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Environment and Communications References Committee
27/04/2021
Australia Post

DEAN, Mr Mathew, Workplace Delegate, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia

GIRDLER, Mr Paul, Lead Organiser, Community and Public Sector Union [by video link]

MURPHY, Mr Shane, National Divisional President, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia

MUSCAT, Ms Brooke, Deputy National President, Community and Public Sector Union

RAYNER, Mr Greg, National Divisional Secretary, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia

TURNER, Mr Kerry, Workplace Delegate, Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia

Committee met at 09:07

CHAIR ( Senator Hanson-Young ): I now open this hearing of the Senate Environment and Communications References Committee inquiry into Australia Post. I begin by acknowledging the traditional owners of the land on which we meet, and we pay our respects to their elders past and present. On behalf of the committee, I welcome everybody here today. Today the committee will be conducting its hearing in person and via videoconference. Thank you in advance for your patience with any technical issues we may encounter along the way. We do know that the APH email system is currently down for many, so we might have to rearrange things as we go. So apologies in advance, and thank you for your patience.

This is a public hearing and a Hansard transcript of the proceedings is being made. The hearing is also being broadcast via the Australian Parliament House website. Before the committee starts taking evidence, I remind all witnesses that in giving evidence to the committee they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee, and such action may be treated by the Senate as contempt. It is also a contempt to give false or misleading evidence to a committee. The committee generally prefers evidence to be given in public, but under the Senate's resolutions witnesses have the right to request to be heard in a private session. If a witness objects to answering a question, the witness should state the ground upon which the objection is taken, and the committee will determine whether it will insist on an answer, having regard to the ground on which it is claimed. If the committee determines to insist on an answer, a witness may request that an answer be given in camera. Such a request of course may be made at any other time.

I now welcome representatives from the CEPU and the Community and Public Sector Union. Information on parliamentary privilege and the protection of witnesses and evidence has been given to you. Do you have any additional comments on the capacity in which you appear today?

Mr Turner : I'm a duty manager at Australia Post's Leightonfield Delivery Facility.

Mr Dean : I'm a PDO at Charmhaven delivery.

CHAIR: I invite each of the organisations to give a brief opening statement, and then we'll go to questions. Mr Murphy, will you be kicking off?

Mr Murphy : Mr Rayner will, and I'll supplement his opening statement.

Mr Rayner : Thank you to the committee for hearing our evidence today. I would first like to note Ms Holgate's situation. The CEPU is a union with coverage of the entire Australia Post workforce. Whilst noting that we do not act on behalf of Ms Holgate, I would like to state in the strongest possible terms that the treatment of all workers at Australia Post must adhere to Australian workplace laws, including the laws and processes relating to employee discipline. All employees, whether they be on the front line or the CEO of a company, are entitled to fair treatment and due process. It is imperative that the government's management of Australia Post, a government business enterprise, be above reproach and that the accountability of the board to the Australian people, represented by its shareholder ministers in the government, be of paramount consideration in all matters. We therefore commend the Senate for its efforts, through this inquiry, to examine whether due process has been afforded in relation to Ms Holgate's employment.

My colleague Mr Murphy will speak to the real-world impact on Australia Post's workers and its community service of the regulatory relief provided last year and the changes in workplace practices and service delivery that have resulted from those regulations. Before that, I would like to focus the committee's attention on the revelations obtained so far through the hearing—particularly from Ms Holgate's submissions and testimony—and on how those revelations confirm that the union was right to warn the parliament last year that the regulations would open the door to an agenda to cut the jobs of essential workers, privatise parts of Australia Post and degrade a highly valued and valuable public institution.

As our submission to this inquiry makes clear, the union objects in the strongest possible terms to the refusal of the federal government to make public the full February 2020 review of Australia Post operations by the Boston Consulting Group, or BCG. We have long believed that this review led to the introduction of changes, given effect by the regulations last year, to Australia Post's service model. Ms Holgate's testimony confirmed this belief, as she notes that the regulations put in place at the height of the COVID crisis align closely with BCG's proposal reform path 3. At the time the regulatory relief was introduced, we warned that the changes to letter delivery, the reduced community service obligations and especially the different treatment of parcel delivery under the regulations were almost certainly the beginning of a process of softening up the community for a full or partial privatisation of Australia Post. Critically, the changed arrangements for parcel deliveries under the regulations point unmistakably to an agenda within the Australia Post board and the government to divest the parcels business—that is, to sell it off to the private sector—as the BCG report recommends under one scenario.

From her testimony, it appears that Ms Holgate resisted the push to outsource all parcel deliveries to contractors under the regulations, but it is clear that the intent of the changes made under the regulations was to separate parcel delivery from standard postie rounds—a duty our posties have undertaken for the better part of the last two decades—making it much easier to carve out the parcel business with a separate delivery network for sale.

As Ms Holgate noted, when the UK went down this path, breaking up Royal Mail and selling off the parcel deliveries off, many local post offices went bankrupt. She also told the committee that the proposed reduction in services under the BCG plan would affect the viability of approximately 3,600 licensed post offices across the country that belong to small-business owners who, on average, invest a million dollars to take a post office licence. As Ms Holgate noted, if parcels and financial services are removed from these small businesses, they will go bankrupt.

The union understands the complex nature of the business and its value to the Australian people and the dedicated people who work for Australia Post. We, as representatives of those workers, are concerned that the same cannot be said of the board which appears to have little appreciation of the significant role that Australia Post, as a public owned enterprise, plays in connecting Australian individuals, families and businesses with one another and the world, or of the reality of the work undertaken by more than 80,000 workers directly and indirectly employed in the industry to keep Australia connected.

The Australian Postal Corporation Act requires that the board include at least one member who:

… the Minister, after consultations with representatives of industrial organisations representing employees, is satisfied has an appropriate understanding of the interests of employees.

The union would like the committee to note that in our opinion that condition of the act is not currently being met. In a phone call I received from a member of Minister Fletcher's staff, I was informed that this important role on the board was to be filled by the chair, Lucio Di Bartolomeo. That was the sum total of the so-called consultation undertaken by the minister's office with the union—as the industrial organisation representing employees—to satisfy the minister that the board included a member with an appropriate understanding of the interests of employees. I would like to impress upon the committee that Mr Bartolomeo's actions with regard to Ms Holgate, his secret pursuit of an agenda to privatise parts of Australia Post, lay-off thousands of staff and close hundreds of post offices, and his lack of attention to significant problems with the ADM that the union has repeatedly brought to Australia Post management, demonstrate that he does not have the requisite understanding of the interests of employees to fulfil this important role on the board. That so-called consultation about the appointment of Mr Di Bartolomeo to this position on the board, which is of significant interest and concern to the union representing Australia Post employees, was insulting—being informed that the minister regards the chair as filling that role was not consultation; it was a decree. Sadly, this is just another example of the contempt with which the board and shareholder ministers have treated the Australia Post workforce over recent years. The revelations before this committee over the last month have proved our worst fears to be true.

If we're going to fix the issues plaguing Australia Post, the entire board needs to go. We need to start from scratch so that we can get Australia's postal network back on track. This inquiry has so far uncovered seriously problematic decisions by Australia Post, and it's time that the board was held to account. We're calling for the appointment of new board members through an independent process, so we know people tasked with carrying out the government's privatisation agenda won't be appointed to the board. Our concerns about such an agenda have been verified by Ms Holgate's testimony to the committee and her tabling of sections of the secret BCG report. It is clear the government and the board of Australia Post intend to engage in so-called efficiencies that would lead to the loss of as many as 8,000 jobs, along with the closure of up to 230 suburban post offices, massive reductions in service-delivery standards and a fundamental shift in community-service obligations. It is now clear that this was to be the first step in breaking up Australia Post and selling parts of it to the private sector.

Australia Post has been a trusted national institution since Federation. It is a cost-positive government business enterprise, funding its operations entirely through revenue and returning a dividend to the federal government in every year other than 2014-15 since its inception more than three decades ago. Australia Post delivers to more than 10 million Australian addresses that are serviced by more than 10,000 posties. It operates 7,000 retail outlets nationwide serving more than one million customers per day. It maintains over 4,000 post offices, including more than 2,500 in rural and remote areas of the country, 15,000 street post boxes and provides employment for over 80,000 Australian workers.

