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Thursday, 25 August 1994
Page: 356

Senator ALSTON (Deputy Leader of the Opposition) (12.54 p.m.) —I would like to address the Australian Postal Corporation Amendment Bill in some detail. It is a classic example of the hypocrisy of the Keating government. Let us go back to July of this year when the Business Council of Australia was calling on the federal and state governments to make the Hilmer report proposals on exposing government enterprises to competition the top priority for economic reform. We all know that this government has had an abysmal track record in terms of micro-economic reform. It has repeatedly caved in to vested interests and trade union pressures. The privatisation of Telecom seems to be off the agenda altogether, despite Minister Lee's flirtation with such ideas as asset stripping. The Prime Minister (Mr Keating) would undoubtedly love to get his hands on the proceeds of a Telecom sale, but we are not going to see the privatisation of Telecom this side of the next election.

  We do not have to go terribly much further down the track of the government's abortive attempts at reform to remember the way in which Senator Collins managed to make such a meal of the waterfront; promised to resign within 12 months; failed abysmally; and then, of course, could not walk away. In every respect, the government has had this challenge before it and that is why the Business Council came out and said what it said. The Prime Minister in turn then said:

By facing public instrumentalities up to the competitive pressures you faced up to—

He is talking to the unions—

the challenge is on some other people and they mostly run the states. If it is good enough for the work force to face the imperatives of a competitive Australia, it is good enough for state instrumentalities.

The Keating approach has been largely to say that it is all the fault of the states for not proceeding fast enough with microe-conomic reform. They are the ones that have got to make the running in terms of Hilmer.

  On 19 August, less than a week ago, we had Mr Keating going up to Darwin and pontificating about the absolute necessity for micro-economic reform, particularly exposing government business enterprises to the challenge of change and saying such things as, `the federation is not a device which is about aggrandising the status of the states.' A Labor federal government was going to a group of largely Liberal-National Party states—that is, nominally pro-market governments—and saying, `Please embrace the markets.' Mr Keating said:

The conservative state governments had to demonstrate they were serious about combining their market and business philosophies with genuine competition reforms.

There is a real test there. A federal Labor government is saying, `We want you to embrace competition and market policy.' There it is: the Prime Minister is setting the high jump bar firmly in front of the states. But where is he when it comes to these sorts of reform? The answer is absolutely nowhere. On 15 November 1992, after deferring the matter on a number of occasions over a three-month period, cabinet finally decided its formal response to the Industry Commission report No. 28 on mail, courier and parcel services, which had been released more than 12 months earlier. The government's response was its first major opportunity to give effect to the report of the Hilmer committee which had recommended an extension of competition policy to government business enterprises and that it demonstrate the nature and extent of its claimed competition credentials. I will come to the detail of what the Industry Commission recommended in a moment.

  But suffice it to say that the Industry Commission recognised Australia Post as one of the last great sheltered business enterprises in the country, particularly one of those over which the Commonwealth has absolute and total responsibility. The commission was clearly urging the government to take action to free up the market for the benefit of consumers. However, in the face of a concerted campaign of opposition by Australia Post and the Communications Workers Union, the government chose to opt out of adopting the Industry Commission's major pro-competitiveness recommendations and instead settled for a toe in the water approach, which even a press release from the then minister responsible, David Beddall, described limply as `a gradual and measured approach to reform.' If ever there is a formula for capitulation, it is that—no revolution there. The hard decisions were deferred until after a 1997 review.

  The main issue was reserved services protection. By far the most important proposal concerned changes to Australia Post's standard letter monopoly. The Industry Commission's preferred approach was to reduce the weight limit for protected articles from 500 grams to 250 grams from 1 January 1994—we are already nine months behind schedule—and then lower the rate of protection from its current $4.50 per article so as to bring it into line with the existing standard letter rate of 45c. This would have eliminated the monopoly in one fell swoop but would also have posed significant problems in terms of Australia Post's community service obligations, particularly in respect of rural and remote areas. The Industry Commission recommended that these be funded directly from the budget.

  However, it virtually conceded that its preferred option was basically an ambit claim, and that the more realistic fall back position was in conjunction with the lower weight limit to reduce the minimum rate, which competitors must legally charge, to carry articles from 10 times the standard rate—$4.50—to a rate of $1.20 per article. The commission also recommended that this rate be further reduced by 10c a year over the next five years until a rate of 70c was reached by 1997. It recommended that a full review should take place at that time to determine the system which would apply beyond the year 2000.

