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Australian Post Office - Commission of Inquiry - Report - Volume 2 -Consultants' Reports


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THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA 1974— Parliamentary Paper No. 124

REPORT OF THE COMMISSION OF INQUIRY INTO THE

AUSTRALIAN POST OFFICE

VOLUME 2-CONSULTANTS REPORTS

Presented by Command 23 July 1974

Ordered to be printed 13 August 1974

THE GOVERNMENT PRINTER OF AUSTRALIA CANBERRA 1975

Printed by Authority by the Government Printer of Australia

AUSTRALIAN POST OFFICE

COMMISSION OF INQUIRY

Evaluation of Financial Management

Price Waterhouse and Co March 1974

PRICE WATERHOUSE & C ° CHARTERED ACCOUNTANTS Τιιιρνομι ? 053^

CASUS AM U IlllGBAMS

PRICEWATER

T h e R o y a l E x c h a n g e B u i l d i n g

G r e s h a m S t r e e t

S y d n e y

POSTAL ADDRESS. SOX 41X7 G PO SYDNEY 2001

5 March 1974

Sir James Vernon Chairman Australian Post Office Commission of Inquiry Box 4564 G.P.O.

SYDNEY NSW 2001

Dear Sir James,

In accordance with our proposal dated June 1973, we are pleased

to present our final report on the evaluation of financial manage­

ment in the Australian Post Office.

We wish to thank the Commissioners and, through you, all Post Office personnel for the assistance and co-operation extended

us during the assignment.

Yours sincerely.

10345/75— L

TABLE OF CONTENTS

Page N o .

TERMS OF REFERENCE -

OVERVIEW OF FUNDAMENTAL PROBLEMS (i)

SUMMARY OF CONSLUSIONS AND RECOMMENDATIONS (ix)

FUNDING AND FINANCIAL OBJECTIVES

The Role of Financial Management 1

Funding 3

Financial Objectives 17

BUDGETING AND MANAGEMENT REPORTING

Short Term Budgeting 36

Long Term Budgeting 41

Capital Budgeting and Project Control 43

Management Reporting and Control 58

PRODUCT COSTING AND TARIFF SETTING

Telecommunications Product Costs 70

Postal Product Costs 80

Tariff Setting 95

REPORTING TO OUTSIDERS

Published Accounts and Statistics 101

Accounting for Inflation 107

SUPERANNUATION 110

FINANCIAL ACCOUNTING

Accounting System 126

Accrual Accounting 129

Depreciation 131

Basis of Commercial Accounts 139

Internal Controls and Auditing 143

Furlough (Long Service Leave) 145

Page No.

FINANCIAL ACCOUNTING (Continued)

Insurance 147

Research and Development 148

A.D.P. 150

REPORT OF THE AD HOC COMMITTEE OF INQUIRY

INTO THE COMMERCIAL ACCOUNTS OF THE POST

OFFICE 1959-60 153

EXHIBITS

Outline of Recommended Basis for

Setting Annual Financial Objectives

for the Australian Post Office 35

Suggested Terms of Reference -Superannuation Study 124

Depreciation Accounting - Summary of

Asset Service Lives 137

APPENDICES

Notes on the Philisophies, Objectives,

Policies and Organisation of the

Australian Post Office 162

Suggested Presentation of Annual

Report 177

TERMS OF REFERENCE

" Independently examine, investigate and

formally report on the accounting, budgeting,

costing and statistical and funding procedures

and philosophies of the Australian Post

Office and to provide the Commission during

the course of its inquiry and in the final

compilation of its report with whatever

information relative to the above which it

may require to correctly and efficiently carry

out its inquiry into the Australian Post

Office."

OVERVIEW OF FUNDAMENTAL PROBLEMS

The Australian Post Office is larger in size and its

activities differ significantly from those of any other

business enterprise in the country. Although essentially

of a business nature, its activities, also include public

service responsibilities as shown by many of the services

which are provided at post office counters. Also it has

particular constraints placed upon it because of the way

it is at present organized and directed by government.

In other respects it has advantages, from a management

viewpoint, such as in its predominantly monopolistic

position. The A.P.O. is therefore a unique organization,

and the way in which it is managed and the results to be

expected, are different from most other large business-

type organizations, particularly those with strong

competitive and profit making characteristics.

However, the extent to which such a difference is necessary

and appropriate is a question which must be answered.

Consideration is needed of the role of the Post Office;

the compatibility of Telecommunications and Postal

Services; the appropriateness of its organization structure

its management powers and culture; and its very size.

Changes relative to many of these matters will impinge upon

the standards of financial management to be expected, and

the quality of performance - particularly if a firmer

business orientation is decided upon and developed.

In order to conduct a thorough evaluation of financial

management it was necessary to make a brief study of

philosophy, objectives and policy of the A.P.O. We have

summarised facts and observations of these matters below,

and the report deals with these more fully in notes included

as Appendix 1.

PHILOSOPHIES

Although we have carried out considerable research we have

been unable to locate a clear statement of the general

philosophy of operation of the A.P.O.

In some circumstances the A.P.O. is expected to operate

as a business, and in others with full recognition of

public service responsibilities. We consider the apparent

conflict here to be a fundamental issue which together

with the unclear definition of philosophies and objectives

impedes management and inhibits a logical planned devel­

opment of the organization as a whole. '

Various reports prepared over the years by Commissions

of Inquiry and by officers within the Post Office, make

reference to the need for the Post Office to operate in

a business-like way. It can be inferred from these reports

that there is a feeling of disappointment that a business­

like performance has not developed to a greater extent.

We believe that Postal and Telecommunications services

should be treated as business entities. However, the

required business orientation is unlikely to develop until

better business direction and greater management autonomy is developed.

There is no intervention of experienced business executives

at top level, as in the case of a large company board.

Senior management personnel do not have extensive external

business experience and the A.P.O. recruit few personnel

with business skills at middle management level. There is

very little decision making authority given to management

to acquire funds for expansion, establish tariffs, recruit

staff, and negotiate industrial relations matters. All

personnel are classified as public servants and this tends

to mitigate against the development of a business

orientation.

OBJECTIVES

General objectives have been determined by A.P.O. management,

and these have been described in the submission to the

Commission, in terms of communications needs, standards of

servicing, quality of servicing, confidentiality, economy

and profitability.

The 1968 amendment to the Post and Telegraph Act gives the

Postmaster-General power to determine financial objectives with the concurrence of the Treasury, but this power has

not been exercised. This is one indication that business

objectives are not receiving sufficient attention at

Government level. The annual financial submission to

Parliament is a further indication. The submission deals

very briefly with profit plans but these are secondary to

the main purpose of the submission, which is for allocation

of funds. Profit budgets do not receive consideration as

would be the case in a commercial organization, and we

consider that it is important that this be done.

Better direction from Government is necessary by a definition

of the long term financial objectives for the A.P.O.

Recommendations on financial objectives are made in this report.

(iii)

POLICIES

Certain fundamental policies of operation of the A.P.O.

should be reviewed and here we refer to the more important

of these. They relate to matters of Government policy as

distinct from internal management policy. Other matters

of policy are dealt with in later sections of the report.

Organization and Management Policy

The A.P.O. is organized as a Department of State, to provide Postal and Telecommunication Services throughout

the country. The Chief Executive, titled Director-General,

is a direct appointment by Cabinet. The Director-General

has no authority to raise funds even in small amounts,

and very little authority in tariff setting, personnel

recruitment and industrial relations.

By comparison with similar positions in large business

organizations, the Director-General has very low level

autonomy, and an exceedingly wide range of responsibilities

covering the whole ambit of Postal and Telecommunications operations.

We have reservations about the management and organization

policies of the A.P.O. There is a need for greater

management autonomy and a more suitable allocation of

responsibilities throughout the organization. Irrespective

of organizational form, an arrangement similar to a

company board could be introduced to provide improved

management, business direction, and advice. We look upon

this as one of the A.P.O.'s most important needs. There

are other aspects of organization discussed in this overview.

(iv)

Financial Policy

Financial Policy is dealt with at length in the section of

the report entitled Funding and Financial Objectives

Financial management techniques are also discussed. These

require considerable development and will be of greatest

benefit when related to suitable financial objectives.

Tariff Policy

Tariffs for Postal and Telecommunications services are

decided upon by Government under powers given by the

Post and Telegraph Act and the Post and Telegraph Rates Act.

Historically, political motivations in addition to economic

considerations, have influenced the establishment of

tariffs. For example, tariffs are rarely raised in the

year prior to an election. If these circumstances did not

apply, it is quite possible that the history of Postal

losses could have been different.

We consider that greater authority should be given to

Post Office management in setting tariffs. However, in

view of the fact that the A.P.O. is substantially a monopoly

operation, it is important that some mechanism be arranged

to ensure that monopoly power is not abused. Recommendations

on Tariff Setting are made later in the report.

Personnel and Industrial Relations Policy

The Public Service Board currently has the responsibility

(under provision of the Public Services Act) for a wide

range of matters which are well described in the A.P.O. submission to the Commission of Inquiry.

(v)

These responsibilities include such matters as salary

negotiation, staff requirements, conditions for

advancement, appointments, personnel qualifications and

efficiency.

It is difficult from a business viewpoint to support the

policy that such functions should be conducted outside

the authority of senior management.

ORGANIZATION

The Director-General, who is described as the A.P.O.'s

permanent head, is directly responsible to the -Postmaster-

General. State Directors report to the Director-General

and they are responsible for regional operations.

The functional arrangement at Central Office consists of

five divisions with a First Assistant Director-General in

charge of each. These officers have functional authority

only in their relationship with their State counterparts.

Six other personnel report directly to the Director-General

at Central Office and this includes 3 Deputy Directors-

General. Other staff are located in Canberra and London.

There are many committees and boards operating within the

A.P.O. These have been described'in the A.P.O. submission to the Commission of Inquiry.

The Director-General's Committee currently has a membership of 11 made up entirely of internal executive and staff

personnel. The role of this Committee is purely an advisory one to the Director-General.

It seems desirable that separate responsibilities should

be designated to particular senior executives for

Telecommunications services and Postal services.

The level of management which at present has responsibili­

ties for either Postal or Telecommunications services only,

is at the level of Assistant Director (State level). This

is two levels below Director-General and in terms of the

hierarchy of classifications of management positions, it

is the fourth level. The last point illustrates the

logic of dividing Postal and Telecommunications services,

and placing each under the control of a separate Chief

Executive.

Such a proposal needs investigation, from the points of

view of both provision of common services, and of

implications in terms of operating costs. Most functions

however, serve either Postal Services or Telecommunications

so that a separation would not seem to present major difficulties.

The logic of basing regional organization on a ' State1

basis should be questioned. The reasons for States and

regions being coincidental are historical, and precede

Federation. However, it seems quite illogical to arrange

a regional operation in areas, for example, as small as

Tasmania and as large as New South Wales. APO management

explains this on the basis that a close working

arrangement with State Government Departments is necessary. We are not in a position to evaluate this.

A policy of present management is to ensure a high level

of delegation of responsibility to State Directors. States

(vii)

operate with considerable independence, and we understand

that effective co-ordination by the senior management

group is difficult.

We suggested earlier that a re-organization should

incorporate a provision for introducing business direction

and advice from a board or committee. This should be

interposed between senior management and the Minister.

Although in theory such a board or committee could be

incorporated in a new arrangement, it may be difficult to

achieve this without introduction of a corporate philosophy.

However, the main requirement is to introduce changes in

organization. A new organization could introduce firm

business direction, greater autonomy of management, and more

delegation of responsibility, thereby enabling a more

practical arrangement for the pursuit of commercial goals.

(v j i i )

SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS

We have concluded that the detailed accounting within the

Australian Post Office is carried out to a high standard.

However, there are weaknesses in financial management and

these are largely a result of lack of clear definition of

objectives.

The primary functions of financial management are in the

acquisition, of capital and in its allocation and control.

We have concluded that the present arrangements for the

acquisition of capital or funding (i.e. the use of Treasury

advances) is the most suitable method and should be

continued.

We have made recommendations on supplementary sources of

funding, namely the retention of profits specifically to

finance the acquisition of capital items and the provision

of supplementary depreciation to bring the total annual

depreciation charge into line with depreciation on

replacement costs. We have also suggested that the APO

be given access to short term borrowings and the facility

to make short term investment at interest.

Regarding allocation and control of capital we consider it

essential that the Australian Post Office management be

given financial objectives for the entire enterprise.

These objectives are obviously closely related to decisions

on funding and to be attainable imply that the Post Office

is in a position to control its tariffs and expenditure to a larger degree than at present.

We propose that the financial objective of the Post Office

be expressed as the required dollar return necessary to pay

interest on Treasury advances, and earn an additional figure

sufficient to provide 50% internal funding of the capital

expenditure programme.

We have also recommended that accumulated losses incurred

by Postal Services to 30 June 1973, (estimated at $140m.)

be written off so that Postal Services is relieved of the

interest burden on these funds from Treasury applied to

finance postal losses.

Provided that the Australian Post Office is given clear

financial objectives and sufficient autonomy to establish

tariffs, control operating expenditure and determine

appropriate capital expenditure levels, it would be

necessary for improvements to be made in a number of

techniques. These include product costing in both Tele­

communications and Postal services, management reporting

and control, and budgeting in all its forms.

The present orientation of Post Office financial management

is towards cash control as distinct from profit. This

emphasis requires changing so that all levels of management

control is orientated to that of income and expenditure.

We agree that cash control is important, but the emphasis

should become less at each progressively higher management

level. At the highest level it should be entirely a

'profit ' orientation rather than one of cash.

In particular we have recommended that each year a three

year financial forecast be submitted to Cabinet for approval

and that Cabinet commit themselves to a progressively

up-dated three year capital budget. Income figures included

(x)

in these forecasts would be based on assumptions of

tariff movements.

Regarding accounting matters, we have recommended that a

supplementary depreciation charge be made against income

to provide for the increasing cost of asset replacement,

and have recommended that an independant actuary be

engaged to review the basis of calculating the annual

charge for superannuation.

We have also included comments on the annual reports of

the Post Office together with suggestions to make the

financial statements meaningful to the business community

and the community as a whole.

As requested we have examined the Ad Hoc Committee of

Inquiry Report and have commented on the implementation

of the various recommendations by the Post Office.

(xi)

10345/75— 2

FUNDING AND FINANCIAL OBJECTIVES

■

THE ROLE OF FINANCIAL MANAGEMENT

The financial management ro.le is to support an organization

in meeting its responsibilities by providing the mechanisms

for the efficient and effective acquisition, allocation and

control of funds.

The extent to which financial management fulfills this

role can be judged in terms of how well funds are provided

in a timely and economical manner, and how well it measures

and reports on fund requirements and how the funds are used.

The main functions of financial management are:

1. Acquisition of capital: to ensure that both working

and fixed capital funds required to keep the organ­

ization operating as a continuing entity are available

as needed, and

2. Allocation and control: to support and facilitate the

managerial processes of planning, operating and

controlling the organization.

Financial management thus includes:

(a) Acquisition and management of funds,

(b) Evaluation of individual and overall proposed plans in

terms of their economic viability, financial require­ ments and availability of funds,

(c) Consolidation of proposed plans in overall forecasts,

(d) Measurement of the economic effectiveness of performance and funds use,

(e) Communication of approved plans to those who execute them,

(f) Periodic reporting on financial status and financial

results of operations.

Current Practice of Financial Management in the Australian

Post Office.

The main emphasis on financial management in the Australian

Post Office is related to the annual appropriation processes.

The new financial arrangements which came into effect on

1 July 1968 have enabled the APO to exercise a considerable

degree of control over its day to day financial operations.

However, despite the on-going predictable nature of its

services and its inherent potential of becoming much more

self-sustaining, it is not financed on the basis of sound

economic criteria applied to its long term operational

needs. As a department of state, it competes for funds

with other government departments against a possible

background of changing national priorities, and is dependent

on the annual appropriation and budgeting processes.

The Post Office is subjected to the same general budgeting

review and control processes common to government departments.

This is not appropriate because the APO is characterised

more as a business undertaking than a government department

through the nature of its services, the payment by the

consumer of a price for services and the business type

relationship which the Post Office has with the public.

2

FUNDING

INTRODUCTION

Present Funding Arrangements

The APO is funded by advances from Treasury and there is

no provision for access to external funding sources.

Funds are allocated by means of the Appropriation Acts

and these are incorporated within the budget presented by

the Treasurer to Parliament each year. They are based upon

estimates of the financial requirements made by the APO

management. The net appropriation is the figure estimated

to be necessary to support APO revenues, in order to

provide the necessary capital expenditure and the expend­

iture for normal operation.

Funds are advanced by Treasury, in the form of individual

loans with long term maturity dates.

At June 1973, there were 52 individual loans making up the

APO portfolio. Interest rates ranged from 4.4% to 7%.

The average rate at June 1973 was 5.67% and the rate for

the most recent loan was 6%. As each loan matures, it is

converted to a new loan and a current interest rate is

applied.

Post Office Trust Account

One of the changes provided for in the 1968 Amendment of

the Post and Telegraph Act was in the establishment of the

/

Post Office Trust Account. This is an account incorporated

within the overall Trust Fund of the Commonwealth to which

all APO revenue is credited, and against which all capital and recurring expenditure is charged.

Prior to 1968, the APO had no separate Trust Account and

its funds were appropriated for individual classifications

of expenditure as described in its estimates. Adherence

to the appropriated figures for each classification was

necessary, whereas since 1968 adherence to the total net

appropriation only has been required. This change has

given the APO considerably more financial flexibility as

compared with other government departments.

Under the present arrangements, the Post Office does not have its independent bank account but must bank its receipts

daily to the Commonwealth Public Account at the Reserve

Bank in each capital city. Cheque payments from day to day

are drawn on Reserve Bank Drawings Accounts, and reimbursed

by Treasury the following day. Total amounts of receipts

and expenditure are charged to the Post Office Trust Account

in the Treasury ledgers. It is according to the balance

of this account that individual Treasury loans to the APO are determined.

A disadvantage of the present arrangement is that, early

each financial year when APO funds are in surplus (i.e.

during the first three to four months of each year revenue

usually exceeds expenditure) APO management has no access

to these funds and is therefore not in a position to use

them to advantage. For example, a figure of $M27.130

appeared to the credit of the Post Office Trust Account

in August 1973 and this could not gain interest.

4

Arrangements ought to be made so that the A.P.O. can

receive the benefit of interest in these funds.

This limitation regarding surplus funds is also a

disadvantage with regard to money order funds held

in bank accounts in each capital city. These accounts

hold the balance of money orders paid for but not yet

claimed. The balances amount of approximately $m9

not including the value of unpresented cheques.

Arrangements ought to be made so that interest is

also paid on these balances.

Funding Limitations

A.P.O. management has very little authority with regard

to the acquisition of funds for purposes of either

business operation or investment in capital development.

It has very marginal authority regarding tariff setting,

no authority to raise external finance, and no direct

authority for raising finance from the Treasury. These

restrictions place limitations upon Post Office Management

because they inhibit flexibility.

The absence of knowledge about the level of funds likely

to be available to them beyond the current year does not

facilitate a planned orderly development of the

organization as a whole. On the other hand, it may be

said that as telephone demand has in most years been

adequately met, this absence of certainty regarding

future fund availability has not substantially prejudiced development.

Funding Requirements

Because of the capital intensive nature of Telecommunications,

and its continuing rapid rate of expansion, substantial

funds will continue to be required for this service.

Funding requirements for Postal Services are much lower,

and in recent years have been 10% to 15% of the figure

required for Telecommunications.

Approximately 50% of fund requirements for Telecommunications

are provided from internal sources (i.e. profits plus non­

cash items such as depreciation). Funds for Postal

Services have not been generated internally in recent

years because of its loss making history.

There are higher demands for working capital in

Telecommunications. $ml74 was required in 1971-72

rising to $ml87 in 1972-73. The heaviest demands are

for stores stock ($ml03 in 1972-73). A great deal of

this stockholding is needed to service capital developments.

The table shown below shows the utilization of borrowings

from Treasury, for Postal and Telecommunications Services

in 1971-72 and 1972-73.

6

POSTAL SERVICES

1971-72 1972-73

($m) ($m)

Borrowings needed for:

Increase in fixed assets 18 19

Increase in current assets

Less increase in current

7 3

liabilities (9) (6)

16 16

Internal cash deficiency

(i.e. losses less depreciation) 7 18

Borrowings $m23 $m34

TELECOMMUNICATIONS SERVICES

Borrowings needed for:

Increase in fixed assets 407 472

Increase in stores 14 (7)

Increase in other current

assets 45 27

Less increase in current

liabilities (11) (7)

455 485

Less internal funding (profits

plus depreciation) 208 231

Net Borrowings $m247 $m2 54

Source: APO business plan 1973

7

It can be seen from the above tables that about half of

the borrowings for Postal Services in these two years was

required to finance losses. In fact, approximately $m6

p.a. of these losses was interest on losses borne in past

years.

The figures quoted above for Postal and Telecommunications are

from the APO Business Plan which is the only readily

available source of information on funds utilisation.

Funding Practice in Overseas Administrations

In the countries where either Postal or Telecommunication

Services, or both, are provided by government, the financing

of services is mostly provided from government sources.

In Greece and Germany where savings bank facilities are

available through the Post Office, financing from this

source is available. In Sweden, long term finance is

provided from Government sources, but short term financing

and the financing of working capital is available by means

of a variable credit at the Riks Bank, guaranteed by the King.

In Japan, the Nippon Telegraph and Telephone Public

Corporation obtains external funds from bonds sold to

subscribers, and also from the Government. The purchase

of bonds is mandatory for persons wishing to become

telephone subscribers in Japan but these bonds are

negotiable on the bond market. In the United States of

America, the Postal Service is authorized to borrow money

on the loan market, but there are financial ceilings imposed by Government on this.

