Mr Colin Lyons, Deputy Secretary, Infrastructure

Mr Andy Townend, Deputy Secretary, Broadcasting and Digital Switchover

Mr Abul Rizvi, Deputy Secretary, Digital Economy and Services

Mr Richard Oliver, First Assistant Secretary, Corporate and Business Division

Mr Don Markus, General Counsel, Legal Group

Mr Simon Ash, Chief Financial Officer, Finance and Budgets Group

Mr Simon Bryant, Acting First Assistant Secretary, Broadband Division

Mr Richard Windeyer, Acting First Assistant Secretary, National Broadband Network Implementation Division

Ms Marianne King, First Assistant Secretary, National Broadband Network Implementation Division

Mr Mark Heazlett, Assistant Secretary, National Broadband Network Implementation Division

Ms Pip Spence, First Assistant Secretary, Network Policy and Regulation Division

Mr Philip Mason, Assistant Secretary, Network Policy and Regulation Division

Mr Brenton Thomas, Assistant Secretary, Network Policy and Regulation Division

Mr Keith Besgrove, First Assistant Secretary, Telecommunications, Network Regulation and Australia Post Division

Ms Sabeena Oberoi, Assistant Secretary, Communication Security Branch

Mr Richard Desmond, Acting Assistant Secretary, International Branch

Ms Sue McIntosh, Acting Assistant Secretary, Consumer Protection and Australia Post Branch

Mr James Cameron, First Assistant Secretary, Regional Strategy, Digital Economy and Research Division

Dr Simon Pelling, First Assistant Secretary, Broadcasting and Content Division

Mr Simon Cordina, Assistant Secretary, Broadcasting and Content Division

Mr Lachlann Paterson, Assistant Secretary, Broadcasting and Content Division

Mr Gordon Neil, Assistant Secretary, Broadcasting and Content Division

Mr Greg Cox, Assistant Secretary, Broadcasting and Content Division

Ms Ann Campton, Assistant Secretary, Broadcasting and Content Division

Mr Robert McMahon, Assistant Secretary, Communication, DST

Mr Paul Vincent, Assistant Secretary, Program Management and Coordination, DST

Ms Barbara Grundy, Assistant Secretary, Communication, DST

Mr Jim Marshall, Acting Managing Director

Mr Michael McCloskey, Corporate Secretary

Mr Peter Meehan, Chief Finance Officer

Mr Bill Mitchell, General Manger, Commercial

Mr Don Newman, Acting Group Manager, National Logistics

Ms Catherine Walsh, Acting Group Manager, Corporate Human Resources

Mr Stephen Walter, Group Manager, Corporate Public Affairs

Ms Christine Corbett, Manager, Strategy, Governance and Major Change

Mr Chris Chapman, Chairman

Mr Chris Cheah, Member and Acting Deputy Chair

Ms Maureen Cahill, Acting General Manager, Convergence and Coordination Division

Ms Nerida O’Loughlin, General Manager, Industry Outputs Division

Ms Claire O’Reilly, Acting General Manager, Legal Services Division

Ms Dianne Carlos, General Manager, Corporate Services Division

Mr Giles Tanner, General Manager, Inputs to Industry Division

Ms Andree Wright, Executive Manager, Industry Outputs Division

Mr Paul White, Executive Manager, Industry Outputs Division

Mr Derek Ambrose, Executive Manager, Corporate Services Division

Mr Vince Humphries, Section Manager, Industry Outputs Division

Mr Mark Scott, Managing Director

Mr David Pendleton, Chief Operating Officer

Mr Murray Green, Director, International, Corporate Strategy and Governance

Mr Shaun Brown, Managing Director

Mr Jonathon Torpy, Chief Financial Officer

Mr Bruce Meagher, Director, Strategy and Communications

Mr Paul Broderick. Director, Technology and Distribution

CHAIR (Senator McEwen) —Good morning, everybody. I declare open this public hearing of the Senate Environment, Communications and the Arts Legislation Committee. The Senate has referred to the committee the particulars of proposed expenditure for 2009-10 for the portfolios of Broadband, Communications and the Digital Economy and Environment, Water, Heritage and the Arts and other related documents. The committee must report to the Senate on 23 June 2009. The committee has set Friday, 31 July 2009, as the date by which answers to questions on notice are to be returned. Under standing order 26, the committee must take all evidence in public session. This includes answers to questions on notice.

Officers and senators are familiar with the rules of the Senate governing estimates hearings. If you need assistance on this matter, the secretariat has copies of the rules. I particularly draw the attention of witnesses to an order of the Senate, of 13 May 2009, specifying the process by which a claim of public interest immunity should be raised and which I now incorporate in Hansard:

(a)   notes that ministers and officers have continued to refuse to provide information to Senate committees without properly raising claims of public interest immunity as required by past resolutions of the Senate;

(b)   reaffirms the principles of past resolutions of the Senate by this order, to provide ministers and officers with guidance as to the proper process for raising public interest immunity claims and to consolidate those past resolutions of the Senate;

(c)   orders that the following operate as an order of continuing effect:

(1)   If:

(a)   a Senate committee, or a senator in the course of proceedings of a committee, requests information or a document from a Commonwealth department or agency; and

(b)   an officer of the department or agency to whom the request is directed believes that it may not be in the public interest to disclose the information or document to the committee, the officer shall state to the committee the ground on which the officer believes that it may not be in the public interest to disclose the information or document to the committee, and specify the harm to the public interest that could result from the disclosure of the information or document.

(2)   If, after receiving the officer’s statement under paragraph (1), the committee or the senator requests the officer to refer the question of the disclosure of the information or document to a responsible minister, the officer shall refer that question to the minister.

(3)   If a minister, on a reference by an officer under paragraph (2), concludes that it would not be in the public interest to disclose the information or document to the committee, the minister shall provide to the committee a statement of the ground for that conclusion, specifying the harm to the public interest that could result from the disclosure of the information or document.

(4)   A minister, in a statement under paragraph (3), shall indicate whether the harm to the public interest that could result from the disclosure of the information or document to the committee could result only from the publication of the information or document by the committee, or could result, equally or in part, from the disclosure of the information or document to the committee as in camera evidence.

(5)   If, after considering a statement by a minister provided under paragraph (3), the committee concludes that the statement does not sufficiently justify the withholding of the information or document from the committee, the committee shall report the matter to the Senate.

(6)   A decision by a committee not to report a matter to the Senate under paragraph (5) does not prevent a senator from raising the matter in the Senate in accordance with other procedures of the Senate.

(7)   A statement that information or a document is not published, or is confidential, or consists of advice to, or internal deliberations of, government, in the absence of specification of the harm to the public interest that could result from the disclosure of the information or document, is not a statement that meets the requirements of paragraph (1) or (4).

(8)   If a minister concludes that a statement under paragraph (3) should more appropriately be made by the head of an agency, by reason of the independence of that agency from ministerial direction or control, the minister shall inform the committee of that conclusion and the reason for that conclusion, and shall refer the matter to the head of the agency, who shall then be required to provide a statement in accordance with paragraph (3).

(d)   requires the Procedure Committee to review the operation of this order and report to the Senate by 20 August 2009.

CHAIR —The committee will begin proceedings with the examination of the Broadband, Communications and the Digital Economy portfolio commencing with Australia Post and will then follow the order as set out in the circulated program.

I welcome, Senator the Hon. Stephen Conroy, Minister for Broadband Communications and the Digital Economy—the departmental secretary, Ms Scott, is not here—and other portfolio officers. Minister, would you like to make an opening statement?

Senator Conroy —Not at this stage.

CHAIR —I now call officers from Australia Post. Does anybody wish to make an opening statement? If not, we will go straight to questions for officers of Australia Post. Senator Abetz.

Senator ABETZ —Minister, can you tell me is that vacant chair there for the secretary of the department or for the managing director of Australia Post?

Senator Conroy —It does not have a name tag on it.

Senator ABETZ —Or for both?

Senator Conroy —It does not have a name tag on it, so I am not absolutely sure, Senator Abetz. I am sure Ms Scott will be along presently. She has many pressing duties to deal with at the moment.

Senator ABETZ —Trying to fix up your national broadband network I could imagine would take some time. First of all, can Australia Post confirm that Australia Post did deliver a letter to the managing director of Australia Post about appearances at Senate estimates?

Mr McCloskey —I think the letter to which you refer is the one of April 2008 that was addressed to me. As in the answers to the questions on notice at the last hearing, I can confirm that that letter was received.

Senator ABETZ —Good, so Australia Post did deliver but it looks as though the reading of the letter has not—

Senator Conroy —Was it in your handwriting?

Senator ABETZ —has not seen the appearance of the managing director. Undoubtedly, he is on overseas business?

Mr McCloskey —The managing director is on a business trip to China at the moment, at the invitation of the Chinese postal authorities. Mr Marshall, who is on my right here, is the acting managing director.

Senator MINCHIN —Why is Mr Marshall described as the acting managing director?

Mr McCloskey —Because the managing director is overseas and when the managing director is abroad or unavailable, then there is an acting managing director appointed.

Senator MINCHIN —Whenever Mr John goes overseas, Mr Marshall becomes the acting managing director?

Mr McCloskey —That is correct, yes.

Senator MINCHIN —And assumes all the rights and responsibilities in the absence of Mr John?

Mr McCloskey —That is correct.

Senator ABETZ —It is a bit like Kevin and Julia.

Mr McCloskey —As provided for under the legislation.

Senator MINCHIN —Sorry to come in on this, but is it Mr John’s position that he does not believe that he needs to appear at estimates? Why would he schedule a trip to clash with estimates?

Mr McCloskey —He did not schedule his trip, Senator. He is there at the invitation of the Chinese postal authorities. We have a joint venture company with China Post called Sai Cheng Logistics International, which has now been working for about three or four years. There have been some changes that have been passed through the Chinese system for the Chinese postal legislation and there are opportunities, it seems, that may be available to Sai Cheng as a result of those changes which will come into effect in October of this year. Mr John is in China to discuss with the Chinese postal authorities, with the Chinese postal regulator and with executives of Sai Cheng what those opportunities might be.

Senator MINCHIN —Could I ask what endeavours were made by Australia Post to rearrange the visit to China with the Chinese authorities to enable Mr John to be here today?

Mr McCloskey —There were not any particular efforts made. The timing was at the behest of the Chinese. There is a particularly important meeting coming up in July of what is called the Kahala Post Group, which is an alliance of Asia Pacific postal administrations, which also now includes the UK, France and Spain. Some of those countries have been expressing an interest in taking an equity position in or becoming involved in the Sai Cheng joint venture that we have with China Post. Mr John is in China basically to find out exactly the commercial potential for Sai Cheng arising out of the changes in Chinese postal legislation so that can be taken into account in the discussions that he will be having in July at the next meeting of the Kahala Post Group.

Senator ABETZ —And he could not find that out tomorrow; he had to find that out today?

Mr McCloskey —Yes, Senator.

Senator ABETZ —Please, Mr McCloskey, this is about matters in July, with a meeting in October, two months and five months away, and you are telling us that Mr John had to be in China today as opposed to tomorrow or the next—

Mr McCloskey —He was invited by the Chinese postal authorities.

Senator ABETZ —Have you ever declined an invitation in your life, Mr McCloskey, because other important issues were at stake?

Mr Marshall —The regulatory changes that we are talking about are quite fundamental to the business that we are engaged in and there will be, and is, a lot of interest around the world in what it means for commerce in China in the logistics industry.

Senator ABETZ —I am sure all that is right, Mr Marshall. Can you tell us when he left for China and when is he coming back from China?

Mr Marshall —My understanding is he left over the weekend. He will be in back in time for the Australia Post board meeting on Thursday. He will be reporting back to the board the outcome of the discussions he has had with the senior China Post officials and the Chinese regulators.

Senator ABETZ —Why could he not have gone last week?

Mr Marshall —He was not invited last week and people were not available last week.

Senator ABETZ —But why was he not able to say to them, ‘The suggested dates don’t suit because I’ve got Senate estimates’? First of all, Australia Post did not get the letter, then they did not understand the letter. When they finally acknowledge that they did get the letter and understood the letter, the managing director is now overseas. I am just wondering what the excuse is going to be next time because you are fast running out of them.

Mr McCloskey —I think that is a rhetorical question, Senator.

Senator ABETZ —It seems to me that no effort was made in any way, shape or form by the managing director to have himself at these estimates. As soon as an invitation was received, he took it, without seeking to make any arrangement that would have allowed him to both go to China and appear at these Senate estimates.

Mr McCloskey —I think you are—

Senator ABETZ —I am just astounded that that is the attitude that Australia Post has.

Senator Conroy —No, I think that is your opinion, Senator Abetz. It is not actually factual.

Senator ABETZ —What?

Senator Conroy —You just talked about their—

Senator ABETZ —Mr John made no attempt—

Senator Conroy —No, I said—

Senator ABETZ —according to Mr Mc McCloskey, to change the timetable.

Senator Conroy —I said that what was your opinion, Senator Abetz, was your reference to arrogance, or, sorry, the attitude of Australia Post.

Senator ABETZ —Attitude, yes.

—That is an opinion. Mr Johns, I am sure, will be available with proper notice if the committee wants him for the next Senate estimate hearings. It is just an unfortunate clash of timing, but China business is very important to Australia Post. I think your points are well made. They were not ever made during the 11½ years that you were on this side of the chair and Mr Johns never turned up for estimates in any of the time that I was on that side of the chair, Mr Abetz.

Senator ABETZ —He was not asked for.

Senator Conroy —The point that you make about the availability is a valid one.

Senator LUNDY —Just make it up as you go along, Senator Abetz.

Senator ABETZ —Well, he was not.

Senator MINCHIN —Could I just ask you if Mr Johns wrote to the chairman of the committee indicating his regret that he would be unable to attend and indicating that Mr Marshall would be attending? Was there any such courtesy paid to the committee?