The privatisation of Australia Post in part or in whole would be disastrous for rural and regional communities, small businesses and the families of tens of thousands of dedicated postal workers who provide a world-class service to the Australian people.

Mr Murphy : The reduction in Australia Post's service model under the regulations introduced last year remains of significant concern to the CEPU and its members. We thank the committee for including it in the terms of reference for this inquiry. It is the view of the union that the regulations put to parliament had barely anything to do with COVID-19 and they were not about the delivery of parcels. The narrative was largely a smokescreen. Rather, every indication is that the intention of the government was to get a foot in the door to lay the groundwork for a structural change agenda that was secret until a fortnight ago. This agenda, outlined in the BCG extracts, lacks any higher purpose. Its objectives are cold, calculating and simple: to reduce costs by scaling back services, laying off thousands of postal and post office workers and creating a structure to make it attractive to divest and sell the Australia Post parcel business. This is fundamentally what it is about.

Under the alternate day delivery model—or the ADM, as it's known—introduced by regulations, Australia Post now only delivers letter based products to households every second business day rather than five days a week. Along with changes to workforce structure that have also led to significant delays to parcel delivery, these have been the most notable changes resulting from the regulations. In our submission to the Senate inquiry into these regulations last year, we warned the parliament that the temporary performance standards were likely to have a significant impact on services to the community, workforce safety and wellbeing. It is now around nine months since the full implementation of the ADM, and it is clear our concerns are well placed. The introduction of the ADM saw the delivery workforce, posties, at sites impacted by the reform—two of which appear here with us today—split into two groups: those responsible for the delivery of both letters and parcels via traditional modes such as motorcycles, electric delivery vehicles, pushbikes and walking routes; and parcel post, those responsible for the delivery of only parcels primarily via van.

Since the start of the ADM, the union has repeatedly alerted Australia Post management to the significant workforce concern about the reduction in customer service and workplace safety. Those concerns are detailed in our submission. Briefly, they include: both letter based and parcel related articles are routinely undelivered and delayed well past even the relaxed regulated time frames; and changes to shift commencement times have impacted on service delivery, take-home pay and the health and wellbeing of postal employees. I'd like to take this opportunity to table this binder of photographs. It contains a sample of those runs of letters and parcel products that are withheld from delivery or being brought back to depots every single day on a daily basis ever since the commencement of the ADM.

When these regulations were introduced last year, the union warned the parliament that the changes to the delivery model would mean significant job losses—a claim management were briefing our members on—directly in their workplaces across the country. The political pressure applied to Australia Post at the time shone a light on this, and allowed us to negotiate a memorandum of understanding with the then CEO to ensure that this didn't happen and that no posties were laid off—as they would have been under the original plan that was clearly aligned to the BCG pathway. Instead our existing posties were split off into the two groups I mentioned. This has proven to be an incredibly inefficient way for our posties to perform their duties, and has resulted in additional costs that weren't anticipated when management designed the ADM.

The original intention was to lay off a large number of workers and outsource parcel delivery. When we pointed this out before the regulations came into force, we were accused of scaremongering over jobs. But we have now seen from the BCG report that this was in fact their intention all along. We now see a significant collapse in the standard of service when it comes to parcel deliveries under the ADM—as shown by the document tabled before this committee last week, which detailed the problems in deliveries in Western Australia. Problems that we have long warned would result from the ADM are now happening in real time.

Australia Post operational level management know the system isn't working for posties and customers alike, and they're going to extraordinary lengths to conceal this from the Australian people and the parliament. In fact, we know that after the leaked document detailing the failures in WA deliveries was tabled before this committee depot managers in WA were directed to no longer share such information in writing with the network of managers in that state, and to only provide it verbally in meetings directly with their area managers so that no-one could access the information.

The ADM does not create any efficiencies. It simply attempts to separate the two functions, overburdening every worker participating in the model. In the end, the consumer suffers. Entire routes of letters, UMS and parcels are routinely withheld from delivery. Customers are told their parcels will be delivered, raising expectations only to have them dashed time and time again as posties are continually forced to return parcels to the depot, unable to complete their full rounds. These are small to medium-sized parcels which could have been delivered efficiently, along with an entire round of letters and UMS, by a traditional postie under the previous model, as they have been doing for many years on a daily basis.

Posties involved in the ADM under the new regulations are increasingly concerned about their workplace health and safety, and are angry about the negative impact of the regulatory changes on their ability to provide the standard of customer service they have prided themselves on over many years. Our recent survey of postal workers working under the ADM found: 58 per cent of letter posties said they left letter based products behind at the delivery centre and brought them back when they remained undelivered for more than one business day; 50 per cent of posties said they left behind or brought back parcel products they were unable to deliver on their run on the day the parcel was due for delivery; 53.6 per cent of posties admitted to not adhering to all footpath and nature strip speed limits whilst performing the delivery function of their role, simply rushing around to try to get the job done; 86 per cent of posties said they were unable to complete their duties within their rostered hours, 34 per cent of whom said they considered the level of overtime required to complete their run to be unreasonable—we've had posties working 13- and 14-hour days under the ADM; and 51 per cent admitted to not taking all their applicable breaks in order to complete their duties. This survey demonstrates that posties engaged in delivery under the ADM are being forced to work inefficiently and are concerned about the impacts this is having on their welfare and on service delivery to their communities.

The CEPU has also recently conducted a survey of all Australia Post occupational groups, including posties, mail and parcel sorters, drivers, administration officers, corporate employees and post office workers, to ascertain their experience of current workplace practices and regulations. Of the survey participants, 94 per cent said the 2020 regulations had negatively impacted on the quality of service to the Australian public; 86 per cent said the changes given effect by the 2020 regulations had increased their workload; 67 per cent said the changes had caused them to cut corners to get the job done; and 88 per cent are seriously concerned that Australia Post may be privatised or broken up.

The 2020 regulations have resulted in a significant decline in public service and workforce safety and wellbeing. We urge the committee to recommend that the Senate disallow any further extensions of these regulations and return Australia Post's legislated performance standard to previous settings as scheduled to occur on 30 June 2021. Further, we urge the committee to recommend that the Senate pass a motion calling on the government to publicly release the full February 2020 report of the review conducted by Boston Consulting Group that led to the changes in performance standards. The BCG report is not some random document; it is a $1.3 million cabinet document. Documents like that don't just get magically put before cabinet unless they have some standing. It is critical that the parliament, on behalf of the Australian people, be satisfied that the decisions being taken by the Australia Post board are consistent with their duty to uphold the standards of public service, workforce safety and wellbeing that the Australian people, as owners of Australia Post, expect and deserve.

Our members have never been fundamentally opposed to change. This has been demonstrated time and time again throughout a long period of significant disruption to the postal industry. Unlike many postal carriers around the world, it is our members' willingness to embrace the pursuit of improvements and to generally engage in the process that has ensured Australia Post is the most significant player in our nation's parcel delivery infrastructure that is the reason why Australia Post fills a void, providing financial services to communities that our banks have deserted throughout regional and rural Australia. However, what has occurred over the past 12 months is not designed to ensure Australia Post is sustainable, nor does it meet the needs of millions of households and businesses across our nation who are relying on a quality and efficient postal service now more than ever before. Australians, no matter where they live, deserve a quality and efficient postal service—one that must be kept in public hands to ensure the realised returns are reinvested to continue meeting the evolving needs of its users, and to continue providing quality jobs across our communities not just in our cities but in our regions too.

CHAIR: Thank you, Mr Murphy. Both of you have spoken about the BCG report. Both of you have spoken about the regulation that was put in last year. Both organisations have stressed the fundamental concerns they have in relation to the further privatisation of Australia Post. Given the evidence by Ms Holgate on her resistance to recommendations in the BCG report and privatisation of parcel services, does it ring true to you that Ms Holgate was resisting that push?