8

COMMENTARY

Possible Extension of Funding Sources

If the sources of finance available to APO management

were to be extended we consider that the only practical

alternatives to be considered would be

(a) Issue of debenture notes for public sale,

(b) Real estate mortgaging,

(c) Use of bank overdraft facilities, and/or money

market loans.

In considering these alternatives, it is necessary to

critically examine the need for extending the arrangements

beyond what is currently available. We believe that the

areas in which greater funding flexibility is required

for APO management include:-

- provision of powers for the establishment of tariffs,

subject to appropriate price control mechanisms being provided.

- granting authority to place surplus funds either with

Treasury or on the money market at interest.

- provision of a short term external source of finance, to be used on emergency occasions.

9

(a ) Issue of debenture notes for public sale

We do not consider the likelihood of fund shortages

of sufficient magnitude to warrant provision of large

sums of money from external sources. We therefore

reject the alternative of public issue of debenture

notes. This would be an expensive alternative in

terms of administration costs, advertising, etc.,

and it is also likely that greater interest charges

would be incurred. It could also be considered

against the national interest that Post Office

management be in a position to raise large amounts

of money, outside the control of the commonwealth

Government.

(b) Real estate financing

The financing of real estate by mortgaging of future

property development is worth considering but requires

separate study before conclusions can be reached.

We have been told that at present, the provision of

non-revenue earning assets such as administration

buildings is restricted because funds are not readily

available. We are not in the position to evaluate

this, or conclude as to whether the practice of

leasing large city buildings is a correct one.

However, if shortage of funds is a serious constraint,

mortgage financing of new facilities would possibly

lead to a gradual rationalisation of city building

requirements, and a more logical and practical devel­

opment in terms of location and facilities provided may result.

10

(c) Use of bank overdraft facilities

Apart from the above, our interpretation of the

present situation is that the extension of present

funding arrangements would be necessary only to

the extent of relatively small amounts, to enable

short term cash shortages from Government ro be

overcome, and also to give APO management some short

term financial flexibility in responding to the

actions of competitors.

We would not consider that access to the money market

would be required. We suggest that a Government

guaranteed bank overdraft of up to say $m25 would be

all that is necessary.

The Capital Programme

The present arrangements for annual funding appropriations

for capital purposes are inappropriate for an organization

such as the APO, where network planning is necessary beyond

20 years ahead and where resources such as materials and

labour must be planned well in advance. In this type of

business, it is necessary that the availability of funds

for approved capital works should be guaranteed at least

for 3 years ahead.

For this reason, we consider that the APO should submit

anually to Cabinet one and three year plans and that firm

commitment of funds for approved capital works should be

made. Annual submissions would be made by the APO through

a board of directors or other similar body appointed in

accordance with a revised organization structure. We

11

understand that Cabinet does not at present have the power

to make appropriations of funds beyond one year, and we

suggest that appropriate changes in legislation be made.

Annual submissions to Cabinet incorporating three year

plans updated yearly would include details of commercial

objectives and operating profit plans, and three specific

decisions would be requested:

(1) agreement to commercial objectives aid profit plans,

(2) agreement with the three year capital development

programme, .

(3) commitment of the three year fund requirements for

approved capital works on the basis of operating

profit plans.

The three year plans referred to above would relate to

10 year financial planning which should be operated

internally as suggested later in the section on Long

Term Budgeting.

Failure to achieve the annual profit plan would initially

prejudice the carrying out of approved three year capital

plans. In the following annual submission, the APO would

be required to justify its failure to meet its first year

objective and submit plans to rectify the situation in

subsequent years.

Long Term Loans.

The APO requires permanent capital to finance its operations.

This requirement is met by the present arrangements on the

12

assumption that Treasury 1 roll over' loans as they fall

due for repayment. The funding of long term capital

requirements through growing numbers of separate loan

accounts is relatively simple to operate, logical in

terms of Treasury financing, and equitable in that the

interest is based on a long term moving average, which

is not subject to violent fluctuations.

The use of a large growing number of separate loans is

not the only method of providing long term finance. An

alternative would be to have one lump sum loan bearing

interest at a rate to be revised annually, or 5 yearly

and based on a moving average or the current long term

interest rate. Another alternative would be the use of

'share capital' financing.

The British Post Office uses the portfolio approach whereas

the South African Post Office uses the permanent loan

account base.

The use of the portfolio approach and the consequent adoption of a long term moving average interest rate

results in a lower than current rate when the long term

bond rate is rising and possibly a higher charge when

the long term bond rate is falling.

On balance, we consider the portfolio approach to be

preferable although the alternative of a fixed loan can be

argued with almost equal conviction.

The Possible use of share capital

Although permanent capital for the APO could be arranged

in the form of share capital, we do not consider this

- 13 -

1014i

method to be appropriate.

The Ad Hoc Committee 1959/60 Report on page 20 paragraph

88, 91 and 93 argued against the concept of share capital

and we agree with the arguments.

"Paragraph 88:

The concept of a return varying with capacity to pay is a

dividend concept. This assumes that the financial relation­

ship between the Government and the Post Office is similar

to that of shareholder and company. This is not an approp­

riate description of the financial relationship between

the Government and the Post Office. Nor is it appropriate

in the case of a Government business undertaking which has

a virtual monopoly of the service it supplies.

Paragraph 91:

An annual return on funds invested based upon capacity to

pay is inappropriate in the case of a Government monopoly business such as the Post Office, unless pricing policy

is aimed at making the highest possible profits. This does

not seem to have been the aim of Governments in the past.

Over the past 59 years, Governments have approved charges

for Post Office services which have resulted in the Post

Office earning total revenue approximately equal to its

total expenses including a reasonable return by way of

interest on the net funds advanced to it from time to time.

Paragraph 93:

Granted that the Post Office should make a return on the

14

net advances it has received, and that the Government,

the Parliament, and the people wish to know the cost of

providing Post Office services, a return in the form of an

appropriate interest charge is the only acceptable form of

return on the net funds advanced by the Government to a

monopoly business undertaking such as the Post Office.

This has always been the approach of the Post Office in its

commercial accounts. If interest is treated as a cost,

the whole cost is then known, and is open to the Government,

on the basis of these estimated costs, including a reasonable

interest charge, and estimated earnings at the then existing

rates, to determine whether it wishes to vary these rates

so that the Post Office may merely cover its total expenses,

or make a profit, or incur a loss."

The use of share capital is a concept which recognizes the

need to reward the shareholder for risk. The APO does not

involve business risks of the usual kind.

Furthermore, the APO is a Government monopoly providing a

ubiquitous service to taxpayers generally and a particular

service to business. In these circumstances, the policy

of maximisation of profits which can generally be associated

with share capital at risk is not appropriate.

Rather than maximising profits, government should ensure

that the APO earns a fair return for the use of money. This

return would normally cover the cost of money but could

extend to providing some funds for future expansion.

We have considered the funding implications if the APO

were to become a statutory corporation, and can see no reason

to vary our recommendation that funding should be entirely

in the form of loans, rather than share capital or a mix of both.

RECOMMENDATIONS

1. The Treasury should continue to be the prime

funding source.

2. Loans should continue to be in the present form

of long term loans to finance facilities and

working capital in accordance with present procedures.

3. Annual budget Submissions to Cabinet should be

continued but distinction should be made between:

(i) Budget approval necessary for the commercial

objectives and profit plans, and

(ii) Approval of annual capital expansion

programmes.

4. The annual submission for capital works finance

ought be supported by a three year plan covering operations and capital works. On the basis of

these submissions, cabinet should make a firm

commitment of funds for the three years.

5. Short term overdraft facilities guaranteed by

Government should be made available with a current

limitation of $m 25. These should be usable at the

discretion of Post Office management.

6. The Post Office Trust Account arrangements should

be extended in order to grant interest credits for

funds when the Post Office finances are in surplus.

7. The Reserve Bank should pay interest on funds held in money order bank accounts.

16

FINANCIAL OBJECTIVES

INTRODUCTION

Section 96H (1) of the Post and Telegraph Act 1901-1971

provides, in the following terms, for a financial objective

to be set for the Post Office.

"In the administration of this Act in relation to the Post Office services, the Postmaster-General shall pursue

a policy directed towards achieving in respect of each

financial year, in respect of those services, such

financial results as the Postmaster-General with the

concurrence of the Treasurer determines."

No specific financial objectives have been set in terms

of this section, and in the absence of specific direction

by the Postmaster-General, Post Office management have

determined financial objectives in the following broad

terms:

Postal:

"To match earnings and expenses taking one year with

another."

Telecommunications:

"To match earnings with expenses and make such contribution

as the Government determines towards new capital required

to expand the service."

The White Paper "Post Office Prospects and Capital

Programmes" presented to Parliament by the Postmaster-General

on Budget Night each year sets out the overall expectations

of the Post Office in relation to the two trading services

for the year just commencing, and these have been deemed

to meet the financial objectives referred to in Section

96H (1).

COMMENTARY

To date specific objectives such as a prescribed rate of

return on revenue or funds employed have not been set by

Government.

Provisions for setting financial objectives are incorporated

in the constituting legislation of a number of Commonwealth

business undertakings such as Australian Coastal Shipping Commission, the Australian National Airlines Commission,

the Commonwealth Serum Laboratories, the Export Payment

Insurance Corporation, Housing Loans Insurance Corporation,

the Overseas Telecommunications Commission, the Snowy

Mountains Engineering Corporation, and the recently established

Pipeline Authority.

The financial objective for these undertakings takes the form of either a requirement to aim to earn revenue

sufficient to cover costs and pay a reasonable return on

capital (in the case of undertakings financed to a large extent by equity type capital), or a requirement to aim

to break even after payment of interest (in the case of

undertakings financed by interest bearing advances).

In either case, financial objectives recognize the need

for the undertaking, in its operations, to recover the cost of capital invested as well as operating costs such as wages, materials and depreciation.

Should a Financial Objective be set for the Post Office

One of the first requirements for effective management of

any organization is a clear statement of goals and

objectives which can be translated into attainable financial

goals.

Section 96H (1) of the Post and Telegraph Act is a policy

statement regarding the financial objectives of the

Australian Post Office. It does not provide clearcut

attainable objectives to the management of the Post Office.

The setting of objectives cannot be solely an arithmetical

exercise. The Government must take into account: return

on new investment, soundly based pricing policy, social

obligations not covered by subsidy, efficient operation,

national prices and income policy.

It is not always possible in practice to reconcile a

prescribed rate of return on new investment, and a system

of pricing which accurately reflects costs, with a predeter­

mined overall return on total assets. Nevertheless, despite

these difficulties, the system of financial objectives has

proved its value in practice; it cannot provide a perfect

formula for the resolution of all pricing and investment

decisions but it does give a framework within which such

decisions can be reached.

In certain circumstances, the application of wider economic

and social factors may involve overall losses. Even here,

a clear financial objective will be necessary as an aid to

management and it will be desirable to set this in a way

to provide a realistic incentive to efficiency and morale within the industry.

19

Post Office management in effect proposes its financial

objectives each year through the appropriation process in

the form of the White Paper "Post Office Prospects and

Capital Programme". These financial goals or objectives

are reviewed and approved in the course of the Parliamentary

debates.

This process does not encourage long term financial

planning, and it does not provide the Government, Parliament

and the people with an adequate yardstick against which

the actual performance of Post Office management can be

measured and judged.

There are inevitable simplifications and compromises to

be made in formulating an overall financial objective for

a large industrial undertaking in the form of a simple

figure.

The Manner in which the Financial Objectives should be set

A number of basic issues have to be considered:

1. Should separate objectives be set for Postal Services and Telecommunications Services.

2. How should financial objectives be expressed.

3. Should financial objectives require the earning

of a contribution tq capital development.

4. What is a reasonable return on funds.

5. Should the APO receive subsidies for services

provided at a loss by reason of government policy.

20

6 . Should indirect taxes be paid.

7. Should interest be paid on past losses.

8. Should Federal income tax be paid.

These factors generally are related to the question of

whether the financial result should be determined on the

basis of:

(a) The APO as a private trading organization in all

respects in which case the question of financial

objectives could be best determined using guidelines

and criteria similar to those adopted by private

organizations, or

(b) The APO as a public trading organization or public

utility in which case one may expect it to return a

lower rate than a private trading enterprise.

These matters involve consideration of the fundamental

question of the role of the Post Office. This question has

been discussed on many occasions both in Australia and

overseas and it would appear that no real agreement has yet

been reached.

In discussing the US Postal Service, the following comments

were made:

"Individuals have difficulty in articulating why the Postal

System seems indispensable. There are other ways of

communicating personal messages, other ways of disseminating

ideas in bulk, other ways of moving things from one point to another.

21

But there is no other one system which transfers ideas,

thoughts, sentiments, information, advertising, commands,

requests, bills, money, warnings and photographs; and

transfers things as well: packages, samples, gifts, books,

newspapers, cheese, newsletters. There is no other one

system which can gather heterogeneous items for pinpoint

delivery, and broadcast homogeneous items. There is no

other one system which is universal, touches nearly

everybody, reaches everywhere, which carries a letter for

a single individual for a few cents and tons of material

for influential business enterprises for millions of

dollars. There is no other one system which is everybody's

servant. "

Thus, the postal service fills the unique role of

universal service to big and small. Ubiquity or univers­

ality is primary on the list of characteristics which a

postal service must possess." 1

These remarks support the case that financial objectives

for a Postal Service cannot be stated in terms which are

strictly comparable with a private business undertaking.

Unlike other forms of communication, including tele­

communications where the provision or use may be generally

based on economics, the Postal Service has traditionally

been regarded by every citizen more as a right than a

purchased option. On the other hand, the two services have

clearly different characteristics. Telecommunications

Services are growing rapidly, are capital intensive; can

pay their way and show a profit without difficulty at current

tariff rates, and generally have an excess of demand for

their services. Postal Services, on the other hand, have

a slow growth rate, have a low capital requirement compared

1

The report of the President's commission on Postal organization June 1968 V ol. 1 Page 163.

22

to Telecommunications, are heavily dependent on manpower

resources, and have been unable to pay their way for a

number of years notwithstanding tariff increases.

The treatment of the two services as separate entities in

future financing arrangements would provide a more meaning­

ful disclosure of these differing needs and meet the interests

of full public disclosure of the separate activities

of the two services.

The setting of separate financial objectives would:

- materially assist the Post Office in its future

planning,

- impose upon management a responsibility to achieve

such objectives.

- provide the means whereby the Government, Parliament

and the people can judge the performance of Post

Office management.

1. Should Separate Objectives be set for Postal Services

and Telecommunications Services

Telecommunications for a number of social and economic

reasons, seems capable of operating more readily as a

commercial business undertaking in the community. In

other countries of the world, notably the United States of

America, and in Japan, Telecommunications are run as a

private enterprise.

In determining financial objectives, the extent to which

an operating surplus is achieved should be considered in

23

the light of the important distinction between taxpayers

and Post Office consumers. Most taxpayers use Post Office

services of one kind or another but the extent to which

individuals use those services and the amount they pay for

them varies greatly from individual to individual.

Taxes paid also vary from individual to individual, but

there is no necessary correlation between taxes paid and

the use of Post Office services.

We were able to relate operating results for both services

to funds employed by way of Treasury advances and retained earnings in Postal Services Division and in Telecommunication:

Division.

The following table expresses the surplus or deficit,

before charging interest as a return on Funds Employed.

Funds Employed are defined as Treasury advances plus

retained earnings minus accumulated losses.

SURPLUS/(DEFICIT) BEFORE INTEREST

Expressed as a percentage return on Net Assets

Year Postal

%

Telecommuncations % Total %

1970/71 (15.91) 5.23 4. 48

1971/72 3.03 6.87 6.74

1972/73 * (5.54) 6.75 6.34

1973/74 * 1.64 6.16 6.03

Estimates

24

In these four years. Telecommunications achieved a surplus

and it is likely that Telecommunications could continue

to be operated profitably. On the other hand, Postal

Services in two out of the four years, did not earn

sufficient surplus to pay its interest bill.

Based on our observations of different social, organizational,

economic and financial considerations applicable to the

two divisions, we have concluded that separate financial

objectives are required.

2. How should Financial Objectives be Expressed

A number of different methods of expressing financial

objectives are in general use

1. Return on funds employed

2. Percentage return on recurrent costs

3. Percentage of annual finance to be provided from internal sources

4. Recovery of costs including cost of capital, i.e.

break-even result

5. Recovery of costs plus a margin.

Financial objectives for other Government trading

organizations are expressed in different ways, usually

depending upon their capital structure.

In the case of undertakings financed by equity type

capital, a dividend is usually required. In the case of

undertakings financed by interest bearing advances, break­

even after interest costs is mere common.

3. Should Financial Objectives Require the Earning of

a Contribution to Capital Development

In a commercial organization, retained earnings are a

significant source of funds for financing growth.

Comprehensive studies in capital format! on and financing

have emphasized the important role of internal financing.

In the United States, in "An Economic Report of the

President" 1967, the extent of corporate internal sources

as a percentage of total funds employed in the years 1955

to 1966 were tabulated. Indications were that internal

funds consisting of retained earnings and retained

depreciation provisions accounted for 68.9% of total funds employed.

This situation is comparable to that existing in at

least some overseas telecommunications organizations.

CAPITAL EXPENDITURE FINANCED FROM INTERNAL RESOURCES (Telecommunications Only)

1970 1971 1972

% % %

United Kingdom 56.59 50. 01

New Zealand Nil 53.92

Sweden 87.46 95.68

Japan - 50.60 -

USA - A.T. & T. 48. 93 55.81

- Mountain Bell 49.25 54.13

Source: APO internal records

Organizations in four out of five of the above countries

are funded from internal sources, to approximately 50%

of total funds. The exception is Sweden where it is

understood the administration does not pay interest on

funds advanced from the national debt fund.

It can be argued that all new capital requirements ought

be met from annual appropriations and that tariffs ought

not be set at a level which would provide funds for future

capital expenditure. To achieve this end general taxation

levels would be raised and tariffs reduced. The incidence

of cost would fall more on the general taxpayer than the

user. A by-product of this change could also be an increase

in demand following reduction in tariffs and a consequent

increase in demand for new capital works.

After considering all aspects of this problem, we have

concluded that the financial objectives for both

Telecommunications and Postal Services should include the

requirement to contribute a minimum of 50% of new capital

works from internal funding sources. This minimum could

be varied from time to time if justifiable for any

reasonable purpose. We consider, however, that it would

be necessary to plan this level of funding on a three year

advance planning basis, and to avoid sudden fluctuations

in the objective from year to year by working on a three

year moving average.

4. What is a Reasonable Return on Funds

It has been suggested that a reasonable return could be

defined as being one which the taxpayer would expect from

a commercial investment. The assumption being that if funds

were not required for the Post Office, taxation would be that

much less and taxpayers would have additional funds available

for investment elsewhere.

27

This argument seems difficult to support because the tax­

payer is not likely to view investment in the Post Office

as an alternative to a commercial investment, and taxes

would not vary with differing Government investment in

the Post Office.

In a commercial enterprise, a financial objective expressed

as a rate of return on total funds employed, is usually

established against a background which includes a policy

of profit maximisation.

This would seem to be an inappropriate requirement for the

APO unless the proposition is accepted that the APO is a

normal commercial entity in all essential respects. We do

not consider this to be the case. In our view the basic

financial objective should be to service the debt on

Treasury advances, and provide a return on retained

earnings.

5. Should the APO receive subsidies for services provided at a loss by reason of government policy

As pointed out in the Treasury submission, at paragraph 22,

the question of the financial result that the Post Office

should seek to achieve is related to the question of the

financial arrangements that apply in respect of services

that the Post Office provides on a concessional or

unprofitable basis for reasons of Government policy.

In the overall context of Post Office services, there will

be undoubtedly a number of services rendered which may not be rendered at a profit. However, it is usually possible

to distinguish those services which have been provided of

its own initiative on a commercial basis and those services

28

being provided to meet some Government policy objectives.

The constituting legislation of TAA and the Australian

National Line provide for a formal direction from Govern­

ment as to the particular services it wants to see

provided. The legislation also provides that in the event

of a loss, the organization will be reimbursed to the

extent that the loss is not offset by profits earned on

other services.

As a general principle, we believe that the subsidy

approach is the most desirable method of accounting for

services which are being provided at a loss by reason of

government policy.

If a subsidy approach were adopted, it would mean that:

1. The specific appropriation of funds by Parliament

for the purpose would ensure that the subsidy was brought under scrutiny by the Government and

Parliament.

2. Government assistance to the section of the

community benefiting could be considered in its

totality and separately for consideration of the

Post Office's finances which could then be dealt

with on a proper commercial basis.

3. The subsidy approach could well assist to foster a

mar e business-like approach in Post Office management and

staff, by avoiding a discouraging situation of services

beyond their control operating at a loss.

- 29 -

10145/75— 4

In the submission by Treasury, reference was made to the

fact that State and Federal indirect taxes which were not

paid by the APO were estimated for 1969-70 year at approx­

imately $60m. An estimate for 1973-74 totals $100.3m.,

of which $53.1m. relates to State and Local Government

Taxes.

The APO is constitutionally not required to make any

payments of indirect taxes to the States. The most

significant State taxes are payroll tax, motor vehicle

registration and third party insurance, and local and

State property taxes. These comprise the bulk of indirect

taxes.

Federal indirect taxes, i.e. sales tax and customs excise

comprise the bulk of Federal indirect taxes and would be

mainly in respect of fixed asset purchases. The remaining

amount of taxes which could be charged against Postal

operations and Telecommunications operations would not be

material. They would be of the order of $1.35m. for

Postal Services and an amount slightly in excess of $6m. for Telecommunications Services in 1972/73.

