounds good.

Senator SINGH: Is that only in metropolitan areas?

Ms Corbett : No, it will be throughout. It is going to be in both metro and regional areas throughout the country.

Senator SINGH: So Tasmania will be included?

Ms Corbett : Absolutely—all states will be included. As you can imagine, it is an extensive rollout program and a big program, so it will take us a number of years; but we will have 30 on the ground across all the states by June this year.

Senator SINGH: So no services will be lost in existing post offices?

Ms Corbett : No; it is extending the services, not reducing them.

CHAIR: Thanks very much, Mr Fahour and Ms Corbett, for your appearance hear today. I now call officers from the department in relation to program 1.2, the digital economy and postal services.

[15:17]

Senator McKENZIE: As previously stated, my questions go to cybersafety. I have some questions around the cyber safety helpline. What were the funding arrangements between the Kids Helpline and the government for the provision of the service?

Mr Rizvi : The Kids Helpline is funded through the ACMA.

Senator McKENZIE: I will save that for tonight then. Since May 2008, how many grants, bursaries, scholarships et cetera have been awarded to educational institutions to undertake research into the online environment?

Mr Rizvi : The research funding that we have in this space is used predominantly to commission research. Firstly, we commissioned a number of pieces of research by Edith Cowan University into cyberbullying in particular. We also run, every two years, a survey of parents and a separate survey of teachers regarding cybersafety issues to track how these issues are changing over time. That is predominantly where our funding goes; we do not fund bursaries.

Senator McKENZIE: Are the results of those surveys that you do publicly available?

Mr Rizvi : They are; they are our website.

Senator McKENZIE: Great; thank you very much. How many grants since 2008 have been awarded to consultants to undertake the research into the online environment? I assume that, as you are doing these surveys—

Mr Rizvi : Both the parents' survey and the teachers' survey were commissioned to an organisation by the name of Iris—I forget the precise name, but I can get you the details of the firm that was commissioned. As I mentioned, the other piece of research in this space was commissioned through Edith Cowan University in Western Australia.

Senator McKENZIE: Was that a competitive process, the Edith Cowan?

Mr Rizvi : Yes, it was.

Senator McKENZIE: Could you provide a breakdown of the funding and how much Edith Cowan got to do their online research?

Mr Rizvi : Yes.

Senator McKENZIE: That would be great. How many members are there of the youth advisory group?

Mr Rizvi : In 2011, the youth advisory group had membership from 125 schools from around Australia. All states and territories were covered. We also made sure that there was a good balance between metro schools and regional schools. That comprised 1,167 students from both primary schools and secondary schools. In 2012, we are going to a different model for the youth advisory group. Essentially, that will involve an online nomination process. We have emailed all secondary and primary schools in Australia and asked them to indicate an interest in participating in the youth advisory group. To date we have received—and the nomination email went out on 30 January this year—158 nominations from all around Australia. We have made an allowance of a maximum of 50 schools per state or territory, with a mix across regional and metro Australia.

Senator McKENZIE: How will you determine the mix? Will that just be proportionate to population distribution?

Mr Rizvi : If the cap in any state is not reached at 50, then we will accept all who nominate. Where the cap is reached and we have a disproportionate number of schools relative to population between regional and metro, we will seek additional nominations from other schools to balance that out.

Senator McKENZIE: It has been going for a while in its various iterations. What outcomes have been achieved as a result of the youth advisory group?

Mr Rizvi : There have been a number of outcomes, but probably the two most tangible ones that we could refer to include, firstly, the creation of a cybersafety help button, which came out of advice from the children themselves, who indicated that they were confused by the array of websites and information on cybersafety that was available. They wanted somewhere where there was one spot which gave them a reference guide to all of the material that was available across government, both Commonwealth and state. Secondly, earlier this year the Prime Minister launched the The easy guide to socialising online, which is a guide to a range of social networking sites and other online games, as well as search engines and how to use them, how to use their safety features and how to report inappropriate behaviour on those sites—those sorts of issues. It provides that sort of guidance.

