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Treaties tabled on 15, 21 and 24 June 2010

CHAIR —Welcome. Although the committee does not require you to give evidence under oath, I should advise you that this hearing is a legal proceeding of the parliament and warrants the same respect as proceedings of the House and the Senate. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. If you nominate to take any questions on notice, could you please ensure that your written response to questions reaches the committee secretariat within seven working days of your receipt of the transcript of today’s proceedings. I now invite you to make any introductory remarks you may wish to make before we proceed to questions.

Mr McIntyre —Thank you for this opportunity to give evidence in support of Australia’s accession to the acts of the 2008 24th Congress of the Universal Postal Union. The proposed binding treaty action constitutes accession by Australia to four acts of the Universal Postal Union, or UPU. By way of background, the UPU is a specialised agency of the United Nations that provides the basis for the exchange of international mail. Australia has been a member since 1907 and is one of 191 member countries. Participation in the UPU allows Australia and its designated operator, Australia Post, to have a say in international postal arrangements.

Arising from the 24th congress, in Geneva in 2008, the acts subject of your consideration are: the Eighth Additional Protocol to the Constitution of 10 July 1964, as amended; the Convention and Final Protocol; the First Additional Protocol to the General Regulations; and the Postal Payment Services Agreement. These acts provide an internationally competitive framework under which designated postal operators are required to operate while seeking to compete on a level playing field with the private sector.

Before the 2008 Geneva congress, the Department of Broadband, Communications and the Digital Economy consulted extensively with stakeholders, including the Department of the Treasury; the Attorney-General’s Department; the Australian Customs Service; the Department of Finance and Administration; the Australian Quarantine and Inspection Service; the Department of Foreign Affairs and Trade; the Australian Agency for International Development; the Department of the Environment, Water, Heritage and the Arts; the Department of Infrastructure, Transport, Regional Development and Local Government; the Department of the Prime Minister and Cabinet; and the Department of Families, Housing, Community Services and Indigenous Affairs. The department also consulted with Australia Post and the Major Mail Users of Australia Ltd. Australia Post was involved in the development of policy positions and was part of the Australian delegation at the congress. These consultations concluded in widespread support for accession to the acts. Given the Commonwealth’s sole responsibility in this area, state and territory consultations were not undertaken.

Following the congress, a best practice regulation preliminary assessment was conducted and from this it was determined that a regulation impact statement was not required. The Minister for Foreign Affairs and Trade approved the national interest analysis following a review by the Office of International Law, Attorney-General’s Department, and the Department of Foreign Affairs and Trade.

Australia has elected to accede to these acts, subject to your consideration. The acts came into force generally on 1 January 2010 and will come into force for Australia on the date provided on the instrument of accession. Accession to the acts will assist Australia to continue to develop a more efficient and effective domestic postal service, while providing the basis for Australia to contribute actively to the ongoing development of the international postal service.

In conclusion: if acceded to, the amendments to the acts of the UPU can be implemented administratively by Australia Post. They will not require any change to the Australian Postal Corporation Act 1989 or related primary legislation. The Australian government’s role in the UPU will not change as a result of the proposed treaty amendments and no action needs to be taken at state or territory government level, as the Commonwealth has constitutional responsibility for postal services. The proposed accession to acts of the 24th congress will allow Australia to continue to participate in the international postal reform process. Not taking this treaty action would reflect negatively on Australia’s commitment to the UPU, especially as Australia has been a leading advocate for reform of the international postal system.

CHAIR —Thank you very much. On the issue of reservations, the committee’s advice is that article 22 of the UPU constitution says that reservations may not be made with respect to the constitution or the general regulations, but we note that there are a series of reservations which Australia has lodged to the various agreements—article 2, subsection 1, article 3, subsection 2 and more. Can you elaborate on why we have lodged the reservations and how that sits with the constitution?

Mr McIntyre —Australia’s reservations are to the principles that underpin the Constitution rather than to the Constitution itself. Basically, they are to give Australia the flexibility to implement the agreement in accordance with Australian law. For example, there are reservations about the way in which we hold other countries liable for loss of international post and other matters. There are also reservations associated with the carriage of certain kinds of dangerous drugs in certain circumstances. The reservations are consistent with the way in which the treaty system works. Other countries similarly make those kinds of reservations as a way of ensuring that the treaty is consistent with their domestic law.

CHAIR —The national interest analysis argues that access to the Postal Payment Services Agreement Framework will make Australia Post more market competitive. Can you give us a little bit of detail about that?