Mr McCloskey —No, Senator, we amended the witness list to add Mr Marshall as acting managing director and we advised the department of that a couple of weeks ago.

Senator MINCHIN —I would humbly suggest that, in future, it might be a good idea to pay the committee the courtesy of indicating by way of correspondence Mr Johns’ enthusiasm for being at these estimates but regrettably this business in China prevented him attending. I think that would go a long way to ensuring good relations between the committee and Australia Post.

Mr McCloskey —I should have done that, Senator, on reflection, but did not think of it; I am sorry.

CHAIR —A very valid point, Senator Minchin.

Senator ABETZ —There was some discussion at the last Senate estimates, and I would have thought it would not have come as a surprise to you, Mr McCloskey, that there would have been some interest in having the managing director here after our last exchange. To simply notify us by way of a change in the list of witnesses is, I would have thought—let us put it politely—not best practice.

CHAIR —I think Senator Minchin has put it far better than you have, Senator Abetz.

Senator ABETZ —I am sure he has; that is why he is the leader. Can I ask whether Australia Post believes there is a strong link between the sending of letters and the health of the economy?

Senator Conroy —That is asking for an opinion.

—Funny that you should laugh, because I have a statement in front of me that tells me that a spokeswoman for Australia Post said that there was a strong link between the sending of letters and the health of the economy. Would you like to laugh again, Minister, or just not interrupt?

Senator Conroy —If you want to ask a question—

Senator ABETZ —This is the official statement from Australia Post, and we are not allowed to ask questions about it.

Senator Conroy —If you would like to ask a question, please do.

Senator ABETZ —Operation Sunlight is in fine form, isn’t it, Senator Conroy?

Senator Conroy —I am inviting you to ask a question.

Senator ABETZ —Can I ask: is it Australia Post’s view that there is a strong link between the sending of letters and the health of the economy?

Mr Marshall —Senator, the letter business has a number of elements to it.

Senator ABETZ —Yes we know, but can I have an answer?

Mr Marshall —Excuse me?

Senator ABETZ —Can I have an answer?

Mr Marshall —I am attempting to answer the question, Senator.

Senator Conroy —If you could let him get more than ten seconds into his answer, Senator Abetz—

Mr Marshall —The particular parts of the letter business that have recently been affected in volume for a range of reasons are those relating to direct marketing and those that come particularly from the consumer market. The consumer market has been in decline for many years. We have seen some up-tick in that decline. The direct mail market is driven basically by the advertising budgets of large companies. We have seen, as senators would know, a decline in that across the whole of the advertising market in recent times; we are no exception to that.

Senator ABETZ —Is the answer yes or no?

Mr Marshall —There is a partial link which I have just described and, in other respects, we have seen the letter business holding on in the current economic climate. So, the answer is both yes and no, Senator.

Senator ABETZ —That is a very helpful answer and people will be very interested to hear that, but you indicated to us that there was a partial link, whereas your spokesman, Nadine Lyford, if I pronounce her name correctly, said there was a strong link. Is it a strong link or a partial link?

Mr Marshall —Senator, I have described the different parts of the letter business that we engage in. What I was trying to explain is that different parts of that business have different degrees of correlation to the level of economic activity at the time.

Senator ABETZ —Yes, I know that. Is there a strong link between the sending of letters and the health of the economy—yes or no?

Mr Marshall —There is a link.

Senator ABETZ —Is it a strong link?

Mr Marshall —I think—

Senator ABETZ —It is the words of Australia Post’s spokeswoman; it is not a trick question by me. I just want confirmation that Australia Post were of that view. It now seems that this poor spokeswoman is undoubtedly going to be brought in for some counselling because you have difficulty with this.

Mr Marshall —I have no difficulty with it, Senator. I am simply trying to explain that different parts of that business operate in different ways and react to the market in different ways. That is all I am trying to explain.

Senator ABETZ —Yes, but is it a strong link or not?

Mr Marshall —In parts of it, yes; in parts of the letter business, yes. We have had trend lines in the letter business that have been going on for years and that are showing signs of weakness and have done for 20 years.

Senator ABETZ —I am not going to get an answer on that. Next time, then, can you ensure that Australia Post’s public statements are in fact able to be supported at estimates by the acting general manager? Can I ask whether there has been a three percent downturn this financial year in domestic volumes?

Mr Marshall —Yes, Senator. The position that we expect this year is a decline of about 3.8 per cent.

Senator ABETZ —So, even all the mail-outs of Mr Rudd’s cheques have not helped to lift that and stimulate the figures?

CHAIR —I think that was more of an opinion, Senator.

Senator ABETZ —No. This has been a massive mail-out that would boost the figures.

CHAIR —Perhaps if you tighten up your question, I think the officer may be able to give you a full answer.

Senator ABETZ —Has Mr Rudd’s mail-out of cheques, the $900 cash splash, been of assistance to Australia Post’s bottom line?

Mr Marshall —The simple answer to that is, yes, Senator.

Senator ABETZ —Good. It is nice to know that we can get some yes and no answers. Can I ask a question in relation to Hobart, which is a very important matter? I have been told that the Hobart GPO is no longer being designated as a GPO. Does anybody at the table know anything about that? Could you take that on notice for me? There has been correspondence to the Premier of Tasmania, the Lord Mayor of Hobart and a number of other persons, including me, suggesting that Australia Post has removed the nomenclature of GPO boxes from the Hobart City location. This person claims they visited your website, which seems to verify this alteration to the operations—that is, the removal of Hobart from this listing or that the alteration of Hobart mail boxes be referred to as no longer being located at a GPO. I was not expecting that you would necessarily have a brief on that so could you take that on notice.

Mr Marshall —We will confirm all those arrangements on notice.

Senator ABETZ —Thank you very much. Another matter is the issue of whether or not there will be a mail service to Scamander and Beaumaris in the north-east of Tasmania. Is anyone aware of that?

Mr McCloskey —Yes, Senator, I think I have some information on that.

Senator ABETZ —Excellent.

Mr McCloskey —We polled the local community in Beaumaris a couple of months ago. The outcome of that was that the community actively supported a change in the local delivery arrangements so that we will be introducing a roadside delivery or a to-the-property delivery in the next couple of months.

Senator ABETZ —A big tick for Australia Post. Thank you very much for that, because my constituent told me that Australia Post had advised parliamentarians so this constituent busily rang parliamentarians, but nobody—Liberal, Labor or Green—happened to know anything about this. This was from an Australia Post official, but we have now heard at estimates that roadside delivery will occur. So a local campaign has done well. Thank you for that; a number of people will be very pleased with that. I did have a number of questions for the managing director, but allow me to start, possibly, with the Licensee Advisory Council. How many full-time Australia Post staff work on LAC matters? Do we know that? If not, take it on notice.

Mr Mitchell —I do not have the exact number of people who work in the LAC. It would be a very small number of people.

Senator ABETZ —Given that, I have got a number of questions that I will now place on notice. Has Australia Post engaged any consultants to work on LAC related matters?

Mr Mitchell —To my knowledge, no, not recently.

Senator ABETZ —I might place that one on notice then as well, just to check up on that. Is the Australia Post LAC a wholly owned subsidiary of Australia Post?

Mr Mitchell —I would have to take the corporate status of the Licensee Advisory Council on notice, if I could, Senator?

Senator ABETZ —Yes.

Mr Mitchell —It is a body of elected representatives. We draw elected representatives from each state and they meet quarterly. My latest information is that about 1,135 licensees are members of the Licensee Advisory Council. In terms of the corporate status of the entity, I would have to take it on notice.

Senator ABETZ —Can you tell us how often the elections are held and what the total cost of elections was in 2008? Is the LAC only made up of licensees or does Australia Post have a few of its own personnel on the LAC as well?

Mr Mitchell —Australia Post does have some of its officers on that body.

Senator ABETZ —Where is the weight of numbers—is it in favour of licensees or Australia Post?

Mr Mitchell —I believe it is in favour of the licensees but I would have to take it on notice and confirm those numbers for you, Senator.

Senator ABETZ —If you could, that would be very helpful. Is the term ‘director’ an appropriate term to use in relation to the LAC?

Mr Mitchell —Yes.

Senator ABETZ —What role do the directors have in relation to compliance monitoring, performance and those sorts of things?

Mr Mitchell —The Licensee Advisory Council’s principal reason for being is to meet with Australia Post as part of that overall body for the purpose of advancing business opportunities between the parties. We would also use that forum to test new initiatives and to seek advice from the Licensee Advisory Council in relation to new products and services that may be being contemplated for release into the market.

Senator ABETZ —Rather than you being in danger of missing something out, if you could possibly take that question on notice and set it all out because it does sound quite detailed.

Mr Mitchell —I would be happy to do that.

Senator ABETZ —I thank you for that. Are the directors paid a fee?

Mr Mitchell —No, I do not believe so, but I will confirm that.

Senator ABETZ —What about their costs?

Mr Mitchell —The costs of the operation of the Licensee Advisory Council are borne by Australia Post.

Senator ABETZ —Excuse me, could you say that again, I did not make myself clear. I understand the directors come together at meetings?

Mr Mitchell —Yes.

Senator ABETZ —Does Australia Post or LAC pay for them to travel to wherever they meet?

Mr Mitchell —Australia Post meets all the travel and accommodation costs of the members.

Senator ABETZ —All the travel and accommodation costs?

Mr Mitchell —All the travel and accommodation costs of the Licensee Advisory Council members, that is correct.

Senator ABETZ —I understand that Australia Post holds annual conferences in each state for licensees; is that correct?

Mr Mitchell —That is correct.

Senator ABETZ —Are you going to hold those conferences again in every state this year?

Mr Mitchell —I cannot answer that question. I am not sure. I would have to check that for you.

Senator ABETZ —If you would take that on notice, I would be obliged. In relation to Express Post late delivery, I understand that if the bag or the article is not delivered within the 24 hours then the customer is given a free bag; is that right?

Mr McCloskey —That is correct. It is guaranteed next day delivery and the guarantee—

Senator ABETZ —It is guaranteed next day delivery—

Mr McCloskey —The guarantee is that if we fail then, yes, there will be a replacement envelope or satchel, depending on—

Senator ABETZ —As a result, a lot of the licensees and agents have to make special trips to guarantee the next day service; is that correct? If a plane gets in late and the mail contractor does the mail run and gets back to the base and there is a next day delivery satchel there because the plane was late then the agent or licensee has to make an extra trip out to that destination; is that correct?

Mr Mitchell —I am not sure whether we require the licensee to do that, but I would suspect, knowing the licensees as I do, that many of them would.

Senator ABETZ —Who pays for that extra cost for the licensee to undertake that extra run?

Mr Mitchell —That would be borne by the licensee.

Senator ABETZ —To maintain Australia Post’s reputation? Are you looking at ensuring that they are compensated? Because for some of these licensees it would be cheaper for them to buy an Express Post bag and give it to the customer rather than doing the run. Do you get the point I am trying to make on their behalf?

Mr Mitchell —I understand where you are coming from.

Senator ABETZ —If you could look into that, I would be obliged. I have also been told that you can send quite hefty parcels via Australia Post and that Australia Post has a policy that any item that is over 16 kilogram is designated as a two-person lift; is that correct? First of all, for over 16 kilogram do you need two people to lift it?

Mr Mitchell —Yes, that is correct.

Senator ABETZ —If that gets sent from a GPO somewhere where they have more than enough personnel then that is all good, but what happens when that then arrives at a one-person licensee office? What provision does Australia Post make for there to be two persons to lift this 16-plus kilogram article? I did ask how on earth would somebody be sending 16 kilograms worth of materials through Australia Post and I was given an example, believe it or not, of somebody sending two concrete mixers via Australia Post. Thank goodness they did not try to fit it into the letterbox! Quite heavy items are in fact being sent via Australia Post. How do you look after the licensees and agencies that only have one person operating them when such heavy items are delivered?

Mr Mitchell —I can attempt to answer that for you. The handling of what we call overweight articles is mainly associated with contract customers—these are the small business to large business type customers. We are quite selective in the type of product that we handle through our mail stream. We put it through various tests of compatibility with our network. Sometimes parcels comply with the requirements of our network but they are overweight and we designate those parcels as a two-man lift. We do try to minimise those parcels into our network. Around September last year we trialled a new method of delivery called Australia Post Safe Drop Parcel Delivery. This enables a parcel contractor to leave a parcel at the address if he goes through certain processes and deems it safe to do so.

One of the outcomes of that is that we reduce the number of parcels that are carted to a post office. A specific objective of the corporation is to try and achieve first delivery, or delivery on the first attempt, as often as we can. That does not catch all of the parcels, of course, and we work with the network and with the various Australia Post people on behalf of licensees to try and deal with each of those cases on a case-by-case basis. There is no blanket answer to the question, but where we become of aware of issues we try to deal with them.

Senator ABETZ —You are aware of the concerns and you are trying to address them and I am sure that will provide some degree of comfort to those who have raised those issues with me. Can I ask a question in relation to another topic: insurance brokers. Australia Post has an arrangement with two insurance brokers, is it, to promote insurance services to licensees or mail contractors?

Mr Mitchell —I would have to take that on notice, Senator.

Senator ABETZ —I have got a few other questions along that line that I will put on notice as well. I asked some questions about delivery points, question number 180 last time, and, given time constraints, be prepared that I will be asking again because I do not think the answer was as specific as I wanted. I will also be asking in relation to dog attacks, which is a regular issue, what is meant by ‘appropriately followed up’? Do we have a definition of what is meant by that? That is in relation to question number 182 that I asked last time. You said that these dog attacks are appropriately followed up but that does not really tell me much at all. When I ask about how they are followed up, I am told they are appropriately followed up.

Mr Newman —Senator, my name is Don Newman. I am the acting group manager of national logistics.

Senator ABETZ —Do you move up one because Mr Marshall moved up one, or not?

