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Environment and Communications Legislation Committee
Australian Postal Corporation

Australian Postal Corporation


CHAIR: With that out of the way, I'll call officers from Australia Post. I welcome the chair, Mr Di Bartolomeo, and the chief executive, Mr Graham. I note that you have an opening statement. Are you happy to table that?

Mr Graham : Yes.

CHAIR: We now go to questions from my colleague Senator Urquhart.

Senator URQUHART: I might go to Mr Graham and, Mr Di Bartolomeo, if you want to jump in you can, but I will have some for you in a moment. Can I just start by asking a few questions about the Swiss-made electric vehicles which Australia Post uses to deliver the mail and parcels—the three-wheeler ones, specifically. How many incidents of tip-overs or rollovers have occurred in the last 12, 24 and 36 months?

Mr Graham : Yes, these are what we call the eDVs. They are electric vehicles. I don't have those exact numbers, but I can get those numbers for you. We'll take that on notice. Suffice to say that the rollout of those vehicles continues. They are sourced from Switzerland. We are also working with a local Australian manufacturer and we hope to deploy those vehicles in April. There have been some delays with those due to COVID.

Senator URQUHART: The Australian ones in April?

Mr Graham : Yes. There have been some delays of those due to COVID supply chains. An analysis shows that the eDVs are upwards of 65 per cent safer than the motorbikes that we have. We are in a transition phase in terms of rolling those out. They can take, obviously, additional parcels and mail. The feedback overwhelmingly is positive in relation specifically to the safety and the telematics, which allows us to ensure that we understand the circumstances should there be a rollover or an accident. In many cases, as we know, these are not the fault of the Australia Post team member, but now we have video evidence to validate that.

Senator URQUHART: So, you've looked at the rollovers and determined that it's not the fault of, what are they called, drivers or riders?

Mr Graham : Riders, yes.

Senator URQUHART: But it's actually something to do with the way this particular machine is made; is that as I understand it?

Mr Graham : No. A lot of the issues are people getting used to these devices/machines, because they are different. We continually work with the manufacturer—we're now on version 2 of the vehicle—to ensure that we continue to build in new safety features. The vehicles themselves are much more stable than an average motorbike. I think we are in that learning curve of people coming off motorbikes into these EDVs and understanding how to use them. The telematics allow us to get that information, and then we will look at whether it's a design issue we can improve, whether it is a training issue for the writer or, indeed, some other circumstances.

Senator URQUHART: You said you were moving from the Swiss-made ones to Australian-made ones. Is that in relation to the rollovers?

Mr Graham : No, not at all. It's really trying to back Australian manufacturing where we can. We have a trial with a manufacturer called Stealth. They have had some delays, as I say. They approached us, and we will put a number of vehicles into operation to test them.

Senator URQUHART: That is mid-year, did you say?

Mr Graham : Correct.

Senator URQUHART: In relation to the information that you're taking on notice, can you also provide on notice a breakdown of the incidents by state and territory, including how many incidents have resulted in lost time injury if there have been any in that category?

Mr Graham : Yes, certainly. We'll have that detail.

Senator URQUHART: In terms of any incidents, has Comcare been notified of all or any of the incidents?

Mr Graham : Where Comcare is required to be notified by the statutes and the regulations we notify them. We have a very comprehensive safety and injury management process that starts with the local depot manager and escalates right the way through to myself.

Senator URQUHART: Has the regulator formally conducted their own investigation into any of the incidents?

Mr Graham : I would have to validate that and come back to you. As far as I'm aware, none of the incidents resulted in serious injury. Obviously any injury is one too many.

Senator URQUHART: But Australia Post has actually undertaken—

Mr Graham : Full investigations.

Senator URQUHART: —full investigations into each incident?

Mr Graham : Absolutely, yes.

Senator URQUHART: Who currently conducts those investigations?

Mr Graham : They are conducted by our safety team. Given that we've had these new vehicles, we've also got independent third-party validation, both from the manufacturer as well as external safety experts, to ensure that we have a full picture of cause and effect.

Senator URQUHART: Who's the third-party investigator?

Mr Graham : I'd have to get that for you. We use a number of agencies to validate.

Senator URQUHART: I think you said earlier that in almost every case rider error was not identified as a cause. Is that correct?

Mr Graham : No. I'd have to look at the data itself. I think there is a combination of issues—environmental issues, other traffic, driver training. There is a range of issues and they would be covered by the reports.

Senator URQUHART: Could you take that on notice?

Mr Graham : Certainly.

Senator URQUHART: Are you aware of any design issues around the centre of gravity specifications in the Swiss-made eDVs?

Mr Graham : It is one of the things that we look at, obviously, as far as the design is concerned. Version 2 has—

Senator URQUHART: Have you identified any issues around—

Mr Graham : No major issues. What we've found is that, depending on the driver, they have a slightly different view as to what the issue may be. It's a bit like Holden and Ford; people have very fixed views.

Senator URQUHART: Have you received technical advice about the centre of gravity perhaps being too high?

Mr Graham : No, we haven't. Not that I'm aware, but again I will validate that's the case. As I say, these bikes are new to the market, new to Australia, and we're in that initial rollout phase and taking feedback.

Senator URQUHART: Can you confirm that Australia Post is now using New Zealand based independent medical examiners to assess workers' compensation claims?

Mr Graham : I'm not aware of that. I can take that on notice. We have a range of providers that do that.

Senator PRATT: Would it be appropriate to use New Zealand—

Mr Graham : I would have to understand the circumstances why, if indeed they were, chosen.

Senator URQUHART: If you could take that on notice that would be great.