Mr McIntyre —That particular agreement is an agreement on the exchange of postal orders. At the moment, Australia Post acts as an agent for Western Union in relation to postal orders. So if you go into a post office you can take out a money order against Western Union. This agreement means that Australia Post is entitled to directly participate in the framework for postal orders, which sits under the UPU. So Australia Post will be able to continue to make orders available through Western Union but, should it decide, it will be able to make postal payments directly through the system. This gives Australia Post that additional flexibility and should increase competition in the postal order sector because it will not only have the Western Union orders; it can make them directly, if it is advantageous to do so.

Ms BIRD —I am interested in article 10, which is a general reference to sustainable development and environmental issues related to postal issues internationally. You make the point that Australia Post has already adapted quite well in that way. Is that a competitive advantage for us or are we just encouraging it by participating in it?

Mr McIntyre —The international postal system aims to do a number of things, apart from just deliver post. It is one of the oldest UN bodies; it predates the UN. One thing the postal system seeks to do is improve the global system in a number of ways. It has had a role in aid for many years in helping developing nations to develop better postal systems by providing them with the support and expertise of other countries. Two other areas that it increasingly has got involved in are environmental issues to encourage postal operators in different countries to do their postal work, as far as possible, in a sustainable way—for example, making fleets of vehicles run more cleanly and encouraging substitution of some services with the use of technology. Those are two areas where the international postal agreement has increasingly put obligations on countries to do those things. Australia, as a developed nation, tends to have its own environmental laws that are more stringent than the kinds of general principles that are in these agreements. So these will not actually drive change and will not force Australia Post to change. Nonetheless, Australia Post is very committed to environmental issues and will continue to push for that not only within the international framework but also for its own fleet and other operations.

Ms BIRD —I have a second question, just for general interest. Given the expansion of electronic mail, has there been a major shift in the nature of the task of the UPU from information based mail to goods, products and services and so forth? Has it set a decline in its overall management of movement or is it increasing in different ways? Can you give me a bit of a view as to how that is?

Mr McIntyre —You have put your finger on the challenge of the times. Internationally, mail services have been in decline for a number of years. Indeed, quite a number of the largest postal operators around the world are on the point of insolvency as a result of drops in letter volumes. The US federal post is in serious financial trouble and, in fact, the Royal Mail is in the process of trying to remain solvent. Australia has been lucky. Our postal service has been more diversified for a longer period. Postal services in Australia have included a retail service, there are joint ventures with Qantas and there are a number of other things that have helped to protect Australia Post against the changing nature of its business. Nonetheless, with the global financial crisis we started to see a very significant shift where companies are increasingly doing their business online and are no longer sending people mail. Indeed, personal mail has more or less disappeared. As a result of that we have seen annual declines, from two years ago, in the number of items that people post and yet we see a continuing expansion of the network with immigration to Australia and so on. So there are more and more points you have to serve, but you put fewer and fewer letters in each one. So it is getting more and more expensive for Australia Post to manage that.

Australia Post have dealt with that by improving the internal operations of the company with automation of letter sorting in various ways. They are also continuing to diversify their services. Also, though, the number of international parcels have been increasing very significantly, particularly in the last six months as the Australian dollar has surged. So Australia Post are delivering more parcels than ever before and some of the revenue they make from parcels is offsetting the losses they are making from letters. Whether these two things can continue to balance themselves is an issue that we are currently very much in discussion with Australia Post about.

Ms BIRD —I am conscious that, in terms of the international protocol, there is a whole extra layer of vigilance required if you are moving parcels and, as you say, parcels do not just come from businesses. Many individuals and households now would have fairly regularly delivery of parcels. I would imagine that that creates a much higher level of responsibility under these agreements for interacting internationally with what goes in the parcels, how they are moved and the security level of the issues when they arrive here. Is that something you feel we are well ahead of?

Mr McIntyre —A lot of that is not captured in these agreements because it is actually managed by the Customs, quarantine and security agencies of different countries. In particular, some of our key trading partners in relation to internet parcels, such as the US, have very stringent requirements. Indeed, the US is currently looking to implement new, even more stringent, measures in relation to parcels, partially in reaction to some of the recent dubious packages that have been transported in the UK and the Middle East. That continues to be an area where there is a lot of work—

Ms BIRD —For Customs?

Mr McIntyre —It tends to be managed by Customs, quarantine and security agencies more generally. Australia Post cooperates fully with those services and, indeed, has an international postal gateway, which is basically a giant warehouse where all the international post comes in and is processed from a Customs, quarantine and Australia Post perspective, all in the single facility. I guess that makes it a little bit easier for us, compared to many services, because it is already being integrated. But it is becoming more and more challenging over time, and it is certainly something we are going to have to watch closely.

CHAIR —I am pleased to report that Australia Post’s viability continues to be underwritten by constituents writing to us with their various concerns.

Mr McIntyre —Indeed, they do.

CHAIR —We are doing our bit by giving them cause to write to us.

Ms BIRD(Inaudible) go to Australia Post rather than to Customs.