Senator McKENZIE: Do you have some sort of measurement tool that assesses how many young people access that information?

Mr Rizvi : Yes. We monitor how many people access The easy guide—at least the online version. We are not able to monitor the hardcopy version. We are also able to monitor the number of computers onto which the cybersafety help button has been downloaded.

Senator McKENZIE: Great. I have some questions around the recommendations out of the government's response to the report. It is around the definition of bullying. The department was to work with the youth advisory group and the teachers and parents advisory group to come up with a consistent definition. I wonder whether you have considered the definition and how the work is progressing around that.

Mr Rizvi : I would have to take that on notice. I am not aware of precisely where our work on that would be up to.

Senator McKENZIE: In your answer, could you also please give an answer on how long the department believes the process for getting an agreement from those three groups around a definition of bullying in the cyber environment?

Mr Rizvi : We will see what we can provide. I would have to say that the definition of bullying is not a simple issue.

Senator McKENZIE: No. Having worked at a university, I can understand there will be many people inputting to that. Recommendation 6 of the government's response goes to the department working with the Minister for Tertiary Education, Skills, Jobs and Workplace Relations to ensure sufficient funding is available to ensure that ACMA can provide the necessary training and PD for Australian teachers. Has DBCDE approached the department of education to discuss this recommendation?

Mr Rizvi : The ACMA has funding, which was included in the $125 million announcement that the government made, to increase its outreach program to teachers, parents and students. That program is ongoing. It received a further boost in funding around two years ago. I would need to confirm that. That is what is being provided at this point. The issue of whether education departments would be prepared to supplement that is one that probably needs further discussion.

Senator McKENZIE: Going to my question: has the department met with the department of education around that?

Mr Rizvi : We met with the department of education through the Consultative Working Group on Cybersafety where the proposed government responses to those recommendations were discussed.

Senator McKENZIE: I am just wondering if the department is undertaking any work on recommendation 25, which goes to the consultative working group on cybersafety investigating the possible improvements to the information provided to parents at the point of sale of computers and mobile phones.

Mr Rizvi : That is also something that the consultative working group is looking at. The consultative working group has on it, for example, the Australian Mobile Telecommunications Association, which represents a number of the providers in this space. That is a discussion that is still ongoing.

Senator McKENZIE: Are we very far along?

Mr Rizvi : I would have to take that on notice. It is a matter that AMTA has been discussing with its members and I would need to get further advice from AMTA as to where they are up to in terms of their discussions.

Senator McKENZIE: I would really appreciate that. Is it appropriate to talk about the mandatory ISP filter here?

Mr Rizvi : Yes, it comes under program 1.2.

Senator McKENZIE: Excellent. In the May 2010 budget as part of the government's cybersafety enhancement the government committed to introducing amendments to the Broadcasting Services Act to require all internet service providers to filter overseas hosted refused classification material on an RC content list to be maintained by ACMA. On 9 July the minister announced that the introduction of the filter would be delayed following a review by the National Classifications Scheme and by the Australian Law Reform Commission. Is the government still committed to ISP level filtering?

Senator Conroy: The good news is that two of the major ISPs in this country have actually introduced it. In fact, there are more than two. For over six months now, three ISPs, including Telstra and Optus, have been blocking a list of child abuse material compiled by Interpol based on referrals from law enforcement agencies from around the world. These voluntary arrangements are established under section 313 of the Telecommunications Act 1997. Under the arrangements for blocking the Interpol list, the whole domain is deemed illegal and therefore is blocked if any part is found to contain child sexual abuse material. The material on the list is retained by Interpol for evidentiary purposes and relevant agencies have access to the evidence through established police channels. I understand that there may be more companies, but it is an issue between the ISP and the police. So it is not one that phone me up and say, 'Hey, we're now doing it.'

Senator McKENZIE: Yes, but a number have signed up.

Senator Conroy: Yes, and a number of others have indicated that. We welcome this commitment by Australia's ISPs to step up and block the Interpol list. We will examine the report of the ALRC, but we remain committed to ensuring that Australians remain in a position where they are not subject to child abuse material.