Mr Murphy : Whilst we obviously don't know what goes on in those meetings, we do understand that there was a fair amount of resistance to some of the changes that were being proposed within Australia Post by Ms Holgate. Whether or not that has influenced the government decision is a matter for this committee. But, in essence, you have to put it in context—and I've said this previously elsewhere—that, over at NBN Co, we had executives paid $77 million in corporate bonuses during the pandemic and the size of their employed workforce is one-sixth of Australia Post. Someone ought to examine what's going on over there. In 2020, NBN executives ran up a $7.4 billion loss. They tried to bury this by not publishing it in the corporate plan. The cost blowout was greater than what was expected, and, at the same time, on the front line, contractors were literally having their payments slashed, and they were being forced onto sham contracts. In Australia Post, we had a forensic four-week investigation led by a law firm into the purchase of $20,000 worth of watches. Then, over at NBN land, we've got executives concealing cost blowouts, paying $77 million in bonuses in the middle of a recession and a pandemic while cutting payment rates to contractors—$77 million in corporate NBN bonuses while, on the front line, staff had their pay cut. Yet the CEO lost her job and the attention was on Australia Post. So you've got to ask yourself: what was the real reason the government removed Christine Holgate from her job? And I think it was more than just Cartier watches.

CHAIR: My apologies, I didn't clock that the CPSU hadn't given their statements. I'd like to hear from them. If you could give a short opening statement, please.

Ms Muscat : Thank you to the committee for the opportunity to appear this morning. The CPSU is the union that represents office based employees in Australia Post who work in call centres and perform administrative functions. Our members are often underpaid and underclassified for the complexity of the work they perform despite Australia Post's record profits. Our members may not always receive the same attention as other parts of the workforce, but they play a key supporting role in keeping our postal system working—an essential public service that local communities and businesses across Australia rely on. Our members have spoken to us about their serious concerns regarding the possible privatisation of Australia Post, current impacts on their job security and working conditions, the need for greater worker participation in board selection processes, and greater transparency by Australia Post executives, in particular, in their failure to release the Boston Consulting Group report and the slow rollout of the CPSU Australia Post MOU agreement designed to provide modest benefits to low-paid employees. It is the CPSU's strong view that, if these issues were addressed, it would significantly improve service delivery and workplace culture.

Our members are deeply concerned about the potential privatisation of Australia Post and the negative effect it will have on their job security. This is compounded by the unnecessary actions made by Australia Post under the pretence of a response to COVID-19, which now appears to have been part of their underhanded plan to privatise the parcels and financial services areas of Australia Post. At the started of the pandemic, Australia Post tried to lead the CPSU to believe that the organisation was at risk of financial collapse and therefore needed to pressure over 1,900 admin and clerical employees to take extended annual leave or long service leave. When our members were left with no entitlements, they were threatened with either being stood down, forced to purchase additional annual leave or sign contracts at lower levels of pay. The CPSU promulgated the argument strongly that Australia Post should request financial support from the federal government to support this essential public service, similar to what had been provided to private corporations like Qantas and Virgin Blue. Instead of seeking financial support for its supposed financial pressures, Australia Post and the federal government decided to reduce its service delivery and introduced every-second-day delivery at a time when the Australian public, the owners of Australia Post, needed this public service the most.

Concurrently, the CPSU requested that Australia Post provide the Boston Consulting Group report, and this was denied. To date this report has not been forthcoming. We once again call on Australia Post and the federal government to make the Boston Consulting Group report public to the shareholders of Australia Post, the Australian public. From what has recently been revealed from the report, we believe that a possible 8,000 workers could lose secure, stable jobs, with up to 500 workers losing employment in the CPSU's area of coverage. As part of our Proud to be Public campaign, close to 9,000 people have signed our petition calling on the federal government to release their secret report and for the Prime Minister to rule out the privatisation of Australia Post. Our members are concerned that the proposed redundancies in these areas—the most profitable areas of Australia Post—would result in further job losses and a further reduction in service standards. This is at a time when Australians need good-quality, secure jobs and services the most.

Given the performance of the Australia Post board, CPSU members are of the strong view that workers and their unions must play a part in board selection processes. Australia Post has a legislative responsibility to consult with workers and their unions under the Australian Postal Corporation Act. We call on Australia Post to fulfil its obligations in this regard. The CPSU is concerned that Australia Post has not been up-front with its employees and the Australian public about the effects of COVID-19 on its financial position and its future plans for major change beyond 2021, including the potential for privatisation. While Australia Post did have regular meetings with the CPSU during the height of the pandemic, management have been less than forthcoming about these future plans. Having access to detailed budgetary forecasts and information about the proposed direction of Australia Post will help inform discussions about regulation and inform imminent enterprise bargaining, which was put on hold by the employer, forcing our very low-paid members onto a wage freeze.

Greater transparency will also help inform discussions about the community's needs and expectations in relation to Australia Post's services. The community's needs and expectations of Australia Post are already currently not being met. Members working in customer service areas across the organisation are telling us that they are being inundated by complaints. The CPSU has concerns that this regulation will only make things worse for those who most frequently use postal services, in particular in regional and remote communities, which may disproportionately affect older Australians and those who live outside of capital cities. Although the regulation is touted to last only until 30 June 2021, it may set the standard for how Australia Post will operate into the future and result in further job losses and a permanent reduction in services, which our union categorically is in opposition to.

In conclusion, the important role of public institutions such as Australia Post has been demonstrated through the COVID-19 crisis. We should be investing in an essential public institution that has been a recognisable part of all Australians' lives and has a geographical spread across the country. Transparency and genuine consultation with unions about the future plans for Australia Post will be fundamental to this. By ensuring ongoing, secure employment for all Australia Post employees and maintaining community service obligations, Australia Post not only will address community concerns but also will meet increased demand on services and provide opportunities for local businesses. It will help local communities by ensuring good-quality jobs they can rely on. Thank you.

CHAIR: Thank you, and I might just ask you to remain at the table. My apologies: I think you should have been sitting there at the beginning, and I wouldn't have missed you. So, apologies for that; I take responsibility.

Senator KIM CARR: I want to ask the officials: given that we've been involved in a series of inquiries around Australia Post following the announcement to introduce the new regulations for the alternative delivery model, did you detect a change in attitude at all within the Australia Post management throughout that process? I'm thinking here about the signing of the memorandum on no job losses. My observation was that the process of dialogue through the political system was that there had to be a change in attitude. Did you detect a change and do you think that that led to a loss of confidence by the government in Christine Holgate, given her statements that she was resisting the introduction of the Boston Consulting Group's recommendations?

Mr Rayner : The process leading up to the signing of the MOU went all over the shop. Like the last submission, we were told that when COVID broke out Australia Post's cash reserves were very low and they had to take urgent steps to put in place all this stuff around COVID, but, as time went on and it was clear that some of the information we were provided with earlier wasn't quite—

Senator KIM CARR: Right.

Mr Rayner : bearing fruit, we took the approach that we needed to shore up jobs. If you recall, from the last inquiry, in October last year, I think it was, there was a document circulated by Australia Post that showed their new model, and it clearly showed that 2,000 of these people—they called them 'Dans', and post H are calling them Dans—didn't have a job. It wasn't until the intervention with the MOU and discussions around that that Australia Post—I won't say it was a backflip—changed their mind and they found work for the Dans and they subsequently found work for more than they originally tried to cut. As for Australia Post's position, I didn't detect—Mr Murphy might have a different opinion—that they were approaching this from a privatisation point of view initially. As time went on, that seemed to be more and more the focus.

Senator KIM CARR: Mr Rayner, the question I'm putting to you is because I was advised—and I remember I had conversations with your officials—in the run-up to 22 October that the government had lost confidence in Christine Holgate, that they were actually looking for an excuse to move on her and that there had been movement. I'm just wondering whether or not it supports the view that she put to this committee around the resistance to the Boston Consulting Group that she was presenting, she said. Is there any credence to that notion, from your experience?