We do not recommend that the APO be required to pay indirect

tax although a case could be argued from the States point of view.

7. Should Interest be Paid on Past Losses

The APO in its submission made the point that one of the

factors contributing to the past and present losses in

the Postal Services was the burden of interest, not so

30

much in respect of capital investment but rather from

financing losses.

In the past five years, a large amount of the funds pro­

vided by Treasury and used for Postal Services have been

required to finance trading losses. While the overall

indebtedness of the service continues to rise, interest

charges will increasingly affect the trading position in an

adverse manner.

During the five years 1968-69/1972-7 3 total Treasury advances

for Postal services have totalled $139.2m. Of this, $83.6m.

have been used to finance capital works and $55.6m. to

finance net postal losses.

The Post Office Business Plan contains a balance sheet of the Postal Services at the 30 June 1973 showing Treasury

Advances in respect of Postal Services totalling $250m. and

accumulated losses on Postal Services totalling $140m.

The net equity or net funds employed in the Postal Services

is therefore $110m. ($250 - $140). The amount of $140m.

representing trading losses as a separate business entity

to Telecommunications can be reasonably viewed as capital

which has been lost.

Treasury regards the A.P.O. as one organization to which

advances are made and applied by the Post Office in the way

it decides, having regard to its operations as a business.

On this view, no advances have been made to finance losses

and the $140m. of losses on Postal Services to the 30 June

1973 have been financed from the accumulated earnings of

the Telecommunications Services.

Both of these views have merit and the problem arises as

to which one should prevail.

31

We believe that the proper business view is that there

are two distinct business operations. Although organ­

izationally this may not be so, we consider that the

regular financing of Postal losses from Telecommunications

is undesirable.

We support the view that the interest bill charged to

Postal Services ($17m. in respect of 1972-73) is in

respect of Treasury advances of $250m., $11Om. of which is

used in the business and $140m. of which has been used to

finance accumulated Postal losses.

Historically, there is a case for viewing accumulated

losses on Postal Services as being totally -attributable to

the wide range of concessional services which were provided

by Postal Services at a loss. Under these circumstances,

it is equitable that accumulated losses be borne by the

taxpayer.

Consequently, we recommend that accumulated Postal Services

losses at the 30 June 1973 totalling $140m. be written off.

We suggest, however, there should not be an arrangement

for routine writing off of losses should they occur. This

would tend to influence APO management to the extent that

the financial objective set may not be taken seriously.

An arrangement to review the situation say every 5 years would

seem more appropriate.

8. Should Federal Income Tax be Paid

This financial objective may be appropriate when one is

comparing a Government operation with a commercial operation to obtain a measure of efficiency.

32

In the case of a monopoly service such as the APO the

effect of charging income tax would be to increase

tariffs, but it is unlikely that general taxation would

be reduced to the same extent. An income tax charge would

transfer some costs from the general taxpayer to the APO

user. The same effect can be achieved by varying the

percentage of capital works to be financed from revenue.

RECOMMENDATIONS

1. Separate objectives ought be set for Postal Services

and Telecommunications.

2. The financial objectives for both Telecommunications

and Postal Services should be to:-

(a) earn interest on the portfolio of Treasury

loans,

(b) earn a return on retained earnings, at the

■ average portfolio interest rate,

(c) earn an additional figure which is sufficient

to provide 50% of capital expenditures. This

could be assessed in accordance with the average

annual requirements to fulfil the Three Year

Capital Works Programme (See Exhibit A for

example).

3. Annual objectives should be established in the

context of a three year plan (which would be part of a ten year plan).

4. Financial objectives for States and other organizational

units should be set in the context of the overall

objectives from formulae appropriate to the

particular segment of the organization.

(Also dealt with under Management Reporting later

in this report.)

5. The government should subsidise the APO for losses

sustained on services specifically provided by

reason of government policy.

6. Accumulated Postal Service losses should be written off.

7. Direct and indirect taxes should not be paid.

34

EXHIBIT A

Outline of Recommended Basis for Setting Annual Financial

Objectives for the Australian Post Office

Tele Postal

$M $M

Financial Objectives:

(a) Interest on Treasury advances 132 17

(b) Return on retained earnings, calculated at the average interest rate for the portfolio of Treasury advances 16

(c) 50% average annual funds required for the three year capital works programme 270 11

418 28

Funds to be provided by:

Required profit from operations (before interest charges) 261 18

Add: internal non cash items i .e . depreciation and long service leave 157 10

418 28

To achieve this objective, the required operating profit after charging interest would be: 129 1

NOTES: 1. Figures used in this exhibit, except profit, have been taken from the A .P .O . Business Plan 1972/73.

2. The Financial Objective and Profit before interest charges, would be reduced by approx­ imately $M6 if Postal accumulated losses were written off against Treasury advances as recommended.

3. Required profits after interest charges shown on this exhibit, compare with Business Plan results of Telecommunications $M76 profit, and Postal $M23 loss.

35

.

BUDGETING AND MANAGEMENT REPORTING

SHORT TERM BUDGETING

The present budgeting system is used for preparing annual

estimates to be submitted to the Minister, and also for

financial control purposes.

The APO estimates included within annual Commonwealth

Budgets are in effect a request for appropriation of funds

for capital development. However, the figure required each

year is determined after deduction of the estimated figure

of funds to become available from APO operating activities. The forecast operating results are shown in the White Paper

1 Post Office Prospects and Capital Programme1 presented to

Parliament by the Postmaster-General each year.

The Annual Budgeting Process

Work on budgeting for each financial year commences at

Central Office in September of the prior year. At this

time, manpower plans, the three year engineering construction

programme, and forecasts of services demand become available,

and are considered at senior management level.

Following the formulation of budget plans, the Director-

General writes the 1 Budget Planning Letter1 to each State

Director, giving guidelines for the development of State budgets.

These guidelines include such matters as services demand expected, service standards, staff levels, value of the

capital works allocations to each State, action to be taken regarding special projects under development, treatment of

new services under development, major cost reductions to be planned, and the basis of wage rates and tariffs to be

included.

The content of the budget planning letter is strictly in

the nature of guidelines. State Directors have authority

to make exceptions to guidelines, but must be able to

support their action to the Director-General. On completion

of State and Central Office budgets, work commences on the

drafting of the submission to Cabinet about May each year.

Cabinet decisions regarding the submission are not made

until the end of July. If the request for funds is not met

in full, budget revisions take place and State budgets must

be adjusted accordingly. These adjustments are invariably

made in the capital budgets as distinct from the operational

budgets.

Budget Content

The State budgets submitted to Central Office include all

categories of income and expenditure, working capital

(stocks and debtors), and capital expenditure. Budgets

submitted by States are prepared according to procedures

established by the Management Services Division at Central

Office. These procedures are very detailed and the

submissions made by all States conform in all respects to

the requirements laid down.

The budgeting of revenue is included at the level of States

only, i.e. formal revenue budgets are not prepared for

organizational levels below State Director.

Expenditure budgeting however, follows the lines of

responsibility accounting codes within the accountancy system. This provides for the analysis of expenditure by

divisions and branches, and provides for organizational

levels as low as district telephone managers in the

37

Telecommunications Division, postal inspectoral districts,

and mail exchange traffic divisions within the Postal

Division. Engineering overheads including maintenance

costs are also classified within branches, but do not

provide for regional analysis within States.

The level to which budgeting is done is consequently no

lower than telephone districts (e.g. incorporating a

number of telephone exchanges), and postal inspectoral

districts (incorporating a number of post offices). There

is no provision in the budget analysis of expenditure for

a specific budgeting of the operations of individual major

post offices.

The operational budgets are prepared to conform with cash

reporting requirements, and this arrangement operates in

line with the management reporting accountancy system which

is a cash reporting system. This means that the concept of

accrual accounting is not incorporated within the present

budgeting system at State level. However, information is collected within the budget, with regard to levels of

purchasing of stores, and of forecast telephone account entries. This enables at a later stage budgets of stocks

and debtors to be prepared using accrual principles.

C OMME NTARY

The operational budgeting system has been designed with a

view to controlling cash resources, and it does not incorporate-

bases which are suitable for use as performance targets in

the various units throughout the organization, for efficiency control.

The budgeting system has been developed in line with the management reporting system, and there are faults in both systems.

It is not possible to isolate within the budgets the key

performance factors, which should be used as a basis for

measuring performance of the various units and key

personnel in the organization. Also, the lack of depth

analysis of expenditure enabling the budgeting of key

facilities such as major post offices, is a fault which

needs to be overcome.

The systems in use enable a high degree of control to be

exercised over cash expenditure. However, we consider

that the low emphasis on profit controls and efficiency

in general which is to be found in the budgeting systems,

is one of several indications that the APO needs to adopt

a more advanced level of management planning and control.

This action is consistent with the intention to develop a

stronger commercial orientation.

It is important that a detailed review of the concepts of

control at all organizational levels within the APO is

carried out. It is of particular importance that future

budgets provide for performance measures and activity

measures, which can be used as a basis of control throughout

the year.

The development of budgeting systems should take place with

a co-ordinated development in other planning, reporting and controlling techniques in use in the APO.

RECOMMENDATION

A detailed review of control requirements at all organiza­

tional levels should be carried out as part of a co-ordinated

review of management planning reporting and controlling needs.

NOTE: Budgeting implications have been discussed

generally under the section on Management

Reporting.

40

LONG TERM BUDGETING

In other sections of this report, we have made reference

to the systems covering the development of engineering

network plans, the three year capital works programme, and

the annual capital budget. We have also describtd the

processes of annual operations budgeting.

In addition to these systems, there is a five year business

planning system. This system has been introduced only

recently and it is subject to further development under the

direction of the Management Services Division at Central

Office.

The current plan covers the years 1972-73 to 1976-77. The

plan includes balance sheets and profit and loss accounts

of each major service separately, statements showing activity

and performance measures, fund sources and utilization and

estimated labour requirements.

This five year planning system is an appropriate development.

However, it is incomplete and could be better described as a

financial budgeting system supported by activity and

performance targets. There is a need to develop better

forecasting and marketing information and to incorporate

within the plan a comprehensive narrative describing the

development intended over the full planning period.

This present plan is used mainly for the guidance of Post

Office management. A copy is provided to the Postmaster-

General, but it does not require formal acceptance at that

level. It is purely an internal planning document as distinct

from a control document.

In addition to improving this five year plan, there is also

a need to extend financial planning by also preparing ten

year financial plans. Ten year technological plans are

already prepared in the Engineering Division and this is

referred to in the next section. The overall aim ought be

to develop inter-related financial plans for one, three,

five and ten years.

With regard to the subject of long term budgeting, we have

observed that there have been increasing demands for

subscriber connections and local and overseas calls in

recent years. The long term financial implications of

this demand need to be assessed. It is likely that greater

demands on the Federal budget will be necessary in the

years to come. In the circumstances, it is very important

that the financial implications of these trends should be

known and that they should be given consideration at

Government level at the earliest possible moment. ,

The planning units within the organization are located in Engineering, Postal and Telecommunications Divisions. We

have not made an examination of the work of each individual

unit, but we believe that consideration could be given to

the establishment of a long term planning unit within the

Australian Post Office, to consolidate the various planning

activities of the Divisions, and provide the necessary

co-ordination of the various planning activities of each Division.

RECOMMENDATION

A detailed review of short and long term budgeting require­

ments should be carried out. This review should consider

the need for integrated planning for one, three, five and ten year periods.

CAPITAL BUDGETING AND PROJECT CONTROL

The Size of the Capital Budget

In the Australian Post Office, capital expenditure in the

Telecommunications Division is high and in the Postal

Division low by comparison. The table below, expressed in

millions of dollars, shows the additions of Telecommunications

and Postal fixed assets for the last three years, and the

forecast figures up to 1975.

Telecommunications Postal

$M $M

1971 3 54 14

1972 407 18

1973 472 19

1974 528 19

1975 611 24

Source: APO business plan 1973

As can be seen, 96% of additions in 1973 were for Telecommuni­

cations fixed assets and rapid capital growth is expected in

the next two years when Telecommunications additions are

expected to increase by a further $M139. This rate of growth

emphasises the importance of highly sophisticated procedures

for capital budgeting and project control.

Each year, the size of the annual capital budget is determined

at Central Office, after considering such matters as forecast

services demand, technological developments, and the level of

funds likely to be available from Government.

Guidelines for the development of State Budgets and the size

of the capital budget, i.e. total funds likely to be available,

10. 145/75—5

are then laid down and conveyed to the State Directors.

Work on the development of State budgets is then done to

conform to the established guidelines.

We feel that Post Office management is strongly influenced

by the size of the capital budget for the immediate

preceding years, and therefore the level of funds likely

to be made available by Government.

If one accepts the satisfaction of demand as a proper measure of achievement, the Telecommunications Division has

received adequate funds in recent years. However, there

are some indications that funding constraints have resulted

in diseconomies.

Forecasting Methods

The forecasting of Telecommunications and Postal Services

demand is the basis upon which the rate of capital expansion

is first considered.

Much of the forecasting work for Telecommunications is done

in the States. Field surveys are carried out in all regions

in each State on the basis of expected population growth,

and industrial and economic development, etc. Forecasts as

far ahead as 20 years are made at both State offices and at

Central Office. Also in Central Office three year telephone

forecasts are made, using the State information as a base

and also considering national economic and development factors.

A forecasting technique section has recently been established

and is commencing development of economic models as a basis

for forecasting Telecommunication demand. Co-ordination with

various external bodies, mainly universities, is taking

place in this development. However, it is unlikely that the

44

Post Office will feel the benefit of these initiatives

for some years.

The Postal Planning Branches in the States carry out

surveys to assess the changing dispersion of traffic, and

changing shopping habits in communities which indicate

the need for rationalisation in the placement of post

offices. This information is used as a basis for

facilities planning at Central Office. Postal Services do

not carry out long term forecasting but the Division is

currently considering the appointment of consultants to

advise on the subject. There is little reliance on the

Marketing Branch for forecasting information as marketing

is more involved with small services which have little

relevance in terms of basic facilities needed.

Network Development Plans

The Community Telephone Plan produced in 1960 was a long

term plan expressed mainly in technological terms for the

development of the telecommunications network up to 1980.

This plan has been worked on since 1960, and apparently

comparatively little amendment has been necessary. In

working to this plan the rate of development from year to

year is based upon services forecasting information done in

the Telecommunications Division. A newly formed National

Telecommunications Planning Sub-Division is currently

working on the development of a similar long term plan to

cover the period from 1980 to 2000. This is to be entitled

'Telecommunications 20001·

On the basis of the 1960 Community Telephone Plan, moving

ten year network development plans for each telephone district

throughout the country are prepared triennially. A typical

table of contents for such a plan is as follows:

45

Survey of State Development

Survey of the Network

Targets (i.e. telephone demand)

Switching

Junctions Subscribers Plan

Manual Assistant Centres

Numbering

Data Transmissions

Buildings

Central Office has recently requested the preparation of

ten year State plans. These are a consolidation of all

regional plans within each State. Until recently, ten

year plans have not included an assessment of manhours

required to implement the plan, or an assessment of

financial resources required. However, these are now

required to be incorporated in the ten year State plans.

When these more detailed plans are available, the Tele­

communications Division will be in a good position to

develop ten year financial planning, and as indicated in

our section on Long Term Budgeting, this is an important

need.

Three Year Capital Works Programme

The three year capital works programmes are the longest

term capital plans expressed in financial terms. They

are developed in each State on the basis of network develop­

ment plans, telecommunications forecasts, and according to guidelines established by Central Office. They are three

year 'rolling' plans updated yearly, and include a description

of individual projects proposed in each State, and the

46

estimated expenditure involved. The first year of every

three year capital works programme becomes the Post Office

annual capital budget.

The annual capital budget fulfils the functions of:

(a) summarizing projects in regard to which approval in

principle has been made for the work to be done in

the year.

(b) providing a formal document to support the annual

submission for funds appropriation.

(c) providing a basis for control of funds expended on

individual projects.

Approval in principle to the projects concerned is in fact

given by the Director-General on the basis of recommendations

made by Divisional Heads at Central Office. This approval

is given subject to allocation of funds being made, which

.depends upon a Government decision. Acceptance of the

capital budget does not amount to formal approval for work

to go ahead on projects, as there are other means referred

to later of more accurately estimating project costs, and

of obtaining project approval.

Projects which involve new services are included in the

programme on the basis of return on investment studies,

and are the subject of special reports at Central Office

requiring approval by the Director-General. These types

of projects are a small minority.

There are three categories of project built into each

programme. These are major projects expected to continue

into the next financial year or years, small projects

expected to start and finish in the year, and nominal

projects which are not really required until the following

year but are nevertheless included in the programme as a

mechanism to provide flexibility to transfer from one

project to another should there be delays in other projects.

This is done so the work force can be kept productive and

so that the full financial allocation for the year can be

used. The majority of projects included in capital works

programmes are on the basis of earlier decisions regarding

network development, e.g. conversion of exchanges to STD.

Return on investment studies are carried out when the

development as a whole is being considered but not for

individual projects. -

However, decisions on the capacity of plant for project

installations are made substantially on the basis of economic studies of required capacity, after considering capital -

equipment cost including interest, as against the costs of

installation. The provisioning periods at present being

used as a result of these economic studies, are as shown

below. These periods are derived from calculations using

present interest rates, present labour rates, and other cost factors.

Exchange Buildings Racks

Switches

Conduits

Cable (large)

Cable (distributing)

15 years

5 years

2 years

30 to 40 years

5 to 8 years

20 years

These provisioning periods may vary according to a number

of factors, the most important of which are: availability

of the equipment, equipment size modules, and the availability of manpower resources.

48

We have not examined the formulae or values used and cannot

comment on the suitability of the provisioning periods.

Estimating and Project Approval

Project cost estimates are prepared and used to support

requests for authorisation of commencement of project work.

These estimates are done under the major headings of:

Labour, Materials and Incidentals. Standard labour times

are used for all repetitive operations. It would seem

that in some cases standards are established by supervising

engineers in charge of the work being done. This practice

does not seem satisfactory, as economies may not be sought

when engineers responsible for doing a job are also

responsible for setting their own standards. Materials

and incidentals are costed at standard rates for materials

ex store, and at purchase cost for direct supply items.

The estimates include an administration loading.

Authorities for Project Expenditures

The Director-General has authority for the approval of capital

expenditure projects, provided the expenditure is covered

by the annual capital funding appropriation made by

Government. However, there is a strata of delegations of

this authority given to State personnel from Director down

to Engineer Class II, and also given to Central Office

personnel. This is a very complex arrangement and there is

a need for it to be reviewed and simplified.

The delegations are given effect by the preparation and

processing of principal project summaries and estimates

for engineering works. These forms require a large number

of signatures for project recommendations of costs,

engineering specifications, and confirmation of funds

availability. The principal project summary requires the

signature of eight personnel, and the estimate for

engineering works requires the signature of seven personnel.

There is a need to review and justify the need for this

requirement.

Cost Recording and Control

Detailed costing of projects is done in accordance with the

procedures laid down in a Works Procedure and Cost Accounts

Instruction Manual.

Labour and detailed material and incidental costings are

posted to a card record and also details of funds allocated

to the project and estimated costs.

The Costing Officer within the Administration Branch of the

Engineering Division in each State, is required to carry

out particular cost reporting and control functions.

Fortnightly, the summary of manhours expended on major works

is reported to the Engineering Superintendent and engineers

in charge of each project. Each month, the costing Officer

must also examine the project costs and report to project

engineers, when 80% of estimated costs have been incurred.

Engineers are expected to review the situation and determine

whether projects will be completed within a margin of 10% of estimated costs.

If it is considered that this cannot be done, then engineers

must prepare amended project proposals to be considered at

the appropriate level, for the authorization of the additional

expenditure. This procedure is also followed when costs are expected to be less than estimated.

50

Material issues are costed in detail, and when material issues

are made substantially in excess of those estimated, the

Costing Officer must report this to the Superintendent

Engineer, and if satisfactory explanations are not forth­

coming, must then report to the Assistant Director.

On completion of work, procedures of reporting the total

costs of jobs are carried out. A summary of the jobs

completed each month making comparisons of actual and

estimated costs, is prepared and forwarded to the Assistant

Director.

As funds are not available for costs incurred in excess of

estimates, cost variances for reasons other than higher labour rates or materials prices, must be covered by other projects

which are completed at less than estimated cost. It must be

assumed that in years where it is not possible to compensate

over-costings with under-costings, the rate of progress of

work is not achieved, i.e. the excess cost is in effect

moved forward to the next financial year.

Costs which are incurred in excess of estimates, for reasons

of higher labour rates and material prices, are covered by

a special provision made in the Central Office budget. The

excess funds are allocated to the States by Central Office

during the year as required, and State budgets adjusted

accordingly.

An examination of the costs of jobs completed in Victoria

during the month of July 1973 indicated that approximately

22% were more than 10% in excess of estimates. This seems

high in view of the fact that most of the work was of a

repetitive nature, where accurate estimating and cost control should be possible.

5]

Overall progress of the Capital Works Programme in terms

of costs incurred compared with budget, and funds available

is reported to State Directors by Chief Accountants in each.

State, and to Engineering Division and the Director-General

at Central Office by the Management Services Division.

These reports take the form of total·expenditure by each

plant category, month and progressive for the year, compared

with budget for the year. These are detailed reports which

express costs only. The rate of progress of the Capital

Works Programme (in terms of physical achievements) is not

portrayed. The evaluation of the overall achievements in

relation to the programme as a whole, is difficult using

the present system, and improvements are needed.