Senator McKENZIE: Thank you, Minister. Does that commitment also extend to the introduction of the legislation, or are you happy with the voluntary code?

Senator Conroy: As I said, we would wait until we got the report. We will be considering the report, and will see where that leads us. I think it is available publicly if you wanted to have a read of it. Sorry, the ALRC have a discussion paper but they have not actually reported. So we are awaiting the final report. But, as I said, we are very pleased to see that a range of Australian ISPs are now blocking this particularly offensive material.

Senator McKENZIE: And the review of the National Classification Scheme's role in that process of the final report?

Mr Rizvi : That is the process being undertaken by the ALRC.

Senator BILYK: I would like to go back a couple of minutes. You mentioned the ALRC report. I am just wondering what assistance industry has been providing with regard to that.

Mr Rizvi : The ALRC has called for submissions and has been undertaking community consultations, and I am aware that industry has been making submissions to that process, including a number of the industry members of the consultative working group on cybersafety.

Senator BILYK: The report is not complete, though, is it?

Mr Rizvi : The report is not yet available.

Senator BILYK: What is the timing of that?

Mr Rizvi : We understand that it is imminent.

Senator BILYK: I will take a minute to check my next questions, because the previous senator asked a lot of them. That is very good—I am pleased to see that the opposition have finally taken an interest in how important cybersafety is. What are we doing to address the websites on the online casino city, which offers gambling services to Australians in contravention of the Interactive Gambling Act?

Mr Rizvi : The list of prohibited online gambling service providers has been the subject of discussions between ourselves and the ACMA. The ACMA has begun investigations into the most popular online gambling sites that are referred to on casino city online. They will assess the provision of those services against the provisions of the Interactive Gambling Act.

Where they find that a particular service provider has been providing services in contravention of the act, they will take two steps. Firstly, they will include that particular URL on the list of URLs that the ACMA maintains which are referred to providers of family-friendly filters—optional filters which can be used at a PC level to block these sites. Parents who choose to use these filters would have these online gambling sites blocked on their PCs. The second thing that the ACMA does is refer the matter to the Australian Federal Police, who will consider it within their own processes. That may include referring the matter to relevant overseas law enforcement authorities or undertaking investigations themselves, if they consider the matter to be of sufficiently high priority.

Senator BILYK: What other programs do you run in conjunction with the AFP in regard to cybersafety in particular?

Mr Rizvi : The AFP runs a cybersecurity website called ThinkUKnow, which is a very useful website. The AFP was, of course, provided significant additional funding by the government to boost its online child protection team. That was increased in size by around 90 staff, so it is now a very significant level of resourcing in the AFP on these matters. Finally, the AFP is a member of the consultative working group on cybersafety and is regularly consulted on measures that it is taking this space, and it is also providing input into the development of policies more generally.

Senator BILYK: Is there any activity taking place specifically on the gambling sites and also some of the sporting sites, who manage to do some advertising that you might not necessarily want children to see? I am thinking about gambling sites in particular. Is there any activity taking place to try to reduce that?

Mr Rizvi : There are two responses to that. Firstly, the Interactive Gambling Act prohibits the advertising of prohibited online gambling services. Where those services are identified to the department, the department undertakes an analysis of the advertising to determine whether it is indeed an advertisement, within the terms of the act, of a prohibited online gambling service. Where we find that it is—

Senator BILYK: I am sorry to interrupt you, but I want to clarify something. That is just for Australian sites, isn't it?

Mr Rizvi : No, it can be for both Australian sites and overseas sites. An overseas prohibited online gambling service provider which is seeking to advertise in some way within Australia is in contravention of the IGA. Where we find that prima facie it is in contravention of the IGA, we refer the matter to the AFP for consideration. Secondly, those matters are also being reviewed in the context of the review of the online gaming act that is ongoing at the moment.

Senator BILYK: Are there any other areas within the department where you would like to see more activity—in regard to cybersafety in particular but also any other areas you might have suggestions on?