Mr Murphy : From our experience, it was very clear, as my colleague Mr Rayner pointed out, and from previous evidence given to the committee, that Australia Post had a plan to cut 2,000 postal workers' jobs as part of the regulation changes, in the one-in-four process, where one in four no longer had a round to do. As a result of the regulation changes and the union then needing to negotiate a memorandum of understanding, it was at that point that we secured the 2,000 jobs. Moving forward from there, and over time, it appears the government was moving away from Christine Holgate, whether that was related to the signing of the memorandum of understanding, the saving of the 2,000 jobs that they no longer got rid of to make those savings relevant to the ADM and the cost benefits associated with that and, obviously, further resistance, we believe, that's come out in evidence last week that Ms Holgate put on about resisting further changes that were related to the BCG report. So that has some relevance, in our view, to where the government landed with Ms Holgate's employment.

Senator KIM CARR: It struck me—as you know from following this closely—that the language changed within the evidence presented to this committee about the relationship with the union throughout this process. The words 'union partners' started to appear. I've always found it amusing when management talk about union partners, particularly given I had direct evidence that the amount of consultation was extremely limited but suddenly you were union partners. I'll put that on the record.

Mr Murphy : When it suits, we're partners. When it doesn't, we're not.

Senator KIM CARR: Yes, that's right. It came very late in the piece. But the point is that it was a substantial change in language. Would you agree or not?

Mr Rayner : I would agree, because in some of the conversations that we had with Ms Holgate—and you've got to understand we knew nothing about what was in the BCG report—she would say to us that her intention was to grow the business. She was looking to grow the business. The only comment she made to us was 'some people don't like that I'm doing that'. Now, who those 'some people' were is starting to become evident.

Senator KIM CARR: Mr Rayner, it's reasonable for a CEO to communicate directly with you about fundamental changes that are occurring within a public company like Australia Post, given its significance. And you've said that you weren't opposed to change.

Mr Rayner : Correct.

Senator KIM CARR: It's only reasonable that you be properly consulted and treated as partners in that change project. What concerns me, given what we now know was in the executive summary of the Boston Consulting Group and given the number of other reports and the instructions given to the chairman of the board by the shareholder ministers at the time of their appointment—that the Boston Consulting Group was to be used as part of the forward strategic plans—you could understand why there might be some concerns about how it might be underpinning the forward strategic plan and the impact it would have on industrial relations, given what that summary actually says. My question to you, though, is: is that a precursor to her removal, and were the occasions that developed around the events of 22 October in fact the catalyst for that?

Mr Murphy : I think we can't give an opinion one way or the other directly, but I have a view, Senator, that a whole range of matters came into play right from the outset where you correctly point out that we were not consulted previously, or, if we were, it was one telephone call about proposing to go to the government around regulation changes. We spoke to the minister, if I recall, back then, after we started hearing about these regulation changes. When we spoke to senators during that process, the motion went through; the regulations were enacted. We obviously engaged to then have an MOU.

CHAIR: Mr Murphy, I can see Mr Girdler trying to get in here.

Mr Murphy : Okay. If he wants to come in first, I'm happy to wait.

Mr Girdler : I'll keep it brief. I don't know if this helps, Senator Carr, but, from our perspective, in our dealings with Australia Post executives—and they were below Ms Holgate's level—they were always extremely keen on the alternate delivery model. They were consistently keen. In fact, they were stating that, unless that was retained, the business would be in financial difficulty. What conversations were occurring internally within Australia Post of course we don't know. There may well have been very strong opposition to it in discussions between Australia Post executives and government, for example. But, in terms of the case that was presented to us consistently, particularly going back to the first six months of last year, we were given the very strong impression that Australia Post was in deep trouble, particularly because of the collapse through its international parcel business in the early stages of COVID and the early lockdowns. We were very sceptical about this right from day one because we could see that domestic parcel traffic was going to increase substantially, which, in fact, happened. And, of course, Australia Post then went on to post record profits—record profits, mind you, during 2020, which was a period when no Australia Post worker got a pay rise. So we had some scepticism, based on what we know, about some of these Australia Post identities now coming out and saying, 'We were anti privatisation all along.' They may well have been. We welcome the fact that information has now come out as a result of this inquiry which is clearly showing what are very disturbing plans from this report, which the government is keeping secret. That's our perspective on where we're at—

CHAIR: Thank you, Mr Girdler. This will have to be your last question for this round, Senator Carr.

Senator KIM CARR: I deal with a letter that the minister sent to the chair of the Standing Committee for the Scrutiny of Delegated Legislation, Senator Concetta Fierravanti-Wells. I'm also a member of that committee; in fact, I'm deputy chair. In that letter dealing with the regulations we've just been discussing, the minister made a number of claims. I'd like both unions to comment on those claims. He said:

Under the changes, Australia Post has announced plans to retrain about 2000 posties who were previously dedicated to handling and delivering letters—

a shrinking market—

and to redeploy them into roles supporting parcel delivery. To further support the growing parcels operations, about 600 new roles are also being created …

So, rather than 2,000 jobs being lost, there'd be 600 extra. And the suggestion was being made to us, on the committee, that there were declining letters and that parcels can be separated out from letters. The next point he made was that the government consulted with Australia Post in developing 'temporary arrangements' that 'targeted' and 'reflected the current operating environment', and, given the urgency and 'unprecedented circumstances', broader public consultation was not possible. Thirdly, he said, 'reflecting the unprecedented circumstances, the government made a time-limited change'—I emphasise those words—which came into effect until 30 June 2021, so they're about to come to an end. I would ask you to comment on those claims about the separation of letters from parcels in terms of the operations—and we've got some people here who actually do the job, so how it actually affects your work—and those claims made to the Senate committee by the minister.

Mr Rayner : The claim that 2,000 posties were retrained to deliver parcels is not entirely true. Posties have been delivering parcels for 20 years. What needs to be understood here is there's what's regarded as small parcels and packets, which range in size up to about a shoe box—

Mr Dean : Three-and-a-half kilos, or thereabouts.

Mr Rayner : and then you've got large parcels, which are generally delivered by our contractors. They could be anything up to a bar fridge, a dozen bottles of wine, whatever you want. I'll try and explain this, and Kerry can jump in if he likes. You used to have one postie delivering on a round, and he might have 600 or 700 letters—

Senator HENDERSON: Or she.

Mr Rayner : or she or they—and they may have up to 130 small parcels and packets to deliver as well. What the ADM did was put two of those rounds together, so they've gone from 600 letters to 1,200, and the number of small parcels they can deliver on the same day has diminished because they've got more letters to deliver. So the excess of those small parcels has been moved to what they're now calling the PDO, and they're delivering the same products they used to deliver on the back of a motorcycle in the back of a van. So the suggestion that posties were retrained to deliver parcels—they've had that training for 20 years. That's been part of their job for 20 years. The only difference is they used to do it on the back of a bike or a pushbike or walk around and now they've moved it over into a van.

Mr Murphy : Can I just supplement what Greg just said?

CHAIR: Very quickly, Mr Murphy.

Mr Murphy : What occurred was, as Greg said, letters were about five or six hundred. What wasn't included there was UMS, the unaddressed mail that was delivered daily as well, prior to the changes, and anywhere between 50 to 130 packets or parcels. They split that—and they've been doing that for many years. There was a myth in that we needed our posties to deliver parcels. They've been delivering parcels for years. That needs to be known. It's a fact. This was simply about splitting it and still giving our traditional postie, now delivering every second day on the mail round, a smaller number of parcels, as Greg said, and the UMS and then simply having our parcel postie delivering our parcel post. The difference being—and I'll let Kerry respond, as a postie who sees it firsthand—pre-ADM, when you were delivering the mix of your five or six hundred letters, your UMS and your parcels, you delivered every single product every single day and there was no delay. Post-ADM—and I'll finish on this point—we have continually had carryover on a daily basis of letters not being delivered, round after round, and parcels not being delivered, round after round. And then you come to the last bit about the government: it is very clear right from the outset this was just a plan to split it up, and the excuses used under COVID were nothing more than a myth. Our people have been doing this work for 15 or 20 years, delivering efficiently every single day to the community on the date it's due. Now it's delayed for days and days.

CHAIR: Thank you, Mr Murphy. I would like to hear from Mr Turner on this, as someone who is out there delivering.