Project Rate of Work

Progress reporting of the timing of project work (as distinct

from costs), is done by Engineering personnel within the

Engineering Division. This function is not laid down as a

responsibility of the costing officers, although these

officers do receive statistical reports of physical

installations, e.g. number of lines installed, and if

requested can make estimates of percentages of projects

completed.

Detailed programming and progress control of particular

projects is done within the Engineering Division. Assistant

Directors receive reports of dates of completion of projects,

compared with scheduled dates. Superintendent Engineers

are responsible for watching the progress of jobs, and time

charting methods are used to plot such progress.

It has been said that generally jobs tend to run behind

time, and that there are a variety of reasons that can

cause delays, e.g. supply of materials, buildings not

ready, etc. It has been stated that programmes are

established on a somewhat optimistic basis, so that

although projects tend to run behind time the actual

results do conform fairly closely to the requirements

to keep telephone demand within control. When projects

are delayed, there is sufficient flexibility in the

Capital Works Programme to enable staff to be allocated

to other work.

Economic Evaluation of Projects

The Economic Policy and Financial Analysis Section of the

Management Services Division at Central Office is responsible

for return on investment studies. Studies are carried out

for all new services proposed and all new equipment of

significant value, i.e. equipment not used before or as

substitute for other equipment for cost reduction reasons.

Individual economic studies on every individual project

within the Capital Works Programme are not done, because

those projects are in fact extensions of the network, and

follow from a basic policy decision made earlier. As

previously stated, the question of optimum capacity of equip­

ment such as telephone exchanges has been studied, and

instructions have been issued to the Engineering Division

as to how to calculate the most economic capacity of each

expansion stage.

A wide range of matters has been studied by the Economic Policy and Financial Analysis Section in recent years.

These include, for example, the point in time when old

exchanges should be replaced, the minimum size manual

exchange which is economic to be converted to automatic,

lease or buy studies. The Branch has also studied other

matters not concerned with equipment purchase and installa­

tion, such as material supply and stockholding.

CQMMENTARY

Effective capital expenditure management for a large

organization such as the Australian Post Office, requires

the use of at least the following techniques.

1. Long range plans and projections for future development

2. Middle range and short range specifications relating

to technological development.

3. Mid term and short term budgeting of funds requirements.

4. The evaluation of the economic worth of expansion

programmes.

5. Economic evaluation of proposed new services.

6. Good methods of cost estimation of individual projects.

7. Expenditure and productivity controls and reports.

8. Penetrating post audits of completed projects.

9. Economic study of facilities nearing the end of their useful life.

10. Forms and procedures to ensure good operation of the system.

Although we have not been able to make a penetrating

examination of techniques used by the APO, we consider those

enumerated above are represented in varying degrees, in the systems used.

The techniques of long range planning and forecasting,

specification of network development plans, and budgeting

of short and mid term fund requirements seems satisfactory

and are being developed. We consider, however, that there

are certain anomalies with regard to the way in which

decisions are taken regarding both the agreement of network

development plans, and the individual projects which follow.

54

The present arrangement is that once regional network

development plans have been agreed by Central Office,

State Directors have the authority to approve individual

projects related to that programme. However, there is

no evaluation of the economic worth of the particular

network development programmes concerned in each expansion

phase of regional development. This could be overcome by

incorporating within each network development plan,

inclusion of estimated investment requirements, and an

evaluation of the resources required. Using statistics of

forecast services demand, which are already available, the

potential profitability of each expansion phase could be

assessed in incremental terms in order to assess its potential

contribution to APO profits.

Partly because of the monopoly situation, there is not

a strong motivation for capital expenditure works to be

implemented at lowest possible cost.

As the Engineering Divisions within each State carry out

capital expenditure projects which are very largely

repetitive both with regard to labour operations, and

complete jobs, it is possible that standard cost techniques

could be used for cost control purposes as well as for

estimating purposes. The situation is not dissimilar to

repetitive production operations, which lend themselves

to standard cost controls.

Using standard costing methods, it would be possible to

produce periodic reports showing labour rate and usage

variances, material rate and usage variances, and overhead

recoveries.

Information is not readily available to us, to be able to assess the extent of projects completed in excess of

estimated costs, and both the extent and reasons for

completion times not being met. We feel, however, that

project progress reporting and control methods could be

improved. Particularly with regard to large projects,

we consider that it is important that the costing officers

and engineers work more closely together to develop

estimates to complete, in order to be in a better position

to avoid cost overruns.

As referred to earlier, a complex arrangement of delegated

authority exists for the approval of individual projects.

This arrangement needs evaluation and simplification, as

well as a reduction in the number of personnel required to

sign the project proposal forms.

The Director-General currently has authority to approve

projects of all kinds and values, as long as funds are

available, from Government sources. We consider that it would

be more appropriate for the largest projects (say those .

above $500,000) to be submitted to a more senior level for approval. Under present organizational arrangements,

this level would be the Postmaster-General's office. Ir.

a commercial organization it would be the Board of Directors.

Post audits of completed projects are carried out at present

to some extent but we consider that a more penetrating

examination is required. The main reason for this is to

gain knowledge to aid with future projects of similar

kind, and to develop information about the pattern of

error associated with different project originators, and to

assign responsibility for mistakes and mismanagement in

project implementation. It is probable that computer

methods of classification of reasons for over-cost situations,

project delays, and physical aspects of projects not in

accordance with original expectations, would be necessary.

56

RECOMMENDATIONS

1. Economic evaluation of phases of regional network

development programmes should be made. The

investment requirements of each programme should

also be assessed, and used as a basis for measuring

the cost of individual projects related to

programmes.

2. Better procedures for making interim assessments

of work necessary to complete projects in progress,

should be made and appropriate reports prepared for

Engineering Management.

3. Better methods of reporting to senior management at

States and Central Office should be developed to

provide an overall evaluation of the progress of

capital programmes, with regard to cost, productivity

and funds available and utilized.

4. Delegated authorities for approval of individual

projects should be reviewed, and the largest projects

should be submitted to a Board or similar authority

for approval.

5. Improved post-audit techniques for major projects

should be installed.

6. The concept of using standard costing techniques for

project control, and reporting, should be further

investigated.

7. The pre-eminent position of revenue over non-revenue

earning projects ought be reviewed to establish

causes and effects and to recommend appropriate

solutions.

57

MANAGEMENT REPORTING AND CONTROL

INTRODUCTION

The responsibility accounting system is the main data source

for the preparation of management reports for use throughout

the organisation. Within this system the costs of operating

divisions, branches and sections within the A.P.O. are

recorded.

Financial information from the responsibility accounting

system, with budget comparisons, is produced for the

responsibility centres in all states and Central Office.

In addition, a considerable volume of data is produced in

the Telecommunications, Postal and Engineering Divisions for

the use of senior management and in particular, the State

Directors and Director-General. .

Present reporting procedures provide information on cash

expenditure and on costed expenditure. Financial reports

do not include expenses and income accruals. Interim

profit or loss for the A.P.O. as a whole are not produced,

but contribution reports are produced in some states.

Reporting at State Level

All officers responsible for expenditures receive cash

and costed expenditure reports monthly. Cash expenditure

report classifications are labour, materials and

incidentals. (Incidentals include hire of equipment,

contract work payments, repairs to plant, minor materials

issued, etc.) Costed expenditure includes costings of

work done by the Engineering Department, Workshop and Transport branches .

Although the system used in all States necessitates a

standard procedure to be adopted regarding reporting of

costs of individual responsibility centres, the reporting

of financial results to each State Director and other senior

managers is not closely defined and is open to individual

interpretations within each State.

At Victorian Office four monthly reports are produced.

These are:

(a) A statement of revenue receipts under each of six

main headings, for the month and year to date,

with budgeted year to date comparisons.

(b) A statement of operating and material purchasing

cash expenditure.

(c) A statement of costed expenditure under main

capital equipment headings, showing expenditure for

the month, and the available balance of the annual

funds allocated for each item.

(d) A Post Office Trust Fund liquidity statement,

showing a summary of the income and expenditure

totals making up the balance.

In addition to the above reports a comparative statement

of earnings and working expenditure is prepared every three

months.

This is in effect a quarterly profit contribution statement

but it does not include an allocation of Central Office

administration costs. The report is prepared using estimates

of accruals at the end of each quarter, which are not

- 59 -

10345/75— 6

represented within the accounting system. Accrual

accounting is operated only at year end when the

commercial accounts are to be prepared. The statement

described above is therefore an estimate only of results

for the three months concerned.

As well as financial reports, the Director in each State

receives a series of reports (again according to individual

State interpretations of need) from the Engineering Division,

Telecommunications Division and Postal Division. These are

similar to a group of reports prepared by each of these

Divisions for the Director-General at Central Office.

Reporting at Central Office ·

Using the same responsibility accounting system, cash and

costed expenditure reports are prepared for responsibility

centres in each Division.

The Accounting and Finance Branch prepares reports for the

Director-General's Committee each month, on the basis of

monthly information provided by each State according to

the requirements laid down by Central Office. The reports

are issued to the Director-General's Committee and include

a narrative by the FADG Management Services. They include

a large amount of financial data and graphical presentation

on income, operations cash and costed expenditure, capital

expenditure, debtors accounts, broadcasting and television

receipts, broadcasting and television expenditure, stock

accounts by State and in total, with analysis of receipts

and issues, staff statistics, and some other matters.

This report usually runs to about twenty pages.

60

In addition, reports are received from the Telecommunications

Division, Postal Division and Engineering Division.

The Telecommunications report includes a graphical

presentation of services demand, cancellations, unsatisfied

demand, and services activity levels.

The Postal Division report is in mainly a narrative form,

with main headings of business trends, services and service

performance, cost reduction and operations improvements,

organisation, staffing, industrial activities and engineering

activities. There is also a statistical report giving

details for each mail exchange, of ‘leave over' mail for

the prior three months with previous year comparisons.

The Engineering Division report is devoted to the progress

of the Engineering Construction Programme and is predominantly

in statistical and graphical form.

In all, there are up to seventy pages of information provided

by the four divisions as described above.

The above reports do not include information on the progress

of trading results, i.e. profits or losses during the year.

We understand that it is a policy that the Director-General's

full committee should not receive such reports and they are

therefore dealt with directly between the FADG Management

Services and the Director-General. We understand further­

more, that the reports are not formally designed and are

therefore on an ad hoc basis. This situation is a further

indication of the lack of orientation towards commercial

goals and profit objectives.

61

COMMENTARY

The management reporting procedures used in the A.P.O. at

present require improvement to give better control over

efficiency and to provide a more satisfactory means of

monitoring performance and measuring progress towards

commercial goals. The main faults are:

(a) The reports do not give an interpretation of

whether key responsibilities of personnel at

various levels are being fulfilled.

This illustrates that there is a need to review

and define the key performance factors .regarding

each position and to develop a means of

measurement. This could be done for example, by

the use of concepts of profit contributions, cost

ratios, activity achievement levels, and service

performance ratios.

(b) Accrual accounting principles are not used within

the accounting systems for interim reporting

purposes.

Failure to use accrual accounting principles in

the accounting records and as a means of

developing interim management reports, is a

disadvantage which needs to be overcome before

accurate profit reports can be produced. We

see no reason why the accrual accounting concepts cannot be introduced to the accounting systems,

particularly as since 1968 the A. P. 0. has been

free of the previous close control exercised by

Treasury over the finance of the A. P. 0. and which

necessitated facility to report in detail on cash

expenditure, as compared with estimates.

62

(c) There is a lack of conformity in the interpretation

of the senior management information requirements in

each State.

This situation partly conforms with the present

policy of delegation of management reporting

responsibility to the State Chief Accountants.

However, we consider that the Management Services

Division at Central Office should fulfill a

stronger role in the control of management

information reporting systems at each State.

We believe that it is important to operate standard

procedures in this area.

(d) A large amount of detailed information is provided

for senior management and in particular, the

Director-General.

We consider that a large amount of the information

at present provided is unnecessary. An example

is that the Director-General receives details each

month of the main stores issues in each State

for each of the last twelve months. (Other

examples could be given).

It is very likely that the present situation is largely a

result of an absence of clear financial objectives. We

have made recommendations on this in another section

and we consider that as a next stage it is important that

financial objectives be also established for the operations of each State.

In doing this, the concepts of accountability for revenues

will need close investigation.

Concepts of Control

There exists in the A.P.O. at present a resistance to the

concept that revenue is in fact controllable. Major emphasis

is directed to the control of both capital and operating

expenditures. Revenue variances are, if possible, compen­

sated for by favourable variances (perhaps in other

States) or on some occasions they may be put forward as

reasons for additional appropriations by Government.

It is difficult to accept that management action cannot be

taken at State level to influence revenue levels. Further

investigation would be needed to decide to what level in

the organization the concept of net revenue accountability

could be applied. In postal services, it is likely that

it could be applied to postal districts and also main

post offices.

This would mean that net revenue contribution targets

would be set each year, being the result of the setting

off of forecast receipts against local controllable expendi­ ture. Views have been put forward against the use of this

concept on the grounds that often transfer of business

from one post office to another by a major customer can

cause a very significant drop in income received.

However, we look upon this as a reason for explaining

a budget variance rather than a reason for not accepting

the concept at all. It is accepted that a profit concept

by post offices cannot be used as income is paid in advance

for a variety of activities which take place away from the

receiving office. However, contributions on revenues

received would appear to be an acceptable alternative.

We have in fact found the use of this concept of control by

a District Postal Inspector in controlling operations of

64

particular suburban post offices. This, however, was

informal, i.e. it was an individual's interpretation of

his own control requirements in his particular area.

With regard to mail exchanges, we consider that control

should be on the basis of work measurement studies and

that standards should be developed and used for labour control.

This is in fact in the course of development but we

consider that the rate of development should be

accelerated. The Canadian Post Office is a good

reference on this subject.

Telecommunications operations would probably be best

controlled at lower levels by the use of cost ratios and

service performance ratios. The net revenue concept

could also be applied, but would not be satisfactory

at the level of District Telephone Managers.

Reporting at State Level

The level of State Director is a most critical organizational

level in the A.P.O. for effective reporting to operate.

The content of reports would require depth study and

agreement of the concepts of accountability and control.

However, for the moment we suggest that reports could be

produced, showing the following information:

1. Value of net revenue contribution and percentage

return on net assets employed - compared with budget.

2. Capital budget cost variances compared with estimates,

and a measure to indicate the progress of capital

works. (Determination of a suitable measure for the

latter would require particular investigation. This

measure would indicate the control over the time

element in construction work, as distinct from

the costs).

3. Service performance ratios, i.e. ratios to indicate

the level of service provided as compared with

the budget standard, e.g. for telephone demand,

leave over mail, fault corrections, etc.

The above is in conformity with our view of State Directors

key responsibilities, i.e. achievement of profits,

construction of facilities and provision of service. We

wish to emphasise that we do not accept that the control

of expenditure within the parameters of available funds

should be a key responsibility of State Directors -

although this is the case at the moment. Funds control

is a matter of financial management - and the responsibility

for this should be located at Central Office, with suitable

delegations to State Accountants.

Control Using Cost Ratios, etc.

The methods of management control used in the British Post

Office have been briefly studied by us and they contain

elements which incorporate some of the views on control

which we have expressed above.

In the British Post Office a large range of cost ratios

are developed from budget information and are used as

measures of control in the various regions throughout the

country during the year. A sophisticated data collection

system is in use and interim reports for all regions

throughout the country are produced expressed in terms

of these cost ratios. There is much less emphasis on cash

66

management at regional levels and targets are expressed

mainly in terms of these cost ratios. Some examples are:

Responsibility Area Cost Ratio

Plant maintenance Field costs per £100 of revenue

Telephone operator services Cost per £100 of telephone revenue

Training schools Cost per employee

Staff administration Cost per employee

Accounting Cost per telephone station

(Source: British Post Office monthly performance results

March 197 2) .

In addition to the cost ratios, another feature of the

B.P.O. budget is the identification of planned productivity

improvements and cost savings they are expected to yield.

To control the achievement of the planned productivity

savings in the budgets, a system of telecommunications

improvement plans is in operation. Reports are produced

to monitor performance in achievement of these plans.

The report produced within the A.P.O. in 1972 following a

visit to the United Kingdom and an examination of the

British system, incorporated the following comment and

the advantages referred to are also desirable in the A.P.O.:

"It involves a great amount of work and some aspects of it are

criticised internally. However, all levels agree that it

has in practice been powerfully effective. The reasons for this are:

- there has been skilful integration of financial

and physical control factors

67

- at area and regional level, people manage

primarily by quantitative tools, things that

are meaningful; if they adhere to their ratios

etc., the money will be provided

- the process of agreeing the cost ratios, etc. involves the organization at all levels

line to line, line to staff, staff to

staff, with the area managers and then the

regional directors personally accountable

- there is a process of reviewing performance

somewhat along the same lines

- the system and performance to agreed

commitment is regarded as crucial from

managing director downwards and people are

under great pressure.to perform."

We have reservations about the adequacy of the management reporting procedures in use at the present time within

the A.P.O. The indications are that wide ranging changes

in the systems and concepts of control are needed. We

wish to emphasise that the need for development of the

management reporting and control systems is recognised by A.P.O. management. Consequently, a new section has

been established within the Management Services Division

at Central Office to carry out a review, and this is to

commence very soon.

On the basis of the conclusions expressed, we make the

following recommendations:

68

RECOMMENDATIONS

1. Accrual accounting procedures should be used in the

A.P.O. accountancy systems for interim reporting on

operations and profit performance.

2. A major review of the management control concepts to

be applied should be made.

This will necessitate a review of key responsibilities

of management personnel and a clarification of

suitable measures of assessing performance. In

particular, the concept of net revenue contribution

and return on net assets should be investigated for

application to State operations. The use of cost

ratios and service performance ratios should be

considered for use at the lower organizational levels.

3. In conformity with the above, a management reporting

system should be designed and the budgeting system

should be changed accordingly.

4. Monthly reporting procedures for assessing efficiency

of operations and profit performance should be installed.

5. A review of the development of work measurement

techniques should be made, and a system designed for daily and weekly control of mail exchange labour costs.

6. Standard procedures of management reporting should be

operated in all States. The Management Services Division

at Central Office should provide training and should

exercise control, to see that this is done.

- foO -

PRODUCT COSTING AMD TARIFF SETTING

TELECOMMUNICATIONS PRODUCT COSTS

This section on Telecommunications product costs should

be read in conjunction with the section on Postal Services

costing.

The Telecommunications product costing system is being

developed in the framework of planning, programming,

budgeting and control systems (PPBC). The development

of this commenced only two years ago, following the recom­

mendations of an A.P.O. Committee. This Committee had

been formed to advise on the development of systems to

meet management information needs in overall planning,

programming and control of Telecommunications and

Postal Services. The Committee's report was issued in

June 1970.

A special team was established in South Australia, to

develop information and to carry out research to be used

as a basis for the development of a product costing system.

This team works under the direction of the Finance and

Accounting Branch of the Management Services Division at

Central Office.

Product costs produced to date relate to the South

Australian operations. To produce Commonwealth product costs,

procedures are carried out using the data developed from

the South Australian study. No decision has been made

as to whether to extend the studies to other States.

We have been told that most overseas telecommunications authorities do not maintain detailed product costing

systems. In the U.S.A. a system is being developed,

largely to meet the requirements of the Federal Communications

Commission for information on product profitability. The

British Post Office has developed a fully distributed cost

system.

This system is similar to that being developed in the

A.P.O., though there are differences in the structure of

accounts and the bases used for the allocation o. costs

to particular service programmes.

Service Programmes

There are 16 'service programmes' being costed. Service

programmes is a term used within the PPBC system. Some

programmes are in fact individual services and others are

groups of services. The 16 service programmes are as

follows:

Service Programme No. 1

2

3

4

5

6

7

8

9

10

11

12

13 14

15

16

Basic Telephone Facility -

Metropolitan

Basic Telephone Facility - Country

Basic Telephone Facility - Rural

Untimed calls - Metropolitan

Untimed calls - Country and Rural

Trunk calls (including STD) Vertical Services

Private Lines and Networks

(excluding telegraph)

Public telegraph service

Telex services

Telegraph private wire services

Common User Data Network

(CUDN) Service

Other Data Services

Directory Publications

Agency Services and Recoverable Works

National Broadcasting & Television Services

71

Annual Costing

These service programmes are costed annually by distributing

all expenses shown in each annual Profit and Loss Account,

and recorded in more detail within the responsibility

accounting system. Costs are finally allocated to product

groups, according to a large number of bases applied within

the following classifications:

Telecommunications District Operations

Charges ex Post Offices

Accommodation Services

General Administration

Central Office Charges -

Depreciation

Plant Maintenance

Interest

Superannuation

Following the annual allocation of costs over service

programmes, figures for each service provided are calculated

for earnings, expenses, trading result (profit or loss),

and return on investment. Unit costs and income per

service provided are also calculated each year.

Personnel

The costing system is being developed under the supervision

of a Deputy Assistant Director-General in charge of the

Finance and Accounting Branch in the Management Services

Division at Central Office. Significant contributions

are also being made by the Chief Accountant in South

Australia. There is a total staff of 12 engaged on the

development of the system, including field staff working in

South Australia. These personnel include Engineers. There

are, however, no personnel with formal Cost Accountancy

qualifications and in view of the complex problems

involved in Telecommunications costings, this does not

seem appropriate.

COMMENTARY

1. The A.P.O. is uncertain of the suitability of the

present system and a thorough review is warranted.

Work over the last two years has provided a basis of

analysis and research which can be used to great

advantage in the development of product costing. At

this stage, within the A.P.O., there is a feeling that

although the development over the past two years has

been satisfactory, there is a need to evaluate the

situation before proceeding further.