Mr Graham : I just want to go now to Mr Di Bartolomeo. I just want to draw your attention to paragraphs 2.1 and 2.3 of the Senate inquiry into Australia Post, which reads as follows:

The Senate Environment and Communications References Committee wishes to express its respect and support for the important institution of Australia Post. It is one of the country's oldest enduring entities that provides a vital public service to millions of Australians and countless businesses. The committee also acknowledges the tens of thousands of hardworking employees, licensee and contractors that ensure its ongoing operations. The committee, nevertheless, has significant concerns about Australia Post's engagement with this inquiry, each of which will be discussed in turn. Respect for the Senate's authority and processes, potential interference with individuals, including Australia Post employees and contractors wishing to make submissions or give evidence to the inquiry, and allegations of false or misleading evidence provided by the chair of Australia Post to this inquiry and to the committee.

I particularly draw your attention to the first of those three points. Why did you reject the first two requests from this committee to appear today?

Mr Di Bartolomeo : I rejected it on the basis of my understanding of what was to be raised. We have Paul Graham, who is not only our CEO but a board member, able to answer questions of board.

Senator URQUHART: On what basis did you refuse a request to attend a Senate oversight hearing when such attendance presented no real conflicts in your diary? There weren't board meetings and there weren't other important issues?

Mr Di Bartolomeo : Are you referring to this meeting today?

Senator URQUHART: That and other Senate oversight hearings. This meeting today is a Senate oversight. This is estimates.

Mr Di Bartolomeo : I had other committees in my schedule. They weren't board meetings, correct. I believed that Paul Graham, our CEO and board member, was able to address any issues this committee had.

Senator URQUHART: With all due respect to Mr Graham, he's just taken a significant number of questions on notice. I guess that's the point that I want to make about why it was important for you to be here today. Can you explain what you understand your role in the system of parliamentary accountability to be?

Mr Di Bartolomeo : Australia Post and the agency is responsible to this committee and the oversight committee. As chair of the board, I take that responsibility with very serious concern.

Senator URQUHART: Minister, do you consider bonuses paid out by the Australia Post board to be taxpayers' money?

Senator Hume: I remember this question was asked of me at the last estimates, although I do not believe it was by you. I think it may have been by Senator Sheldon at that point in time. I would refer you back to my answer then, but we know that Australia Post is a government business entity and that decisions about bonuses are entirely their business.

Senator URQUHART: I understand the decisions.

Senator Hume: However, that said—I have not finished my answer—Minister Birmingham has made it very clear that Australia Post, and indeed all other government business entities, should understand that, while they are commercial entities, they are also taxpayer funded commercial entities and owned by the taxpayer, and should establish their remuneration structures with that foremost in their minds.

CHAIR: I know you have lots more questions. We will come back to you. Senator Davey.

Senator DAVEY: Thank you for appearing today. I have a few questions about your agreements with licensed post offices or post office agencies. Specifically, can you explain the licence arrangements with licensees, the arrangements between a licensed postal office, and the mail service arrangements; are they consistent across all agencies or are there new contracts now being negotiated between franchisees or licensed agents?

Mr Graham : As you say, the licensed post office network is a significant partner with Australia Post. These are small businesses operating in all areas, but particularly in regional and rural Australia. We have very mature agreements in place with the licensees that are subject to annual review. We have just completed that review with the licensees and will, as a result of that, be paying an additional $16 million in 2022 to the licensees. This is on top of the $2.34 billion that we have paid to them over the last five years. There's a range of fees that gets paid in relation to the services they provide. It depends on the range of services that a licensed post office does provide, whether it provides a full range of mail services or a partial range, whether it provides a full banking service or a partial range. They do vary, but there's a very detailed agreement in place to reflect fair payment and reward for the work that they do. As I say, they are a critical part of our network going forward and we have a very strong partnership with them. They form a big part of our future strategy.

Senator DAVEY: Can you explain specifically the mail service payment and what services that is made for?

Mr Graham : Again, that is for a range of services. It depends on an individual licensed post office. This could be for putting mail into a licensed postbox, it could be for receiving mail—a whole bunch of different things, taking mail over the counter, parcel express or postal express. It would depend on the licensed post office and, again, the fees reflect the work that they do. We have very detailed discussions with the LPOs ensuring that we reflect in the payments the time and effort that they put in to providing these services. But they do vary significantly.

Senator DAVEY: Has there been occasion over the last 12 months where you've had to backpay mail service payments to licensees or agents?

Mr Graham : I don't think "backpay" is the right term. There have been occasions where there has been a change of circumstances or a change of what was previously the way that the mail or other things were handled, and then we have been asked to review that by the licensee. We've reviewed that and then we've agreed a new payment for that change in circumstances. Obviously during the COVID situation a lot has changed in our day-to-day operations and we are reflective of the fact that, when circumstances change, it may require additional work from that licensee or it may require less work. If it's additional work, we will discuss that and we'll reflect that in providing the payment in lieu of that work.

Senator DAVEY: What sort of a time lag is there for a review? If a licensee believes they've had a change of circumstances, what's the time lag between when they first alert you and you might have a review and, in some cases, find that there has been an underpayment?

Mr Graham : We've tried to make that payment as soon as possible, as soon as it's been validated that indeed there is a payment due. Again, it will depend on the complexity and the nature of the analysis that needs to be done, but our effort is to pay that as soon as it's been agreed.

Senator DAVEY: Are all licensees fully aware of all the range of fees that they can potentially be eligible for and is there a process in place for Australia Post to actively ensure that all licensees are claiming all of the fees they're eligible for or may there be occurrences where some licensees are not being paid because they're unaware of it?