Mr Turner : I totally agree with what Shane has said. Basically, it is only the delivery vehicle that has changed; we've always delivered parcels. Under the original model, we used to deliver them every day—we had pride in delivering them every day—and it was so unusual to come back and bring any product back. The new model has slowed it down. In a way, it's become unsafer with the electric vehicles. It's okay on some beats, but it is not the answer to the delivery solution. We've got people constantly being injured; they vibrate you around. Basically they can only work on footpaths, but we're trying to drive them on grass, over rough terrain. The injuries are increasing and are going to accumulate. It is not only musculoskeletal injuries; you've got repetitive strain type injuries. In the future, they are going to develop into bigger, worse injuries. The UMS—we've had instances where it's been left behind for ages. I had a postie report the other day that letters date-stamped 14 April were being delivered on 23 April. This is because there is such a struggle to deliver the volume; it's nearly impossible.

CHAIR: Thank you, Mr Turner. Senator McKenzie.

Senator McKENZIE: Thank you, Chair. Thank you, everyone, for your evidence. I will have a range of questions on notice. My area of interest is how these changes impact service delivery to rural and regional Australians. One of the questions I'll be asking is about the impact Ms Holgate's leadership had on service provision in rural and regional Australia and your workforce in that space. We have talked length around the alternate day delivery method causing delays and reduced services. You've tabled a range of photos highlighting undelivered mail and parcels stacking up in our communities. Is it your evidence to us today that Australia Post is failing on its obligations as a publicly owned entity to provide guaranteed delivery services across Australia?

Mr Murphy : At the moment, Australia Post are failing the service delivery standards. They will say they are meeting their service delivery standards, under the regulation, at around 94 to 97 per cent. We know that the letters that are tested to meet this regulation are test letters, not the ordinary mail going to the Australian people. And they make sure these test letters are getting through the system, that they meet the regulations, so they can then show the Australian people it is all in order. The facts are—

Senator McKENZIE: When I questioned Telstra on their community service obligations—Australians pay hundreds of millions of dollars to make sure they maintain landlines—it was: 'It's alright, Senator. We're meeting 94 per cent of our obligations.' But it's the same six per cent who never have their landlines fixed, and the inherent risk there.

Mr Murphy : As I say, this is only a test letter—the ordinary mail does not get tested—

Senator McKENZIE: I will ask them a range questions on that.

Mr Murphy : and they make sure that mail gets through. I will come to Mattie Dean in a moment. Matt is a postal delivery officer on the Central Coast, which is classified as a regional area. As you know, there are regional areas caught up in this regulation change—Tweed Heads, Townsville, Geelong, the South Coast, the Central Coast and the Hunter region, including Port Stephens. Those areas are no longer getting daily delivery services. And, when it comes to their second-day delivery services, they are not even able to receive their mail or parcels on the day they are due. Our posties at these facilities are bringing product back—or they're not taking it out. They simply cannot do what they were doing for the community pre ADM, when the product was delivered on a daily basis. On many days, they are unable to do it. In other instances, the political mail—the UMS that customers are paying for—is ending up in the bin. Ever since this ADM has commenced—and it's happening in regional areas—UMS is ending up in the bin and Australia Post then has to reimburse the customer, who is paying for a service, because they simply can't deliver. This never occurred pre ADM. Our people were able to deliver the mail, deliver the UMS and deliver the parcels in rural and regional areas.

Senator McKENZIE: This was never meant to impact rural and regional services—

Mr Murphy : Correct.

Senator McKENZIE: that was categorically put into this regulation. Your evidence to us today is that it is impacting rural and regional services.

Mr Murphy : Correct.

Mr Dean : Australia Post used a 1991 document to rezone the regional areas into the metropolitan areas. We were never part of metro—until these regulations came in.

Senator McKENZIE: So you're saying there is a 'definition of a region' document that is based on 1991 data?

Mr Murphy : Correct.

Mr Dean : Correct. It states that anything with a population of over 100,000 is considered metropolitan, and they've used that to throw us all of into the same net.

Senator McKENZIE: Heaven forbid that we have growing regional capitals in this country!

Mr Dean : That way the net was thrown over everything.

Senator McKENZIE: That includes Bendigo.

Mr Dean : Cessnock, the Hunter Valley—you name it.

CHAIR: Mr Rayner, could I ask you to swap with Ms Muscat. She wants to get in on this conversation.

Senator McKENZIE: Absolutely. The CPSU must be heard.

Mr Murphy : We worked it out. We'll swap whenever needed—

Senator McKENZIE: They should.

Mr Murphy : We worked out the responsibilities.

Senator McKENZIE: Well, someone needs to go.

CHAIR: I'm going to swap Mr Rayner.

Senator McKENZIE: Do you have something to add, Ms Muscat?

Ms Muscat : I want to make a comment in response to Senator Carr's question around whether there was an attitudinal change from management but also about whether there was—

Senator McKENZIE: A question from Senator Carr?

Ms Muscat : Yes.

CHAIR: Ms Muscat, stay at the table and I'll come to you. If you want to jump in on any of the other questions from senators, that's fine. The blokes can shuffle themselves around; you don't have to move. Senator McKenzie.

Senator McKENZIE: We have significant impacts in rural and regional Australia despite promises from government that this regulation won't do that. Thank you very much for your evidence. If anybody has a copy of that definition document, please table it.

Mr Murphy : I believe it was a 1991 census document.

Senator McKENZIE: I would love to have a look at it, because that is absolutely outrageous—30 years down the track, three decades down the track. I have limited time, ladies and gentlemen, so I'd appreciate short, sharp answer so I can get through what I need to. One of the terms of reference around the BCG review was that it was to look at e-commerce, the regulatory environment and changes in business and customers' needs—that’s straight from the minister's press release. I'm very concerned about an ABC report that said Australia Post wasn't doing perishable goods from March—and they've extended that to June. I'm interested in your views on whether Australia Post's decision to get out of perishable goods was related to some of the e-commerce findings of the BCG review.

Mr Murphy : Absolutely it does. All of the cuts in Australia Post at the moment—whether it be farmers not being able to send their perishable goods, changing work hours, cutting back on overtime and the number of Sundays worked, and not picking up mail on Sundays—are related to the BCG report.

Senator McKENZIE: Do you know that, or is that a—

Mr Murphy : We don't know that, but many things that are happening in Australia Post are clearly relevant to the BCG report.

Senator McKENZIE: Was either union consulted on the cuts to perishable goods?

Ms Muscat : No.

Mr Murphy : No. Sorry, Chair. We actually wrote to Australia Post, and my colleague Mr Rayner got a response saying it is not a matter they need to talk to us about.

CHAIR: So you asked for consultation and didn't get it?

Mr Murphy : Correct.

Senator McKENZIE: The new CEO, Paul Graham from Woolworths, has a track record of rationalisation. Could you provide us with your views of where he may be focusing the organisation?

Ms Muscat : It's probably difficult for me to comment, but I would say that over the last eight months when we were negotiating an MOU with the organisation, one of the key focuses of the organisation at the time was not to provide our members any job security at all. So the CEPU were able to negotiate some protections for their workers in terms of maintaining jobs in the organisation over a period of time, but we were unfortunately unsuccessful, so our members' jobs are still very much at risk. We don't have an MOU that talks about job security or provides the job security that is fundamental for our members and their jobs. We are concerned that the new CEO may continue to promulgate that agenda and move towards the privatisation of Australia Post. Given the way that Australia Post has acted over the last eight months in particular, in terms of our members and their lack of interest in providing members tangible protections around their jobs, we are very nervous about what the future of Australia Post might look like.

CHAIR: Mr Murphy, do you have something to add to that?

Mr Murphy : I support what Brooke said. We're concerned about the new appointment, although I will say that the new CEO has reached out to the divisional secretary and had a short conversation. So we look forward, obviously, to meeting and greeting, but we do have concerns similar to Senator McKenzie around what's happened in this person's previous work life. In essence, this inquiry has learned reasons for Ms Holgate's departure and issues around that—resisting changes to what the government wants to. We're concerned that this person may be brought in to implement what the government wants to do.

Senator McKENZIE: Finally, do you think it's time to get rid of the temporary order and go back to business as usual for Australia Post and delivery of our parcels and letters?

Mr Murphy : In one word, absolutely. It has never been worse for our community or our people delivering. Many have left the job, after years on the job, for mental health issues simply because it has affected them—not being able to deliver the products that their communities rely on under the ADM, as they'd done for many, many years.