Mr Newman —No. I have been in this position for some time. The appropriate follow-up would depend on the circumstance. For example, most dog attacks need to be reported to the council and in some cases to other authorities. The follow-up action is to make sure that that dog threat is no longer there at the place where it occurred. We have a variety of techniques that we can use to do that. For example, communication with the owner of the dog is one; working with the council to get the animal under control and using their various bylaws is another.

Senator ABETZ —Mr Newman, I thank you for all that information and could I invite you to set all that out for us in a more detailed answer—

Mr Newman —Certainly.

Senator ABETZ —to explain what ‘appropriately followed up’ means. I think, once again, that will provide some comfort to the people who have asked me to ask these questions. Thank you for that. I understand Australia Post has moved or is moving to new headquarters?

Mr Marshall —That is correct.

Senator ABETZ —It has moved?

Mr Marshall —No, it has not yet.

Senator ABETZ —When is Australia Post moving?

Mr Marshall —We are moving over a period of time in a few months.

Senator ABETZ —Has the move started?

Mr Marshall —Not to my knowledge, no.

Senator ABETZ —When is it going to start? I understand it is going to happen earlier than originally anticipated.

—No.

—No?

Mr Marshall —We are anticipating the move occurring in the October-November period and perhaps a little beyond that.

Senator ABETZ —There will be no moving ahead of schedule?

Mr Marshall —No.

Senator ABETZ —So there will not be any dead rent left on 321 Exhibition Street?

Mr Marshall —That is my understanding.

Senator ABETZ —Thank you for that.

Senator MINCHIN —Pardon my ignorance. Could you remind us why you are moving?

Mr Marshall —It is essentially a commercial decision. We have been in the current building for some 18 years or thereabouts.

Senator MINCHIN —Eighteen years?

Mr Marshall —Eighteen years or thereabouts. The building is in need of refurbishment by the owners. The building has changed hands a number of times in that period of time. Some time ago we made a commercial decision that we needed to change location. We had an opportunity to take the building that was on the drawing board at the time a couple of street blocks away in Melbourne, so we took that opportunity in preference to staying in the building and essentially being in a substandard situation for some time. The commercial arrangements, I understand, are quite attractive.

Senator MINCHIN —Does that mean you will be paying more in rent than you currently pay for the same office space? Are you getting more space? Are you paying at the same rate?

Mr Marshall —I do not have all the rent details. I can tell you that the new building will bring together all of our staff in the Melbourne CBD area whereas we occupy other—

Senator MINCHIN —So you are exiting other rental space as well?

Mr Marshall —Yes, we occupy a number of different buildings at the moment around Melbourne, usually in a fairly fragmented way. We are collecting all of our people together in one place with the exception of our IT nerve centre, if you like, in Roslyn Street in West Melbourne together with our shared service centre, which operates with that IT centre. It is also part of the strategy to bring the people back together again in one single building.

Senator MINCHIN —Have you signed a lease for the new place?

Mr Marshall —Yes.

Senator MINCHIN —I would be interested in seeing the details of the rentals that you currently pay for the disparate properties and what you will be paying in the new premises and the relevant size.

Mr Marshall —We can provide those details on notice.

Mr McCloskey —We have provided information previously on the rental in the new building on notice.

Senator ABETZ —It is $172 million over 10 years?

Mr McCloskey —It is $14.7 million a year. We were asked how much we expected it to be over a 10-year period with increases and, that is right, Senator Abetz, it was $172 million.

Senator ABETZ —And the fit-out was $70 million?

Mr McCloskey —The fit-out is $70 million; that is correct.

Senator ABETZ —Is that still on budget?

Mr McCloskey —My understanding is that it is.

Senator ABETZ —Well done.

Senator MINCHIN —I would just like to see the comparison between that and what you would have been paying if you had renewed and stayed where you are for the equivalent.

Mr McCloskey —Certainly.

Senator Conroy —It is a little hard to speculate on a figure like that with what you are currently paying.

Senator ABETZ —Just tell us that the landlord is not John Curtin House Ltd.

Senator Conroy —I am sure we can confirm that to be the case, Senator Abetz.

Senator ABETZ —Good, thank you, Minister. In relation to Australia Post’s financial position, have you reassessed your likely profit in light of the prevailing economic circumstances? I assume the answer to that is yes.

Mr Meehan —Yes, we have reassessed our profitability going forward. As you would understand, like our counterparts overseas, Australia Post has not been immune to the effects of the global financial crisis. As mentioned before, we are experiencing real decline in letters volumes which has a direct impact on our profitability. Equally, after many years of exceptional growth, the parcel volumes are expected to decline this year by about 0.9 per cent. With this, combined with a number of items that are outside of our control—for example, in regard to bond rate movements, which has affected our provisioning by in excess of $60 million—we would expect our profit this year to be down 40 per cent against our original expectations.

Senator MINCHIN —That is for 2008-09?

Mr Meehan —Yes, 2008-09.

Senator MINCHIN —Forty per cent down?

Mr Meehan —Yes.

Senator ABETZ —Is the government still seeking a special dividend out of Australia Post?

Mr Meehan —No more than the $150 million that has always been provided for.

Senator ABETZ —For how long has a special dividend been paid by Australia Post to the government?

Mr Meehan —On several occasions over the years.

Senator ABETZ —Has the rate of those special dividends been the same?

Mr Meehan —The amounts of special dividends have varied from time to time. The one we were asked for most recently, in the prior budget, was an extra $150 million, which we will still be paying at the end of this financial year.

Senator ABETZ —Are we in the same financial year for that?

Mr Meehan —No, it is overlapping. Most of that dividend is payable out of last year’s profit, which as you will recall was a record profit for Australia Post. The significant amount of that is last year’s—

Senator ABETZ —The Howard government left you in very good shape.

Senator MINCHIN —You will pay most of that $150 million out of 2007-08?

Mr Meehan —Certainly.

Mr McCloskey —It is $111 million from out of 2007-08 profits. The balance is out of an interim dividend declared back in February of this year.

Senator BIRMINGHAM —Was that $150 million or $111 million the sum total of dividend paid to government or a special dividend over and above your normal dividend?

Mr McCloskey —It was a special dividend over and above the normal that would be paid. The normal is paid at 75 per cent payout ratio of after tax profits.

Senator MINCHIN —On this dividend issue, the budget papers refer to an 2008-09 expectation of $427.8 million. Is that correct?

Mr McCloskey —That is correct.

Senator MINCHIN —That includes this part of this $40-odd million?

Mr McCloskey —Correct. That is the amount that will have been paid in the course of this financial year. The bulk of it will have been declared out of last year’s final profits and some of it out of this year’s interim.

Senator MINCHIN —Are you able to give an indication of what the expectation is in terms of retained earnings for 2008-09, having paid that dividend?

Mr Meehan —It will enable us to have enough retained earnings to manage the business successfully.

Senator MINCHIN —You declare that somewhere, do you?

Mr Meehan —You would be aware that we need to go through a process with the board to assess that we have significant cash reserves to run the business before such dividends can be paid.

Senator MINCHIN —But you have not sought, in the face of a 40 per cent decline, to renegotiate with the government the dividend payment for 2008-09?

Mr Meehan —No. We have done a lot of work on cash flow over that period and determined that we can still pay that dividend.

Senator ABETZ —What work have you done on the cash flow? Are you liquidating assets, are you going to downsize the workforce? What work have you done?

Mr Meehan —Significantly, we have looked at a lot of exercises within Post to download our capital expenditure. We have put limits on capital. This would have happened regardless of the dividend based on the economic circumstances. We still have a major capital program going over the next two or three years of about $300 million per annum and we believe, under the figures that we have got forecast, that we can afford that.

Senator ABETZ —Does that include your vehicle fleet?

Mr Meehan —Yes, it does.

Senator ABETZ —Are you going to extend the lifetime of the vehicles that you have? I understand you keep them for five years. Is that correct?

Mr Meehan —That is correct. Where it is appropriate, we have reviewed lives of vehicles, but we will not put staff at risk. If we believe that the vehicle should be replaced in a certain time frame, that is what we will do.

Senator ABETZ —But there is the possibility of extending it beyond the five years. A lot of Australian cars are older than five years and I do not think they would be putting people at risk.

Mr Meehan —We are looking at all those options, and in some cases that may happen.

Senator ABETZ —You have a requirement for licensees and agents that they have vehicles that are not over five years of age. Is that right? If you do not know, take it on notice.

Mr Meehan —I cannot answer that.

Senator ABETZ —Just let me know if that assertion is correct. I am going from memory on that, if you can let me know how that would dovetail in.

Mr Meehan —Certainly we get useful lives out of all our assets.

Mr Mitchell —To my knowledge, we have no requirement upon licensees to have a motor vehicle for the purposes of operating their shop. Some people who work out of licensee premises who deliver mail may have a requirement.

Senator ABETZ —Thank you for that. Who sets the directors fees for Australia Post?

Mr McCloskey —They are determined by the Remuneration Tribunal, Senator.

Senator ABETZ —What about bonuses for directors? Are any bonuses paid for directors?

Mr McCloskey —No, there are no bonuses paid to directors.

Senator ABETZ —What about senior managers?

Mr McCloskey —Senior managers are eligible for bonus payments.

Senator ABETZ —Including the managing director?

Mr McCloskey —Including the managing director.

Senator ABETZ —He is eligible for a bonus.

Mr McCloskey —Yes.

Senator ABETZ —Has he been paid a bonus?

Mr McCloskey —Yes.

Senator ABETZ —How big was that?

Senator MINCHIN —And when?

Mr McCloskey —It is in our annual report each year.

Senator ABETZ —Is it $1 million or something? Was it a sizeable sum?

Mr McCloskey —For 2007-08 the managing director received a cash bonus of $1.064 million.

Senator ABETZ —Who determined that bonus—the board?

Mr McCloskey —It is determined by the board. The managing director’s remuneration is determined by the board within parameters that have been approved by the Remuneration Tribunal.

Senator ABETZ —Undoubtedly, Mr Meehan, as you are looking at ways to make savings et cetera in relation to the 40 per cent reduction that you have been talking about, I daresay that might be one area that might receive some attention.

Mr Meehan —That is not for me to decide.

Senator ABETZ —Fair enough. I take Senator Birmingham’s suggestion for the Remuneration Tribunal or whoever sets the parameters for these bonuses that one of the KPIs could be attendance at Senate estimates. Does Australia Post self-insure and, if so, in what areas?

Mr Meehan —Yes, we do. We self-insure in the way of workers compensation. We also self-insure deductible in regard to our major insurance policies for risk and for liability, which are insured through Lloyd’s of London. In many cases we have a $10 million deductible, which enables us, because we have not had any claims in the past, to maintain a good relationship with the underwriters and to maintain good premiums.

Senator BILYK —I read in the Hobart Mercury last Friday that 13 staff are going to be sacked from Australia Post’s Tasmanian call centre. That is part of what the staff union estimate will be nearly 300 people that may be affected by a move by Australia Post to shut down centres across four states. It is not just Tasmania, but my specific interest at the moment is in regard to Tasmania. Can you tell me not the full-time equivalents but the actual number of people to be affected by this move to shut down the Hobart site? What are the dates for this to take place? What arrangements have been put in place to cover these job losses? I wonder if part of the $1.046 million bonus is related to saving money by cutting jobs.

Mr Mitchell —Allow me to provide some background to the decision you are referring to. We had an extensive review of our customer contact centre network across Australia and we have decided to rationalise our current six-contact-centre network down to two. Those sites nationally will be located in Brisbane and in Melbourne. In transitioning to the two-centre model, we will progressively close the existing centres in New South Wales, Western Australia, South Australia and, as you referred to, Tasmania.

Senator BILYK —I read all that in the newspaper.

Mr Mitchell —We will start to upgrade the call centre system in August to reduce call-waiting times, to improve the accuracy of information we give to our customers and, generally, to upgrade the quality of service.

Senator BILYK —So you are going to shut these centres because they do not work efficiently.

Mr Mitchell —And to increase the efficiency through the whole national network.

Senator BILYK —Are you saying the Hobart call centre and the three other call centres do not work efficiently?

Mr Mitchell —The technology with which we operate our national call centre network dates back to 1998. It is old technology that really does not help us do the job that our call centres are there to do.

Senator BILYK —You have not actually put money into infrastructure?

Mr Mitchell —That is correct. Over the years we have not put money into infrastructure. Australia Post runs a six-centre national call centre network. No other major Australian organisation does that, so we are collapsing that network into two centres. I will go to the heart of your specific questions, and I have details for all of the states. In Tasmania, there are nine FTEs, but there are 13 people who will be affected by that change. We will commence that piece of work in Tasmania in August, to migrate the functions from the Tasmanian call centre across to the national call centre network, which will comprise Melbourne and Brisbane, as I mentioned, with a view to that work being completed in October.

Senator BILYK —You will migrate the function, but what happens to the 13 staff?

Ms Walsh —Australia Post has a comprehensive RRR agreement, the redeployment, retraining and redundancy agreement. We have made a commitment to both our employees and their representative unions that there will be no forced redundancies through this program of work.

Senator BILYK —Will people be forced to move interstate?

Ms Walsh —No-one will be forced to move interstate. We are currently talking to staff and their representative organisations to best assess what people wish to do—whether they do wish to take a redundancy, whether relocation is an option they wish to pursue or whether there are redeployment options throughout other facilities that Australia Post run within that state. This is in not only Tasmania but all of the states. We are hopeful for successful redeployment, relocation or retraining for all of those staff.

Senator BILYK —So you are formally talking to staff and to the union representatives.

Ms Walsh —Correct.

Senator BILYK —When did you start doing this?

Ms Walsh —The decision was made some two weeks ago now.

Mr Mitchell —The decision was made on 12 May.

Senator BILYK —When did you start talking to the unions and to the staff?

Ms Walsh —Soon after that decision was made, so last Wednesday, 20 May.

Senator BILYK —At 5.20pm were the four relevant unions in each state all told that this was going to happen?

Ms Walsh —Correct.

Senator BILYK —How long have you been in making this decision?