The uncertainty within the A.P.O. regarding the

suitability of the system in use is partly caused

by the fact that the objectives of the system have not

been well defined. Fundamentally, we consider it is

necessary that the system should provide information of

sufficient accuracy and detail to support tariff increase

applications, to assist with estimating costs of proposed

services and to assess the effect of changes of volume

on profitability.

2. The problem of developing a satisfactory product costing

system is a complex one for the reason that Telecommunica­

tions costs are very largely equipment oriented and a

large proportion of plant is common plant, i.e. plant

which does not service particular unique products but

is capable of servicing a variety of products in

accordance with the demands placed upon it.

- 73 -

10345/75— 7

The importance of equipment oriented costs in

Telecommunications and the significance of them

is illustrated by the table shown below. This

lists the 1971/72 expenditure under ten main headings

and shows the percentage of each to total expenditure.

Plant Maintenance, Depreciation, and Interest - all

equipment oriented costs make up nearly 70% of the total.

1 %

Regional and district operations

Post Office charges (for tele-75,536,000 1 3 . 2

communications work done at

Post Offices) 30,012,000 5 . 2

Accommodation Services 19,533,0.00 3 . 4

General Administration 17,064,000 2 . 9

Central Office Charges 12,442,000 2.2

154,587,000 26.9

Plant Maintenance 138,124,000 24.1

Depreciation 135,244,000 23.5

Interest 117,607,000 20.5

Superannuation 21,063,000 3.7

Furlough 7,452,000 1.3

$574,077,000 100.0%

Source. · A.P.O. internal accounting document.

Furthermore, only approximately 45% of these equipment

oriented costs are allocated to service programmes on

bases which we consider to be satisfactory. These costs

are for subscribers equipment. This equipment can be

directly related to particular service programmes, though

even here, there re some difficulties due to the broad

categorization of asset records.

The balance of 55% of equipment oriented costs is common

plant and embraces all equipment in the networks other

than subscribers' equipment. It amounted to an

investment of approximately $1,650,000,000 at

30 June 1972.

Engineering statistics are used as bases for common

equipment allocation at present. For example, 1 number

of circuits' is the statistic used for the allocation

of Ducts and Conduit over 12 service programmes.

'Number of channel ends' is used as the statistic for

allocation of Trunk Carrier Equipment over trunk calls

(including STD), private lines and the telegraph group

SP9 to SP11. A secondary allocation of the telegraph

group is then made, using 'number of telegraph machines' as a basis.

We have suggested that traffic dispersion studies could

be used as an alternative basis for allocation of common

equipment costs. We understand that some work on this

has been done. The use of traffic dispersion data would

enable the development of a concept of charging service

programmes on the basis of time utilization of the network.

It may be satisfactory for some items of common plant,

but not for others.

Many of the asset categories which can be described as

common plant require allocation over as many as 12

service programmes. This indicates a high sensitivity

to variation in costs according to the allocation basis

decided upon, and shows that very careful study and

research is necessary to ensure that the bases used can

be supported on logical and reasonable grounds. If

the basis cannot be supported in such a way, then the

extensive expenditure of time and effort must be

75

questioned as to justification. The use of completely

arbitrary methods or even methods which recognize the

service users' ability to pay may be just as satisfactory

and less expensive to employ.

3. The service programmes at present being used while

defensible in relation to programme costs are not

satisfactory for calculating product costs because

several service programmes are in fact groups of products. Further extension of work is needed so

that unique products may be costed. There are other

faults, for example, STD is not costed as a separate

product but is included with other trunk calls.

4. The present system does not provide for a distinction

to be drawn between direct and indirect costs.

Any future costing development will need to recognize

the important distinction between direct and indirect

costs. This information is required for various

purposes including the estimating of costs of

proposed products to be introduced, and to assess

the effects of changes in volume on profitability.

This aspect of costs is important even though direct

costs are known to be generally low.

5. The present system relies entirely on historical informatioi

No attempt is made to anticipate costs or utilization.

Because Telecommunications product costs are by nature very

largely fixed, the estimation of costs of operating the Telecommunications network one year ahead would not be

difficult. As one of the main requirements of the costing

system is for tariff setting, a basis of costs for a

period of one year ahead would seem more satisfactory than using historical costs alone.

76

6. Existing methods of allocating many costs which are

not equipment oriented are satisfactory. These costs

include Telecommunications Divisional costs (marketing

costs, switchboard operation, etc.). General Administra­

tion costs and Central Office overheads. Sufficient

study of these has been made to isolate those expense

elements which can be logically allocated to

particular programmes, and those expense elements which

can be allocated only in an arbitrary way. We consider

that the methods being used for the logical allocation

of many cost elements could be extended quite simply

to the operations of other States without the need for

similar research to be repeated in those States.

With regard to the small proportion of costs which

are being allocated on arbitrary bases, we consider

that it would be better for these not to be allocated

to service programmes at all.

RECOMMENDATIONS

1. A thorough review of all aspects of the Telecommunications

costing system should be conducted. This review should

be done by senior Telecommunications personnel and

best practices in overseas countries and in other public

utilities should be considered. Advanced costs

accounting skills should be introduced to assist in

this study.

2. Management should consider appointing an expert from

outside the A.P.O. to manage the internal committees'

work during the initial phases, provide technical advice

and to report to management on progress.

77

3. The work of the internal committee should encompass

at least the following:

(a) Identification of the different objectives to

be met by the costing system.

(b) The feasibility of developing product costing

on the basis of estimated costs a year ahead,

rather than on historical costs.

(c) The application of separate costing principles

to equipment oriented costs which are -

(i) relating to equipment dedicated to particular services,

(ii) relating to equipment which is common

equipment.

(d) Conducting traffic dispersion studies to assess

the 1 product1 utilization of some items of

common equipment (such as Trunk Cables).

(e) The extension of fixed assets records, to

conform with the requirements for equipment

analyses by services.

(f) The extension of services to be costed,

beyond present service programmes, to a

level of detail which will enable unique

products to be costed.

(g) The distinction of direct and indirect costs.

78

(h) The treatment of costs which can be allocated

only on an arbitrary basis, as a separate group

not warranting allocation at all.

(i) Establishing a timetable for implementation.

79

POSTAL PRODUCT COSTS

The operations of Postal Services cover four basic types of

activity:

(i) the transmission of mail from a point of origin to

a point of destination,

(ii) the provision of related special services, registered

mail, insured mail, cash on delivery, certified mail,

messenger delivery.

(iii) the provision of other special services such as

philatelic sales of stamps, money order and postal

order sales, and

(iv) the provision of non-postal agency services, such as agency work for Commonwealth Bank, federal tax stamps

and state duty stamps, broadcast and TV licences,

war service home loans, customs, and various services

for other Government Departments.

The provision of postal and various non-postal services to

other Government Departments and agencies are charged as

follows:-

(a) for services which are the same as those available

to ordinary users, (i.e. postal services,) Government

Departments and agencies pay at the same rates as the ordinary consumer.

(b) for other services, of a non-postal nature, Government

Departments and agencies make a reimbursement to the

Post Office of charges which are determined from

information developed through the cost system.

The A.P.O. operates more than 6,700 post offices, 1,300 of

which are classified as official post offices and 5,400

are classified as non-official post offices, with a Mail

Exchange in each capital city. Over 9 million articles of

mail are handled daily from 25,000 collection points to

over 4 million homes and businesses scattered over 3

million square miles. In addition, in excess of

$ml,000 annually in financial transactions are handled at

post office counters.

The complexity of determining the cost of an individual

Postal Service rests with the fact that many services differing in scale and character are produced from common

resources resulting in wide areas of common costs. The

postman, for example, delivers many types of articles -

letters, other articles, registered newspapers and periodicals,

bulk pre-sorted mail, householder delivery mail, registered

post, certified mail, etc. Changes in the volume of one

or another service may alter requirements for postmen, so

will other non-volume factors such as changes in working

conditions (four weeks leave), alterations in service

standards (elimination of second delivery) , changes in

delivery points served, etc. There is no simple relationship

between changes in volume of any one service and the

resources required to produce them.

A fully distributed cost system is used in the A.P.O., and

this is very similar to that widely used in postal

administrations in other parts of the world.

81

Present System

The accounting systems do not record information by

individual services or products. A separate internal cost

apportionment system operates within the Postal Services

Division.

The internal cost apportionment system permits analysis of

the voluminous and widespread operations of postal services

and provides for the distribution of all earnings and

expenses to individual postal services on an annual basis.

The system encompasses a wide range of techniques to test

a variety of common process operations so that earnings

and related costs can be allocated. _

A detailed annual study is made, and this involves a

multitude of steps in allocating the historical costs of

the previous year of each revenue and expense item to ,

the respective classes of mail and special services. The

results are generally not available until some months after

the close of each financial year.

This annual study has been developed from requirements in

prior years to develop cost information for purposes of

setting agency fees and annual charges from Postal Services

to Telecommunications Services, and has not been designed

to provide specific information for tariff purposes.

The study has not been expressed in procedural form or

other documented record of method, and present procedures

are in the form of working papers only.

The particular knowledge and experience necessary to carry

82

out the study is dependent upon a small number of officers

in the Postal Division at Central Office.

The annual distribution of costs is done in two stages:-

(a) The total costs of postal services as shown in the

Annual Profit and Loss Account, are distributed to

four major cost centres (Mail Exchange, Post Office

Branch, and Carriage of Mails (Departmental and

Contractor)), and to 36 functional cost centres

within the major cost centres.

(b) The allocation of costs to individual postal services

based upon data relating to volumes of various types

of postal traffic passing through these functional

cost centres, and the weighting of this traffic to

allow for the relative complexity of handling traffic

through functional cost centres.

The major area of difficulty is in the data collection

information required to identify the extent to which

individual postal services flow through all or only some

of these cost centres and the weighting which should be

given to these individual postal services in order to

allocate an appropriate element of total costs to that particular service.

Letters and other articles are the largest separately priced

service handled through numerous common processes and based

on experience, these articles (excluding bulk pre-sorted)

are generally weighted one to two in dividing up processing time and cost.

Recognition of the pre-sorting and other preparatory work

83

performed by bulk mailers has been given in the case of

those services where such work is mandatory.

The measurement of various types of postal traffic passing

through function cost centres is carried out using a number

of sampling and statistical techniques.

Some data is obtained from existing statistical sources,

e.g. analysis of mail posted at post offices by tariff item

is obtained from Statistical Returns - IB39 - "Statement

of Business Transacted at Official Post Offices" and IB 37

"Statement of Business Transacted at Non-Official Post Offices.

Other data is obtained from surveys which are somewhat out

of date, e.g. the allocation of departmental transport costs

is made on the basis of data contained in a routine duty

review, carried out in 1967/68. Airmail costs are allocated

on the basis of an air mail survey carried out in 1970. .

Labour costs comprise 70% of total postal costs and the

present labour recording techniques based on individual

postal officers recording their own activities for selected

periods of time, without a great degree of supervision, does

not provide a high degree of reliability.

Mail Exchange costs. Post Offices official and non-official

operating costs are further classified by function or

process on the basis of periodic cost studies at official

post offices, units earned at non-official post offices,

and recorded manhours at Mail Exchanges. At some Mail

Exchanges, it is possible to directly classify and allocate

a number of costs directly to functions.

84

Departmental transport costs are classified to function

in accordance with routine duty reviews, the costs of

these functions are in turn distributed on the basis of

relative weight of traffic transported in the case of

letter receiver clearances and parcels delivered, and on

the basis of weight carried in the case of inter-office

transport.

Current Developments

The need has been recognised for the development of a cost

ascertainment system and a small cost ascertainment section

has been established at Central Office. The duties of this

section include:-

(a) a review and refinement of the bases whereby costs

are allocated to the four major cost centres and 36

cost elements of the present system.

(b) a review of better bases of selection of data and use

of better techniques to collect information on

activities at official post offices.

(c) a new study into non-official mail work costs at non­

official offices.

(d) deeper analysis of reported data by Mail Exchange

Branch in areas of parcels, customs, bulk postage,

counter, face up and post marking, registration, coding, travelling post offices, etc.

Current plans are to build up the knowledge and experience

of this group over a period of the next two years.

85

There is also a possibility that a senior officer from

the Commercial Branch of the Postal Division could visit

Sweden in the near future to study data collection methods,

and that on his return this experience and knowledge be

applied to further developing data collection methods in

Australia.

Because data collection methods are fundamental to the

successful operation of an acceptable cost ascertainment

system, it is also planned during this development

period to enlarge the cost ascertainment group by

(a) the appointment of field officers, to be located

in each of the States, where the data is. gathered.

(b) the provision of staff to handle the processing of

the survey data.

Overseas Systems

The Australian Post Office is aware of the developments

which have been taking place in the United States Postal

Service to develop a system with ' long run incremental cost' as the basis.

This system involves the application r f complex econometric

methods such as multiple regression techniques and cross­

sectional analysis, as well as the refinement of past data

and the introduction of new data collections.

Extensive studies have been conducted to identify the major

causes for changes in costs and highly sophisticated

mathematical techniques are under development to this end.

The indications are that advanced skills and expertise are

86

necessary to develop and master these techniques and it is

understood that the United States Postal Service does not

expect to obtain results from these studies for some time.

The Australian Post Office has taken the view that they

are better advised to await the results of the present

activities in the United States before finally concluding on

the most suitable system for Australia.

In 1964, the International Bureau of Universal Postal

Unions issued a collection of postal studies, one of which,

entitled "Ascertainment of Cost Prices from Postal Services"

involved a study of the postal services in many countries

of the world. The most developed systems at that time were

those of the Swedish Post Office. In the short term, the

Australian Post Office is developing its postal services

costing system along the lines developed by Sweden.

The Swedish approach involves extensive sampling, consider­

able efforts in the analysis and understanding of costs to

identify direct variable, direct fixed and indirect costs,

from extensive studies of operating costs applied on a

judgement basis rather than extensive use of mathematics

which is the basis of the American approach.

Sweden is using the classical techniques of work study,

activity sampling, and cost analysis. The Australian Post

Office is following the same approach, and at present is

seeking a better analysis of direct costs.

The present activities are limited by the number of surveys

which can be run in the field and the need for additional

resources and survey skills and cost accounting expertise.

87

COMMENTARY

1. The fully distributed cost basis has served adequately

in determining commission charges for agency work

performed for other Government Departments and

Instrumentalities and charges to the Telecommunications

Service. The functional cost information yielded has

been valuable to operational management and for

planning purposes. However, the system has limitations

when it comes to providing costs by classes of service.

A major difficulty in the allocation of costs to

individual Postal Services is the development of

appropriate criteria for apportionment.

The problem of ascertaining cost and revenue by

service category is not unique to postal administrations

and in fact applies equally to service organizations

throughout the world. There are difficulties in using

normal cost accounting methods (including the costs of

such approach) for service costing. Generally

sampling techniques may be used provided that the

sampling methods are mathematically sound and

statistically accurate. The need to pursue a course

of development of the cost apportionment system is

recognized within the A.P.O.

2. There is a need to define clear objectives for the

cost ascertainment system. In our view, these

objectives would include provision of:

(a) revenue and cost data for individual classes

of mails and services for the purpose of setting tariffs.

8 8

(b) a means whereby new services can be costed

accurately.

(c) a means whereby the effect on individual

services of any proposed wage increase can be

calculated.

(d) information enabling the effect of changes in

volume, on profitability to be assessed.

There is a need to design, test and implement a programme

to fulfill such objectives.

3. The fully allocated cost concept underlying the

present method is appropriate to postal services,

and the technique used to allocate annual costs to the four major cost centres and 36 cost classifications

have been developed to a reasonable stage.

Inherent in the fully distributed cost basis is the

concept that fixed costs should be shared between

the various Postal Services. Generally, such costs

as overheads have been distributed on the basis of

operating labour costs.

The fully distributed cost basis has been criticized

by some user groups who have advocated that the only

costs which should be charged against their particular

services are those which are directly identifiable

as variable costs and should exclude any part of fixed

costs. The basis of this argument is the contention

that the primary function of the Postal Service is

to deliver letters and that all other functions are incidental.

- 89 -

10345/75— 8

This contention is not supported by facts, which

indicate that historically and at present, items

other than letters are always prominent in postal

business and in total currently account for 20%

of the mail handled, some 25% of mail earnings

and some 35% of total mail costs.

The basic issue is one of recognizing that since

joint products or services are produced simultaneously,

there arises the problem of determining how much cost

applies to each service. The problem of allocating

costs to joint products or joint services is

essentially a matter of identifying and establishing

by study and analysis the most equitable method

available.

4. Much greater information is necessary to determine

various types of postal traffic passing through cost

centres, and to determine the relative complexity

of handling different types of mail through mail

centres.

The system tends to develop cost data in broad

averages and is unduly complex for the results obtained.

Individual judgement is used to a great extent for

determining certain significant allocation bases.

5. The cost ascertainment system should be developed to

fulfill long range planning requirements.

Since all costs and revenues are included, historical

information can be readily provided for budget

preparation and trends in costs, revenues and mail

volumes can be used to prepare long range forecasts.

90

The effect of changes in service mix or in rates

for unit costs over a period can be evaluated.

Anticipated increases in capital expenditure for

mail handling equipment in more post offices may

be checked for economic feasibility.

The total distributed expenses for the 1972 year

of $m224.6 were distributed to the Mail Exchange

Branch, the Post Office Branch and Carriage of

Mail - (Contractors and Departmental) on bases

as follows:

$M %

Direct through responsibility

accounting system 164.032 73.0

Allocated on logical bases 41.702 18.5

Allocated on arbitrary bases 18.883 8.5

Source: A.P.O. Postal Finance Report 1971/72.

In our review of the bases described as arbitrary,

we were generally satisfied that an equitable distri­

bution of these costs has been made.

However, in view of the comments we have already

made regarding the present annual cost apportionment

study, we are not able to express a confident view

regarding the operating results for individual

postal services.

91

We consider the general principles used are

sound. Our major reservations relate to the

quality of the data used to measure the extent

and volume of postal services passing through

each functional cost centre.

7. There is a need to set up a properly designed

programme of surveys and data collection activities

to replace the present ad hoc type studies.

The present level of activities relating to the

development of a cost ascertainment system for the

costing of individual postal services are

conducted at a relatively low scale, and there

is a need to apply greater resources and efforts

to the task in order to achieve the necessary

outputs of management information to an acceptable

period of time. .

8. There is a need for greater co-ordination of

efforts in this area of data collection, and there

would seem to be considerable scope for developing

a larger data base of Postal statistics and

survey information so that this information can

be drawn off for a variety of user departments.

Furthermore, in the conduct of surveys in Post

Offices where a major limitation arises because

of disruptions to Post Office operations, less

frequent but more comprehensive surveys could be

conducted on a regular basis so that a number

of user needs for statistics can be met, including

the needs of the cost ascertainment systems.

92

RECOMMENDATIONS

1. A thorough review of all aspects of Postal Services

costing should be conducted.

2. The review should be conducted by senior Postal

Services personnel and should consider best

practices in overseas countries and in other

public utilities.

3. Management should consider appointing an expert

from outside the A.P.O. to manage the internal

committees' work during the initial phases,

provide technical advice and to report to

management on progress.

4. The review should encompass at least the following

(a) definition of objectives and information

output requirements of a cost ascertainment

system.

(b) study of the purposes of information contained

in the present Postal statistical systems and

data collection methods currently in use.

(c) design of a cost ascertainment system and devel­

opment of the required data base.

(d) specification of the required programme of

data collection surveys and activities.

93

(e) the distinction of direct and indirect costs.

(f) establishment of a timetable to implement new systems.

TARIFF SETTING

COMMENTARY AND RECOMMENDATIONS

Tariff recommendations are made by A.P.O. management, in

accordance with known cost information, with a view to

raising sufficient funds for operations and capital

expenditure. The adjustment of tariff rates appears to

be largely used as a means of generating funds, with

insufficient emphasis being given to the establishment of

a structure of tariffs on the basis of sound principles

and policies, and in accordance with overall profit

objectives. This situation is not surprising in view of

the fact that objectives and policies are not clear and

because of the involvement of politicians and sectors of

society with vested interests in low tariffs.

If the A.P.O. is to be managed as a business, it is

desirable to remove the authority for tariff changes from

Parliament. It is also important to produce a clear and

•detailed definition of tariff policy and ensure that there

are sound services costing systems in operation. Only

in these circumstances will the A.P.O. be in a position

to exercise authority appropriate to its business nature

and to logically support its actions in the field of

tariff changes.

The adoption of sound principles in relation to tariffs

requires:

clearly defined tariff policies

knowledge of costs and clearly defined

cost systems

. clear working procedures for the collection

of cost and other data.

. the capacity to interpret information and

make appropriate recommendations

. a well informed senior management to assess

tariff recommendations prepared internally

by specialist staff.

Clearly defined tariff policies

Because many of the services provided by the A.P.O.

contribute significantly to the overall national interest,

it is impossible to divorce completely the tariff

policies of the A.P.O. from national political and social

considerations. It is desirable however, that national

policies be expressed and incorporated by government into

objectives set from time to time for the A.P.O.'s operation.

In addition to documenting the social objectives which

may not inevitably be met by the application of business

principles to tariff setting, government ought to

document all its objectives for the A.P.O. for the guidance

of management. This guidance is required generally for

the effective management of the organization and in

particular for effective and consistent tariff setting.

Documentation of social and business objectives should

minimise ad hoc political involvement in rate setting

and should assist in developing tariff setting principles.

In addition to overall government policies and objectives

referred to above, it is important that clear and

detailed policies for the pricing of individual services

should be developed for the use of A.P.O. management. We

96

consider that the Postmaster-General should appoint

an external committee to advise him on tariff policy

so that as a consequence the basis for A.P.O. tariff

assessment can be settled once and for all.