  At that time it recommended a full review should take place to determine the system which would apply beyond the year 2000. As expected, the government completely rejected the ambit claim, but also effectively rejected the softer rate reductions; with the then Treasurer, Mr Dawkins, arguing for the Industry Commission recommendation but being opposed by senior non-economic ministers such as Senators Ray, Richardson and Collins—and no doubt Senator Schacht would have done if he had been allowed into the cabinet room for a moment—as well as Mr Beddall.

  The cabinet on that basis agreed on a compromise rate of $1.80 with no further phased reduction. Despite this being presented as a significant reduction from ten times the standard rate to four times, in fact it is a Clayton's cut which is most unlikely to put any significant pressure on the current monopoly. Overseas experience, particularly in New Zealand and the United Kingdom, has graphically demonstrated that the gap must be quite narrow before effective competition enters the market. In discussions with the Industry Commission in May 1992, New Zealand Post indicated that the present margin of 35c—that is, less than two times its current standard letter rate of 45c—provided sufficient protection from potential competitors to maintain its ability to provide a universal letter service. That assessment of the situation was confirmed by my office with the New Zealand Ministry of Commerce.

  Clearly, everyone who is serious about reform of the postal service would acknowledge that if one really wanted to expose Australia Post to any meaningful competition in relation to the reserved standard letter service one would need to come much closer to two times. Yet what the government has got is four times, with no phasing down—in other words, a complete and utter cave-in.

  What a farce that makes of a Prime Minister who wanders around the country beating his chest, giving lectures to the states and pretending that somehow he is the champion of micro-economic reform. The fact is that he is a total and abject failure. He had the opportunity here to do something about it, and he failed. I do not blame Mr Lee, because Mr Lee does not make any decisions off his own bat. We know the deferral of the cultural statement this week—for the fourth time—was entirely because the Prime Minister decided that, as he is delivering it, he had to be satisfied with it. He did not like Mr Lee's draft and he wanted to rewrite it, so it has been put off. That is a pattern of behaviour that we have become quite used to. It is not really Mr Lee's fault. It is fairly and squarely the fault of the person who has the gall to get up and pretend that the federal government has been making any running at all on micro-economic reform.

  What they are trying to do is put the burden on the states. What they are trying to do is screw the states so that they do not get any meaningful compensation for conceded access to those monopoly rents that they have been deriving. As a result, the Commonwealth just becomes a huge net winner from that particular exercise, and undergoes no pain itself in the process. That is what hypocrisy is all about: a classic, defining example.

  Not only have they squibbed the acid test when it comes to reserved services protection, they have actually been backsliding ever since. Let us go to some of the other changes; for example, bulk interconnection. Private carriers are currently only allowed to interconnect with Australia Post at the mail exchange closest to the address of the sender. For example, if a Canberra based firm has bulk mail to be delivered in Perth, its private carrier must lodge the mail at the closest Canberra mail exchange to the sender. The company is legally not allowed to use the private carrier to carry the bulk mail to Perth and then have it lodged at an Australia Post mail exchange. The Industry Commission recommended private carriers be allowed to interconnect with any Australia Post mail exchange between sender and receiver up to the location of final sort before delivery, thereby reducing Australia Post's advantage in being the only service to provide nation-wide coverage.

  It ought to be blindingly obvious that what we have in place at the moment is a whole series of Byzantine restrictions simply designed to protect the monopoly of Australia Post, and presumably those employed by it, despite the fact that consumers are the ones who then have to bear the burden. If the government is serious about trying to give business a fair go, if it is serious about businesses as the job generators, if it really wants to be export oriented, then the main thing it should be doing is looking at ways in which it can reduce the cost of business inputs. The government has not done it anywhere near fast enough in telecommunications, and here it is squibbing the challenge once again in relation to postal services. We had at least thought that there would be some movement in that area.

  The government rejected the Industry Commission recommendation and instead embraced Australia Post's position, which was to accept interconnection on the basis that mail is pre-sorted and then lodged at designated mail centres. My understanding is that Australia Post plans to have only 43 designated mail centres throughout the country, which will be very limiting. It is reasonable to accept that bulk mail be lodged only at mail centres rather than at every post office in the network, which may not have the facilities to deal with bulk mail, but it is certainly not reasonable that interconnection should only be allowed to take place at a few designated centres. It is possible that Australia Post could designate all 43 mail centres in one or two cities, which would not inject much competition into the system at all. It ought to be a matter of commercial negotiation.

  The current arrangements contained in the bill, as I understand them, leave it very much open to the proposition that we will only have interconnection discounts applying if the bulk mail has been transported interstate by a private mail operator. In those circumstances, we will be seeking to amend the bill in the committee stage to ensure that the interconnection discounts apply to both inter- and intra-state mail.