Mr Mitchell —The matter of the call centre operations has been under review for several years. We have tried some other interventions to address some of the service issues that we will be able to address through this decision, and clearly they have not worked in the manner that we intended. That manifested in a 22 per cent increase in the costs of running our call centre network over the past two years, so we had no option but to consider next steps in this process.

Senator BILYK —Were staff and unions consulted about this?

Ms Walsh —We have been having a range of discussions with the unions over a number of years about the call centres and that there were reviews being undertaken.

Senator BILYK —About closing four specific call centres?

Ms Walsh —One of the issues that was on the table through the review process was that there was a possibility of consolidation, but no decision as to how that consolidation would actually work or how that would look was made until last week.

Senator BILYK —To be more specific, when did these consultations with the unions take place?

Ms Walsh —We have been talking with them about the call centre review process over a number of years.

Senator BILYK —So you could give me specific dates about when you have spoken to them in regard to this specific issue of closing these four call centres?

Ms Walsh —The specific discussions with the union about the closure of these specific call centres commenced last Wednesday, 20 May.

Senator BILYK —At 5.20pm.

Ms Walsh —As we started consulting with our staff.

Senator BILYK —When you told staff.

Ms Walsh —Yes.

Senator BILYK —You did not have any prior discussions, so where does that leave the discussions under the agreement?

Ms Walsh —Under EBA6, which is our current certified agreement, with the CPU and CPSU as the primary unions, there is an obligation to undertake consultation as soon as practical after a decision has been made to ensure that the impact and the effect on staff is discussed with the unions. We are of the view that that was fully complied with.

Senator BILYK —So you would not mind if you had someone representing you who was told, once the decision had been finally made and with no discussion about it, that you were likely to lose your job.

Ms Walsh —Our view is that, as the closures are not happening imminently but are happening progressively from August, there is now—

Senator BILYK —Until when—October?

Ms Walsh —February 2010 will be the final closure.

Senator BILYK —But you have made the decision; it is going to happen. How many staff members throughout the whole of Australia are likely to be affected by this?

Ms Corbett —Throughout New South Wales, South Australia, WA and Tasmania, 285 people in those centres will be affected. In the Melbourne centre we are actually creating an additional 137 jobs.

Senator BILYK —That does not help those 285 people unless they are willing to work in Melbourne.

Ms Corbett —There will be opportunities for those 285 people. There will be no forced redundancies.

Senator BILYK —What sort of redeployment and retraining are you going to offer, and are you going to be discussing this with the unions?

Ms Walsh —Yes, that is exactly what we are doing with the unions right now.

Senator BILYK —Before you make any final decisions, as opposed to last week?

Ms Walsh —The decisions about how it will affect and impact on individual staff will be discussed with the unions between now and when the impact actually occurs as to whether or not an individual is redeployed, made redundant or retrained into another role.

Senator BILYK —So you are willing to discuss that between now and when the decision might be made final, but you are not willing to discuss the actual fact prior to the 5.20 pm announcement last Wednesday, when the unions and the workers all found out at once?

Ms Walsh —It was a business decision that was made.

Senator BILYK —Do you think that was a good business decision?

Ms Walsh —I think it is an excellent business decision.

Senator BILYK —I just find that astounding.

Senator WORTLEY —Ms Walsh, in relation to the enterprise agreement, isn’t it the case that your enterprise agreement specifically requires you to consult ahead of making a decision that would have such a major impact on staff? There is a clause in your current enterprise agreement, which you have already referred to, that says:

Yet you agree that Australia Post did not tell the union of the decision until 20 May. If that is the case, isn’t it a fact that you have breached the agreement, because you deliberately failed to give the union any real opportunity to influence the decision? Do you really think you have given the employee representatives the opportunity to influence the decision about these decisions that you have made?

Ms Walsh —Yes, we do. There are a number of other provisions that make up that clause—it goes over two pages, in fact. The focus of consultation will be on the impact of Australia Post’s decisions on its employees. Now that the decision has been made, we are working with the employees and their representatives to ensure that the impact on the employees is minimised. As we have said, we have made a very strong commitment that there will be no forced redundancies.

Senator WORTLEY —We are not talking about the forced redundancies at the moment. EBA6 at 3.4 says you will:

Ms Walsh —That is correct.

Senator WORTLEY —What evidence have you got that you have met the tests set in the industrial agreements?

Ms Walsh —We provided that information to the unions as soon as practical after the decision was made, which was on Wednesday.

Senator WORTLEY —But 3.2 says:

Did that occur?

Ms Walsh —We say yes because the focus of the consultation is about the impact on employees. Now that the decision has been made, they have the ability to impact and influence us about how we best carry out the impact of this change.

Senator WORTLEY —I have already quoted where it says:

It is the common misconception.

When you notified the unions on 20 May, some eight days after you had made the decision, how then would they have the opportunity to influence that decision if it is a fait accompli—if that is what is happening?

Ms Walsh —We see that the role that they have got to play now is around the impact the decision has on the employees. They have what we consider to be a considerable amount of time to now influence how the redeployment, how the redundancy and how the retraining program is effected on staff. We actually think that there is quite a lengthy period now in which we will be working with them to make sure that the impacts on staff are minimised.

Senator BILYK —Basically you deliberately kept this from the unions until 5.20 last Wednesday—would you agree with that?

Ms Walsh —I do not agree with that. I think we have complied with the requirements of our EBA.

Senator BILYK —That may well be tested in another area. Certainly I think they were probably hijacked in some ways, but that is my personal view. If any staff members are prepared to move to Melbourne or Brisbane, what would the relocation costs be?

Ms Walsh —We do have provisions within both our policy and awards around the relocation. What we are seeking to do now with the employees and their representatives is to assess the interest the people have and the possibility that they might want to move. Once we have an indication of the numbers of people who may wish to relocate, we will be having discussions with them and their representatives about what relocation benefits will then flow from that.

Senator BILYK —How many jobs do you think will be created for redeployment if staff are interested?

Mr Mitchell —There are an additional 137 new jobs being created in Victoria.

Ms Walsh —Certainly, our view also is that the call centre staff have many skills that are required in other parts of the business. They are very skilled individuals and the work that they have undertaken in having to understand the business and provide advice to customers means that we think that there will be a number of redeployment opportunities for them.

Senator BILYK —Do you think there will be other redeployment opportunities for the staff in Hobart to stay in Hobart?

Ms Walsh —We will be exploring those opportunities, yes.

Senator BILYK —What is the cost of operating the six customer contact centres at the moment?

Mr Mitchell —For the past 12 months it was $51.9 million.

Senator BILYK —How much do you expect to save by consolidation?

Mr Mitchell —We will save in the order of $6.8 million a year in operating costs.

Senator BILYK —Can you tell me again what the cost has been?

Mr Mitchell —The cost currently for the 2007-08 full year is $51.9 million.

Senator BILYK —How much do you expect to save?

Mr Mitchell —We expect to save an estimated $6.8 million per annum once the operation is bedded down.

Senator BILYK —A proportion of that will obviously go to that nice $1 million bonus payout, I should expect. When will the existing centres be closed?

Mr Mitchell —The time frame for Hobart, Perth and Adelaide is to start the work of migrating those operations to the new centres in August, and they will cease to operate no later than October. For Sydney, we will start that process in January 2010 and close that facility in relation to the incoming calls in February.

Senator BILYK —When will the two centres be ready to start?

Mr Mitchell —We want to have the network fully operational and all of the various considerations completed by 30 June 2010. The Victorian and Brisbane facilities are currently operating, but we will need to do some capital works in the Victorian facility in particular to be able to accommodate the additional 137 jobs.

Senator BILYK —What is going to happen in Hobart? I come from Hobart. If I have a problem, I will obviously ring the call centre in Victoria or Queensland and speak to people who probably have no idea of any geographical information. I will be put on hold; I will be pressing buttons to get put through to other people; I will be generally frustrated. Is that how it will work?

Mr Mitchell —We hope that is not the case, but it is correct that your call will come through to either the Melbourne or the Brisbane call centre.

Ms Corbett —Certainly, the new technology that we are employing will allow us to be able to reroute those calls to people who have specialist knowledge. That is something we are unable to do today in any of our singular state based contact centres. In addition, we will be able to have some call overload facilities to lessen wait times on queues. A primary objective is to improve the customer experience as a result of the optimisation.

Senator BILYK —How many calls does the Hobart centre take over a year?

Ms Corbett —We have not got the individual state breakdown—

Senator BILYK —Could you find out for me? Maybe someone could go and find out; it should not be too hard to find out. Maybe someone could go and make a call.

Ms Corbett —Yes.

Senator BILYK —I would also like the national numbers and I would like to know how many are actually complaints.

Ms Corbett —We have got the national numbers. We take 5.9 million phone calls per annum on a national basis, of which approximately 500,000 are complaints.

Senator WORTLEY —Could I just go back for a moment?

CHAIR —Still on the same topic?

Senator WORTLEY —Yes, on the same topic. In relation to the staff that are made redundant, is this a lawful redundancy given that, as you are aware, taxation concessions are provided with redundancies?

Ms Walsh —Absolutely.

Senator WORTLEY —You were mentioning numbers. I did not catch the numbers for Sydney. I do not want full-time equivalents; I want to know exactly how many people will lose their jobs in Sydney, Adelaide and the various other centres that are closing.

Ms Corbett —It is only the inbound call centre function that is affected. All of the outbound call centre roles will remain in each of the states, so the sales roles will remain. Specifically, in New South Wales 181 people in the inbound function will be affected; in South Australia 37 people in the inbound roles will be affected; in Western Australia 54 will be affected; and in Tasmania there will be 13.

Senator WORTLEY —Senator Bilyk asked earlier about the numbers and about whether there will be forced redundancies or whether people could be forced to go interstate. You said first of all that they will not. Regarding the job opportunities or the offers being made by Australia Post to the employees who are to lose their jobs, are those job offers within the same state?

Ms Walsh —That will certainly be our primary focus. We do not make the statement lightly that there will be no forced redundancies and that we will be seeking to redeploy and retrain. We are committed to seeking to have people maintain their jobs where possible.

Senator WORTLEY —I am assuming that, in your decision to do this, you would have an estimate of the number of people you expect to actually take a redundancy?

Ms Corbett —It is very hard to work out that number. We had a very detailed staff briefing with all the staff since the announcement was made last Wednesday. We had our HR representatives on the floor in each of the contact centres on Thursday and Friday so that we could take questions from concerned staff members. Next week, we are planning to send a letter out to each of our staff to go through the details under the redundancy redeployment and retraining program and ask them to indicate their preference for redeployment or redundancy. That will start to give us a first indication.

Once we understand who actually wants to be redeployed, we then work individually one-on-one with each of those staff members to actually ascertain what area of the business they are in. As you can appreciate, there are opportunities across sales and retail as well as our operational functions in the mail area as well. We need to determine what their particular interests may be and work with those particular interests, then work through where they may live individually and then look at what opportunities we would be able to create to match that.

Senator WORTLEY —Senator Hutchins wanted to ask a question specifically in relation to Sydney but he is in another committee so perhaps I will just touch on that.

Ms Corbett —Certainly.

Senator WORTLEY —In Sydney, for example, where precisely in Post are there similar jobs available to accommodate the 181 affected employees?

Ms Corbett —There are opportunities. I think it is actually important to note too that we have a 40 per cent attrition rate now in our call centre operations, if you actually look at the numbers, which is very high. As Catherine referred to earlier, a lot of our staff go into our sales area and retail area now due to the skill base of our operations that they have actually built up. There are opportunities in the retail side of the business. We are also looking at opportunities in the outbound call centre function as well, and we will be working through those details on a state basis if people want to pursue them.

Mr Mitchell —Senator, if I could just add a comment, that of the 181 people that we are talking about, some work on fixed-term contracts and some are temporary so they have a sunset on their employment already. That was the part of the arrangements under which they were originally engaged to work in our call centres.

Senator WORTLEY —Do you have the figures on those for the states?

Ms Corbett —Yes. In Sydney, of the 181 staff, 44 are on fixed-term contracts.

Senator WORTLEY —Any casuals?

Ms Corbett —With regard to our casual employment, generally they are just brought in for immediate peak loads. Of the 181, 44 are fixed-term contracts. In South Australia, of the 37 staff, 16 are fixed-term contracts. In Western Australia, of the 54 staff, two are fixed-term contracts. There are no fixed-term contracts in Tasmania.

Senator WORTLEY —Were these Australian workplace agreements that you are talking about?

Ms Corbett —No. They are hired on fixed-term contracts for a variety of reasons. It could actually be that someone owns a position and they may be on maternity leave or they may be acting in another role, so they are brought in for a fixed-term nature. Certainly we will honour all of the contracts that we have in place. For some of the centres in that transition period, there may also be the opportunity to extend some of those contracts to actually coincide with when some of those inbound functions will close.

Senator WORTLEY —Are the new employees all on enterprise agreements?

—All of our employees are currently on enterprise agreements.

Senator BILYK —Just to wind up, have you got formal arrangements in place now to meet with the unions?

Ms Walsh —Yes we do, Senator.

Senator BILYK —Can you give me the dates of them?

Ms Walsh —I do not have the dates.

Ms Corbett —The next meeting has been scheduled for Wednesday. We had a teleconference with the national secretary last week and they requested—

Senator BILYK —That was some time after 5.20 pm last Wednesday I presume?

Ms Corbett —There were phone calls made Wednesday. The announcement was at 4.30 pm. At the same time as our commercial managers in each state were making the announcement to staff at a state level, the national offices of the union were contacted by our commercial HR people.

Senator BILYK —What about the state offices?

Ms Corbett —We then also sent written correspondence to each of those state offices at the same time.

Senator BILYK —You just mentioned that there would be one-on-one interaction with people to try and help them sort out their future.

Ms Corbett —Yes.

Senator BILYK —Who does that?

Ms Corbett —The contact centre managers as well as our HR managers are on the floor at the moment to work through any questions that staff may have. We have also made sure that all staff are aware of our employee assistance program.