Senator McKENZIE: Ms Muscat?

Ms Muscat : Yes, 100 per cent.

Mr Turner : If I can add to that, to give you a snapshot of the coalface, I did a survey and asked a simple question of 70 people at our facility: do you think ADM is working? The results were: 93 per cent no; and seven per cent yes, because they had motorcycles and smaller beats that they were happy with. And the majority of those said they don't believe that the customer is getting the best service at the end of the day, and it has definitely gone backwards.

Senator McKENZIE: Unequivocally, across the board, this has detrimentally impacted rural and regional service delivery.

Mr Dean : Yes, 100 per cent. It's actually embarrassing.

Mr Murphy : I will just table this as evidence; it's not in my folder. This shows eight days of mail after restart, most recently. I thought this would be relevant to hand out.

Senator McKENZIE: Is that a rural and regional facility?

Mr Murphy : This is Tweed Heads, classified as rural and regional.

Senator McKENZIE: That was not supposed to be impacted by this order?

Mr Murphy : Originally it was metro, but these regional towns have been caught up because of that census document.

Senator McKENZIE: Because we're using 30-year-old data.

Mr Murphy : Correct. I just want to table that. That's eight days of product not delivered to that community.

CHAIR: Sorry, Mr Murphy, what town is that?

Mr Murphy : Tweed Heads.

CHAIR: Was that in the document folder?

Mr Murphy : No, that's separate.

CHAIR: You'd like to table that separately? Can we have a copy of that? Thank you. Senator Henderson—

Senator KIM CARR: Can I just ask a follow-up question?

Senator HENDERSON: I haven't had an opportunity to ask any questions, so I would like the call next, please.

Senator KIM CARR: Can I ask—

Senator HENDERSON: Chair—

Senator KIM CARR: whether the Australia Post executive has approached the union—

CHAIR: Hang on a second. Sorry, Senator Carr; I did just go to Senator Henderson. We'll come back to you if we can.

Senator HENDERSON: Thank you very much, Chair. I wanted to firstly go to some statements made by both unions on the day that Senate estimates revealed that Australia Post had gifted Cartier watches to highly paid executives. Ms Muscat, you said on 22 October in a media release:

It is clear that the board and the CEO are more concerned with lining their pockets than public services and their workers.

This is the latest in a string of dodgy and selfish decisions made by management.

…   …   …

It's not enough for the Prime Minister and Minister Fletcher to be shocked, they have to act.

You in fact called for the resignation of the Australia Post CEO. Do you stand by those statements you made?

Ms Muscat : I think new information has come to light that I was not privy to at the time. What I would say is that, in that period, when I made those comments publicly, our members were being forced to take a pay freeze—they are low-paid workers—

Senator HENDERSON: No, I'm actually asking about the comments—

CHAIR: Senator Henderson, the witness is answering. Let's give her an opportunity.

Ms Muscat : at the same time as senior executives were giving themselves exorbitant bonuses. At the time the organisation was being led by Ms Holgate; we made a comment at that time, with the information that we knew at that time.

Senator HENDERSON: Okay. Just to be very clear, though, it is the case that, when you discovered the gifting of the Cartier watches on 22 October, you did call for the Australia Post CEO to resign and you called on the Prime Minister and Minister Fletcher to act. You've mentioned the new information. What's new about your position? Isn't it the case that you continue to have concerns about the gifting of the Cartier watches?

Ms Muscat : Yes. We do. We think it was an opulent gift at a time when low-paid workers could barely pay their bills and bargaining had stopped and started and stopped and started, and now our members have had to face a pay freeze for a very long period of time.

Senator HENDERSON: Alright. Just on that issue, I just want to go to Mr Rayner, because I want to focus on what was said on the day.

Senator KIM CARR: I think the witness should be allowed to answer the question.

CHAIR: Yes, she is trying to answer.

Senator HENDERSON: Sure. Ms Muscat.

Ms Muscat : Great. We also referred to the board as well, not just the CEO, and we still have concerns with the mismanagement of Australia Post.

Senator HENDERSON: You didn't call for the board to resign though.

Ms Muscat : But we raised significant concerns about the operation of the board. At the time—

Senator HENDERSON: Yes. I'm just reading out what you said:

… the CPSU is calling for the resignation of Australia Post CEO and investigation into to the board.

Ms Muscat : Correct.

Senator HENDERSON: Thank you. Mr Rayner, I want to refer to the statement that you put out: 'resignation of Christine Holgate does not fix serious, systemic'—there's a word cut off here; I imagine that word is 'issues', but in the copy I have of your press release the word is cut off. After Ms Holgate resigned you didn't seem to express concern about Ms Holgate resigning. You said: 'There's something seriously wrong when management thinks'—I'm sorry, there is a word missing from my—

CHAIR: Senator Henderson, just to be clear, I think that, if the witness can answer, he can. But if you want a fulsome answer with transparency, perhaps you could get a copy and we could put it on notice with the full words. I think that would be fair.

Senator HENDERSON: What I do have is that, on 2 November, the day of the resignation, you were very critical of the gifting of Cartier watches and you did not in any way object to Ms Holgate resigning. Is that the case?

Mr Rayner : I don't recall the press release you're talking to, but if I had it in front of me I would obviously talk to it. My position from the start, and I remember some television interviews I gave, was that I wasn't calling on Christine Holgate to resign; I was calling on her to stand aside while it was investigated. My views were that Christine Holgate wasn't the only problem in Australia Post and that any process that examined the gifting of the watches should encompass the board members as well. That's essentially the thrust of what I was saying.

Senator HENDERSON: Thanks very much, Mr Rayner. I want to refer to the memorandum of understanding that you entered into in relation to the temporary reform. I will be asking Ms Muscat about this as well. It is the case that both unions committed to actively and constructively support the temporary reform in the memorandum of understanding?

Mr Rayner : We supported the arrangements that were put in place, yes.

Senator HENDERSON: That's right. Did the CEPU freely enter into this memorandum of understanding with Australia Post?

Mr Rayner : It did, based on the fact that the parliament had made its decision that the regulation changes had come into effect.

Senator HENDERSON: So you could have declined to enter into the memorandum of understanding, but you—

Mr Rayner : I think we'd declined about half a dozen previous versions.

Senator HENDERSON: But the fact of the matter is that you didn't—

Mr Rayner : The fact of the matter is that—for job security and the payment of penalty rates or an ADM allowance to at least half the posties out there—yes, we entered into the MOU.

Mr Murphy : Can I just add something? We needed to ensure posties didn't lose $7,000 out of their pay, 2,000 jobs from the community—that is the real reason, after the regulations were enacted. We knew that start times were going to change. That, in essence, took $7,000 away from our postal delivery officers, who are already workers who can't afford that pay cut. And to save 2,000 posties—it has been well versed that, 12 months ago, they were going to disappear, and yet we can't deliver the product with the ones we still have today. Just imagine what it would be like without 2,000 more.

Senator HENDERSON: I have a couple more questions in relation to the memorandum of understanding. Ms Muscat, isn't it the case that the CPSU entered into the memorandum of understanding, which included a commitment to actively and constructively support the temporary reform? I believe that doesn't expire until August this year.

Ms Muscat : It took us months and months to negotiate an MOU. In fact, we had to go to the Fair Work Commission to move that process along. We weren't overtly in support of ADM, but we needed to make sure that our members secured some sort of benefit over the course of 12 months. They're incredibly low paid. We didn't, unfortunately, secure the no-forced-redundancy protections, which were one of our most important agenda items throughout that process. We were trying to do what was in the best interests of our members, noting that we believe we need to revert back to previous practices.

Senator HENDERSON: Can you inform the committee about the ways in which you have actively and constructively supported the temporary reform, as obviously you are required to do?

Mr Murphy : I can comment from the CEPU's point of view. We have actively met with Australia Post numerous times—I wouldn't have enough fingers and toes. They have attended, in numerous states, weekly meetings with the floor delegates, the AURs. Time after time, issues have been raised by the union, directly by our workplace delegates in meetings with management. As late as six or seven weeks ago, we had another final meeting with Australia Post, where we tabled a further 14 issues, because many issues over the past nine months, regardless of those discussions, have remained not fixed.