Mr Graham : It is a good question. We provide detailed training, both in person and online, for all of our licensees. We do have a very diversified product range. We are providing financial services to 80 financial institutions. We provide phone services. We provide insurance services. It is a complex range of products. We have licensees who are really engaged in understanding exactly what products are and what the fees associated with them are. But we have that all based on our website and on our online training, and if there's any occasion where a licensee is unfamiliar we're happy to provide information. Our goal is to ensure that we pay them for everything that they do, because if they are losing revenue then it may be the fact that Australia Post itself is losing revenue if we're not identifying that we're charging someone for that service.

Senator DAVEY: It has been put to me that there are bonuses available for Australia Post network managers if they reduce licensee payments. What would your response be to that allegation?

Mr Graham : My response would be that I am not aware of that. That would not be in keeping with the spirit of the culture that we want to push at Australia Post.

Senator DAVEY: Just moving on to another topic and I'll be brief and hand over the call. Australia Post is in the service of delivery. We saw during COVID for legitimate reasons some of the delivery times pushed out, and that's all understandable. Does Australia Post deliver their mail to all of their licensees or are there occasions where licensees must pick up mail from an Australia Post depot?

Mr Graham : In the vast majority of cases we deliver mail. There are occasions where, during COVID, it has been necessary, because there simply was not someone to deliver mail in an area and we have worked with a licensee on arrangements to come and pick that up. But in the vast majority of cases, particularly in metropolitan and regional areas, we deliver the mail to the postal operator. In some remote communities it's a bit of a hybrid, to be honest. Certainly during COVID there were some rare occasions, certainly in Victoria, where we had mail centres that had 80 per cent absenteeism, and we would make arrangements for that mail to be picked up by the licensee if that was indeed available to them, and they would get paid for that service.

Senator DAVEY: They would get compensated. Is there a backup plan in place on those occasions or in the regional/remote areas where there is a hybrid model, if something goes wrong, say, the licensee's van breaks down or something, to ensure the post still gets there on time?

Mr Graham : Yes, we always have a plan B and a plan C. Obviously during COVID those plans were all brought into play. In remote areas or areas like the Cocos Islands, for example, which we service, aircraft services went down to one a week. We had to put on additional capacity to make sure that mail and other essential parcels got delivered. It has been, and continues to be, unfortunately, a very fluid situation. I think overall, if you look at the context of the circumstances where we've had 28,000 of our team members impacted and not been able to do their normal job due to COVID, I think the overall feedback from the community, as you say, has been one of understanding. However, we take any service failure seriously. I think overall in the circumstances with record volumes we have been able to achieve a fairly consistent and reliable level of service.

CHAIR: Do you have one more?

Senator DAVEY: I have just one more. I explained earlier the network managers who oversee licensee arrangements. Is there a process in place for Australia Post to evaluate network managers' performance and is there a process in place where licensees have an issue where they can put in a complaint and ensure that it's reviewed? Do you report back to the licensees about that review process and any actions that are taken?

CHAIR: Excuse me. Just give me one minute. After this answer, I'll talk to the committee. Do you want to answer that question?

Mr Graham : Yes, thank you. We have a very detailed review process on performance, based on feedback from the licensees. We have regular meetings with the licensees where they have a forum where they can air any grievances or any issues. Obviously, if it's of a very serious nature, we also have whistleblower, and fulfil all of our obligations under the normal whistleblower regimes. I think we've got a good, robust relationship with the licensees. It's a large, complex network with many moving parts. We are not perfect, but when an issue is raised to us, if it's a systemic issue in terms of our process, we will look to fix the process. Where it's a misunderstanding, we will look to clarify that. But it is an open, transparent relationship. I encourage, as I have met with many licensees, them to raise their challenges and issues. We have a formal process for doing that as well as a formal process for reviewing the performance of the area with regional managers.

CHAIR: Thank you. I just wanted to get the committee's agreement that we are going to permit photography in the room today. Are you happy to provide that authority for the day? Everyone is okay with that? Senator Urquhart.

Senator URQUHART: I'll probably direct these to the minister and Mr Di Bartolomeo, given that you weren't the CEO at the time, Mr Graham. Question on notice 4293 provided us a breakdown of how much in bonuses were paid out across multibase salary bands, including the number of bonus recipients that were in that band. In 2021 the data in that question on notice indicates that Australia Post executives receiving a base salary of between $300,000 and $400,000 a year received an average taxpayer funded bonus of $168,000. This band, for example, saw an increase of 22 per cent in average bonuses compared with the year prior. Minister, does the government consider this to be appropriate?

Senator Hume: Thank you. That's not dissimilar to your last question, and I will repeat the fact that remuneration paid by Australia Post is entirely a matter for the board. Australia Post operates, as we know, in a very competitive commercial environment and it does have to attract and retain staff as it sees fit. However, Australia Post should and must also meet government and public expectations about appropriate compensation.

Senator URQUHART: What are those expectations?

Senator PRATT: I think Minister Birmingham has made that very clear.

Senator Hume: I think you accept that those are expectations.

Senator URQUHART: Mr Di Bartolomeo, can I ask you the same question: do you consider that, on a salary of between $300,000 and $400,000, executives receiving that amount received an average taxpayer funded bonus of $168,000. That's a 22 per cent increase in the average bonuses compared with the year prior. Do you consider that to be appropriate?

Mr Di Bartolomeo : Thank you for the opportunity to shed some light on this subject. I guess the first point I'd like to make is I don't see those as bonuses. They are a short-term incentive; they are part and parcel of the contractual arrangements that Australia Post has with all of its executives that have a short-term incentive. It's made up of a fixed amount of remuneration plus an extra amount that is within a reference band that is at risk subject to performance. It's not a bonus, it's just that some of this recognised remuneration is only available to them based on performance against set criteria.