Such an external Tariff Policy Committee should

comprise three well qualified people e.g. a person with

expertise in pricing theory, a businessman from a large

company who is accustomed to using complex cost data in

arriving at competitive pricing decisions, and an

accountant experienced in cost accounting and accustomed

to assisting clients in establishing business policy and

making pricing decisions. On the basis of detailed

policy definition by the Postmaster-General, A.P.O.

management should work to this, develop cost systems and

make tariff change recommendations to the Minister.

Knowledge of costs and clearly defined cost systems

In the chapters of this report dealing with product costs

we recommend that two internal committees be established

to plan, develop and implement improved costing systems.

Each committee would require clear definition of the

purposes for which Postal or Telecommunications services

costs will be used. In so far as tariffs depend upon

good cost information, the committees will need explicit

terms of reference. These will need to emanate from

management, and would be developed to conform to the

policy requirements.

The committees would need to be well advised. Because

of the complexity of the problems of service costing,

management should appoint an independent specialist to

97

assist the committees in the initial problem

definition and systems planning phases.

Such a person could;

. Direct the two committees in their work.

. Provide technical assistance as required, and

. Report regularly to management on progress

of the committees.

At the completion of the systems planning phase

management may consult with the Policy Committee of three

to ensure that the requirements originally specified will

be satisfactorily provided for. We consider that the

appointment*of a specialist as suggested above, would be

essential to ensure appropriate cost system development

because of the complexity of the problems in this area.

Clear working procedures for the collection of cost and

other data

Having established the overall systems requirements for

cost and other relevant data the A.P.O. would need to

document working procedures and design appropriate forms,

computer programs and the like. This work should be done

internally within the A.P.O. and be subject to periodic review.

This also would be an important phase as the development

of processes of data collection would require careful

management and the coordination of efforts of several

divisions. Staff training would be an important Requirement.

The capacity to interpret information and make recommendations

Recommended tariff changes will most likely be developed

by personnel not directly connected with the development,

installation and maintenance of costing and associated

systems.

Because of this dichotomy it will be necessary for all

personnel connected with tariff setting to be well

informed on all relevant cost systems and on the availability

of data.

In the longer term those who are concerned with long term

financial planning and tariff calculations should dictate

the requirements of the costing system in relation to

tariffs.

A well informed management to assess internally compiled

tariff recommendations

Tariff recommendations made to management from time to

time will be both for immediate implementation, and for

use in long term financial plans. In each case management

will need to be skilled in assessing recommendations.

This is particularly important in view of the interest

shown in tariffs by the public generally, interested groups

and Parliament.

In this regard the Commission may wish to consider the

value of the A.P.O. retaining the services of the Tariff

Policy Committee suggested earlier. The involvement of an

external group with specialities in the different fields

as described earlier, should help to ensure that decisions

are fairly made against a background of business requirements

and national responsibilities. It would appear to us

to be in the interest of all parties - management,

government and people, that such a group be utilised.

100

REPORTING TO OUTSIDERS

'

PUBLISHED ACCOUNTS AND STATISTICS

The APO has a st_Lutory requirement to make public reports

on its finances in accordance with the Post and Telegraph

Act (No. 2) 1968.

Section 96L requires that an annual report on the operations

of the APO together with supporting financial statements

duly audited by the Auditor-General, should be laid before

each House of the Parliament.

ANNUAL REPORTING

The annual report of the APO is made up in respect of a

financial year ended 30 June. It is printed and generally

purports to be drawn up in accordance with current standards

of accounting philosophy and practices with regard to its

content, presentation and degree of information disclosed.

We understand that the report is given wide distribution

to other Government Departments, to industry, Chambers of

Commerce and Manufacturers, Universities, Institutes of

Management, Public Administration, and to selected customers.

It is provided to all Members of Parliament and overseas

postal and telecommunications administrations, and is avail­

able to the general public upon request.

Financial information to outsiders and the general public

is also available from the White Paper tabled in Parliament

by the Postmaster-General on Budget night, through the

Auditor-General's Annual and Supplementary Reports which

are also tabled in Parliament; the Senate Estimate Committee

procedure ; and the hearings and reports of the Joint

Parliamentary Committee of Public Accounts.

The Annual Financial and Statistical Bulletin consists of

fifty-three separate tables of which tables 1 to 14 relate

to strictly financial information including the annual

financial statements and notes contained in the annual

report. There are also additional tables not contained

in the annual report, which simplify or supplement the

annual report (e.g. Table 14 - "Value of Post Office

Business Transactions").

STATISTICAL REPORTING

In addition to the publication of an annual report each

year, the APO also publishes a report entitled "Financial

and Statistical Bulletin". .

This publication is available to the general public shortly

after the presentation of the annual report. For example,

the annual report in 1972 was presented on 25 September, .

and the Statistical Bulletin was dated 10 October 1972.

It includes the annual financial statements of the APO in

the same form and content as that included in the Annual

Report and in addition, includes a total of 53 tables

covering a wide range of statistical information relating

to the activities of both the Postal Services and

Telecommunications Services.

These statistics are largely derived from the statistics

compiled by the operational areas of the APO in all States

throughout the financial year. For example. Table 16 shows

statistics from 1959 to 1972 in respect of postal articles

handled by the Certified Mail Service from 1963 to 1972.

A great volume and range of statistics are gathered from

all operating areas in both the Postal and Telecommunica­

tions Services on a regular routine basis.

102

These statistics purport to meet a number of information

requirements by operational management.

COMMENTARY

1. Various means are available to achieve public

reporting of A.P.O. finances but the initiative largely

lies with the general public to seek the information.

2. We have reviewed the 1972 Annual Report and although

the form and content represents a disclosure and formal

presentation that compares favourably with financial

reporting by private enterprise, we believe that there

is scope for making changes designed to improve the

manner in which the financial statements will:

. aid the determination of funding requirements

. assist in assessing the overall management

performance

. provide information to assist tariff reviews

. inform Parliament and the people

3. Our suggested presentation of existing information

contained in the 1972 Annual Report is set out in

the form of a model presentation on Appendix 2.

4. The Annual Report and Annual Financial and Statistical

Bulletin can be regarded as the only regular means by

which the public may judge the financial performance of

the A.P.O.; they undoubtedly contain a great deal o£

information, and by customary standards in the private

sector, are unusually informative, particularly

regarding operational data, e.g. numbers of postal

articles handled, telephone services in operation, etc.

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10345/75— 9

Over the years the APO has made major changes in

presentation in order to improve its reporting to

the public at large and there has been general

tendency towards the inclusion of additional

information from time to time.

There is no doubt that in presenting this information

the APO provides the general public with a large amount

of detailed information, but in doing so, we believe

it quite possible that the average reader finds some

difficulty in digesting such a volume of varied data

to a point where confusion arises.

5. In considering the most suitable and informative

presentation of financial data we concluded that the

basic requirements were admirably illustrated in the

1972/73 Report of The British Post Office.

This report has been designed to present all of the

relevant information logically, concisely and in the

form of tables, graphs, charts and statements.

The major features, which we consider to be important, include:

. Use of a large paper size (12" x 8") compared

with the APO Report paper size (9%" x 7")

. Effective use of colour, large type face and

areas of blank space

. Simplicity and clarity of statement presenta­

tion particularly by 'rounding-off ' figures

to nearest ' $000 ' .

. Structure of information in levels and sections,

104

e.g. broadly the report presents the information

at three levels:

(i) Financial results for Post Office, using

full basic financial statements -

Balance Sheet

Profit and Loss Account

General Reserve

Funds Statement

Fixed Assets and Depreciation Summary

(ii) Divisional financial results for each

operating division, showing separate

statements for each division as in (i).

(iii) Supplementary information for each division including -

Ten year statistics

Staff statistics

Financial results by type of service

Expenditure details

R & D expenses

Operating statistics

Major Capital Works

With the exception of "Financial results by type of

service" and some minor statistics, the information

contained in the BPO Report can be found in the

A.P.O. Report. The difference is basically one of

presentation.

105

RECOMMENDATIONS

We recommend that a review of all external reporting should

take place within the A.P.O. This should be done using the

BPO Reports and Appendix 2 attached as guidelines.

106

ACCOUNTING FOR INFLATION

The problems of accounting for inflation (changes in the pur­

chasing power of money) has been discussed and debated

in business circles throughout the world for a great

number of years.

A major step has recently been taken by the Accounting

Standards Steering Committee of the Institute of Chartered

Accountants of England and Wales, with the release in

January 1973, of an Exposure Draft (EDS) entitled

"Accounting for Changes in the Purchasing Power of Money".

At this stage, it is an exposure draft and subject to comment, but it is reasonable to assume that it will be

the forerunner of standard accounting practice on the subject.

Australian accounting practice generally follows the

profession in the United Kingdom, and although no steps

have yet been taken by The Institute of Chartered

Accountants in Australia or The Australian Society of

Accountants the subject of accounting for inflation is

regarded as an important topical matter.

COMMENTARY

The exposure draft referred to chooses the 'general

purchasing power method', that is conventional accounts

drawn up on the concepts of historical cost are translated so as to show the results and state of affairs in terms of

current purchasing power. This is done by means of general

indices relating to the changing values of money, or where

available, the use of current values of particular assets.

The method is deliberately intended to deal with the effects

of inflation only - i.e. of changes in the purchasing power

of money generally.

It does not deal with changes in other factors such as

technology or other concepts such as current cost accounting

(also known as replacement cost accounting and par value

accounting).

In considering the relevance of accounting for inflation in

the Australian Post Office, the question arises concerning

the logic of one government undertaking presenting statements

adjusted for price level change when all other government

accounting is on an historical accounting method. This may

not be a problem if historical accounts are still presented

with financial statements adjusted for price level change

included as supplementary information.

The same motivation for effecting adjustments to account for

inflation does not exist in the APO, as in many public

companies because of the possible effects of overstatement

of real profit on share market prices and taxation. However,

the situation can be viewed as important if profits are a

factor in decisions on tariff changes.

At this stage the superimposition of price level accounting

on the present Post Office accounts does not seem warranted.

However, there is a need to recognise the incidence of

inflation in the development of pricing policies and price

fixing mechanisms, and to provide for example, for a

depreciation charge related to the replacement of fixed assets. We have made recommendations on supplementary

depreciation later in the report.

Further developments can be expected to take place in

Australia in the near future on this matter of accounting

for inflation, and we consider that the Australian Post

Office should review progress of price level accounting

in Australia at that time, and adopt a suitable method of

presenting supplementary financial information relating

to the effects and changes in the purchasing power of

money.

109

SUPERANNUATION

SUPERANNUATION

Employees of the Postmaster-General's Department, together

with all other Commonwealth employees, are required under

the provisions of the Superannuation Act 1922-1971 to

contribute for superannuation or provident benefits on

retirement.

Contributions in respect of superannuation are based on

units of pension according to salary, and at appropriate

rates according to age; while those in respect of provident

benefits are approximately 5% of the fortnightly salary.

Superannuation has been the subject of a separate detailed

Reserve Submission by the APO to the Commission of Inquiry.

Following the recommendations in the Majority Report of

the Ad Hoc Committee of Inquiry in 1959-60, the annual

cost for superannuation liability has been actuarily

calculated and included in the commercial accounts of the

APO on an accrual basis.

In determining the superannuation costs in the commercial accounts of the APO, it is assumed that the Treasury is

operating an insurance business at cost and the APO pays

to the Treasury each year a premium sufficient to discharge

its accrued liability for superannuation. These premiums

are deemed to be invested in Commonwealth securities and

interest is deemed to be received thereon and reinvested.

This arrangement is referred to as a 1 notional fund' and

the yearly 'investments' are 'credited ' with interest at

the same rate as is used in calculating the interest on

net Treasury advances to the APO, i.e. it is assumed that

the 'notional fund' is invested in long term Commonwealth bonds.

From 1 July 1968, the date on which the new financial

arrangements for the APO came into effect, the APO

has made cash payments for each pay period (i.e. every

two weeks) to the Treasury for the cost of superannuation.

It is understood that in making the calculation of the

annual liability and the superannuation cost to be charged

against the commercial Profit and Loss Account of the APO,

the Commonwealth Actuary uses the following major

assumptions:

(i) Treasury is the Department’s insurer for superannuation.

(ii) A 'notional fund' exists in respect of the accrued

superannuation liability, and this 'notional fund'

is invested and earns interest at the same average

rate as that applicable to Treasury investment in

the APO.

(iii) Investments for the 1 notional fund' earn income at

. the same rate as the last long term Commonwealth

cash loan raised prior to the investments.

At the 30 June 1973, the average earning rate of the

'notional fund' was 5.64%. This is stated to compare with

the Commonwealth Superannuation Fund (in which the employees'

contributions are invested), which in 1971-72, earned at an average rate of 6.19%.

The APO has made submissions to Treasury pointing out:

(a) That the earning rates of the ' notional fund1 of

the APO have averaged about half a percent per

annum less than the earning rate of the Commonwealth

Superannuation Fund, and

111

(b) That comparison shows that larger private sector

funds have earning rates of between 1.55% and

1.85% in excess of the 1 notional fund1.

The investment of the Superannuation Fund has been limited

and has not included the scope of investment which is

available to the private sector funds.

In addition to superannuation costs related to present

officers of the APO, it has been necessary to charge addi­

tional amounts from time to time consequent upon increase

in pensions payable to retired public service employees or their dependants.

It is understood that these increases were in respect of

an increase in additional widows' benefits granted in 1959

and increased pensions granted in 1961, 1963 and 1967 in

excess of that originally provided in the Commercial

Accounts of the APO.

These additional past service benefits are being met by

the Commonwealth Actuary including in the annual estimates

a special item of $490,000 each year for 15 years from

1959-60 to meet the additional widows' benefits, and

$500,000 per year for 10 years from 1967-68 to meet the

liability for the post-retirement pension increases of 1961, 1963 and 1967.

In August 1971, a Government decision was taken to again

increase pensions and the effect of this decision has been

to add $46m to the Department's overall liability. Treasury

proposed that this liability be amortized over 10 years by

an instalment of $4.875m in 1971-72 and $6.5m each year

thereafter until 1980-81. Action regarding this increase in pensions has been deferred.

In November 1972, Professor A. H. Pollard undertook an

independent non-parliamentary inquiry into the methods of

adjusting Commonwealth Superannuation and Defence Forces

Retirement Fund benefits, and his report recommended that

the Commonwealth share of pensions be increased from 1 July

this year to recognize changing economic circumstances.

The recommendations in the report have been accepted by

the Government and it is understood that under the existing

arrangements regarding superannuation costs in the APO, a

further substantial increase in the liability for super­

annuation and annual costs can be expected.

Professor Pollard estimated the additional lump sum liability

for the Postmaster-General's Department arising from the

adoption of the Consumer Price Index method of adjustment, at

$311m ($119m for pensioners and $192m for existing employees).

In addition, the new annual payment would be assessed on a

basis of 4.3 times the employee's annual contribution to

the Superannuation Fund; the existing basis is 2.5 times.

The APO has estimated that on the assumption that the

Department could not make such a lump sum payment to Treasury,

a payment of the amount in equal instalments over 10 years

would cost the APO $40m per annum. Added to this would be

the increased basic annual charge estimated at $38m in

respect of 1973-74 increasing the estimated cost for that

year from around $ 54m to around $ 132m.

COMMENTARY

1. The question of superannuation costs and liability in

the APO is a complex and difficult issue.

113

Since 1959-60, the costs of superannuation in the APO

have been steadily rising. In addition to the question

of rising costs, the APO has been required to accept

additional costs in respect of adjustments made by

Government decision to the value of past service pensions

not only in respect of existing employees, but also in

respect of retired employees and their dependants.

In 1959-60, it was considered that the main question

was one of determining the true cost of superannuation

in any one year to the APO regarded as a business.

However, the situation which has arisen on a number

of occasions since 1960, where the APO has been required

to accept increased superannuation costs and liability

in respect of pension increases, without prior consulta­

tion and in circumstances beyond its control, differ

greatly from a business undertaking which operates

under normal business constraints. ·

2. The need for the APO to accept large additional costs

such as superannuation, without prior consultation, makes

any requirement to maintain profitable operations as a

business undertaking extremely difficult, inhibits proper

financial planning and imposes severe financial strain

when the absolute magnitude of the costs of pension

adjustments is of the order contemplated by the Pollard Report.

3. There are a number of important issues to be resolved

concerning superannuation.

(a) Determination of Annual Cost

The annual 'cost1 is determined by the Commonwealth

Actuary using actuarial assumptions and methods established

following the recommendation of the Ad Hoc Committee of

114

Inquiry in 1959-60. The actuarial assumptions and

methods are critical to the determination of a

proper annual cost, and because of significant changes

in circumstances over the intervening years these

assumptions warrant re-examination.

First and foremost is the basis upon which the

contributions by the Post Office are invested in order

to finance the employer's portion of superannuation

benefits.

(b) Financial Implication of the Pollard Report

The second problem concerns the financial difficulties

and strain brought about by the absolute magnitude of

the cost of pension adjustments particularly those

costs estimated to flow from the recommendations of

the Pollard inquiry.

(c) Accounting for Superannuation

The third issue concerns the manner in which the

superannuation costs are dealt with in the accounts

of the APO.

Determination of Annual Costs

The traditional actuarial valuation determines the contribu­ tion (or range of contribution) for the current year, and

generally speaking an actuary will recommend, with considerable justification, a conservative approach to pension funding

notwithstanding that it may result in a 'high' annual cost.

The question of how conservative the actuarial cost estimates should be is an important one. Ideally, pension costs should

115

be computed as realistically as possible to aid the

establishment of proper annual costs and tariffs, and

maintain an equitable relationship between generations

of consumers.

In two major respects at least, the present assumptions

and methods used result in a high cost for superannuation:

(a) the nature of the investment portfolio, i.e. the

assumption that the 1 notional fund1 is invested in

long term Commonwealth bonds; and

(b) the low earning rate of investment portfolio, i.e.

5.64% at 30 June 1972.

The basic questions are:

(a) what is an appropriate assumption to make regarding

the composition of an investment portfolio for the

'notional fund 1; and consequently,

(b) what is an appropriate rate of earnings, from such

an investment portfolio.

Comparisons made with private sector funds indicate that

if the 1 notional fund' had been conservatively invested

along the lines of some of the larger private sector funds,

the rate of return would have been between 1.55% and 1.85%

higher than it has been.

However, it should be noted that to date the Government has

not, as a matter of policy, permitted the Superannuation Fund

to be invested in a similar manner to private sector funds.

116

In our view, there is a case for the superannuation liability

of the APO being calculated (including a re-calculation from

1959-60) on the assumption that the 'notional fund1 of the

Post Office had been invested in exactly the same manner and

had been earning at exactly the same rate as the Commonwealth

Superannuation Fund.

We understand that the Commonwealth Actuary carried out

calculations of the 1 notional fund' as at the 30 June 1967

using the actual interest earning rate achieved by the

investments of the Commonwealth Superannuation Fund. This

showed that if the average earning rate of the Commonwealth

Superannuation Fund had been used between 1959-60 and 1966-67

instead of the interest income of the 'notional fund1, a surplus of $44.2m would have resulted.

So far as future investment policy and earning rate is

concerned, we understand that the Report of a Treasury

Committee on Superannuation which was tabled in the House

of Representatives on 8 May 1973, contains a number of

recommendations regarding the Commonwealth Superannuation

Fund, including the following recommendations relating to

investment powers:

"The Fund could be invested in the following ways:

(i) At least 30% in Commonwealth, State, semi-Government

and local Government securities in accordance with

the 30-20 legislation applying to superannuation funds;

(ii) Mortgages;

(iii) Other trustee investments;

- 117 -

10345/75— 10

(iv) In shares, debentures, real property and building

societies registered under Territory or State

Government Building Society Acts or Co-operation

Acts ;

(v) Investments in the short term money market and

'buyback 1 investments; and

(vi) In loans to an appropriate body for the specific

purpose of making finance available to contributors

for housing purposes. 1 1

These investment powers are very similar to the investment

powers contained in superannuation trust deeds in the private

sector.

If this recommendation is implemented by Government, the

future investment portfolio of the 1 notional fund1 would

be deemed to be invested in securities similar to those

found in private sector funds and accordingly, the interest

rate or earning rate would be determined on a basis which

could be considered comparable to the larger private

sector funds.

We suggest that an independent actuary be retained to assist

in evaluating the principles and assumptions made in calcu­

lating annual superannuation costs, and determining the

additional lump liability resulting from the adoption of Professor Pollard's recommendations.

Financial Implications of the Pollard Report

Commitments of the APO to consolidated revenues to discharge

the additional liabilities resulting from the adoption of

the recommendations contained in the Pollard Report have

been estimated to be:

118

(i) a lump sum payment in respect of all existing

pensioners - $ 119m;

(ii) a lump sum payment in respect of existing contributors,

in respect of whom in the past payments have not been

large enough to cover an increase in pension - $192m;

(iii) an increased annual payment in future in respect of

existing contributors because the present contribution

rate will only provide a flat pension and not an

increasing one. The increase would result in a

multiplier of 4.3 being applicable in place of the

2.5 multiplier used in the past.

In short, a substantial lump sum payment or its equivalent

in instalments, would be required in respect of existing

pensioners, another in respect of past contributions on

behalf of existing contributors, and the fortnightly

contributions in future will be based on a higher multiplier

than the figure used at present.

In making this estimate of $311m. Professor Pollard requested

the Commonwealth Actuary to make certain assumptions,

including a growth rate of 3*5% in the Consumer Price Index,

and a discount (i.e. earning) rate of 5*$% but this estimate

would be significantly varied by changes in the assumptions

which have been made.