Mr Rizvi : I think the key is the quality of the information and the education we provide. I think the work that the ACMA does in this regard, in terms of its outreach programs, is very important, as are the tools that are being developed as a result of the advice from the youth advisory group, and the teachers and parents group that we have established is also important. As we continue to consult with those groups, new ideas come forward and we consider those in the context of the resources we have available and we will pursue those wherever we can.

Senator BILYK: Can you talk about hubs and enterprise programs, or is that for a different area?

Mr Rizvi : That is this area.

Senator BILYK: Can you tell me what the purpose of the hubs and enterprise programs is?

Mr Rizvi : Yes. The purpose of the digital hubs is twofold. Firstly, it is to enable local residents to experience an NBN-enabled service and to experience the kind of applications that will work effectively on the NBN. Secondly, it is to provide seminars and workshops targeted particularly at local residents who may not yet be online or who may use the online environment in only a limited way. At present, around 21 per cent of Australian households are not online, and the purpose of the digital hubs is—in the communities where the hubs will be located—to increase participation by Australian households in the online world.

Digital enterprises are targeted predominantly at small to medium enterprises in the local region as well as not-for-profit organisations in the local region, to assist them to make greater use of online opportunities to become more competitive. The digital enterprise services will run seminars on various topics around the issues of getting online. In addition, those small to medium enterprises and not-for-profit organisations that wish to have further advice about getting online can have access to up to four hours of free advice from the digital enterprise service providers. After that, they would need to pay for the advice.

Senator BILYK: When will they start delivering services?

Mr Rizvi : We are aiming for the first digital enterprise and digital hubs to be opening up later this month. From then on they will progressively be launched during 2012. We have funding for up to 40 digital enterprise and digital hub service providers in the first 40 communities that benefit from the NBN.

Senator BIRMINGHAM: Can I go to the convergence review please. The 2009 discussion paper published by the department, looking at regulatory matters, said that a key theme in these considerations will be the scope for winding back industry-specific regulation once the National Broadband Network is firmly established as an open-access, wholesale-only national network. It was discussing media and general industry regulation overall. Is that still an aim of the department?

Mr Harris : The convergence review interim report has a substantial number of deregulatory initiatives within it. Obviously the convergence review itself will have a position. The department's role will be to take into account its position in providing advice to government, and government ultimately will have to decide on these things. But based on what has been put into the public arena, there are a significant number of initiatives likely to result in a very substantial rewrite of the Broadcasting Services Act—as I think we foreshadowed last year in some public statements we made. I could list the sorts of changes, but in no sense would it be reasonable to say that the convergence review has failed to take into account the potential for the need to remove regulation that has had its day as a result of convergence.

Senator BIRMINGHAM: In the convergence review's interim report they talked about establishing essentially an industry superregulator of sorts that would deal with technical, social and economic issues and content and communications and that would have sufficient powers to encourage competition and compliance, and broad powers to encourage media diversity. They sound like fairly sweeping regulatory powers for a cross-media regulator.

Mr Harris : I have not seen that summary from them. I suspect that is somebody else's summary. Perhaps I should list that the convergence review has recommended that a content licence be no longer required—

Senator BIRMINGHAM: They are extracts from page 2.

Mr Harris : They have talked about the removal of cross-ownership laws. They have talked about the relationship with the potential development of a new regulator whose subject matter may be quite different from the current regulator's—in other words, that there will be a deregulatory approach in that area. They have talked about the revised media diversity rules. It is not as if there will not be any media diversity rules, but obviously they have talked about having an option in substitute for some other form of regulation currently in place. This is not unexpected with the nature of the convergence review.

Perhaps the timing is unexpected, but it is not unexpected that some parties who object to some particular forms of regulation, on seeing their forms of regulation either not removed or amended in ways that are not suited to them, will put in submissions or make public comment to the contrary. I guess the timing issue is the most obvious one. We had expected that this might actually take place some months ago. In some ways I think the convergence review itself, in making its interim report, has beckoned and invited people to pay a bit of attention to what has been going on here, which probably has not been the case to date.