Mr FORREST —Interestingly, Australia contributes to the operation of the ANU. I understand it is about $850,000 a year, but it is paid by Australia Post. I wonder why that is so when there are other carriers in the postal market who will take advantage of the protocols. Why does Australia Post make a contribution?

Mr McIntyre —Australia Post is Australia’s designated operator, so under the UPU treaties the Australian government elects one or a number of designated postal operators and, in Australia’s case, that is Australia Post. So it is only Australia Post that is in fact bound to do the various things in this treaty. Perhaps the most onerous of those is that it is required to deliver international mail, according to the strictures of the Universal Postal Union, whether or not it likes to and whether or not it is profitable, whereas other postal operators in Australia are not required to do that.

However, that is not a real problem, because separately the Australian Postal Corporation Act requires Australia Post to deliver parcels anyway as part of the community service obligation that we place on post in Australia. So I guess the answer is that it only binds Australia Post and therefore Australia Post is the one with the vested interest that means that they should contribute to the fees. In practice, the Australian government in some instances defers to Australia Post to represent our interests in Universal Postal Union discussions where they are of an operational nature and they only involve postal operators. Then they come and report back to us and we scrutinise the way in which they have carried forward our business and direct them as to how we wish them to take it forward in future. So Australia Post is very much involved in the UPU and in fact, because we are very happy with the way Australia Post does this, we are often happy to act effectively as their agent in facilitating their participation in the postal services.

Mr FORREST —How is that $800,000 figure determined though in a budget of $50 million or so? Is it on a usage basis?

Mr McIntyre —Part of the act, including some of the amendments, relate to the payments process that determine basically on the size of countries how much they should contribute to the operations, and that is dictated in the various acts that we are discussing today. That is a negotiated amount, effectively, by virtue of all of the countries involved agreeing on their size and therefore the size of the contribution they should make. Basically, countries are put into tiers depending on their size and the level of their development and they contribute in kind as a result.

Ms BIRD —When you say ‘size’, are you talking population or geography?

Mr McIntyre —Population, typically.

Mr FORREST —There are 190 countries, I believe. Do you have any idea what they are contributing?

Mr McIntyre —I think the total budget is about $34 million—and I will see if we can get you the correct figure—

Mr FORREST —On notice would be good, just for interest—to make sure they are pulling their weight, that’s all.

Mr McIntyre —It is to the order of $34 million across the whole world. In terms of Australia’s contribution, that is probably roughly the kind of contribution that you would expect, given that developed nations overcontribute and developing nations undercontribute, as a way of fostering and encouraging the development of the mail services internationally. We will see if we can get you the exact number. I remember that it is in the National Interest Statement, but I am sorry, I cannot recall off the top of my head.

Mr FORREST —No, on notice is fine.

Mr McIntyre —Here we are: $38.1 million is the total budget of the UPU.

Mr FORREST —My question was about all the other countries and what they are contributing.

Mr McIntyre —In sum, the total that all the countries contribute is $38.1 million, and Australia contributes some $850,000 dollars. If you like, on notice I can get you the actual contributions of, say, the top 10 countries? Is that the sort of thing that you are looking for, or just some representative countries?

Mr FORREST —I just want to be satisfied that they are pulling their weight. I understood that were about 190 countries—

Mr McIntyre —One hundred and ninety-one, yes.

Mr FORREST —We do not want them all—but the United States, Britain, European countries, to make sure that they are pulling their weight. That is all I am after.

Mr McIntyre —Yes, absolutely, and of course that is part of the treaty negotiations for all the countries believe that it is a reasonable deal across the service. But on notice, I will get you that information.

CHAIR —We were talking earlier about the postal payment services agreement and whether you see the prospect of any new services or procedures that Australia Post would bring into effect following accession to that agreement and whether that is likely to have any impact on consumers.

Mr McIntyre —It is going to be a matter for Australia Post whether they wished to offer any services under that agreement, and indeed they have not really been champing at the bit in that this agreement has now been available to them for a couple of years and they have not been agitating for us to accelerate this process of accession. However it provides Australia Post with the ability to set up a postal payment service if they wish.

They already have one; they have the Western Union postal service. This is if they would want to set up an alternative. They would do that if they believed that they could offer a product that was quite different from the one that they are already offering, and one could imagine that that would be on the basis of either being significantly better or significantly cheaper. So one would expect that, should they choose to take up the options under this, it would be beneficial to consumers because it would be offering a product which provided value over and above the current Western Union one. It would also provide some competition for Western Union, which means that even if they do not introduce such an agreement, it may in fact put a competitive pressure on Western Union and the product they offer to consumers.

CHAIR —Thank you for attending to give evidence today. If the committee has any further questions, the committee secretariat may seek further comment from you at a later date.

[11.15 am]