Senator HENDERSON: I'm actually asking a different question. I'm asking how you actively and constructively supported the temporary relief, as you are required to do under the memorandum of understanding. Could you address that particular question, please.

Mr Murphy : We've actively participated in the process by identifying issues that affect the daily operation of the ADM.

Senator HENDERSON: No. I'm asking you a question about how you actively and constructively supported these arrangements.

Mr Rayner : Perhaps I could—

Senator HENDERSON: Yes. Thank you. I am keen for that particular question to be answered.

Mr Rayner : Once the actual nuts and bolts of the ADM were introduced, we actively supported the creation of local working groups at every delivery centre. A lot of our reps said that they didn't want to be involved, that it was a crock of you know what. We encouraged reps to get involved and to have a say in the process as to how the ADM would be implemented in their facilities. Sadly, the outcome of those LWG, or local working group, meetings was that the reps—and Mr Dean could speak to this—raised ideas like 'We think we could do it this way or that way,' and they were met with a blanket 'No, this is what we're doing.'

Senator HENDERSON: I've got very little time, so I'll just address that to Ms Muscat: how did you actively and constructively support these arrangements?

Ms Muscat : Paul, did you want to go to this one, or did you want me to take it?

Mr Girdler : I'm happy to. I think we would answer that question by saying that we were trying to make a flawed system work as well as it possibly could. I'll talk, in particular, about our members working in call centres, who were responsible for dealing with Australians who were angry that their parcels had not been delivered. They were ringing up our members in call centres, who often faced abuse and aggression. They were nevertheless committed to making this model work as well as it could, because of the fact they are committed to serving the Australian community in the best way possible.

Senator HENDERSON: It sounds to me as if you—

CHAIR: Senator Henderson, we're going to have to go to Senator Fawcett.

Senator HENDERSON: Sorry, Chair, I have this document that I referred to before, where there were some missing words. Could I read that out, that I've got now?

CHAIR: No, you can table it and ask for questions to be on notice.

Senator HENDERSON: I might come back to it if there's some time, please.

CHAIR: Okay.

Senator FAWCETT: I'm happy for Senator Henderson to read that into the record; then I'll go ahead with my questions.

Senator HENDERSON: Thank you. Mr Rayner, I want to refer to your statement that the resignation of Christine Holgate does not fix serious issues with management at Australia Post. You said:

There's something seriously wrong when management thinks nothing of splashing out on Cartier luxury watches but delivers only cut backs and service cuts for the rest of us.

That's the comment you made. You were obviously very critical, and on the day Ms Holgate resigned you raised no objection to her resigning. Is that right?

Mr Rayner : I wasn't in a position to raise any objection to her resigning.

Senator HENDERSON: What do you mean you weren't in a position to raise any objection? Of course you were.

Mr Rayner : I'm not convinced yet that she did resign.

Senator HENDERSON: You didn't make any reference to that in your statement. I have it here. You had ample opportunity to raise concerns about Ms Holgate resigning and you did nothing of the sort.

Mr Rayner : It wasn't my place to raise those objections.

Senator HENDERSON: But you made a very fulsome statement almost celebrating the fact that Ms Holgate resigned.

Mr Rayner : I wouldn't call that a celebration.

Senator HENDERSON: You certainly had the opportunity to raise objections, and you didn't.

Mr Rayner : I was saying that the issues in Australia Post extended beyond Christine Holgate.

Senator HENDERSON: Thanks, very much. I have no further questions, Chair, thank you.

Senator FAWCETT: We've had a field of evidence today around what, essentially, is an accusation of bad faith, on behalf of Australia Post. Am I correct that that's the evidence of the unions, that they have operated in bad faith throughout this process?

CHAIR: Mr Murphy?

Mr Murphy : I wouldn't call it, in your terms, Senator, 'bad faith', but I would say that we've participated in the process. We've identified the issues. Our reps have attended all of the working groups. I'll say that as late as six weeks ago I met with Australia Post. I identified 14 issues. Those issues remain unresolved. It affects our members doing their jobs each and every day. So if it's, in your words, 'bad faith', then that's what it is. But we had numerous meetings, numerous discussions, tabling issues, time after time, to the point where it appeared it was only about seeking the support of the CEPU, not fixing the 14 issues that are daily affecting our members in their service to the community but about us signing another MOU, which we rejected—I make that clear, rejected—to seek an extension that we would go to government with them and seek an extension to the regulations. That won't happen.

Senator KIM CARR: What date was that?

Mr Murphy : I estimate around six weeks ago.

CHAIR: Can you take that on notice?

Mr Murphy : I will take it on notice, the exact date, but it was around six weeks ago.

Senator FAWCETT: The CEPU, in a statement to their members on your website on 25 March this year, says:

The Union is pleased to report that engagement with Australia Post in an effort to resolve this matter have been genuine and productive, and the delay in reaching agreement on this matter has only occurred due to an administrative oversight.

This is in relation to the ADM payments. That strikes me as saying that it's been a very constructive engagement where there is good faith on the side of both parties. Could you reconcile that statement with your position to this committee?

Mr Rayner : Can I correct what you just said? The letter you're referring to was in relation to the payment of a functional allowance. The reason for the delay—and I put my hand up; I wrote that letter—is they were written to shortly before Christmas. I canvassed that letter with my colleagues in the other states, waiting for responses. I didn't get any responses and it slipped through the cracks. I then engaged with Rod Barnes, the general manager of deliveries, about putting the functional allowance back on track.

Senator HANSON: Mr Murphy, we've met before, haven't we?

Mr Murphy : We have.

Senator HANSON: That was last year, to do with the disallowance motion.

Mr Murphy : Correct.

Senator HANSON: We had discussions. It came down to One Nation's vote and whether that disallowance motion was accepted or not. We had lengthy discussions, and with the CEO.

Mr Murphy: Correct.

Senator HANSON: At that time, you raised with me the 2,000 jobs being lost. That was based on documentation that was put out by the executive explaining what Dianne and Peter would be doing and their jobs It was explained by the CEO Christine Holgate in two days that that was not the reason behind it. Because of circumstances to do with COVID and the delivery of parcels and mail, they had to reorganise how the structure of Australia Post and its workers were going to carry on under COVID. Is that correct?

Mr Murphy: We had those discussion, but I will say we've never, ever agreed with the position of Australia Post—I think that was clear in our discussions with you back then, if I recall—that they were never going to get rid of 2,000 jobs like they said. It was a fact in our view, and I believe it is now supported, in essence, by what the BCG report says, which is up to 8,000—between 5,000 and 8,000 jobs.

Senator HANSON: Actually, it was Australia Post under CEO Christine Holgate that employed 5,000 more workers, didn't she?

Mr Murphy: We always get workers at Christmas time; they're called 'Christmas casuals'. We always overflow.

Senator HANSON: They employed more people, didn't they?

Mr Murphy: They employed some casuals.

Senator HANSON: Right, they employed them. They took on the people. They were on. They actually employed 5,000 people.

Mr Murphy: They employed a number of casual workers. Whether that be 3,000 or 5,000, and many of those are no longer with Australia Post.

Senator HANSON: You have also mentioned the delivery service. According to a lot of post offices around the world, they have struggled. They have actually gone under. Australia Post has done extremely well under the circumstances, only due to Christine Holgate and the way she led the charge on this. Under her direction, Australia Post cut back letter delivery, which was on the decline. Letters are very much on the decline—they have been for many years—but with parcel delivery, off the top of my head, because I did go to the facility, about 12,000 parcels an hour were going through in Australia. Also, under the circumstances that was happening, because Qantas and Virgin had stopped flights—

CHAIR: Senator Hanson, let's just get to the question, if we can, because we're short on time.

Senator HANSON: it was due to delivery. You couldn't deliver the parcels. Is that correct?

Mr Murphy: No, that's not correct.

Senator HANSON: They couldn't get it from state to state, because the flights weren't available, so they actually had to go to hiring their own planes or getting trucks on the roads to take the parcels and letters to the different communities.