CHAIR: We are having a bit of a problem with your connection.

Senator URQUHART: It's okay. I can actually work out what he's saying, I think.

CHAIR: I'm wondering if it might be best to try switching off your video to see whether that might aid the connection.

Mr Di Bartolomeo : I'll repeat very briefly what I said. It's a great opportunity for me to try to clarify this notion of incentive payments. We certainly don't see them as bonuses at all. With our senior executives we have contractual arrangements around the remuneration that provides two components of remuneration. One is fixed and payable irrespective of performance, and another part is payable subject to identifiable, targeted and measurable performance outcomes. Clearly, performance outcomes from year to year may well see different payments being made. They're not increases in pay. They're not increases in bonuses. They're just simply getting more of what was at risk for them rather than what obviously occurred the previous year. Those packages are set on the basis of what is in the marketplace for those sorts of positions. It starts off with the group general manager for Australia Post. In this case he has a fixed and an STI that was established by the independent remuneration tribunal, and that broad structure applies to a number of executives down to some reasonably junior levels.

Senator URQUHART: The rate of inflation for the 12 months of the 2020-21 financial year was 3.8 per cent, according to the Bureau of Statistics. What we're looking at here are these bonuses or remuneration—whatever you want to call them—that are six times the pace of inflation.

Mr Di Bartolomeo : It's not an inflationary increase. In fact, their package did not increase at all that year. What increased was the performance against those specific targets. Their performance that particular year was better than the performance the prior year, and therefore there's an increase in how much they were able to earn of what was available to them. It wasn't an increase in their remuneration package per se.

Senator URQUHART: Minister, I'll come back to you. On 13 August 2021 the Sydney Morning Herald published a story with a headline 'Public sector bonuses to be dramatically slashed in federal government edict'. So, what happened to Australia Post? Doesn't it just make a mockery of the supposed edict?

Senator Hume: Again, Minister Birmingham made it very clear what the government's expectations are. The government expects all entities, including government business enterprises, to act ethically and to adhere to high standards regarding the expenditure of money, as the public also rightly expects.

Senator URQUHA RT: Was the minister aware as to the growth in executive bonuses across every highly remunerated base salary band in Australia Post?

Senator Hume: Australia Post accounts are transparent. I would assume that the minister would be able to have full visibility of Australia Post accounts, as would the rest of the Senate and the parliament.

Senator URQUHART: Mr Di Bartolomeo, by what average amount did the base salaries of the executives on $300,000 to $400,000 increase from financial year 2020 to financial year 2021?

Mr Di Bartolomeo : I believe that year the increase was zero.

Senator URQUHART: So, they didn't get any increase in their base salary?

Mr Di Bartolomeo : No.

Senator URQUHART: What about the $400,000 to $500,000 group?

Mr Di Bartolomeo : Their base salary did not increase. The maximum STI that was available did not increase. What occurred was that the performance was deemed superior to the prior year and they earnt more of the proportion that was available for them to earn. It wasn't a base salary increase, either to the base salary, the fixed amount or the at-risk amount. They just simply earnt more of that available to them.

Senator URQUHART: I'm sorry, but what you've just gone through with us about bonuses versus incentives versus whatever you call it, from my point of view, is just spin. If you have a look at your annual report, the message from the chair on page 74 of that report says that Australia Post acknowledges that the government recently released performance bonus guidance principles governing performance bonus use in Commonwealth entities and companies to apply from financial year 2022. You've used the term 'bonus' to refer to the STI payments?

Mr Di Bartolomeo : Yes, I did.

Mr Macdonald : I'm mindful that your questions have related to remuneration and incentives in the financial year 2021. The APSC guidance that was published, as you referred to, on 13 August applies from financial year 2022. The statement that the chair made in the annual report that you've referred to does refer to performance bonus guidance. The chair there is referring to the title of that guidance. But as he made the point earlier, we have an incentive program which is performance based and involves at-risk remuneration, and he made the distinction there from bonuses.

Senator URQUHART: Has the board conducted any independent process to assure itself that these bonuses paid for financial year 2021 constitute value for money? Do you benchmark against other industries?

M r Di Bartolomeo : Yes, we certainly do. We have independent benchmarking occurring against other industries and we set remuneration levels to attract the quality people that we believe are in our organisation. Our packages, generally speaking, lie in the bottom and second quartiles, generally below medium, and certainly no-one is above medium. We believe we are placing remuneration packages that are good enough to attract the people we want, but we're certainly not leading the field.

Senator URQUHART: I'm happy for you to take it on notice, but can you provide us with the industries that you benchmark against? My understanding is that the government thinks these are bonuses, but the chair doesn't. Minister, do you consider these to be bonuses?

CHAIR: I'm going to rotate the call now. Do you want to quickly answer that question?

Senator Hume: It's not up to me, it's entirely up to Australia Post as to whether they refer to them as bonuses or not. But I can say, for the record, that the government expects Australia Post will follow the principles that are outlined in the Morton review from 2021-22 onwards.

CHAIR: Senator Mirabella.

Senator MIRABELLA: My first couple of questions relate to the forthcoming federal election. I think we are expecting probably a record high participation in postal voting. Can you give me a general description of what, if anything, you're doing to get ahead of that?