There is a need therefore to re-examine the basis upon

which this estimated liability has been determined.

Comments regarding the accounting implications are discussed

in the following paragraphs.

119

Accounting for Superannuation

Superannuation costs are an important element of business

expense and the method by which they are accounted for may

have a significant bearing on the price at which a business

undertaking will sell its services or products and

consequently on reported net income from one period to another.

The costs accrue as an employee renders service to his

employer and whether his rights to such benefits have vested

or will not vest until some future date, does not alter

the fact that the related costs have accrued.

To produce a proper allocation of costs to accounting

periods, the full cost of accruing superannuation entitle­

ments should be absorbed in the period in which the service

was rendered.

There are a number of acceptable methods of accounting for

pension commitments to employees, subject to appropriate

disclosure in financial statements.

In some instances, immediate provision is made in the

accounts for the estimated cost of providing past service

pensions irrespective of whether there is any intention of

paying the amount immediately or by a series of instalments

over a number of years.

In other instances, where it is decided to discharge the

commitment for 'past services' pensions by annual payments

over a number of years, the position may be noted on the

accounts and the instalments taken up as a cost in the

accounts and charged against earnings in the years in which the instalments fall due.

120

The variations in methods of accounting for superannuation

costs in the accounts of employers are reflected in the

pronouncements by Accounting bodies in other countries.

In the United Kingdom, the position is covered by paragraphs

29 to 34 of Statement N21 - Retirement Benefits issued by

the Institute of Chartered Accountants in England and Wales on

29 February 1960.

In Canada, the position is covered by Section 3460 - Pension

Costs of the Canadian Institute of Chartered Accountants

Handbook.

In the United States, the position is covered in considerable

detail by "APB8 - Accounting for the Cost of Pension Plans"

issued by the American Institute of Certified Public

Accountants in November 1966.

In Australia, no statements or recommendations on super­

annuation/pension costs have been issued by The Institute

of Chartered Accountants in Australia, or The Australian

Society of Accountants.

Although no recommendations have been made in Australia,

we consider that the present method of accounting for

superannuation costs in the APO is in accordance with

acceptable accounting principles. However, we consider

the present basis upon which the additional past service

costs are being written off to be conservative.

The general principle relating to accounting for past

service costs is that:

121

"An increase in past service cost resulting from an amendment

which increases the benefits of a pension plan should not be

deferred indefinitely and should therefore be taken into

expense (together with any related charges for interest)

over a reasonable period following the effective date of

the amendment."

The significant phrase is of course, 'a reasonable period'

and the question arises as to whether a ten year period is

reasonable (as distinct from conservative) in the case of

the APO.

The increased costs for past services resulting from the

recommendations in the Pollard Report totalling $311m are

estimates of 'underfunding' based on actuarial assumptions

and as such can be significantly altered by changes in

assumptions, e.g. Professor Pollard assumed an interest

rate of 5 % % . A variation of h % to 1% could produce a

significantly different amount.

From an accounting point of view, it would appear that the

amount of immediate 'underfunding' (estimated at $311m)

arising as a result of the Pollard Report, can be accepted

without immediate accounting action, provided the present

value of the vested benefits of present and ex-employees of

the Post Office did not exceed the current value of the

pension fund ('notional fund').

The varying acceptable ways of taking up this 'underfunding'

in the accounts of the APO would range from an immediate

recognition of the liability of $311m (without necessarily

having to immediately 'fund' that amount) to the amortization

of the amount (plus interest) over a reasonable period.

122

In the present instance and taking into account the material

sum involved, a period of 10 years would appear to be unduly

short. Provided there is no likelihood of significant

additional liabilities, there would be justification for

amortization of the expense over, say, 30 to 40 years, in

the case of the APO with a corresponding funding of the

liability over that period.

Although there may be some justification for allowing a

permanent pension shortfall of, say, $311m, we do not believe

that this method of accounting should be held out as being

acceptable under present accounting theory in Australia, and

we would find it difficult to support any proposal which did

not require amortization and funding of the cost over a

defined period.

SUMMARY

The foregoing paragraphs outline the nature and scope of

the problems relating to superannuation in the APO.

Resolution of these problems will require further study,

and consultations with Treasury, the Commonwealth Actuary,

and the APO.

In the conduct of these studies, we believe that the advice

of an independent consulting actuary with extensive experience

of superannuation schemes would be of considerable assistance.

As a basis for developing the appropriate study draft terms

of reference have been prepared and are set out on Exhibit "A".

123

EXHIBIT "A

SUGGESTED TERMS OF REFERENCE

Superannuation Study

Review the present basis and the principles used in

determining the annual costs of superannuation and

provident fund provisions for employees of the Australian

Post Office.

Consider and report on appropriate alternative methods

of assessment of annual cost.

Report on the appropriateness or otherwise of the present

methods of funding particularly having regard to the

assumption that the Australian Post Office were a private

commercial undertaking.

Having regard to the assumption that the Australian Post

Office were a private commercial undertaking, review and

comment on the principles and assumptions relating to

the establishment of the 'notional fund' and comment on

its appropriateness with particular emphasis on:

Investment policy

Earning rate of investment

Review and report on the appropriateness or otherwise

of the present method of determining the annual additional

costs arising as a result of decisions to adjust pensions

of retired employees and dependants and increase future

pension benefits of existing employees.

Having regard to the assumption that the Australian Post

Office were a commercial undertaking, develop recommenda­

tions designed to establish the most suitable method of

EXHIBIT "A" (Cont'd)

determining the 'real annual cost1 of superannuation

and provident fund properly chargeable against the commercial profit and loss account of the Australian

Post Office.

7. Separately, generally advise as required in any matters

arising relating to the determination of superannuation

cost.

125

FINANCIAL ACCOUNTING

ACCOUNTING SYSTEM

In addition to the basic records of receipts and expenditure

which the Department is required to maintain, the APO also

maintains a commercial accounting system and related sub­

systems to assist in the financial management and control of

its operations.

Each State and Central Office maintains a self-contained set

of accounting records covering the operation of the area

involved in a manner and using methods very similar to branch

accounts in a normal business. The accounting systems

consist of:

Commercial accounting system

Responsibility accounting system

Costing systems covering engineering costing,

workshops costing and transport costing.

The main objectives of the commercial accounting system are

to provide:

(a) a measure of the trading operations of the Postal

Services and Telecommunications Service

(b) a record of the value of the assets (buildings, motor

vehicles, exchange equipment, debtors) and liabilities

(creditors for materials and services, uncashed Postal

and Money Orders, etc).

The commercial accounting system records historical information

and is similar to accounting systems of commercial enterprises.

The responsibility accounting system is a sub-system of the commercial accounting system and was introduced on 1 July 1968

at the time when the new financial arrangements to set up the

Post Office Trust Account replaced the normal Treasury system

of cash accounting.

The responsibility accounting system operates to serve two major needs:

1. The provision of regular reports of actual receipts

and expenditures against the budget figures previously set.

2. A basis for preparation of annual budgets from the

lowest level of responsibility provided for in the

system up through successive levels in the States and

to Central Office.

Supplementary sub-systems in the areas of engineering costing,

workshop costing and transport costing support the commercial

accounting system.

(a) The engineering costing system provides for recording

of capital and working expense costs of telephone,

telegraph, broadcasting, television and other plant

used for special services in the Engineering Division.

It provides financial information relating to the

operations of the Engineering Division; is a source

of statistical data; and it provides control over

stores and material issues to Works and recovered

from demolished plant.

(b) The workshop costing system provides financial control of the operations of the departmental workshops in each

State and job costing information for reports to work­

shop management and charges to customers for its services.

127

(c) The transport costing system operates to record the

costs of operating the departmental transport fleet.

The information provided forms the basis of charging

out the cost of transport to the appropriate users of

the fleet.

COMMENTARY

The commercial accounting system and related sub-systems

are well designed and efficient systems. However, they

will require amendment following a review of control

concepts recommended earlier.

128

ACCRUAL ACCOUNTING

Accrual accounting (being a system which requires a

matching of all the applicable costs against the revenue

of a particular period) has been applied in the Commercial

Accounts of the A.P.O. for a great number of yeais and was

re-affirmed in the Majority Report of the Ad Hoc Committee

of Inquiry into the Commercial Accounts of the Post Office

in 1959-60.

Accrual accounting is not applied for monthly reporting

purposes under the responsibility accounting system,

although estimates of accruals are used in preparing

quarterly profit contributions statements in State

offices, as described in Management Reporting and Control

earlier.

COMMENTARY

The annual commercial accounts of the A.P.O. are prepared

in accordance with principles of accrual accounting, as

described above. We are in agreement with these principles

and our review has not indicated any basis upon which we

would wish to have these principles varied.

Interim reporting of profits to higher levels of management

should be done, and it is important that the systems should

provide for estimates of accruals for reporting to these

levels. At lower levels, adequate control of controllable

costs can be achieved on the cash basis.

RECOMMENDATION

Accrual accounting should be adopted for the purpose of

interim reporting to senior management. This should be

done in conjunction with a further review of the

responsibility accounting system.

130

DEPRECIATION

Depreciation is a significant item of cost in overall

departmental operations. In 1971/72, depreciation charges

represented 17.5% of total working expenses of the A.P.O.

In the Telecommunications Service, the figure was 23.5% and

in the Postal Service, 2%.

Practices and_Policies

The current depreciation practices and policies were

developed from the recommendations contained in the

Majority Report of the Ad Hoc Committee of Inquiry in

1959-60, and follow the generally accepted accounting

concept of depreciation.

The Ad Hoc Committee recommended that the provision for

depreciation of fixed assets of the A.P.O. should be

calculated each year in conformity with the basic principle

that all additions to, or major replacement of, fixed assets

should be charged to fixed asset accounts and should be

depreciated by means of annual charges to the Profit and

Loss Accounts estimated to spread the original cost, less

the estimated salvage value, of each asset as evenly as

possible over the estimated life of the asset.

In a subsequent study, certain practical factors arose which

made it necessary for the recommendations to be implemented

with minor modifications.

The main difficulty was that records for the bulk of assets

were not available in a form suitable for accounting purposes

to permit individual indentification of each asset, its cost,

date of installation, date of withdrawal from service and

estimated salvage value.

IO.U5/7S— N

Accordingly, a system was developed (based on a concept

used in the British Post Office) whereby the accounting

life of an asset was deemed to be equal to its estimated

service life. Depreciation was calculated on a straight

line basis over its accounting life.

The system is designed to write all assets off at

historical cost and a regular review and realistic

assessment or re-assessment is made of asset service lives.

Since the system was introduced, the service life of each

class of asset has been reviewed on a three year cycle

and the service life has been varied as necessary.

Where the service life of an asset or class of asset is

adjusted, on review, the balance of its historical book

value at the date of review is written off over its

revised service life. .

The service lives of assets, as revised, are summarised

in the accompanying exhibit A.

Supplementary Depreciation

The A.P.O. has the major portion of its funds invested in

fixed assets and the annual depreciation charge is a

significant item in the total costs of its services. For

this reason the basis upon which annual depreciation charges

are determined is an important factor.

Two points of view can be put forward in accounting for

periodic depreciation charges:

(a) The allocation of historical costs of fixed assets

over service lives

132

(b) A means of financing the replacement of the assets

at the end of their service lives

The present depreciation practices followed by the

Australian Post Office are based on (a); the allocation

of the historical cost of assets over their service lives.

The question arises as to whether the 'cost1 which has been

charged is necessarily appropriate for purposes of tariff

setting. Also, the nature of the fixed assets, the obvious

technological advances which are taking place, particularly

in telecommunications field, and the incidence of inflation

on costs suggests that consideration be given to a supple­

mentary depreciation charge to reflect a more appropriate

'cost1 and to provide additional funds for fixed assets

replacement.

In at least two overseas countries, the Postal administrations

make provision for supplementary depreciation over and above

the normal depreciation provided on the historical cost of fixed assets.

In the British Post Office, the z.nnual charge for supplementary

depreciation is designed to bring the total annual depreciation

charge into line with depreciation on replacement costs. It

is charged in the Profit and Loss Account as a separate item

additional to the normal depreciation charge. The

supplementary depreciation amount is credited to general

reserve.

The supplementary charge is arrived at by applying current

price indices to the historical cost of certain asset groups

and computing depreciation at appropriate rates on the added

values. The British Post Office has made supplementary

depreciation charges for a number of years using price

133

indices current at the time. They do not adjust the

provisions of previous years for subsequent changes

in price levels.

A brief comparison has been made between normal

depreciation charges in the Australian Post Office and

the British Post Office. This information is based on

the annual accounts for the 1972“ 73 year.

1972-1973

A ■P .0. B .P.0.

$M £M

Fixed assets (excluding land)

at beginning of year 3.540.5

Normal depreciation charge 160.0

Normal depreciation charged

as a percentage of cost 4.52%

- 3.978.4

169.4*

4.26%

* Excludes depreciation which we consider to be abnormal

of £m26.7 for obsolete Strowger telephone equipment -

Refer Note 6, British Post Office Accounts 1972-73.

This broad comparison tends to support the view that there

are no significant variations between the rates of annual

depreciation charge (based on cost) of the Australian and

British postal administrations.

However, after adjusting for supplementary depreciation

which totalled £ m71.2 in the 1972-73 year, the total per­ centage of depreciation to assets as described above

valued at cost in the British Post Office increases to 6.05%.

COMMENTARY

So far as concerns depreciation charges based on historical

cost the current depreciation policies and practices

applied in the A.P.O. are in accordance with generally

accepted accounting and commercial principles.

As a separate commercial entity the Australian Post Office

needs to provide internally for funding of fixed asset

replacements. Like a commercial enterprise in the private

sector it normally should only look for an injection of

additional funds from its sponsoring 'shareholder1 when

it could be demonstrated in financial terms that physical

expansion or substantial change of technology justified

it. In other words, shareholders of a company can reason­

ably expect directors to operate and account in such a way

that their investment is maintained intact in terms of

current replacement values.

We believe that it is appropriate that organizations such

as the A.P.O. - with a high rate of technological development,

and a fast rate of expansion should provide for replacement

of assets at current values.

RECOMMENDATION

In calculating depreciation, two factors should be

considered: ( i )

(i) provision for the replacement of assets at historical

costs.

(ii) additional provision to cover higher costs when assets are replaced.

135

The determination of the means of assessing the annual

values of a supplementary depreciation would require

special study and we suggest that this should be done

by the Management Services Division of the A.P.O.

136

Exhibit A

DEPRECIATION ACCOUNTING

SUMMARY OF ASSET SERVICE LIVES

Asset Code Year

Telecommunications:

Subscribers' Exch. Equip. (XE) 25

Subscribers' Instruments (XI) 11

Subscribers' PABX's (XX) 20

Subscribers' Carrier Equip. (xz) 11

Subscribers' Radio Equip. (XR) 15

Ducts and Conduits (XC) 60

Subscribers' Cables (XU) 27

Subscribers' Aerial Wires (XW) 17

Jnctn. Carrier Equip. - Teleph (IQZ) 20

Jnctn. Carrier Equip. - Telegr (ZQZ) 20

Jnctn. Radio Bearer Equip. (QR) 22

Junction Cables (QU) 35

Junction Aerial Wires (QW) 20

Trunk Swtchbrd. Equip. (TX) 24

Trunk Carrier Equip. - Teleph. (ITZ) 20

Trunk Carrier Equip. - Telegr. (ZTZ) 20

Trunk Radio Bearer Equip. (TR) 22

Trunk Cables (TU) 40

Trunk Aerial Wires (TW) 25

Telegr. Equip. - Pub. Traffic (IGE) 14

Telegr. Equip. - Ofcl. See. (ZGE) 14

Data Transmission Equip. (DE) 10

137

Exhibit A (Cont'd)

Postal: Years

Mail Handling Plant 20

Automatic Vending Machines 15

Postal Plant - General 20

Other:

Mechanical Aids 7

Engineers Movable Plant 14

Transport Motor Vehicles 3

Engineering Motor Vehicles . 5

Workshops Plant and Machinery 20

Electric Light and Power Plant 15

Furniture 20

Office Machines and Aids 10

Bicycles 10

Miscellaneous Plant 12

Stores Handling Plant 10

ADP Equipment 7

Engineering Technical Assets (CO) 12

Buildings 66

Land and Buildings Improvements 20

Leasehold Improvements 10

Source: APO Reserve Statement "Depreciation" 1973.

138

BASIS OF COMMERCIAL ACCOUNTS

The Commercial Accounts of the A.P.O. are the Annual

Financial Statements consisting of the balance sheet,

profit and loss statements (Consolidated, Postal

Services, and Telecommunications Services) together with

the notes thereon are prepared and laid before

Parliament each year, in accordance with the requirements

of the Post and Telegraph Act (No. 2) 1968.

The Commercial Accounts are prepared on the accrual basis,

the essential feature of which is that revenue earned is

matched with the costs of earning that revenue.

Distinctions are made between capital and revenue

expenditure items for the purpose of proper matching of

costs and earnings.

Capital expenditure, being expenditure intended to benefit

future periods, follows the basic principle that all

additions to, or major replacement of, fixed assets are

charged to fixed asset accounts. In the practical

implementation of this -

(i) costs which do not exceed $2,000 are charged to

working expenses

(ii) proportions of depreciation, superannuation,

furlough (long service leave) interest and

administration expenses, (so far as these costs are applicable to assets, staff and funds

relating to capital works), are charged to fixed

asset accounts.

The balance sheet items are stated at historical cost

and after all accrued liabilities and assets have been

brought to account.

Section 96H(3) of the Post and Telegraph Act (No.2) 1968,

defines the amount of the profits (if any) of the A.P.O.

services in the following terms:

"For the purposes of this section, the amount of the

profits of the Post Office Services for a financial year

is the amount (if any) remaining after deducting from the

amount of the revenue received or receivable, in respect

of those services in that year an amount representing the

cost of those services properly chargeable against that

revenue".

In addition to operating, maintenance and general revenue ,

expenses for labour, material and expenses incurred in

the general day to day operations of Postal and Tele­

communication Services, costs matched against earnings

include:

(a) Depreciation - the portion of the annual depreciation

provision relating to Operations. Depreciation on

fixed assets used in connection with the construction

of other fixed assets (e.g. mechanical aids, workshop

plant, engineers movable plant and motor vehicles)

is included in the cost of the new assets and is not charged to Profit and Loss Account.

(b) Superannuation - consistent with the accounting

policy to distinguish between capital and revenue

expenditures that portion of the accruing liability

140

for superannuation applicable to staff engaged

on capital works is charged to fixed asset

accounts. The balance is charged against

revenue.

(c) Furlough (Long Service Leave) - the provision

for long service leave is retained by the A.P.O.,

for the reason that actual payments to staff are

made from the Post Office Trust Account. The accounting treatment is in accordance with the

recommendation of the Fitzgerald Committee, and

as in the case of superannuation, the portion of

the accruing liability applicable to staff engaged

on capital works is charged to fixed asset accounts.

(d) Interest - the basic principles involved in the

calculation of funds provided by Treasury and

the annual interest charge is quite straightforward;

i.e. interest on previous years' advances is

calculated at the rate applicable to the various

Advances which make up the Portfolio of Debts, and

interest is also calculated on current year's

drawings.

At the end of each financial year, a calculation is

made to determine the amount of interest to be

capitalised into fixed asset accounts. This

practice is consistent with the practice adopted

for other charges for depreciation, superannuation

and long service leave.

The interest charges made to Postal and

Telecommunications Profit and Loss Accounts are

equitable i.e. there is no cross subsidisation in

the bearing of interest charges.

141

COMMENT

Comments on the specific items of depreciation,

furlough, superannuation, insurance, etc., appear

in other Sections of this report.

142

INTERNAL CONTROLS AND AUDITING

The A.P.O. is subject to both internal audit and

external (Commonwealth) audit.

Internal audit is carried out by A.P.O. staff who have

been especially assigned to the internal audit

organization in each state.

Internal audit staff are concerned with those functions

for which the State Chief Accountants are responsible,

including:

(a) appraisal of the adequacy of the internal checks

which are laid down, and

(b) ensuring that they are being efficiently operated.

Certain other internal audit functions are undertaken by

staff other than those attached to the internal audit

section.

These include:

(a) audit inspection of Postmasters' financial

transactions. These audits are performed by

district postal managers and their inspectors

and form part of their periodic inspections of

Post Offices which are carried out at prescribed

intervals.

(b) audit of engineers stores transactions. These are

undertaken by stores inspecting officers attached

to the Engineering Division.

The A.P.O. is subject to external audit by members of the

Commonwealth audit staff under the direction of The

Auditor-General.

Commonwealth audit staff are attached to the Department

and carry out a continuous audit throughout the accounting

period, and the Auditor-General, as external auditor, is

required to provide a certification of the Annual Post

Office Statements of Profit and Loss and Balance Sheet.

Within the A.P.O., Treasury directions and Departmental

instructions provide for built-in safeguards and internal

checks which are the primary responsibility of the

operating and accounting unit concerned.

These built-in safeguards are illustrated by:

(1) Procedures covering the - accounting for. cash receipts

or incurring of cash expenditure normally require

checking action on the part of two or more officers.

(2) Machine check of individual transactions and use of

machine proving of postings against pre-determined

totals.

(3) Use of control ledger accounts against which detailed

transactions and balances are proved.

COMMENTARY

The Auditor-General's function is comparable to that of an

external auditor of a public company.

Based on our review and observations made during discussions

and examination of material, internal control, internal

audit and external audit procedures are carried out to

high standards.

1 4 4

FURLOUGH (LONG SERVICE LEAVE)

Permanent employees of the Department are eligible for

furlough (long service leave) benefits under the

provisions of the Public Service Act and temporary and

exempt employees are eligible for furlough benefits under

the Commonwealth Employees Furlough Act.