Senator BILYK —And that they have the right to union representation?

Ms Corbett —Absolutely.

Senator BILYK —You have made that clear to them have you?

Ms Corbett —All staff are aware of that, yes.

Senator BILYK —You have made it clear to them? How do you know they are aware of it?

Ms Corbett —The union make regular meetings at the contact centre.

Senator BILYK —What I want to know is, if you are speaking to staff one-on-one at the moment, have they been told that they have the right to have a union representative with them for those meetings?

Ms Corbett —They have not been told that at this stage.

Senator BILYK —Should not they be told that?

Ms Walsh —There is no obligation to do that. Can I just say Senator, that as an employer, Australia Post we think has a very open and consultative process with the union.

Senator BILYK —They are certainly not thinking that at the moment.

Ms Walsh —They are regular visitors to our work sites. I think it would be clear to most people that the union have a role to play and that they would be welcome to be there as a representative for any individual who so requests it.

Senator BILYK —You are presuming that people will think that; I want to know that people know that.

Ms Walsh —I cannot say to you that I know that everyone knows that.

Senator BILYK —Can you take steps to make sure, in the next 24 hours, that all people affected know that?

Ms Walsh —Senator, we can undertake to do that.

Senator BILYK —Thank you.

Ms Corbett —Senator, with regard to your earlier question about how many phone calls Hobart take, during the 2007-08 year, 113,908 calls were taken through our Hobart inbound call centre.

Senator BILYK —That is a significant number. If Tasmania could prove that they had a business case to keep going, would there be a reconsideration of that?

Ms Corbett —The service that we are offering with the integrated technology that will be located out of Melbourne and Brisbane will be able to give a better level of service and minimise the queues for all public ringing.

Senator BILYK —So the answer is no?

Ms Corbett —The answer would be no.

Senator BILYK —Thank you.

CHAIR —I might just ask a question. Are the people on fixed-term contracts entitled to the employee assistance program as well?

Ms Corbett —Yes, they are.

CHAIR —Do they have any access to redundancy payments?

Ms Corbett —No, we will actually honour their contract so whatever contract term has been specified—

CHAIR —Do any of their contracts have redundancy payment provisions in them?

Ms Corbett —No, they do not, Senator.

CHAIR —Thank you. Are there any further questions on this topic before we go to Senator Fielding for another issue?

Senator FIELDING —I would like to tap onto that one issue if I can, thank you.

CHAIR —Yes, certainly.

Senator FIELDING —Thanks, Chair. I am wondering whether any further redundancies would be due to call centres being placed overseas or do you have a policy against placing call centres for Australia Post overseas?

Mr Mitchell —Senator, we have elected not to contemplate sending our call centre operations offshore. I think Australia Post is an iconic brand so that is something that we dismissed very early in the process.

Senator FIELDING —Is that something that is reviewable? For how long is that going to be in place? Do you review that from time to time?

Mr Mitchell —There is no plan whatsoever to give that consideration now or in the future.

Senator FIELDING —Would it be too much to ask that you would let this committee know if that was to change before it actually changes; is that possible?

Mr Mitchell —I believe that would be possible.

Ms Corbett —We certainly have no intention to outsource those operations overseas whatsoever.

Senator FIELDING —I just want to make sure, that is the key part. It would be a shame to see if that was the case. Another area which is at the heart of a security issue for Australia, just speaking generally, is the involvement that Australia Post has in reports about a fake passport racket. It involves potential people-smuggling and flying illegal immigrants in. These are very touchstone issues for Australians. The reports in the paper have left a lot of people with a lot of concerns about how widespread this is. I do not want to have a slant on any Australia Post people at all but obviously reports that were in the paper recently leave us all feeling a little concerned and alarmed. The question is: what has Australia Post done about checking this out? This is about an Australia Post worker, and there may be more, allegedly being involved in a fake passport scandal.

Senator MINCHIN —I wanted to ask about that. Perhaps Australia Post could begin by reminding us all of the role of postal officers in the passport approval process. What level of staff are entitled to or authorised to perform those functions? What sort of screening do they go through? What sorts of measures are in place in Australia Post to ensure the incorruptibility of those officers? And what has Australia Post done since the revelations of these charges that have been laid to improve your standards and procedures? If you could follow it through in that fashion, it would be very helpful to the committee.

Mr Mitchell —We conduct about 1.3 million passport interviews per annum through selected offices within our network. It is not every office. The process that our people undertake is to interview the applicant in person and sight certain documentation which attests to their identity, and we record that information on the application form.

Senator MINCHIN —Who is authorised to perform these interviews? Is it anybody in any post office or is there one designated officer per post office?

Ms Corbett —Individuals have to be trained. There is a special passport training program, and then they get accredited to be able to undertake passport interviews. If they have not done the compulsory training, they are not able to undertake any of the interviews.

Senator FIELDING —Are there further security checks on them other than the normal checks on Australia Post staff? What security checks are done in addition? This is a very highly sensitive area and, quite clearly, we have had a breach.

Ms Walsh —All Australia Post employees have a criminal history check.

Senator FIELDING —I understand. You have dedicated staff doing this. Are there any additional checks on those people doing this particular task?

Mr Mitchell —No, there are not.

Senator FIELDING —Keep going, then, with your explanation.

Mr Mitchell —The types of people that conduct the checks are anybody working on a counter position right up to the postal manager within the outlet. Once the documentation is sighted and a record is taken, we then send that information through to the Department of Foreign Affairs and Trade and they conduct their own tests to verify the integrity of the documents that have been submitted in support of the person’s identity. That is the front-end process that we undertake on behalf of the Department of Foreign Affairs and Trade. The issue at Fairfield was a breach of our procedures by a staff member, and the charge was three counts of knowingly making a false statement on an Australian travel document. We have been working with the Department of Foreign Affairs and Trade and the Australian Federal Police on this matter, and it is our belief that this is an isolated instance. There is no evidence to suggest that there is a widespread practice within our own ranks, but quite clearly we will review the procedures that we currently have in place to ensure the integrity of that process which we undertake on behalf of Foreign Affairs and Trade.

Senator FIELDING —If I could just go through to try and help reassure the Australian public, how have you checked that this is not happening at another post office? How many post offices are there across Australia?

Mr Mitchell —There are just short of 4,500 points of presence.

Senator FIELDING —How many of those 4,500 do passports?

Mr Mitchell —I would have to take it on notice. I think there are about 2,400 outlets where our customers can go to have their passport applications processed.

Mr McCloskey —I have a figure here, as it just so happens. It says that we have 1,703 outlets nationally that are accredited by the Department of Foreign Affairs and Trade to conduct passport interviews.

Senator FIELDING —So there are at least 1,703 staff. You may have two or three at some particular places who are authorised to do this procedure. You have said that you are reassured that it is not happening elsewhere. You say that, but how do we as the Australian public know that that is the case? How many weeks has it been since you have looked at it? And what has happened to reassure us that it has not happened elsewhere?

Mr Mitchell —I believe the story broke on 4 May. If I could, I will take your question on notice to give you the facts of what we have done in that intervening period, because I do not have the information with me.

Senator FIELDING —So 21 days. I would think that this is such a high security issue that someone at your level would be able to brief us on how we could be reassured that this is not more widespread than just the one person. I would have thought that this would have been a high security threat to Australia. Fake passports are being issued with the involvement of Australia Post. How can we be reassured, 21 days after, that it is not more widespread than just the one case?

Ms Corbett —I think the reassurance is the fact that we have been working very closely with DFAT as well as the Australian Federal Police. Certainly from all of their investigations they are comfortable that it is not widespread at all and they see no further instances nor have any suspicion of any further instances.

Senator MINCHIN —Did you say the AFP are of that view?

Ms Corbett —Yes. We have been working with the AFP and with DFAT. We have no knowledge of any further suspicions that anyone has in any other office throughout Australia.

Mr Mitchell —The Department of Foreign Affairs and Trade conduct their own checks. They have their own internal processes to be able to detect irregularities as well. That is another level of checking within the process.

Senator FIELDING —How long before you review your procedures? You said you are reviewing the procedures for this area of operation of involvement with passports.

Mr Mitchell —As a matter of course, when we have a breach like this we automatically go back and review our processes internally and in conjunction with the agency concerned to ensure that there are no process irregularities that we ought to deal with.

Senator FIELDING —Who is heading up that review?

Mr Mitchell —That would be undertaken in my part of the business by a chap called Andrew Wiseman, who is the head of agency services within the commercial division of Australia Post. He would have his contacts within the Department of Foreign Affairs and Trade.

Senator FIELDING —You said ‘that would be’. Does Mr Wiseman have a review in process and in train in this area?

Mr Mitchell —I do not know the extent of the formal review that he has in process.

Senator FIELDING —Does he report to you directly?

Mr Mitchell —Yes, he does.

Senator FIELDING —He reports to you directly and you do not know whether he has a review in process? Can you help explain that?

Mr Mitchell —I believe he has, but, as I indicated before, I would prefer to take that on notice so that I could give you the facts.

Senator FIELDING —There is no time line for this review that you know of?

Mr Mitchell —No, I do not, but a review of a breach such as that which has occurred would be time sensitive.

Senator FIELDING —I am not really feeling that reassured. To be absolutely real, I would have expected you to say, ’We have a formal review in place and I know these are the terms of reference for it and this is the time frame for it.’ This is a breach at the highest level. DFAT has played a role in this as well, but obviously a lot of it has come directly from an Australia Post employee, and we have at least 1,700 others. Again, I do not want to say that any others are doing it, but we need to be reassured. This is a security threat at the highest level. People are wandering around Australia with Australian passports who are actually illegally here.

Mr Mitchell —The parties that I know are working on this issue with Australia Post at the moment are the Department of Foreign Affairs and Trade, the Australian Federal Police, within Australia Post our own corporate security group—who work very closely with the AFP, as you can imagine—and my own people who are responsible for the in-store processes.

Senator FIELDING —At this stage there are no extra security checks. Has anything changed at all since 4 May other than the Australian Federal Police and DFAT being involved and a review being done which is a bit nebulous at this moment?

Mr Mitchell —I do not believe anything has changed since that time.

Senator FIELDING —So there are no extra security checks done on those people who are actually performing this role?

Mr Mitchell —No, this was a breach by a staff member knowingly who knew they were doing the wrong thing.

Senator FIELDING —Would you be able to contact your direct employer? Who was it?

Mr Mitchell —Andrew Wiseman, who is my Group Manager, Agency Services.

Senator FIELDING —Would you be able to find out from him and report back to the committee today on exactly what the review entails, the terms of reference and when it will be finished so we can all be reassured that this is going to be looked at as a high priority?

Mr Mitchell —I would be happy to do that, Senator.

Senator FIELDING —Thank you.

Senator MINCHIN —Just remind us what the arrangement is between Australia Post and DFAT? Australia Post works under a contract for DFAT, does it, to supply this service?

Mr Mitchell —We have a commercial contract in place with DFAT.

Senator MINCHIN —So this is a revenue raising part of your business.

Mr Mitchell —That is correct.

Senator MINCHIN —You are paid a fee per application.

Mr Mitchell —That is correct. DFAT pay us a fee to conduct these application interviews on their behalf.

Senator MINCHIN —And that contract presumably puts the onus on you, does it, for the security of the procedures?

Mr Mitchell —There is an onus on Australia Post in respect of the people who undertake the interviews, the training that they undertake and the accuracy with which they conduct that transaction as well.

Senator MINCHIN —On you?

Mr Mitchell —Yes.

Senator MINCHIN —So you do the training of these officers, not DFAT?

Mr Mitchell —Yes, we do.

Senator MINCHIN —Is there any suggestion of breach of contract in relation to this matter?

Mr Mitchell —I do not believe so, Senator, but I would have to take that on notice. Our staff, if I may add, are very well regarded in respect of the manner in which they conduct this business, to such an extent that 10 Australia Post people work in the offices of the Department of Foreign Affairs and Trade at a state level and conduct the interviews on behalf of the Department of Foreign Affairs and Trade.

Senator MINCHIN —What exactly is the role of the officer at the post office to verify that the person before them is an Australian citizen, is entitled to the passport and is the person they claim to be?

Mr Mitchell —The role of the Australia Post acceptance officer is to accept the application form, go through the application form in some considerable detail to ensure that the form has been correctly and completely filled out. We sight the required documentation that the person submits to attest to their identity, which could be any form of documentation as specified by the Department of Foreign Affairs and Trade, and we record those documentation numbers. In some cases we will take the photograph of the individual concerned, submit the documentation along with the photograph—details of the documents that we have sighted—take the payment from the customer and send the documentation through to the Department of Foreign Affairs and Trade, and we settle the commercials at a later time.

Senator MINCHIN —So you are not approving an application?

Mr Mitchell —No.

Senator MINCHIN —You are facilitating?

Mr Mitchell —We are not approving.

Ms Corbett —That responsibility still rests with DFAT. Australia Post—

Mr Mitchell —Ours is to accept the documentation.

Senator MINCHIN —The allegation in this case is that Ms Triglia was charged with three counts of making a false statement. What is the nature of the statements that the post office worker makes in relation to applications that in this case are alleged to be false?

Mr Mitchell —I believe that the breach pertained to the individual not being present. The name on the application was not, in fact, the individual concerned.

Senator MINCHIN —Was not present in front of the officer?

Mr Mitchell —That is correct.

Senator MINCHIN —But the concern, to back up Senator Fielding, is that people smugglers will now target postal officers, who presumably are not well paid and, in the eyes of people smugglers, potentially easily corrupted. I share Senator Fielding’s concerns.

Senator BILYK —You do not have to be not well paid to be corruptible.

Senator MINCHIN —True, but I am looking at it from a people smuggler point of view. They would say, ‘These are an easy target for us.’ I do share Senator Fielding’s concerns about the potential for this to become a major issue and the need for considerable rigour in the review of procedures, but no doubt you will be doing that.