Mr Graham : Yes, we are aware that there will potentially be a far higher level of postal votes. Australia Post has a long record of providing exemplary service during election campaigns. We recently provided services to the recent by-elections in both Victoria and New South Wales and had a good trial run, shall we say, on the Census last year, which was a very extensive and complex program. We have the South Australian elections coming up shortly as well. We have a very skilled and experienced team who have been involved in managing Australia Post and its interface with the Australian Electoral Commission for many years. I think the COVID situation, where we have been able to be very agile and react quickly, has just further strengthened the muscle that we have in that respect. We will have a command centre set up. We have had many meetings and dialogues with the Australian Electoral Commission, and believe that we have all of the necessary tools in place to be able to provide the level of service and competency that the Australian taxpayer requires.

Senator MIRABELLA: As a matter of interest, if you've been having discussions with the AEC, collectively or individually have you put a number on what you anticipate in postal voting?

Mr Graham : No, that's not our prerogative. Our prerogative is to provide a service to make sure that any postal vote that is placed is returned to the AEC for counting. We're not aware of any numbers that may be in their head.

Senator MIRABELL A: Do you have to put on extra staff and/or do you provide any extra training for staff?

Mr Graham : We have a very thorough process. Where we feel that there may be a need to put on additional people we will bring those people on. As I said in response to some other questions, the COVID situation has brought into contact some of the challenges in regional and remote Australia. We will have additional backup services in place there in relation to the election, because getting to some of those places in a normal sense is challenging; during COVID with restrictions even more so. We have significant training programs in place for people dealing with the electoral process, and how they manage votes, both at our post offices when it comes to postal votes coming in there, as well as through our mail and sorting centres.

Senator MIRABELLA: I'd like to jump to another topic now. I've read your tabled report. This is not a criticism, but I note there's no mention there specifically of regional services. I have a particular interest in regional services. I am going to ask you an open-ended question. What are you forecasting, say, over the next 10 years, as to the increase or decrease in services to rural and regional Australia?

Mr Graham : I think Australia Post is uniquely placed, more so than many other organisations in the country, to continue providing essential services to regional and remote Australia. We do that on a daily basis. We touch every single postcode in Australia with our parcel and our letter business. We've also, over recent years, continued to expand our range of services, particularly banking services. We now cater to 80 banks and financial institutions throughout our postal network. We are looking at the growth in regional areas and whether that will be due to COVID and people moving to country areas, and also the dynamics of remote Australia. Our goal is to continue to provide a broader range of services based on the demands that our customers are making. In our licensed post offices the more services they can provide the better revenue stream and profit stream for them.

We are seeing in many of these regional areas that we are the last service based organisation standing in terms of managing cash, managing banking or financial services, providing access to sign up for a mobile phone, whether it be insurance services, parcel services or obviously our traditional mail services. We see continued investment to expand our presence and the range of services that are demanded by rural and regional Australia. We'll be rolling out our first what we call community post concept, which is an expanded footprint, where we will look to provide dedicated banking lines, more space for parcels—because obviously they've continued to increase—but also look at potentially the facility of having videoconferencing rooms where someone can come in. If it's a mobile banker, because they might not have a bank, they can book that to have a consultation with their clients. Or, indeed, in the case where someone may want to come in and book a videoconference with their specialist in Melbourne or Sydney.

We see those areas as opportunities for growth. We're not shrinking. It's part of our strategy that we'll be recalibrating in a post-COVID environment. Obviously COVID has taught us a lot about changes in our customers' buying behaviour and also what they are looking for and we see and are proud to be a company that actually views regional and remote Australia as a strong part of our business going forward and one that we look to invest in.

Senator MIRABELLA: You've actually anticipated a couple more questions, but just quickly on banking—obviously, banking is important. Regionally the majors are disappearing. I am pleased to hear that's a priority. You have arrangements, you said, with I think 80 banks and financial institutions. Are there any missing?

Mr Graham : ANZ is missing. We continue to have a dialogue with them. We were happy to announce recently a 10-year agreement with Commonwealth Bank and National Australia Bank, and we're in final discussions with Westpac about extending their relationship. But ANZ was an exception at the beginning of that process, and we're in dialogue with them around them potentially coming into that. As you stated, we now have 80 banks and financial institutions, and that number continues to grow.

CHAIR: Senator Urquhart.

Senator URQUHART: Mr Di Bartolomeo, which member or members of the board are on the remuneration committee?

Mr Di Bartolomeo : All members of the board are on the remuneration committee.

Mr Macdonald : I just wanted to clarify one point. It's all non-executive directors that are members of that committee. The managing director is not a member of the nomination and remuneration committee.

Sena tor URQUHART: I want to look at a different band. Australia Post executives and senior personnel on a base salary of between $200,000 and $300,000 received a cash bonus of $74,000 in late 2021, yet when we look at the equivalent executive base salary band in NBN Co the average bonus for 2021 was $21,400. Minister, why are Australia Post executives receiving taxpayer funded bonuses which are on average over three times higher than bonuses paid to an equivalent executive within NBN Co?

Senator Hume: Again, I can only say that decisions about remuneration structures, bonuses and short-term incentive payments are matters for the NBN board and matters for the Australia Post board, and they are best directed to them.

Mr Graham : If I may talk about the context of remuneration, at NBN the base salaries are far higher than those at Australia Post. It's not an apples for apples comparison, but I take your point. I think in the context of remuneration, as the chair mentioned, this is a contract; it's a contract that commits a lump sum of money, part of which is at risk based on performance. Whether you call that a bonus, an incentive, it is a contractual obligation, and people signing up for that contract understand that a high portion of that total sum is at risk and based purely on performance. In the context of Australia Post, we fully respect our role as a GBE. However, we do run the largest retail network in Australia, with 4,500 branches. We do run the largest mail service in the country. We do run the largest e-commerce parcel service in the country. We are providing services to 80 banks and financial institutions. We are an international parcel provider. We also provide insurances and telephone services.