Mr Murphy: That's one reason Australia Post use—you are correct—back 12 months ago or thereabouts around the reasons behind this change. But let's just break the myth again. Our posties have been delivering our parcels for years as part of letters, UMS and parcels. They delivered them all every single day to every single community five days a week. The difference now is that they're doing it two days one week and three days the next. They've split it, and neither the letters, the parcels or the unaddressed mail, including political mail, are being delivered when they are due, ever since the commencement of ADM. We have people in rural and regional towns who should never have been part of this process from the outset caught up waiting for essential items that aren't turning up. You talk about delays in flights. I will finish on this point. That is one excuse or reason used by Australia Post. But what's the excuse when they've got it on the plane, they've transported it and they've processed it through their processing centres, but at the back end it's sitting in their delivery centre because it can't be delivered under the ADM?

Senator HANSON: You stated that you got no bonuses. Didn't Christine Holgate authorise a bonus for all frontline employees, including community post offices? Figure paid in July. Is that correct?

Mr Murphy: That is correct. As part of the MOU and discussions with Australia post they received, because the federal government wage freeze couldn't award workers a wage rise while they were working during the pandemic and they will paid a one per cent bonus, but far short of the value of a Cartier watch or a payment to executives of hundreds of thousands of dollars.

Senator HANSON: You won't get an argument out of me with regard to that, but you did get a bonus.

Mr Murphy: We got a one per cent bonus.

CHAIR: Mr Murphy, for the sake of this committee's deliberations, when you say 'one per cent' and 'that's far short of a Cartier watch', what is the vicinity we're talking about.

Mr Murphy: About $500 to $600.

Mr Dean : I got about $680—something like that.

Senator HANSON: Are you aware of what the executives got paid as their short-term incentive payments?

Mr Murphy : Not off the top of my head.

Senator HANSON: I'll just read some of them. The pay for one senior executive in 2019 was $891,165. The short-term incentive was $669,375.

Mr Murphy : Absolutely disgraceful.

Senator HANSON: It is disgraceful. That's only one. Another one got $804,951 in 2018—$635,250. In light of this, the Cartier watches are basically nothing, are they?

Mr Murphy : I said it earlier: when you compare those extraordinary numbers, of hundreds of thousands of dollars in bonuses, the extraordinary bonuses paid to NBN in another government business enterprise—you've got to compare the apples with the apples.

Senator HANSON: These people were getting—

Senator HENDERSON: You didn't do that at the time, though.

Mr Murphy : We've always done that.

Senator HENDERSON: You didn't do that at the time. You were very critical—

CHAIR: Hang on.

Senator HENDERSON: You were very critical of the Cartier watches. On the day, you condemned it.

Mr Murphy : We still don't condone it. Let me be very clear from the CEPU. We—

Senator HENDERSON: Right. Well, let's just be clear on this—

CHAIR: Order!

Mr Murphy : We do not—

CHAIR: Just hold it up a bit. Senator Hanson has the call.

Senator HANSON: All I'm saying here is that Christine Holgate tried to do the right thing by the employees of Australia Post and the community post offices all along. You raised the concerns about the privatisation of Australia Post. I actually put that to Christine Holgate, and she said, 'No way.' I think I relayed that back to you.

Mr Murphy : Correct.

Senator HANSON: She was opposed to privatisation of any sort. She actually has picked up the service of Australia Post and run with it, and they've made profits since. The fact is that she has given evidence that she was opposed to the BCG report. She wants to see Australia Post in the hands of the government, for the people of Australia. It belongs to the people of Australia—therefore, her response to all this, as you've said, the reason why they had to get rid of her.

Mr Murphy : I agree that there is more than Cartier watches in the reason that this government has removed Christine Holgate from Australia Post.

Senator HANSON: Are you aware that the present CEO wants to get rid of those jobs?

Senator HENDERSON: Sorry; I just—

Mr Murphy : There hasn't been any word from the CEO. If we reflect the BCG report, which has been given in evidence at the last hearing, it's absolutely clear—

Senator HANSON: That's in my conversations with Christine Holgate. The present CEO wants to get rid of those jobs.

Senator HENDERSON: Chair, just to clarify the evidence so it's clear: is Senator Hanson talking about the acting CEO?

Senator McKENZIE: Or the newly appointed CEO?

Mr Murphy : Yes. Please clarify, Senator.

Senator HANSON: The acting CEO.

Mr Murphy : Yes, we have our concerns on behalf of the Australia Post workforce and the community about what Mr Boys's plans are for Australia Post in relation to privatisation, the breaking-up or many changes—

Senator HANSON: And wanting to outsource the roles.

Mr Murphy : enacted similar to what the BCG report recommendations are.

Senator FAWCETT: Throughout the evidence today, there has been an ongoing assertion that the government has an intent to privatise the parcel element of Australia Post. Given that the chair of the board, in answering questions from Senator Canavan in an inquiry, said that no such recommendation has been made to government and it's not part of Australia Post's plan, and given that the Treasurer, Mr Frydenberg, and Minister Fletcher have both indicated that the government has no plans to do that and that they see parcels as being a core part of Australia Post's business, could you point to the specific evidence that you have that underpinned your claims that this is the government's intent or plan? Other than inferences from the BCG report, I can't see any evidence to that effect. In fact, all of the evidence points to the opposite.

Ms Muscat : Perhaps if the government released the full report then we wouldn't be considering the inferences, because that's all we can go on at this point in time. It's very problematic that we don't know what's in that full report. We've asked for it over and over again. Release the report. That's incredibly important. As I said previously, with Australia Post refusing to enter into an MOU that protected our members' jobs, that again leads us to believe that there could be a focus on privatising parts of Australia Post. So we are concerned. Release the report. Make it known.

CHAIR: Mr Murphy?

Mr Murphy : In short, we couldn't get a copy of the regs off the minister last year. We couldn't get a copy of the BCG report, as my colleague from the CPSU pointed out. It has remained a secret document. If the government has nothing to hide on the privatisation issue, they should release it. Release it to the people who own Australia Post—that is, the community—and then let's have the real debate about whether there was a secret plan or not to privatise Australia Post.

CHAIR: We're well and truly over time. We're going to go to Senator Carr for a final follow-up.

Senator KIM CARR: On this BCG report, the minister advise the Senate committee on the question of the regulations that the minister had 'no plans to extend the measures contained in the instrument'. Given what you've just told us, that six weeks ago you were approached to get an MOU to extend the plans, how confident can you be when the government says it has no plans to implement the BCG report?

Mr Murphy : I can only go on our discussions from six weeks ago. The meeting for us was about participating actively, members raising issues, effects on service and their jobs and putting those on the table. It was about Australia Post. It was not addressing those matters. It was about saying to us: 'We'll do that, if you support and sign an MOU to go to government to extend regulations.' We, this Senate, the workforce and the Australian community was told from the outset that these were temporary measures. But, six weeks ago, it appears they weren't temporary measures. There were either talks going on with Australia Post and the government or Australia Post had its own agenda that it wanted to continue these on far well beyond the temporary measures of 20 June this year.

Senator HENDERSON: What is the evidence of that? I'm disputing that you have the evidence to support what you are saying.

Mr Murphy : You weren't in the room where they wanted us to sign an MOU to extend the regulation.

CHAIR: So the evidence you're putting to us today is that—

Senator McKENZIE: I want to hear from the AMWU.

Senator KIM CARR: They're later.

Senator McKENZIE: They're next.

Senator HENDERSON: But extending the regulatory relief is not the same as permanent arrangements.

Mr Murphy : Let me be very clear—I will clarify—they were asking us to go to the government for another further 12 months extension to the regulation.

CHAIR: Thank you, Mr Murphy.

Mr Rayner : Part of all this discussion that went on about the MOU was Australia Post senior executives coming to us saying, 'We cannot go back to the way it was.' We dispute that. We say that you can go back to the way it was. It was delivering to every Australian every day with the existing staff delivering the same amount of product you've got on now.

CHAIR: Thank you, Mr Rayner. Thank you everybody for joining us today and for your evidence. If you've taken questions on notice, the secretariat will be in touch with you.

Senator KIM CARR: I've got a couple of questions I will put to you on notice, particularly about how to improve industrial relations.

CHAIR: Thank you.