Senator FIELDING —I think also with some speed, really. This is a hole in our security net and we have to make sure we are protected. I want to be reassured that there is some speed and some real force behind Australia Post’s involvement in the review. I am seriously concerned about it.

Senator MINCHIN —I agree.

Senator FIELDING —That was an alarm for most Australians. When we read about it in the papers, we thought, ‘Gee, this is really serious.’ We have heard that there is no extra security checking of the staff. I think the staff would also feel reassured if they knew that checking was done.

Mr Mitchell —I hear what you are saying, Senator, and I will get that information for you as soon as I can.

CHAIR —Thank you. Are there any further questions on this particular issue?

Senator WORTLEY —Just in relation to swine flu, has Australia Post sought advice as to the likelihood of the people who are doing the passport interviews or any of its other workers contracting swine flu?

Ms Walsh —Yes, Senator. We have been working closely with the Department of Health and Ageing to ensure that we are up to date with the current threat level and in particular the threat to our employees, given the nature of their work and that they are handling mail that comes in from overseas as well as interacting with people in the community through our retail outlets. Our advice at this stage is that there is no need for extra precautions in the workplace to prevent people contracting swine flu, but we are interacting with the department on a daily basis to ensure that we have the latest information on that.

Senator WORTLEY —It has been established that there is a possibility that the people who do passport interviews could come into contact with people with swine flu and would be at risk. Are there any other workers in Australia Post who would be at risk?

Ms Walsh —We have people employed handling international mail, but we have checked the status of swine flu and, if there has been any contact with the mail, it certainly would not survive, as we understand it, long enough on a piece of mail to be transferable once it hits Australia. Decipha, one of Australia Post’s subsidiaries, currently handles the health cards that people fill out when they get off a plane. Those people may handle those pieces of paper, but, again, the advice that we currently have from the department is that they are not at a heightened risk from handling that documentation compared to any other member of the community.

Senator WORTLEY —Does Australia Post offer influenza vaccinations or any vaccinations to their workers who come into contact with people who may be carriers of these conditions?

Ms Walsh —We do not have a national policy on flu vaccinations. On a facility or business unit basis they can make the decision to offer that to staff if that is something that is being done. There are parts of the business that have made that offer, and it has been taken up in previous years.

Senator WORTLEY —Can you tell me again how many people do the interviews for passports?

Ms Corbett —There are 1,703 officers.

Senator WORTLEY —Given the issue that we now have before us, would Australia Post in the future at least look at offering those people vaccinations?

Ms Walsh —We will be continuing to work with the department to get the latest level of information about the threat level and what precautions we need to take to best protect our work force. If that changes, we will put in place anything that we are required to put in place to ensure the safety and health of our staff.

Senator WORTLEY —Can I just clarify that there are no vaccinations offered?

Ms Walsh —Not on a national basis.

Senator WORTLEY —Thank you.

CHAIR —Thank you. I take it there are questions still of Australia Post after morning tea. We will break for morning tea now and resume proceedings at 11 o’clock.

Proceedings suspended from 10.44 am to 11.01 am

Senator BIRMINGHAM —Officers of Australia Post, thank you for your time today. I understand a happy birthday is in order for this year.

Mr Walter —It is our bicentenary.

Senator BIRMINGHAM —What celebrations are planned for the bicentenary?

Mr Walter —Quite a sizeable program, actually. We are running a series of activities throughout the year to celebrate the bicentenary of the postal services. In fact 26 June upcoming will be the first date that mail arrived from the UK and was dealt with by the newly appointed postmaster at a site where First Fleet Park is in Sydney now, just outside the Museum of Contemporary Art. We are having a re-enactment on that day. Basically, the overall aim of our bicentenary program is to celebrate our unique role and contribution to the nation’s history but also to declare our relevance for the future. There is a very heavy emphasis on staff involvement. We are running a series of programs for staff, not just family days but also recognising staff through the awarding of a bicentenary medallion. Other staff are nominating people for that.

Senators may have seen recently the bicentenary Foxtel film, which was a two-hour documentary that appeared on Foxtel in March. There was also a book published by Allen and Unwin, The Stamp of Australia, and we have had a bicentenary themed supplement in the News Ltd papers around Australia in February. There is another one coinciding with the bicentenary day, 26 June.

We are also running three very important events for the general public. One is called Letters of a Nation, which is a project where people around Australia are supplying letters that have been crucial to the development of Australian history. For example, we have letters that were written by Alexander Graham Bell to the Queensland administration of Australia Post or the Postmaster General, as it was then. We have some very heart-wrenching letters from the trenches in the First World War, people writing about the first anniversary of Anzac Day when they were from Egypt, just about to go off to the Western Front. I think a lot of us did not realise that the very first Anzac Day celebrations were on 25 April 1916. That is a program that is going on throughout the year.

A program more directed at youth is the 200 Seconds short film competition in Australia with the Australian Film Institute. Schools and tertiary institutions around Australia are, as we speak, producing a film of 200 seconds based around the theme of a parcel. That will be shown at the AFI awards later this year.

Senator ABETZ —This is not a take-off of The Castle, is it?

Mr Walter —I do not know about that, but it is something that really has made schools, universities and TAFE colleges aware of our bicentenary. We have also run a competition to choose Australia’s favourite stamp over the period that stamps have been produced. That is the essence of our program. If I could highlight the reasons and the rationale for it, it is based around the central role of Australia Post in Australian history and its status as the oldest continuously running commercial organisation in the country. We are also focusing on sustaining the business into the future. I do not necessarily need to go through all the objectives of the program, but it is targeting staff, key stakeholders, major customers, industry partners, the general public and youth communities, as I have mentioned. We can see that this program is already enhancing our relationships with our key stakeholders, generating community goodwill, lifting staff morale and engendering pride in the corporation, which has been borne out by recent results of staff attitude surveys. Senators may have seen a week or so ago that Australia Post was ranked first for reputation in a study of Australia’s 60 biggest companies. The result was announced in the Financial Review on 18 May, with the article stating that Australia Post is top of the list of 60 top-scoring companies, climbing from fourth place a year ago. We all know that Australia Post is a very trusted and iconic brand in Australia, and we felt that all the stakeholders and the entity itself deserved recognition of the sort that we are providing during the course of this year.

Senator BIRMINGHAM —Thank you for that very comprehensive answer. What is the budget for the bicentenary celebrations?

Mr Walter —It is $1.5 million. We have had great support from the National Archives, from our customers and supporters in terms of supporting the features that I mentioned in the News Ltd supplements, but our own spend is in the vicinity of $1.5 million.

Senator BIRMINGHAM —Not wanting to be a scrooge, and I am happy for everybody to have a birthday celebration, but $1.5 million is a lot for birthday celebrations. How is that fee broken down?

Mr Walter —I do not have the exact details with me, but we are running staff celebrations in every state, and several in some states. We have 35,000 staff, and we are catering for those functions. It is those sorts of expenses. I could break it down for you, but most of the money is going on the staff celebrations and recognition. The other things, like the re-enactment, are really quite modest. If I may say so, without referring to any other major corporations of recent times, it is very much a modest budget compared with what has occurred recently in other corporations.

Senator BILYK —Maybe you should ask what transpired in the call centres.

Senator BIRMINGHAM —Indeed, Senator Bilyk, it would support a few jobs in those call centres. Is Australia Post funding the supplements in the News Ltd papers?

Mr Walter —We are underwriting them, but as we speak we have huge take-up on it. Almost all the funding is coming from partners, supporters and customers. You can imagine who they would be. You will see in the supplement coming out who they are, because you will see their congratulations to Australia Post as well as their positioning of their corporations in relation to Australia Post.

Senator BIRMINGHAM —And the funding for the Foxtel documentary film?

Mr Walter —There was some seed funding from Australia Post. I do not know if you saw it or not. Perhaps I should say this: the history of Australia Post has been related so closely to the history of this country that Foxtel jumped at the idea of the program. It is talking about the gold rushes, the arrival of the earliest Australians in New South Wales, Kingsford Smith and the world wars. Les Carlyon in particular you would all know. It is a superbly produced documentary. It was very appealing to them. We did have some initial consultations with Film Australia but in the end Foxtel jumped at the opportunity.

Senator BIRMINGHAM —Perhaps if you could take it on notice to give us some details of how the $1.5 million is apportioned across the different celebrations that would be most helpful.

Mr Walter —Certainly, Senator. I would say at least 80 per cent would be in staff celebrations, but I will certainly break it down.

Senator ABETZ —And talking of staff, invitations from China notwithstanding, the managing director will be in attendance?

Mr Walter —I would imagine so, Senator.

Senator ABETZ —Good. Thank you.

Senator MINCHIN —I do not begrudge the money as I think you should celebrate properly, but have you taken it from an existing marketing or staff relations budget or is it a net addition to your other normal expenditure for these sorts of things?

Mr Walter —No, Senator, we planned for this well in advance. For example, you cannot put a Foxtel documentary on air in March of the bicentenary year without planning in advance. It was in my budget, the corporate public affairs budget, in the budget estimates or the budget projections. It was a one-off special item added into my budget.

Senator MINCHIN —Your budget was augmented to allow you to do this rather than you having to find $1.5 million from somewhere else in the corporation?

Mr Walter —Augmented, sorry. Yes, that is right.

Senator BIRMINGHAM —Moving to a celebration of a different kind, how much did Australia Post end up spending on its involvement with the Olympic Games?

Mr Walter —A figure of $2.73 million. Senator, if you would just give me one moment I will get the details. An answer given on notice to a question from the last estimates broke down the $2.73 million, Senator. There was a question asked by Senator Abetz last year.

Senator ABETZ —What question number was that again?

Mr Walter —Number 177. I mentioned last time too that it helped us generate revenue of $7 million. The outlay was $2.73 million but the revenue was $7 million. I do not know if I made the point clearly enough last time, but we cannot do the gold medal stamps without the approval of the IOC and the AOC. Part of this is about having that permission. Australia Post has been a long-term supporter of the Olympic Games movement and the Australian Olympic team in particular, so that continues, but we do now make a very solid return on our outlay.

Senator BIRMINGHAM —How do you measure that $7 million?

Mr Walter —I just cannot quite find it, but philatelic sales made up about $6.5 million of that, and then we had the revenue from an Express Courier International consumer competition of around the $380,000 to $400,000 mark. One of our products is Express Courier to other countries. We are in an alliance with 10 other countries, and we had a very strong response to that competition. We had a Letter Link program, which I think Senator Abetz applauded Australia Post on last time, and received $100,000 in revenue from that. The main purpose of that was for schoolchildren around Australia to write to their favourite athlete, and more than 250,000 letters were involved in that. We had three staff in the Olympic village in Beijing delivering not just the school children’s mail but also the mail from every other Australian who wanted to support our Olympic team. I think that is getting pretty close to that mark, Senator, but that is pretty much it. Basically, it was the philatelic sales, the gold medal stamps and the other Olympic philatelic products, that underpinned the whole thing at $6.5 million.

Senator BIRMINGHAM —$6.5 million out of those gold medal stamps and so on?

Mr Walter —Yes.

Senator BIRMINGHAM —Some of them would be regular 55c stamps that feature gold medallists? Is that what we are talking about?

Mr Walter —No, we only do them for the Olympic Games, Senator. We started them in 2000. I cannot remember the revenue. It was at least twice as large in 2000, when there were 400-metre queues outside the Sydney GPO when Ian Thorpe and Cathy Freeman won their gold medals, but we have continued on since that time, and it is only for the Olympic Games. Within 24 hours of an Australian winning an Olympic gold medal we have the stamps on sale in many of our outlets around the country. A photograph is taken of the athlete at the time of the medal ceremony, which then goes to our stamp processing area and is delivered basically within 24 hours for sale around the country.

Senator BIRMINGHAM —And you are claiming that is $6.5 million worth of collectibles?

Mr Walter —A large part of it would be. There are other elements. There are coins and other things. It is not just the gold medal stamps. Yes, people collect. There is an album that comes out as well at the end of the program. People want to keep those stamps. Of course, they get used as well, but a lot of people buy those to keep.

Senator BIRMINGHAM —It is just that of the $6.5 million some of it gets used, and that which is getting used is simply displacing the purchase of other stamps and Australia Post products in one way or another, which obviously reduces the return that you are claiming directly on the Olympic sponsorship.

Mr Walter —You have to buy the stamps as a sheet. I do not have the details with me and, of course, we do not entirely know, but I know from having been involved since 2000 that the vast majority are collectibles. If people get the stamp from the post office as well, it is not just an Olympic piece of memorabilia, it is actually the day the stamp is released that marks the winning of a gold medal at the Olympic Games. People want to collect those things. They would rather use other stamps. I am not expert on this side of it, but, of course, we have a range of other stamp releases during the year.

Senator BIRMINGHAM —Let us go to the $2.73 million. I am afraid I do not have the answer to Senator Abetz’s question on notice in front of me, but I see that in response to a question I asked about hospitality expenses related to the Olympics the amount was $1.2 million. That is question on notice 206, for your information.

Mr Walter —Yes, Senator.

Senator BIRMINGHAM —Does that $1.2 million form part of the $2.73 million?

Mr Walter —Yes, it does. That is right.

Senator BIRMINGHAM —Do those hospitality and sponsorship hospitality activities include travel to the Olympics?

Mr Walter —No, travel was $250,000. Part of the hospitality included transport and airport transfers, but, in fact, the flights were $250,000. I think I also mentioned last time that as a major Australian corporation we operate in a number of highly competitive markets and it is in this context we undertake a program of sponsorship hospitality activities. We took some of our most important customers and stakeholders, but basically customers and potential customers, to strengthen relationships. That was very much part of that program. I also think I said last time that we had four staff and between 36 and 40 customers. The usual ratio in sponsorship terms is one to four, but we were very keen to keep the ratio quite low, just sufficient so that we could look after the needs of those customers, some of whom spend tens of millions of dollars with Australia Post every year.