Senator URQUHART: Mr Graham, I am sorry to cut you off. I do know all of that. We are running out of time. I just want to go back to the minister. Do you accept that they are bonuses paid to people over and above their salary?

Senator Hume: I think that was very well explained just then by Mr Graham, that remuneration—

Senator URQUHART: I'm asking you as the minister whether you believe these are bonuses as part of a salary.

Senator Hume: What my opinion is on this is entirely irrelevant.

Senator URQUHART: It's the government. It's taxpayers' money.

Senator Hume: It's entirely irrelevant, because the decision on how to remunerate staff and executives is a decision for the Australia Post board.

Senator URQUHART: Minister, this is taxpayers' money.

CHAIR: Order!

Senator Hume: The government has made it very clear, whether it be in the Morton review or in statements by Minister Birmingham, that the government expects Australia Post will follow those principles in the Morton review.

Senator URQUHART: Yes, you've said that three times.

Senator Hume: And you've asked the same question four times.

CHAIR: Order! It is getting a bit repetitive. If you want to ask questions to the minister, that's fine.

Senator URQUHART: Okay. Minister—

CHAIR: Order! I'm making a rare statement here. I think if you are going to ask questions to the minister, that's fine, but it would be good if you allow the minister to answer the question. The whole point of this session is for senators to ask questions primarily to the departments and the agencies, perhaps to get a clarification from a minister and then hear the answer.

Senator URQUHART: We can actually ask the minister questions as well.

CHAIR: The whole point is to hear the answer.

Senator URQUHART: What independent oversight outside the board exists in terms of examining whether the performance targets to which Australia Post executive bonuses are linked are appropriately aspirational?

Senator Hume: That is the role of the board.

Senator URQUHART: Has the minister ever commissioned an independent assessment on this?

Senator Hume: Not that I'm aware of.

Senator URQUHART: In 2021 only 152 out of 32,755—or 0.4 per cent—frontline Australia Post workers on an award salary received a bonus, compared to 33,014 out of 33,337—99 per cent—in 2020. Is that fair?

Senator Hume: I'm sorry? Is that a question for me or is that a question for Australia Post?

Senator URQUHART: It's a question for you, Minister.

Senator Hume: I think it's actually a more appropriate question for Australia Post, and fairness is not an issue upon which I should comment.

Senator URQUHART: Mr Graham, what role does Australia Post play in terms of direct logistical support for vaccine and rapid antigen test deliveries?

Mr Graham : Yes, we have been approached by various state agencies, particularly from state agencies, to provide logistics support to roll out rapid antigen testing kits to schools and to other public health agencies. We provide that through our normal network. That has been very successful, I believe, and we will continue to provide a range of services to both federal and state governments in relation to the pandemic.

Senator URQUHART: Has the Commonwealth government made any formal requests of Australia Post support in terms of the national COVID effort?

Mr Graham : Like I guess many large logistics companies, we have played a role in moving what could be regarded as COVID related products, whether that be PPE or rapid antigen tests on behalf of government agencies and on behalf of private companies or indeed customers of ours who are looking to have these made available to their team members across Australia.

Senator URQUHART: Can you very briefly just describe, where appropriate, what your role is and how that's actually coordinated?

Mr Graham : Our role is as a service provider, the same as any other service provider using our wide national network to ensure that products that are given to us are delivered safely and in a timely manner to people who need them.

Senator URQUHART: What patterns has Australia Post seen in its parcel volume since the Christmas peak?

Mr Graham : We saw during the Christmas peak December was the busiest month on record for Australia Post. We moved 58 million parcels, which is extraordinary when you place this against the context of the Australian population. Like many people, we expected that the pandemic would start to ease off, but Omicron obviously reared its ugly head and we have seen a continued increase in parcel volumes over and above what we anticipated. People are still staying at home. People are fearful of going out. We are seeing that starting to ease. However, it is higher than what we anticipated, and that continues to place a great strain upon our network and our team members.

Senator URQUHART: Now that you've had a few months in your role as CEO, what are the key observations that you've made to date about the operation and functioning of the network and the investments and changes that you might be seeking to make?

Mr Graham : It's month four now. I've been incredibly impressed by the commitment and dedication of the Australia Post team across-the-board. It is a complex business. We are competing with many global players who have very deep pockets, both in terms of those that have logistics networks as well as those that are investing significantly in digital and data, and that is something that we need to be concerned about. I have two clear responsibilities as a CEO. The first one is to keep people safe. The second one is to ensure that Australia Post remains a sustainable economic organisation in the years ahead.

We are in an incredibly competitive environment. Omicron and COVID has accelerated e-commerce significantly. We have seen significant sums of money poured into the Australian economy by e-commerce players to try to capture market share, and we compete against many of these players. We have investments that we need to continue to make. We have a war on talent, as has been discussed this morning. We are competing against the open market for digital. We have one of the largest used digital applications in the country in our parcel tracking app. We need smart people to be able to manage and continue to upgrade that in response to our customers' needs. We need to continue investing in our regional network, because we see that frankly as a point of competitive advantage. We are in places where no-one else is.

The Australian taxpayer has spent billions of dollars over many years helping build a network that we have today. What we can't afford to do is open that network and give that network away. We have seen in other postal operators globally where they have not invested in the right talent or not invested in their business that they are now in a loss-making situation. The most glaring example would be the United States Postal Service, which did not invest in people, did not invest in systems or process, and last year posted a USD8 billion loss. We do not want to be in that situation. We should not be in that situation. But it will require us to continue hiring and attracting the right talent, making sensible investments that are executed by smart people in our network, in our retail footprint, and continue to look at how we broaden our range of services. Because particularly in regional and remote Australia we are going to be there, and we are going to be there today, tomorrow and long into the future. We are very proud of that responsibility.