  In relation to one other important aspect, catalogues and leaflets, the current blanket exemption for catalogues and leaflets will be removed and replaced by an exemption for unenclosed catalogues or leaflets, enclosed catalogues or leaflets not addressed to a particular person or address, and catalogues or leaflets enclosed in a transparent cover and directed to a particular person or address.

  These provisions will, in effect, further limit the number of items on which there can be competition. Quite rightly, a number of organisations have been greatly concerned that this is a classic case of backsliding, despite the fact that the minister claimed in his speech on the second reading that the reforms in the bill will provide a competitive discipline to ensure that services are provided efficiently and economically. So we oppose those provisions to the extent that they restrict current practices. At the very least what the government ought to be doing is legislating to formalise arrangements that have been in place to this point.

  The same goes for the contracting out for document exchanges. The exemption provisions will allow organisations to contract out the carriage of letters between officers of the same organisation. An exemption will be inserted to allow the movement of documents as part of a document exchange service. However, documents will no longer be able to be carried from one document exchange service to another or to be delivered directly to the addressees of individual members, even though this practice has been widespread for some years. The Victorian government is presently investigating whether the definition of `organisation' will prevent it from continuing to use a non-Australia Post carrier for its inter-departmental mail. It would be the height of absurdity if the result of this bill is that it is no longer possible to transport mail between government departments via a courier service. Yet the government has shown absolutely no interest at all in trying to clarify the situation, let alone liberalise the regime. Accordingly, we will be moving amendments to ensure that current practices are not limited.

  There are other recommendations in relation to the disclosure of Australia Post information which I do not think are contentious, such as the opening and examination of mail and the carriage of dangerous goods. There is, however, one other provision which I think is of concern. Australia Post will no longer be required to have a government board member and I think that is right and proper otherwise it is very difficult to argue that it has any degree of independence or managerial autonomy. The managing director will be appointed by the board, not the minister; however, the minister may terminate the appointment of any director on the board.

  I would have thought that was, self-evidently, an insidious proposition. What it means is that, whenever the government does not like the behaviour of the board, it can effectively intimidate it. It can say in advance, `Get it right or we will sack you.' That is an intolerable situation to allow. As a result, we will be moving an amendment to remove that power to terminate the appointment of any director on the board. It is a very dangerous precedent that should not be supported. If it was a provision in relation to the ABC board, perhaps it might have a little attraction; but it is not. It is in relation only to Australia Post.

  I do not know of any criticisms of the Australia Post board. I would generally be of the view, having visited it and looked at its performance over the last 12 months, that it is doing a pretty fair job. I think it would respond positively to further competition. It would rise to the challenge. The problem is, as it would well know, this government is beholden to the TWU. This government is really interested in paying off its mates; it is not particularly interested in any significant micro-economic reforms. We have just seen all that rhetoric of the Prime Minister matched against this hopeless reality.

  Finally, the Industry Commission recommended that where roadside delivery is only once a week it should be increased to at least twice a week. We have long held the view that twice a week is the least that can be reasonably expected in rural and remote areas. In our regional communications policy at the last election, we made a commitment to increase the maximum once-weekly service to rural and remote Australians to a twice-weekly minimum service. However, in its 1994 edition of The Rural Book the government boasts:

Every effort is made to provide at least two services per week to rural householders, even in the most remote areas.

Despite all that rhetoric, there is nothing in this bill that would require a minimum of two services per week. That is pretty much par for the course. Other recommendations in relation to rural and remote users were made by the Industry Commission and were totally ignored by the government in its formal response and in this bill.

  The government has made it abundantly clear that it is not particularly interested. Maybe it does not think there are too many votes in the bush on this issue. It is fundamentally wrong, of course. Something like 3,152 households are not receiving at least two roadside mail deliveries per week on the latest figures available to us. There is no reason why the government should not go down this path and there is no attempt to justify ignoring that recommendation. So we will move an amendment to expand Australia Post CSOs to make it a requirement that that obligation should be enshrined in legislation.

  I conclude simply by saying that this is the crunch and the government has failed the test abysmally. In terms of the government's response to Hilmer, we had the perfect opportunity to deliver the goods, not just by giving the states lectures about how they ought to lift their game but by setting a very specific example. Australia Post is entirely the responsibility of the federal government. The federal government knows full well—it has been told so by the Industry Commission and anyone else who has looked at the area—that there is absolutely no justification these days for the sorts of protections that are in place at the moment. It has paid that lip service. At best, it has reduced the reserved services protection down to four times which will make absolutely no difference. It has actually done worse in terms of liberalising competition in a number of other significant areas. If this is the best that Mr Keating and the government can do, all I can say is it is going to be game, set and match to us when it comes to micro-economic reform credentials at the next election.