Senator BIRMINGHAM —The 0.25 or the $250,000 is in addition to the $1.2 million?

Mr Walter —Yes, if you add the hospitality costs and the air fares you get $1.2 million.

Senator BIRMINGHAM —The air fares are inclusive?

Mr Walter —Yes, that is inclusive.

Senator BIRMINGHAM —The remaining $1.53 million is all related to actual sponsorship activities?

Mr Walter —Yes, $1.15 million was sponsorship of the Australian Olympic team through the Australian Olympic Committee and the rest was advertising promotions for the competition I mentioned earlier. The Express Courier International competition and the Letter Link school program, of course, cost money to advertise and promote that so we ended up with those 250,000 letters from schoolchildren and, of course, the gold medal stamps. That was the balance.

Senator BIRMINGHAM —So you managed to just outspend the level of sponsorship with the level of hospitality and entertainment, $1.15 million going to the team sponsorship, $1.2 million being travel and hospitality and so on.

Mr Walter —Yes, that is right.

Senator BIRMINGHAM —A reasonable balance?

Mr Walter —Very reasonable in terms of the fact that we projected the sort of revenue that we did get and there is the fact that it was a very special Olympic Games and that we attracted a very high calibre of customer who, from their feedback, thoroughly enjoyed it. It certainly strengthened their relationship with Australia Post. We had that opportunity, so we took it.

Senator BIRMINGHAM —Did you do any follow-up assessments of value gained from such activities?

Mr Walter —I do not have anything like that with me, but of course we always keep a close eye on our major customers. I was one of the staff members in Beijing and I witnessed it at very close hand. While I am not the person who deals with them on a day-to-day basis, I have made strong links with many of those people. We monitor our major customers and we see the situation in terms of the revenue we receive from those customers, and I believe they remain our major customers and in some cases perhaps have increased their business with us. I do not have details of that with me. It is just me saying that. I would need to check that, but that is my belief.

Senator BIRMINGHAM —Let’s turn to another area of expenditure, also addressed partly in the response to a question on notice: No. 209. Australia Post forecasted expenditure on consultancies for the current financial year of $59.9 million. I will call that a round $60 million for ease. Is that still your expected budget expenditure on consultancies?

Mr Meehan —Our current financial year forecast is to spend $59.9 million. That is one of the areas where we had specific cost cutting in relation to the economic circumstances that we are in.

Senator BIRMINGHAM —You were asked very specifically in those questions on notice to identify the name of the consultant, the subject matter of the consultancy, the duration and cost of the consultancy and the method of procurement. The response to that was: ‘Australia Post does not maintain a central register of individual consultancy arrangements.’ Is that a satisfactory response, do you think, to provide to a Senate committee?

Mr Meehan —Senator, it is the case that all these consultancies are done within individual areas of the business. We maintain a central area for contractors within the business, but consultancies are all part of the individual businesses’ budgets and a part of the budget process that we go through. Various areas will have their own consultancies within them. We have seen no need to have a central repository of all those agreements.

Senator BIRMINGHAM —The department managed to provide a list of consultancies and, rest assured, thanks to the NBN project, that went on for pages and pages and pages, ACMA managed to provide a list of consultancies and SBS managed to provide—

Senator Conroy —I think bringing South Australian factional politics into it and that sort of blatant attack on Senator Minchin and his extravagant consultancies really is not the thing to do here. Keep your South Australian fights at home, Senator Birmingham, because if you try to make something of it I will have to detail the beyond lengthy list of money spent by Senator Minchin. I am awake to your cunning plan.

Senator BIRMINGHAM —We really do not need to bring factional politics into the arrangements you might like to strike—

Senator Conroy —I am awake to your cunning plan to embarrass Senator Minchin. I just want you to know that.

Senator BIRMINGHAM —How is the written deal proceeding, Senator Conroy, between you and Senator Carr?

Senator Conroy —I am awake to your cunning plan.

CHAIR —Order!

Senator BIRMINGHAM —Is the prenup still intact?

Senator Conroy —I am awake to your cunning plan to undermine Senator Minchin, Senator Birmingham. Just—

Senator ABETZ —A foolish area to venture into, Senator.

Senator Conroy —I am always happy to.

Senator BIRMINGHAM —We like your prenup with Senator Carr, Senator Conroy. We look forward to seeing how it goes. Back to where I think we were, the ABC and SBS both managed to provide lists of consultancies that they had entered into. Why couldn’t Australia Post furnish any details at all in response to the question they were asked?

Mr Meehan —Senator, I cannot answer that but I do believe that with an extended process we could get more information than has been provided in this answer.

Senator BIRMINGHAM —That would be most appreciated because $60 million in consultancies is a lot of money and, indeed, this Senate committee, as do all Senate committees, takes a particular interest in these matters. When a question is asked in plain language, as it was in this instance, it is disappointing to receive such a curt and uncooperative response from the agency that requires us to go through this follow-up process. Can you provide us with any headline details of what the major consultancies out of your $60 million may be?

Mr Meehan —Certainly that is something I am sure we could do, Senator.

Senator BIRMINGHAM —You cannot provide us with any of those details?

Mr Meehan —Not right now.

Mr Marshall —Senator, I can talk about some of the areas that I am familiar with. The term ‘consultancy’ is a very general term. In our context I know that a number of those that add up to significant amounts of money are associated with our operational processes. For example, we have a ‘consultancy’ which is a contract for an external body to sample the on-time performance of our letter business and our Express Post business. We have contracts with equipment suppliers for escalated maintenance back into, in some cases, their originating country when our own technicians are unable to fix the problem. My understanding is that those kinds of expenditures are included in that amount of money.

Senator BIRMINGHAM —That would be fine and welcomed, Mr Marshall. I am sure that, if we can get a breakdown that actually details that, we will see how reasonable most of the expenditure is.

Senator Conroy —But there is a difference between a commercial operation and the ABC and SBS. They run businesses, but they are not running in a commercial sense against the free-to-airs. I think that to reveal some of the information that is being sought would not be in the commercial interests of Australia Post. I am sure we can help and get you as much information as we can, Senator Birmingham, and I am sure you are not seeking to jeopardise commercial operations. So perhaps the conversation—

Senator BIRMINGHAM —Reasonable responses will be dealt with reasonably.

Senator Conroy —Sure. I appreciate that.

Senator BIRMINGHAM —The provision of no information and simply a statement—

Senator Conroy —Maybe we need to tease through which ones would be run of the mill, which is what I think you are really looking for, as opposed to those that impinge on commercial operations. If Australia Post take that on notice we can work our way through that.

Senator BIRMINGHAM —That would be much appreciated. Thank you, Minister.

Senator ABETZ —Potentially, we would be entitled to know the moneys paid to various consultants—

Senator Conroy —As I said, I am defining—

Senator ABETZ —even if we are not told the purpose of the consultancy.

Senator Conroy —I am not questioning your ability to gather the information. That is a proper process for Senate estimates. I am simply seeking to ensure that we do not jeopardise commercial operations. If the tender for a consultant has got ‘X’ purpose, then there will be some sensitivity about what was ultimately paid. I am sure we can work out a reasonable solution to try to ensure that commercial operations are not jeopardised. If they are consultancies in the traditional sense that we normally talk about here, then I understand the committee’s interest, but I am sure a little bit of discussion backwards and forwards between Australia Post and the committee will be able to resolve that.

Senator BIRMINGHAM —Thank you, Minister. Do we have a budget for 2009-10 in terms of consultancy expenditure?

Mr Meehan —I will have to take that on notice, Senator, but we will have a budget.

Senator BIRMINGHAM —Thank you. Lastly on these areas, I note in response to question on notice No. 205, on the media spend on recurrent promotion of commercial products et cetera, that for the calendar year 2008 you forecast an expenditure of $6.6 million and for 2008-09, until 28 February, that expenditure was just $2.68 million. That appears, unless it is quite backloaded into the financial year, to be a reduction across two different 12-month periods. Is there a reduction in those activities?

Mr Walter —I think the situation is that, in calendar year 2008, we ran a very successful brand campaign called ‘Part of every day’. I do not know if you saw it, but it featured Australia Post’s activities over seven days of the week. That brand positioning campaign also featured a lot of our products and services. I will have to double-check, but if that ran in the last financial year it would only have been a very short burst. That would probably account for most of the difference.

Senator BIRMINGHAM —Thanks, gentlemen.

CHAIR —Are there any further questions for Australia Post?

Senator WORTLEY —I have some.

CHAIR —Senator Wortley.

Senator WORTLEY —Thank you. At the previous estimates hearing Senator Hutchins asked questions regarding Australia Post’s decision to end its 25-year contract with Ford and to move to Mercedes to provide vans for the collection of mail from roadside post boxes. The move was quite controversial from the point of view of the drivers, who claim that the van selected had issues with limited visibility because of the absence of side windows, which makes it hard for a driver to get a clear view when manoeuvring into tight spaces to pick up mail. I understand that Australia Post referred this issue to Comcare for investigation.

Ms Walsh —It is the normal process after a PIN is placed that Comcare will investigate.

Senator WORTLEY —And Comcare has finalised its report?

Ms Walsh —Comcare has finalised its report.

Senator WORTLEY —Can you explain what the response was from Comcare in relation to the issues raised by the drivers regarding safety?

Ms Walsh —Senator, I would just highlight that in the investigator’s opinion Australia Post failed to conduct adequate hazard identification and risk assessments in relation to the vans in particular to the range of environments and tasks carried out by the Australia Post drivers. While the van from the view of Australia Post is obviously compliant with the Australian standards and it is used extensively not only in Australia but across the world without the side windows, the view of this particular investigator was that in relation to the specific work undertaken by Australia Post further assessments needed to be done and in particular that some of the training requirements had not been, in the investigator’s view, undertaken through the transition from the Ford through to the Mercedes van period. On that basis there was, if you like, a variation to the improvement notice that had been issued initially. That was the investigator’s report.

Senator WORTLEY —Sorry, can you just repeat that?

Ms Walsh —Sorry. On that basis, there was a variation to the PIN that had been initially placed on the Mercedes vans.

Senator WORTLEY —I understand that the report stated: ‘I am satisfied that there is sufficient evidence of a real risk to health and safety in relation to the introduction of the Mercedes Sprinter vans without rear side visibility, particularly in relation to reversing from angle parking and turning across multilane roads.’ And I understand further that it said: ‘Further issues articulated on page 11 of the APC’s submission suggest that the Mercedes vans were chosen amongst other things for their load capacity and that should side windows be installed for safety reasons the vans would not be able to be used as envisaged as APC would have to ensure that the vision through such windows is uninhibited. There is no evidence to demonstrate that this issue was raised as part of any consultation process with either individual drivers or the CEPU.’ My question is: if Comcare identifies a risk with your current equipment, is the reason why Australia Post will not eliminate safety risks because it values productivity above safety?

Ms Walsh —The answer to that question is, no, Senator. Australia Post places safety at the top of its priority list. It is important to note that in that investigation the investigator did not make a finding that the vehicles must have the windows installed and that they were unsafe without those windows installed.

Senator WORTLEY —But the investigator did say there was sufficient evidence of a real risk to health and safety.

Ms Walsh —On that basis that on an individual assessment of the individual round conducted by the van driver in the particular circumstances, it is also important to point out, Senator, that Australia Post is appealing against the decision of the investigation undertaken by Comcare, as is the CEPU.

Senator WORTLEY —On this basis, if you asked Comcare to test the vans to see whether they are safe, then why are you appealing against the decision?

Ms Walsh —Senator, we do not ask Comcare to undertake it. It is their obligation under their legislation and a decision is issued in a set of circumstances.

Senator WORTLEY —On what basis is Australia Post appealing against the Comcare investigation?

Ms Walsh —Australia Post is appealing on the basis that in our view there were certain facts about the process that was undertaken by the investigator that were not taken into account that we think would have altered the outcome of that investigation. That is currently working through the appeal process in the Industrial Relations Commission, and a hearing date has been set for August of this year.

Senator WORTLEY —You maintain that there was not an issue with the safety of these vans?

Ms Walsh —We are of the view that these vans are safe for use for the purpose that they have been purchased.

Senator WORTLEY —If that is the case, why do you think the drivers would raise the issue?

Ms Walsh —Well, I think there is an issue here of change, that it is a different type of van from the one that had been used previously, and drivers were used to having windows in the back. We say that the current vans with the side rear vision mirrors that are provided do provide for them to be used safely in all circumstances without having the rear windows installed, but it is a matter of them undertaking appropriate training, which it is our obligation to provide, and we say that we will before anyone is required to work on those vans. We will be continuing to work through with that, but we consider them safe.

Senator WORTLEY —Is it the case that if the changes to the vans were made they would not be able to carry out the function for which you sought the vans in the first place?

Ms Walsh —I would have to take that on notice. I am not fully conversant with the usability issues, Senator, but I am happy to take that on notice.

Senator WORTLEY —I would appreciate that. I would like to turn to another issue now. I understand that on Tuesday, 24 March, the minister visited and inspected a number of Australia Post operations and work sites, and one of those work sites visited was Leightonfield delivery facility in Sydney’s western suburbs. On departing the Leightonfield work site, the CEPU New South Wales state secretary and the minister were confronted by an employee by the name of Brett Griffin. I understand that Mr Griffin broke down in telling his story of how he was being treated by management following a work related injury being sustained. Are you aware of the case?

Ms Walsh —I am not fully across the detail of that case, but I am aware that Mr Griffin did approach the minister and, indeed, the state secretary of the CEPU on that visit. I understand that Mr Griffin has been temporarily moved to the South Windsor delivery centre as a result of his concerns, and the allegations that he has raised regarding his treatment are being investigated by HR representatives, but that investigation is ongoing, and I am not sure what the outcome of that will be.

Senator WORTLEY —Are you aware that the management representative at the centre of the complaint and allegations made by Mr Griffin is now located at the Seven Hills delivery facility acting in a position at a higher level?