But the world has changed in COVID. E-commerce has changed significantly. That represents 80 per cent of our business, and we need to make sure that we're keeping pace with what our customers want, what our communities expect of us, and at the same time to be competitive both from a pricing perspective as well as from a service perspective.

Senator URQUHART: We are very conscious of time. I'll put the rest on notice, but if you can provide a little bit information about broadening your services on notice that would be good. I have a few other questions but I'm happy to put them on notice.

CHAIR: I appreciate that. Senator Canavan.

Senator CANAVAN: Congratulations, Mr Graham, on your appointment. I'm particularly interested in your relationship with licensed post offices. I realise the financial stresses you are under, but I'm sure you appreciate they have struggled as well in recent years. Your predecessor, Ms Holgate, was doing some very good work, in my view, with the LPOs. Can I ask for an update on the bank@post deal? I believe at the last estimates you mentioned Westpac had extended for a year to the end of this year, and you're still in discussions with ANZ. What is the latest on those discussions?

Mr Graham : We have announced recently a 10-year extension with both National Australia Bank and Commonwealth Bank, which is terrific news. That provides surety to us as well as our licensed post offices, who rely on that income. We are in discussions with Westpac to extend their current agreement, and we are in discussions with ANZ to enter into an agreement. Those discussions are ongoing, but we have expanded our range of customers that we can now provide services for to over 80 banking and financial institutions. Based on the number of inquiries we get, that will continue to expand and is, as you say, a very beneficial service offering both for the communities in which we operate but particularly for the LPOs.

Senator CANAVAN: That's great news. Thank you very much for that. Just more generally on seeking to find third-party revenue sources, at the last estimates I asked questions about Australia Post's deal with 7-Eleven. I think there was something about delivery boxes. Has there been any attempt to try to find more third-party revenue sources for licensed post offices and your own post offices through, for example, partnering with delivery firms like Toll or others, so that with online ordering you're not just restricted to the Australia Post network to provide revenue for LPOs?

Mr Graham : There is no intention to partner with any other delivery service. We are the largest delivery network in Australia. We don't need any support in doing that. We do provide an open network so that companies that are in competition to us can place their parcels within our network for a fee. But as I mentioned just recently, Australian taxpayers spent billions of dollars building the Australia Post network. It is a distinct competitive advantage for us. I believe we offer a very reliable and excellent level of service at competitive rates, and we want to maintain that competitive service. We continue to look at all areas of opportunity for our LPOs, whether it be in the retail space, whether it be in providing additional services such as telephone services or insurance services, and we take their feedback. We have a working group with them to continue to look at other things we can do. Within that physical footprint we have the opportunity to do more, and look forward to doing that.

Senator CANAVAN: Perhaps we can take this up another time, but I'm hearing feedback that, notwithstanding, yes, you're right as to Australia Post's extensive network, the restrictions on not being able to offer delivery to other entities is restricting the market share or services offered by post offices themselves. Correct me if I'm wrong, but I believe the agreements you have with LPOs restrict them from entering into any third-party agreements in that sense? Maybe on notice, could you take for me what is Australia Post's market share of online delivery packages, and how that has been tracking for the past five years?

Mr Graham : Yes, happy to take that on notice.

Senator HANSON-YOUNG: And broken down into regional versus metro?

Mr Graham : I believe we can. I'll take it on notice.

Senator HANSON-YOUNG: I think that would be helpful.

Senator CANAVAN: Lastly, board representation. I always raise the issue of having LPOs on the board. Is that something you've had discussions about yet, Mr Graham, or considered?

Mr Graham : It's not a matter for management.

Senator CANAVAN: I'm sure you could provide advice to the board on it, but if you so choose.

Mr Graham : It's not an area that I would look to provide advice on.

CHAIR: Senator Hanson-Young.

Senator HANSON-YOUNG: Just quickly on the matter of bonuses—for the record I think lots of Australians, particularly those who work in aged care facilities right now, would just be gobsmacked that somebody on $200,000 or $300,000 a year is getting a bonus of $170,000. I think that is out of touch. I think it proves that nothing has really been learnt from the last two years. I'd urge the Australia Post board to think a bit more clearly about the message they're sending, particularly when frontline workers are not the ones who are getting the bulk of that money. I did want to ask, however, about retention bonuses and whether there have been any retention bonuses paid both in the last 12 months but also in this financial year. Could we just get some clarity on that?

Mr Graham : I would be happy to take that question. There were three retention bonuses paid in the last 12 months. They were paid to senior people in our network operations. That was just prior to my joining, but I was consulted on that. My view, very clearly, was that it was appropriate to retain those people. These skills are very, very difficult to find, both in the Australian market and indeed in the international market. They were being coaxed away by a major competitor, and I felt that the damage that their departure would have done would have been significant, and therefore the board approved the retention payment for those three individuals. It is not an unusual process to pay retention when people are under threat of moving to a major competitor, but I felt in this particular case it was appropriate to do so given the skillset, given the complexity and nature of our business and the great difficulty in replacing those individuals in our business.

Senator HANSON-YOUNG: What were those retention bonuses worth?

Mr Graham : I would have to take on record the actual specific detail, but they were paid over a period of, I believe, three years in single lump sums, in addition to the normal base salary that individual has. I'll provide the specific detail and take it on notice.

Senator HANSON-YOUNG: They were within the executive team?