Senator BIRMINGHAM: You mentioned other submissions. Treasury has made a submission, which states:

Treasury considers that regulation should focus on a market failure and that the benefits of regulation must outweigh the costs. Treasury cautions against applying regulation to new media simply to deliver ‘regulatory parity’. … new technology may make such regulation ineffective, unenforceable and/or unnecessary.

Is that a perspective that this department has some sympathy for?

Mr Harris : I have certainly heard a very similar view on a wide range of policy areas from economic portfolios.

Senator BIRMINGHAM: Is this all consistent with the minister's calls for a broader public interest test in relation to media ownership and his stated need, it seems, for greater regulation in this space?

Senator Conroy: I think you are now asking the officer at the table to speculate on my thoughts, but I think if you read the report it suggests there should be a public interest test. I am on the record as saying anyone is entitled to buy into media or set up their own, as both Ms Rinehart and Mr Wood have done recently. But what we have to ensure in this country, because it is about the lifeblood of democracy, is that we have enough voices. At the moment, it could be argued that the Howard government's changes reduced the diversity and saw a greater concentration of ownership. I would be sympathetic to that view and, as I think I said many times at the time of posing the convergence review, I would be in favour of going down this path. So I think they are entirely consistent.

Senator BIRMINGHAM: Have you had the department undertake any preparatory work on legislative amendments or otherwise that may pre-empt in any way the findings of the convergence review and fast-track any of your thoughts in relation to media diversity or public interest tests, Minister?

Senator Conroy: No. Unlike those who have recently jumped on the bandwagon because of individuals, I have actually set in place a process to review all of this area. I think the answer to your question is no. I will happily look to the officers if I have misled you, but I do not think I have asked them to do any work on the public interest test.

Mr Harris : We not done work on the public interest test but we have anticipated the legislative program and looked at the timing options that might be available for addressing the results of the convergence review. It is part of normal business as far as we are concerned, so we are well prepared should the government ask us to do something reasonably quickly. But the nature of the convergence review itself is very broad and very sweeping and, particularly when we are addressing the earlier issues that you were referring to, a complete rewrite of the Broadcasting Services Act, for example, would be very substantial task and would take some time. So it all depends, really, on the government's own approach to whether they want to disaggregate the convergence review report—and, I might note, in disaggregating something as complex as the convergence review report you are likely to find that there are knock-on effects. It will not necessarily be the sort of thing that you can pluck a piece out of.

Senator BIRMINGHAM: Sure. Mr Harris, very quickly, can I just get you to explain what you mean and what actions you have taken as part of your consideration of the legislative program? Does that mean that you have commenced drafting work on potential changes or purely a timeframe when they may be able to be implemented?

Mr Harris : We are not able to draft any legislation without cabinet authority. It is just a question at looking at the legislative program and noting how packed the legislative program is likely to be for the coming year. If you have a review, no matter who is the government, we always look at when the next election is and we realise that elections will impede legislative programs, and we say to ourselves, 'You won't be able to do anything in the second half of 2013.' So the question ultimately is based around the reporting date of this review: what could plausibly be done between the reporting date of 30 March 2012 and a pretty much drop-dead date for doing anything serious in a legislative sense of the middle of 2013.

Senator BIRMINGHAM: And because of the scope of work required to rewrite the broadcasting act that may be smaller changes before the next election rather than a total rewrite?

Mr Harris : That is the sort of work we have done, but it is not a direction from the minister.

Senator Conroy: We have not received the final report. We said we would consider the report. Nothing has gone to cabinet. The sort of time line and complexities that Mr Harris has indicated are in play. So, as I said, we put in place a process so that we could consider these outside of the usual political debate. The fact that somebody sets up some media or buys into a particular media company has not been a driving factor. What is important is that the Howard government's laws weakened diversity in this country and we will look forward to seeing the convergence review's recommendations in this particular area.

CHAIR: Thank you, Senator Conroy. We will adjourn and reconvene with the ABC after a short break.

Proceedings suspended from 15:47 to 16:03