Ms Walsh —I am not aware of that, Senator, but I am happy to take that on notice and confirm it.

Senator WORTLEY —I would appreciate that. Just one other issue, still on the same subject area. I refer you to Australia Post’s most controversial medical policy involving facility-nominated doctors performing so-called fitness for duty assessments when a sick and/or injured employee only notifies a work related injury or medical condition and/or makes a claim for workers compensation. I understand that your policy uses a legislative avenue not available to many other similar businesses, being the principal determination which exists under the Australia Postal Corporation Act. I understand the Australian Industrial Relations Commission has been called to resolve disputes about this policy on a number of occasions between 2006 until May of this year. Could you please provide regular updated briefings of these proceedings before the Australian Industrial Relations Commission, and can you please provide an update to the views of Comcare on the same matters following a complaint made by the CEPU representing Australia Post employees?

Ms Walsh —If I can take the last matter first, Senator, we understand that the CEPU has approached Comcare around our self-insurance status and our licence to be a self-insurer and it has made submissions. They have not been made available to us. We understand they have been made but we have not seen a copy of them. We will obviously be working through Comcare, through the proper processes, to respond and assure them that the processes that we undertake in relation to facility-nominated doctors and the application of the principal determination in these circumstances are lawful and fair in all circumstances. It should also be noted that as part of our self-insurance process we are required to undergo a review by Comcare and under the SRC Act on a regular basis. In previous audits and reviews they have found no inappropriate or unlawful activity on our part in relation to the use of that policy and the principal determination, but we will obviously work through with the authorities should they wish to discuss that with us.

Senator WORTLEY —Are you aware of an employee who is employed at the Sydney parcel facility at Chullora who was directed to attend an FND after she had notified an injury and had made a claim for workers compensation with a medical certificate from her treating doctor for three days off work due to her work related injury?

Ms Walsh —Do you have the name of the employee?

Senator WORTLEY —Pamela Emmanual.

Ms Walsh —I am sorry, I do not have a briefing on that but I am happy to take it on notice and provide any background.

Senator WORTLEY —Given that, I will put some other questions on notice in relation to that, and if you could respond to those I would appreciate it.

Ms Walsh —Sure.

Senator ABETZ —A question came to mind about your 200th birthday celebrations—congratulations. Is there any chance or possibility of you recouping some of that money with special first day covers, special stamps or other collectables which might reduce the $1.5 million tag to help pay for the birthday cakes, candles and balloons?

Mr Walter —Yes, it is remiss of me not—

Senator Conroy —I thought Senator Minchin displayed a far more charitable approach to this than you, Senator Abetz, so I can only encourage you to follow your leader.

Senator ABETZ —I do.

Senator BILYK —Senator Abetz is probably concerned about those people losing jobs.

Senator Conroy —In Tasmania? No, I did not hear him mention that.

Mr Walter —In fact, there are three stamp releases marking the history, the current and the future based on the fact that we are positioned at the hub of communities and have been over the 200 years. We have had recent advancements in our capabilities and our networks and are focusing on sustaining our business into the future. There are three stamps. I should have mentioned those.

Senator ABETZ —What indicative extra income do you think might arise from that? Is it much of an offset or not? Will it pay for the beer or the champagne as well?

Senator Conroy —Please, Senator Abetz, I am not sure that was a question that was possible to answer; that was more of a comment.

Senator ABETZ —Of course it was.

Mr Walter —They are part of our stamp program. There can only be a certain number of stamp releases every year. Hopefully they will sell really well but we are not relying on that.

Senator ABETZ —But you indicated earlier to my colleague Senator Birmingham that with the Olympics you in fact got some revenue back by the expenditure. I was just wondering if the same was applying to the 200th birthday celebrations.

Mr Walter —I must admit it did occur to me after I sat down to say what I am about to say now, and that is that a normal stamp release might give up to about $1 million in revenue, whereas of course we are talking about $6.5 million for the Olympic Games. Depending on the popularity of the stamp release, it can be more.

Senator ABETZ —We will be able to find out in due course, no doubt.

Mr Walter —But they are very good stamp releases. Also I am reminded that the Foxtel DVD will be on sale through Australia Post outlets from the time of our bicentenary day on 26 June, so there will be some revenue coming from that as well.

Senator ABETZ —That will undoubtedly top the charts.

Mr Walter —I hope so.

Senator ABETZ —What sort of cost is the DVD?

Mr Walter —I could get that for you. I do not have that figure. The program was made, so real really it is—

Senator ABETZ —I can see Christmas stockings being chock-a-block with the Australia Post DVDs.

Mr Walter —Usually it is 12 months before you are allowed to do anything like we are doing but because it is for the bicentenary Foxtel has only had a three-month period from the time they have had it exclusively. I can get the actual costs but they will not be huge.

Senator ABETZ —It might be just in time for Christmas.

Mr Walter —Well in time for Christmas.

Senator ABETZ —Good. I have spoken to some people that reside in Beaumaris who say thank you very much for extending the service into that very important part of Tasmania. Mr Newman, in relation to the issue of fuel prices with the contractors, I understand that at the last Senate estimates a commitment may have been given in relation to providing a fuel price starter to mail contractors. If that is the case, has it happened?

Mr Newman —I think the commitment that I gave was that we would advise the contractors, if they requested it, on the price point of the fuel that formed part of the review. I think we pointed out in this forum before and, I thought, on our questions on notice that FUELtrac is the provider of our fuel data, and we do that under contract, and they are not comfortable in making that information available to a third party.

Senator ABETZ —Right.

Mr Newman —However, they did agree that the fuel price point as it relates to that contractor—which is, in fact, FUELtrac data—can be made available to the contractor on request.

Senator ABETZ —The contractor should then approach Australia Post?

Mr Newman —Absolutely.

Senator ABETZ —Then Australia Post will make that available?

Mr Newman —We will just give the information; that is correct.

Senator ABETZ —Thank you for that. Would that come at a cost to the contractor?

Mr Newman —No.

Senator ABETZ —No?

Mr Newman —Not just that single price point. If they wanted to go beyond that they would have to form some form of relationship with FUELtrac themselves.

Senator ABETZ —Thank you very much for that.

Senator WORTLEY —I am mindful of the time. I do have some other questions for Australia Post that I will put on notice. Specifically, when I have been out in rural and regional Australia, I have had people raise the issue of Australia Post acting as an agent for banks, the Commonwealth Bank and so on. Some of the questions are around a long clearance time for cheques. Why do cheque clearances take so long when they are deposited through Australia Post and what happens to the funds in the interim?

Mr Mitchell —I wonder if I could take that question on notice?

Senator WORTLEY —I will add in another one, then. Is Australia Post making any attempt to reduce clearance times for cheques and deposits made at post offices?

Senator MINCHIN —I just wanted to ask a few questions about your dividend projections. We talked about the dividend for 2008-09 and the incorporation of part of the special dividend. The backdrop to this is that I think somebody mentioned a 40 per cent decline.

Mr Meehan —A 40 per cent decline in this year’s profitability.

Senator MINCHIN —In revenue or in profit?

Mr Meehan —In profit.

Senator MINCHIN —What is the revenue decline in 2008-09?

Mr Meehan —Our revenue from last year to this year is actually up by about $90 million, but that is predominantly in price, but significantly down on our budget.

Senator MINCHIN —So revenue increased but much less than had it been—

Mr Meehan —Yes, and certainly revolved around price not volume.

Senator MINCHIN —What projections are you making for profits for the next three ensuing financial years?

Mr Meehan —We are expecting our profitability for this year and the next two years to be around the same level.

Senator MINCHIN —Stable. So the hit will be in 2008-09?

Mr Meehan —There is a significant hit in this year, but we are not expecting profitability to go up at all. In the next year, 2009-10, we are expecting a slight decrease in profitability and we believe we will stay around that number for 2010-11 and look for an increase in 2011-12, much of which is dependent on what happens to the letters business and in particular with the prices associated with it.

Senator MINCHIN —I notice in the PBS the dividend projections show a very dramatic fall from 2008-09 to 2009-10.

Mr Meehan —That is correct.

Senator MINCHIN —It is down by nearly two-thirds.

Mr Meehan —A lot of the dividend that is paid in 2008-09 relates to the year ended June 2008, which is a record profit, so we have had a significant decrease. Our projected dividend for the next part is about 20.5 below initial expectations for 2008-09.

Senator MINCHIN —It is down to 151½, then 152, but then for 2011-12 and 2012-13, you are down to 140.

Mr Meehan —That is correct.

Senator MINCHIN —There is a continuing decline, and that is based on your forecast for the letters business, is it?

Mr Meehan —Partly letters and the fact that other parts of our business—for instance, parcels—are fairly flat at the moment. It is a very competitive area. The margins are being squeezed all the time. The letters business is the one that is of most importance to us for profit, because most declines in revenue go straight to the bottom line because we cannot necessarily change the expense level that is behind it. It is a relatively fixed network. That is the significant drop in our profitability over those years.

Senator MINCHIN —Does your forecasting seek to work from assumptions derived either internally or externally about the state of the economy itself going forward?

Mr Meehan —It is a combination. We look at government estimates and at what all the analysts out there are suggesting. We have obviously got a very close relationship with our customers, so we look at what they are doing. That gives us a much closer look at where we expect our volumes, particularly in the letters business, might be going over the next two or three years.

Senator MINCHIN —There seems to be a disparity. The government, which owns you, is forecasting a return to strong economic growth in 2011-12 or 2012-13 of 4½ per cent, but your dividend projections, based on your assessment of the profitability of your business, are very flat and well below trend. Does your internal forecasting of the state of the economy not accord with that of the government which owns you?

Mr Meehan —No, most of our projections are based specifically on what we believe is happening with the letters business. We think that a lot of the decline in the letters business now is predicated on the current economic circumstances. When things turn around we may not be able to pick all that revenue back up. People will find other ways of doing things that they have previously done through letters. The growth rates or the decline in the letters business will widen significantly compared to the figures that we have through Australia Post. Because that is such a significant part of our business, we are looking at that going forward on the basis that, if we can keep profits in total flat for that two or three-year period, we will have done exceptionally well.

Senator MINCHIN —So, even if the economy does recover to 4½ per cent in two years time, which no-one else believes, you do not believe it would have the requisite impact on your profitability?

Mr Meehan —Not as big an impact. It would certainly have an impact on our parcels volumes, because people will start buying more and we will be doing a lot more delivering. You would be aware that most of the post deliveries are in the consumer area. That is an area that is very weak at the moment, so those sorts of increases would help that side of our business but not necessarily the letters side of our business.

Senator ABETZ —I think Senator Minchin is onto something here, because Australia Post—

Senator Conroy —No, I think I will stick with the Treasury’s forecasting of the economy.

Senator ABETZ —Chair, are we going to stop these interjections, or not? I think Senator Minchin is onto something here, because Australia Post itself has said publicly there is a strong link between the sending of letters and the health of the economy. Your projections clearly do not suggest a healthy economy, as the government is trying to stymie the outcome of the—

Senator Conroy —I think that is a wonderful discussion that you and Senator Minchin are entertaining yourselves with. Do you have any questions?

Senator MINCHIN —Is the dividend forecast that is in the PBS the forecast that you give the government?

Mr Meehan —That is correct.

Senator MINCHIN —So they accept your figures?

Mr Meehan —They have at this stage, yes.

Senator MINCHIN —They have not second-guessed them or said, ‘No, we don’t agree; we want more from you.’

Mr Meehan —We have certainly put them up for the outer years. They are certainly preliminary estimates and we have advised the government of that and they have taken the numbers that we have put through, and I would have to say that they are conservative.

Senator MINCHIN —You hope so. But this is a very dramatic decline in the profitability of the business. Do you have an internal team working full time on ways to cut expenses?

Mr Meehan —Absolutely. In this year compared to budget we have saved nearly $100 million worth of cost. We mentioned before that a lot of the expenditure that has come through particularly this year is outside of our control. I did mention the bond rate reductions of having tax on our provisions of about $61.3 million. We have had an additional superannuation expense of nearly $15 million, and property devaluation and sales are about $45 million less than what we expected because of interest rates, and yet expenses have gone up. That is $133 million of items of expenditure that are fundamentally outside of our control that directly impact on this year’s profitability.

Senator MINCHIN —I commend you for taking $100 million of costs out. Where, by and large, has that come from?

Mr Meehan —A lot of areas. It was certainly across non-discretionary spend throughout the corporation, cuts to non-business critical travel and non-essential training programs where virtually every division has cancelled management conferences. We did not have the major corporate management conference last year. We had significant reductions in promotional and advertising expenditure. Mr Walter mentioned before that the ‘Part of every day’ program has been significantly wound back. We have reprioritised and deferred a lot of capital expenditure, which has a lot of other expenditure associated with it. As we have talked about before, we have had a lower management consultant spend which we will be analysing in more detail.

Senator MINCHIN —Presumably labour costs in your business are the biggest expense by far?

Mr Meehan —That is correct, and those labour costs are fundamentally tied to the EBA.

Senator MINCHIN —There are stories around about you asking your staff to take unpaid leave, those sorts of things. Has that been contemplated or have steps been taken of that kind? Are you discussing that?

Mr Meehan —Not as far as I am aware. We do have staff that have excessive leave outstanding, so we have a program in place that every division is looking at.

Senator MINCHIN —That is paid leave?

Mr Meehan —That is paid leave—that is correct.

Senator MINCHIN —There has been no request for anybody to take unpaid leave?

Mr Meehan —No.

Senator MINCHIN —Just remind me, when does the EBA come up again? Is it currently being negotiated?

Ms Corbett —We are currently negotiating the EBA.

Senator MINCHIN —You are going to considerable lengths, presumably, to make the point to your staff that the business is in significant constraint.

CHAIR —Are there any further questions for Australia Post? If not, thank you very much, officers of Australia Post for appearing before the committee this morning.

Proceedings suspended from 11.58 am to 12.04 pm

 [12.04 pm]