Mr Graham : Yes, there were.

Senator HANSON-YOUNG: Three executives. What were their—

Mr Macdonald : Sorry to interrupt. Just to clarify: of those retention incentives, my understanding is that it was five individuals, not three. There was one on the executive team, and that individual was included within our remuneration reporting in the annual report for 2021.

Senator HANSON-YOUNG: With it being listed as including the retention bonus?

Mr Macdonald : Yes, I believe it was footnoted as a long-term incentive.

Senator HANSON-YOUNG: So, out of the five, one was from the executive team?

Mr Macdonald : That's correct.

Senator HANSON-YOUNG: So the other four were what—senior management?

Mr Macdonald : Yes.

Senator HANSON-YOUNG: And what roles were they in?

Mr Macdonald : They were in senior operational roles that face the considerations that Mr Graham referred to earlier.

Senator HANSON-YOUNG: Do you have the figures there in front of you on how much?

Mr Macdonald : I don't have the figures in front of me.

Senator HAN SON-YOUNG: I'd like you to take that on notice.

Mr Macdonald : We'll take that question on notice.

Senator HANSON-YOUNG: Both the total and the breakdown of each of the positions. Is it right to then conclude that these five individuals received the retention bonus over three years, plus had a slice of this incentive payment, as well, that we've been talking about all morning?

Mr Macdonald : I don't have the details of the specific arrangements, but I can confirm that they would have remained eligible to participate in the incentive plan and the retention incentive was an additional incentive.

Senator HANSON-YOUNG: A retention bonus—you must have some sense of what the round figure would be for people's roles. Are we talking 100,000 per year? Are we talking 50,000 per year? What are we talking?

Mr Macdonald : I don't have the exact figure with me and I want to make sure that I'm accurate.

Senator HANSON-YOUNG: But are we in the ballpark or was it even more than that?

Mr Macdonald : As Mr Graham mentioned, the incentives were paid over a three-year period—in effect, a two-year period: a payment that was made at the end of the financial year; further payments in a year; and a further payment in two years. The highest of those payments in aggregate over those three payments was $500,000. Others were less than that. I just don't have the precise figures.

Senator HANSON-YOUNG: Half a million dollars retention bonus over three years. And that individual retained the ability to get the incentive bonus as well?

Mr Macdonald : Yes, Senator.

Senator HANSON-YOUNG: Oh my God, that's a lot of money. That's a lot of money. From a public organisation. That's extraordinary.

Mr Macdonald : Mr Graham has spoken to the circumstances—

Senator HA NSON-YOUNG: Talk about out of touch.

CHAIR: Order! This is questions and answers. Do you have a further line of questioning?

Senator HANSON-YOUNG: I do, actually. I look forward to getting those details on notice. Out of those five individuals, what was the gender split?

Mr Graham : I believe they're all male.

Mr Macdonald : I think that's right.

Senator HANSON-YOUNG: They're all men.

Mr Macdonald : Yes.

Senator HANSON-YOUNG: The reason I'm asking this is because it's been put to me that there's been an exodus of senior women from Australia Post over the last 12 months. You're nodding, Mr Graham. Is that fair to say?

Mr Graham : I'm nodding in relation to the fact of acknowledging the question, Senator. I don't believe that's the case. Ms Mangos could provide some context to the situation, but we have had what we'd regard as our normal levels of turnover. I'm very pleased that in my new executive team we have a 50:50 split and that was done on the basis of the skill set of the individuals. But I don't believe we have an out-of-normal turnover. We encourage and have many programs in place to ensure that we are trying to promote our female talent. In our network operations in particular, we have a very traditional male-dominated environment and we are trying to change that. Indeed, I was out at one of our sites last week in Minchinbury that has a strong coterie of female leaders now—48, which is great. Four or five years ago that same site had seven. We're working through that, but we can do more in terms of making the transport and logistics side of our business more attractive for female leaders.

Senator HANSON-YOUNG: Out of your executives and senior management, how many women have left the roles over the last 12 months?

Ms Mangos : When you look across the board and our leadership roles, we've got about 39 per cent of those leadership roles occupied by females. As to the number of women that have departed since—what period are we talking about?

Senator HANSON-YOUNG: The last 12 months.

Ms Mangos : The last 12 months? I don't have that information.

Senator HANSON-YOUNG: Can you take that on notice?

Ms Mangos : I will certainly take that on notice.

Senator HANSON-YOUNG: In relation to the incentive payments, we've heard that the retention payments were given to five blokes. Out of the incentive payments, what has the gender split of that been as well?

Mr Graham : That would reflect basically the management. We can provide that for you.

Senator HANSON-YOUNG: Thank you.

Senator MIRABELLA: Mr Graham, you've only been in the job a short time. You strike me as being on top of everything. You've given us a pretty succinct outline of the organisation and where it's going. You've also said that your remuneration levels are significantly below other competitors such as NBN. I'm going to ask you a very blunt question, which probably requires a very short answer. In your job, would you say that the focus on the controversial matter of remuneration and incentive in Australia Post makes life difficult for you in attracting the talent that you need in this competitive environment?

Mr Graham : I think it's a further complication, Senator, and certainly when discussing bringing people into the organisation it creates some difficulties and challenges. But that is the nature of what we are as a GBE. I am passionate about Australia Post, as I know our leadership team is. We have a great purpose and we have a very clear responsibility to the community. It is a further complication, but one that we all know is there as part of our role as a GBE and we take that on the run like we take everything else.

Senator MIRABELLA: I think that's a yes. Is that a yes?

Mr Graham : I would say it would qualify as a yes.

CHAIR: Thank you for being here today.