To 1959, the Department made no provision in its

commercial accounts for accrued furlough entitlements of

staff.

Payments made for furlough taken during service or in

lieu of furlough on separation from the service were

included with other labour costs and charged to either

Asset or Profit and Loss Account as incurred.

The recommendation by the Ad Hoc Committee of Inquiry in

1959-60 resulted in full accruing 1lability as determined

by the Commonwealth Actuary being charged to the Profit

and Loss Accounts each year. Actual payments in respect

of furlough taken by staff are charged to the provision.

It is understood that the Government has approved

amendments to the two Acts which will be effective from

1 January 1973. The major change is to be a reduction in

the basic qualifying period from 15 years to 10 years and

appropriate adjustments to the other conditions under

which furlough or payment in lieu is taken, and this will

result in a substantial increase in the annual contribution in respect of future liability for furlough.

COMMENT

Subject to acceptance of the actuarial basis of

calculation, the accounting for annual furlough costs

is in accordance with commercial practices.

1 46

INSURANCE

The A.P.O. carried its own insurance risk and any losses

are charged against the accounts of the year concerned.

This is in accordance with government policy which

provides that to the greatest extent possible, the

Commonwealth will act as its own insurer for all property

under its control and accepts insurable risks as early as

possible in the production of the property to be

purchased by it.

This government policy regarding insurance matters is the

subject of Treasury directions which detail the procedures

and manner in which Commonwealth Departments shall accept

insurable risks.

COMMENT

Based on our review of the appropriate Treasury directions

and our understanding of the general nature of the

insurable risks of the A.P.O., the practice adopted of

carrying internal risk is an acceptable practice. It is

one which is generally in accordance with commercial

circumstances where self-insurance or non-insurance is

appropriate and where the practice of writing off losses

in the accounts of the year in which the loss occurred

can be regarded as an acceptable accounting method.

10145/ 75— 12

RESEARCHAND DEVELOPMENT

The major research efforts of the A.P.O. are centred in

the Australian Post Office Research Laboratories in

Melbourne.

The Research Laboratories are a sub-division of the

Engineering, Planning and Research Division and work in

close collaboration with other Departmental Divisions and

Branches to conduct research and development work in

telecommunications theory and practice as particularly

applied to Australian conditions.

In appropriate projects, the Research Laboratories collab­

orate with the Australian Universities and other Government

laboratories such as CSIRO and Department of Supply, and

suppliers of equipment. .

The laboratories develop new forms of telecommunication

plant and techniques for use in the department; they

investigate problems in existing plant and appraise world­

wide development in communication systems and techniques.

The Research Sub-Division has a total staff of about 530

people and is equipped with advanced scientific and

telecommunications equipment and facilities estimated to

exceed $M6 in value.

The present total annual operating costs of the Sub-Divisior.

are in the vicinity of $M5 per annum.

The research and development programme is planned internally

on a 3 year basis and about 95% of the professional resources

work is directed to the telecommunications network.

COMMENTS

Costs relating to the A.P.O. Research Laboratories are

charged to operations in the year in which they are

incurred and we consider this to be in accordance with

accepted accounting practices.

We suggest that the principles and methods followed in

accounting for research and development costs should be

disclosed in the notes to the accounts and the amounts

should also be disclosed.

149

AUTOMATIC DATA PROCESSING

The present equipment consists of:

NSW - Honeywell 8200

Honeywell 1800 with a Honeywell 200

as a peripheral

Victoria - Honeywell 8200

A third Honeywell 8200 is on order and it is planned

for installation in 1974.

A broad structure of a computer network has been designed

and generally this provides for two main computing

centres, one in New South Wales and one in Victoria.

In these centres, there will be considerable computing .

power provided by large units of equipment and these

large computers will be supported by Level 2 centres and

Level 3 centres in New South Wales and Victoria and with

installations in Western Australia, South Australia,

Tasmania and Queensland.

The development of ADP plahs is co-ordinated on a national

basis and existing applications are stated to have been

developed as part of an overall integrated plan.

The major use of computers throughout the A.P.O. has been

in the Telecommunications and Engineering areas where

the power of the computer has been applied to planning

and engineering type problems.

The use of the computer as an accounting tool has

generally been limited to telephone accounting systems,

development of inventory management and control systems,

and payroll and employee records.

The major accounting system in current operation is the

telephone billing system and telephone accounts for New

South Wales and Victoria. It is part of the plan that

this system be extended to provide for processing of

telephone accounts in other States and this is expected

to commence early in 1974.

The philosophy on the use of computers in the A.P.O. has

been to take things slowly and make use of computing power

in those areas where immediate benefits were obtainable

and identified problems could be dealt with.

In October 1971, the Public Service Board requested the

A.P.O. to conduct a cost benefit review of its ADP

achievements up to date. This review was carried out and

-a report was submitted to the Public Service Board in

December 1971.

The general conclusion drawn from this review was that

costs since 1964 had totalled about $M22 including about

$M5 for capital equipment. Benefits totalled about $M31

and about one-third of these had been achieved in the

reduction of overtime and avoidance of staff increases.

The remainder arose from improved plant utilization and

reduced maintenance expenditure made possible by the

more complete and timely information.

151

COMMENTS

The general philosophy which has been applied in the

development of automatic data processing within the

A.P.O. seems reasonable so far as the processing

systems are concerned, the main emphasis has been on

those areas where high volumes and clerical costs have

indicated benefits both in the processing of the

information and in the costs of doing so.

152

REPORT OF THE AD HOC COMMITTEE OF INQUIRY

INTO THE COMMERCIAL ACCOUNTS OF THE POST

OFFICE 1959 60

.

THE AD HOC COMMITTEE OF INQUIRY INTO THE COMMERCIAL

ACCOUNTS OF THE PCS T OFFICE 1959 - 60

This committee was formed as a result of disagreement

between the Treasury and the Postmaster-General on

matters concerning the commercial accounts of the

A.P.O. The particular points of concern were whether -

(a) interest on capital advances should be charged

and if so, on what basis, and

(b) the principles to be used in accounting for

superannuation.

The terms of reference were:

(a) to assess the extent of net financial advantage

that had accrued to the Post Office from the

inception of the Commonwealth.

(b) to assess what part, if any, of the net financial

advantage should be treated as the amount on

which the Post Office should make an annual

contribution, and the basis or rate of that

contribution.

(c) to investigate the basis of preparation of the

commercial accounts, with particular reference

to the above matters but also with reference to

services provided at lower than cost, superannuation,

pension, furlough payments and depreciation.

Full agreement was not reached and separate majority and

minority reports were lodged.

MAJORITY REPORT RECOMMENDATIONS

The Majority report recommended that:

(a) Net financial advantage should be considered as

"the net amount of cash that the Post Office

regarded as business would have received from

the Treasury regarded as business financier

including interest calculated on the balance of

this net amount from year to year."

(b) Contributions to Treasury should be made on the

basis of interest, and that this should be

calculated at the rate of the longest term

public loan raised in Australia at about the

time of that advance.

This recommendation was on the grounds that

interest should be chargeable, as otherwise

an advantage would accrue to the Post Office

at the expense of the provider, i.e. the

taxpayer - thus transferring the costs from

the Post Office to the taxpayer. It was also

stated that if finance had been provided by

some other financier, the requirement of

paying interest would be there.

(c) The full accruing liability of the Post Office

for superannuation and furlough payments should

be made, and appropriate charges included as costs in the Profit and Loss Account.

154

(a) Depreciation should be accounted for on a

straight line basis by means of annual charges to

spread the original cost less the estimated

salvage value of each asset as evenly as possible

over the estimated service life of the assets.

Recommendations were made about the treatment

of provisions for depreciation and how these

should be shown in the commercial accounts.

(e) Notional credits for services provided at

less than cost as a result of government policy

should not be included as revenue earned.

These services included mainly bulk postage,

third class mail, telephone rental, extended hours

of telephone country service. At the time of the

report, they were approximatly $M7 per annum.

(f) As a starting point for the future preparation

of commercial accounts for the Post Office, the

Balance Sheet at 30 June 1959 should be revised

to reflect decisions of the government.

MINORITY REPORT RECOMMENDATIONS

The Minority Report differed substantially from the

Majority. The Minority considered that:

(a) The net financial advantage that has accrued to

the A.P.O. was the present worth of the net

tangible assets, not the value of funds received from Treasury.

(b) The contribution to be made on past capital should

be at an initial rate of 4%, to be reviewed every

three years up to a maximum of 6%. It agreed however,

that the interest rate of new investment should be

at the rate equivalent to the long term bond

rate, but that investment undertaken by the A.P.O.

in the national interest, should not carry interest

until its commercial results fully covered the

capital charges.

(c) Superannuation, pension and furlough payments

should not be accounted for on an accrual basis,

and the commercial accounts need only show the

actual cash payments made each year. -

(d) Depreciation should be calculated on a straight

line basis on original cost, but there should be

a supplementary charge to cover the cost of replacement of plant at current costs.

It was stated that depreciation calculated as

described in the Majority Report was insufficient

to meet Post Office requirements. This was

because of the effect of rapid technological

developments and the need to take account of

increasing obsolescence.

(e ) The A.P.O. had carried an unreasonable burden in

the cost of uneconomic services provided as a

matter of government policy. It saw no reason

why the loss on uneconomic services could not be

closely estimated and offset against the

contribution on past capital.

1 5 6

(f) There should be no change in the policy that the

A.P.O. should not pay indirect taxes. (The Majority

Report made no recommendations on this matter.)

(g) A statutory Post Office fund should be established,

and a definite separation of finances from the

Treasury brought about.

The Minority Report dealt at some length with the

complex situation in the A.P.O. at that time in

having to maintain the cash and commercial

accounts in the dual accounting system. It

questioned the value of an audit of the commercial

accounts while the necessity for a dual accounting

system continued.

DECISIONS TAKEN

Decisions taken by the Government were as follows:

(a) The figure of 40 million pounds was adopted as a

suitable assessment of the net financial

advantage at 30 June 1959, this figure was

between the different figures recommended by the Majority and Minority Reports.

(b) It was decided to apply interest at the rate of

4.27%, in conformity with the Majority Report

recommendation.

(c) The Majority Report recommendation that the full

superannuation liability should be charged on an

accrual basis was accepted.

157

(d ) The Majority Report, recommendation on depreciation

was accepted. It was subsequently varied by

agreement between the Ministers to the extent that

assets were to be depreciated over their estimated

accounting life and written off at the end of that

period. The full cost of assets were to be spread

over the accounting life, and salvage values

credited to Profit and Loss Account for the year

concerned. Cost of dismantling and recovering

such assets would be debited to Profit and Loss

Account.

(e) Revenue taken into account as earned during any

year would not include notional credits' for

services for other Commonwealth Departments

for services provided at less than cost.

(f) The Balance Sheet as at 30 June 1959 was to be

revised in accordance with the decisions of

Government, and to be developed on lines to be

agreed between the Post Office, the Treasury and

the Auditor-General.

The commercial accounts of the Post Office as at the

1 July 1969 were changed in accordance with the

recommendations and decisions made, and on the basis of

principles laid down in the Majority Report.

COMMENTARY

The subject of net financial advantage, the amount on

which a contribution to Treasury should be calculated,

and the matter of balance sheet adjustments are matters

of history and we do not consider that further comment

158

by us is warranted. With regard to other matters in the

Committee's Report, we have dealt with most of these

throughout the various sections of the report. We summarise

our views on the main issues as follows:

1. Loans from Treasury should be interest-bearing,

and we agree that the long term bond rate x . a

suitable means of varying interest charges payable

by the A.P.O. from time to time.

2. Superannuation, pension and furlough should be

accounted for on an accrual basis, and this is

in conformity with well accepted accounting

principles. However, we consider that the

assumptions used to determine the annual cost

of superannuation should be reviewed in the light

of the changes which have taken place since 1959-60.

3. The method of accounting for depreciation used

in the A.P.O. at present, is fully acceptable in

accordance with accepted accounting principles,

and we do not recommend a variation. However,

we believe that the question of supplementary

depreciation charges should be reviewed.

4. Notional credits should not be included in the

accounts as an allowance for uneconomic services

provided for at less than cost. In recent years,

the value of uneconomic services has been

sufficiently high to warrant consideration of

subsidisation by Government, but this matter is

now of less importance as a result of decisions

taken in the last Commonwealth Budget, which will

have the effect of reducing the level of uneconomic

services to a large extent.

5. The Minority Report also contained a number of

suggestions of considerable merit. For example:

(a) the recommendation that capital development

undertaken in the national interest and

directed towards services which are not

covering costs should not carry interest.

We are not in a position to evaluate the

significance of non-economic investment in

the Telecommunications network or in Postal

Services. If it were found that uneconomic

investment was a significant amount, there

would be a justification for claiming a

Government subsidy in regard to this.

(b) the recommendation that a financial advisory

committee should be appointed to advise on ■

the administration of the investment programme.

Although this suggestion has some merit, we

consider that the present disadvantages in

capital investment decisions and control of

projects, can be overcome by better procedures

and improved systems, as has been aealt with

in our section on Capital Budgeting and Project

Control. The appointment of an external board

would also have considerable impact with regard

to the evaluation of the capital programme and

potential for appropriate commercial returns.

(c ) the recommendation about a separation of finances

from the Treasury and to operate a dual accounting

system.

160

To a very large extent, this recommendation was

given recognition in the establishment of the

Post Office Trust Account and the preparation

of commercial accounts. However, it is not

clear to us whether the intent of decisions

taken at the time were fully put into effect,

considering the fact that the Post Office

accountancy systems remain predominantly cash

accountancy systems. As has been said earlier

in the report, accrual accounting principles

and accurate assessments of profits made takes

place only once a year.

- 161 -

IOj45/75— IJ

X

.

APPENDICES

Appendix 1

NOTES ON THE

PHILOSOPHIES, OBJECTIVES, POLICIES AND ORGANIZATION

OF THE AUSTRALIAN POST OFFICE

PHILOSOPHIES

FACTS

A clear statement of the general philosophy of operation

of the A.P.O. is not available.

We have however, reached our own individual interpretation

of the present Post Office philosophy which can be summar­

ised as follows:

1. The fundamental purpose of the A.P.O. is to provide

a complete communication service to fulfil the needs

of all in the community.

2. Common standards of service are intended throughout

the country without regard to the possibility of

uneconomic operation in particular regions.

3. Because of the dependency of modern society, partic­

ularly the business sector, on efficient mechanisms

of communication, effective operation and development

is vital.

Management should be well informed on international

developments, and keep the A.P.O. at the forefront

in adopting d 'elopments appropriate to Australian

requirements.

4.

5. Management is expected to achieve a reasonable

return on the use of Commonwealth funds.

6. The A.P.O. must operate in a business-like way

utilizing the best of management techniques as seem

appropriate.

7. The A.P.O. must observe general Government policy

and utilize common Departmental services in such

fields as personnel services and building services.

8. Decisions on all key issues should be made at Govern­

mental level.

9. Because both Post and Telecommunications Services

are public utilities, they should utilize monopoly

powers to avoid needless duplication and consequent

wasted resources.

10. Post Offices throughout the country should be used

as social service centres, i.e. convenient places to

make contact with individuals for the distribution

of tax forms, issue of radio/TV licences, electoral

cards, etc. Government Corporations and Departments

may utilize them as points of contact with the public.

The absence of a clear statement of philosophy at both

Government and Post Office management levels is impeding

management and inhibiting a logical planned development

of the organization as a whole.

The A.P.O. is expected to operate in some circumstances as

a business, and in other circumstances as a Government

Department with public service responsibilities.

163

There is a conflict in the operation of an entity with

dual business and public service roles. Various reports

prepared over the years by Commissions of Inquiry, and

by officers within the Post Office, make reference to the

need for the Post Office to operate in a business-like

way. It is inferred in these reports that there is a

feeling of disappointment within the A.P.O. that business­

like performance has not developed to a marked extent.

Major areas of operation where public service considerat­

ions significantly affect profitable performance should

be defined and values of revenues applicable determined.

Services which are to be provided, if necessary at a loss,

and regions where this applies, should also be specified.

Every large business operating on a national scale has a

social responsibility. The key to determining the proper

role of the A.P.O. may be in making a distinction between

this level of social responsibility applicable to large

national business, and the yet wider social responsibility

which some may feel the A.P.O. should carry. In fact,

such a wider social responsibility is the role of a public

service. This may not be appropriate for a business entity

which is substantially capable of operating in an economi­

cally viable way.

There is scope for operation of the A.P.O. purely as a

business, and this is possible irrespective of the organi­

zational form under which it may operate. A business

philosophy is justifiable, as the A.P.O. receives revenues

for the services it provides and is potentially capable of

satisfying market needs. Given appropriate powers, it

could substantially control its own destiny and sustain

itself economically.

164

The required business orientation is unlikely to develop

until business direction and greater management autonomy

is developed.

There is no intervention of experienced business execut­

ives at top level, as in the case of a large company

board. Senior management personnel do not have business

experience, and the A.P.O. recruits few personnel with

business skills at middle management level. There is an

absence of decision making authority to acquire funds for

expansion, establish tariffs, recruit staff, and negotiate

with unions. All personnel are classified as public

servants and this in itself is a factor which tends to

mitigate against the development of business orientation.

OBJECTIVES

FACTS

The general objectives of the A.P.O. and of its Tele­

communications and Postal Divisions are included in the

A.P.O. Submission. These refer to communication needs,

standards of servicing, quality of servicing, confiden­

tiality, economy and profitability.

The 1968 amendment to the Post and Telegraph Act gives

the Postmaster-General the power to determine financial

objectives with the concurrence of the Treasury.

Financial objectives have not been set in the past.

In the circumstances, the Post Office management have

determined financial objectives as follows:

165

Postal: "To match earnings and expenses taking one

year with another.

Telecommunications:

"To match earnings with expenses and make

such contribution as the Government determines

towards new capital required to expand the

service."

Objectives for the main organizational units of the

A.P.O. (Engineering, Telecommunication Operations,

Postal Operations, Management Services) have not been

defined. However, statements are available describing

the fundamental purposes of the various branches and

sections of the organization. These are included within

the organization files prepared by the Personnel Branch

and Public Service Board.

Service performance standards have been established in

both Postal and Telecommunications and these are dealt

with in the A.P.O. Submission. ·

There is a business planning system in operation. This

is in reality a financial budgeting system and it includes

statistics. These statistics could be interpreted as objectives for activities (such as number of telephone

connections). They also include performance targets,

(such as telephone services per 100 population).

Source: 1 . Australian Post Office Commission of Inquiry submission by the Postmaster-General's Department, page 338.

2 . ibid, page 411

166

COMMENTS

Business objectives are not receiving sufficient atten­

tion at Government level.

This is partly due to the process of the annual financial

submission to Parliament. This submission deals very

briefly with profit plans but this is subsidiary to the

main purpose of the submission, which is a funding matter.

Profit budgets do not receive separate consideration and

individual approval, as would be the case in a commercial

organization. It seems important that this should be done.

Profit plans have never been rejected or amended at Gov­

ernment level and this may be an indication of a lack of

attention to them.

The fact that financial objectives have not been established,

although such power is given the Postmaster-General accord­

ing to the 1968 Amendment of the Post and Telegraph Act, is

a further indication of insufficient attention to the subject of business objectives.

It is a fundamental fault that financial objectives have

been determined from within the organization, i.e ., by

Post Office management, rather than at Government level.

Better direction from Government is necessary by a definition

of the long term financial objectives for the A.P.O. Post

Office management is made difficult by the fact that clear

objectives have not been established.

A.P.O. management see the need for clear objectives. This

need is apparent from reading the A.P.O. submission. It

is relevant however, that A.P.O. management consider that

167

the setting of objectives would be virtually meaningless

unless more authority were given in the areas of tariff

setting, funding, and some personnel matters.

Specific quantified objectives for the units of organiz­

ation , and the senior officers within those units, are

important requirements. Study should be carried out to

review the responsibilities of units and key personnel,

and determine key objectives and measures of performance.

However, there are more important priorities at the moment,

e.g. improvement of organization and the establishment of

overall policies and objectives.

POLICIES

INTRODUCTION

There are certain fundamental policies of operation of

the A.P.O. which need to be re-considered. Here we deal

with the more important of these. They relate exclusively

to Government policies as distinct from internal manage­

ment policies.

Organization and Management Policy

Facts

As a Government policy, the A.P.O. is organized as a

Department of State.

The Chief Executive is titled Director-General and this

is a direct appointment by Cabinet.

168

The Director-General has no authority to raise funds

(even in small amounts), very little authority in tariff

setting, and also very little in personnel recruitment

and industrial relations.

There are fourteen senior management personnel and six

others reporting directly to the Director-General.

COMMENTS

In view of the very large size of the A.P.O. and also the

importance of its role in society, the senior management

positions are among the most important executive appoint­

ments in Australia.

The position of Director-General however, by comparison

with other senior management positions in large business

organizations, has very low level autonomy, and an exceed­

ingly wide range of responsibilities covering the whole

ambit of Postal and Telecommunications operations.

There is a need for greater management autonomy and a

more satisfactory organization structure. Irrespective

of organizational form, an a rrangement similar to a company board should be introduced to provide business

direction and advice. This is one of the A.P.O's most

important needs.

Financial Policy

Financial policy is discussed at length in the section of this

report dealing with Funding and Financial Objectives.

169

Tariff Policy

Facts

Tariffs for Postal and Telecommunications services are

decided upon by Government. This power is given by the

Post and Telegraph Act and the Post and Telegraph Rates

Act.

Management is given authority to make tariff changes with

regard to some services, but these are of little signifi­

cance .

Historically, political motivations in addition'to economic

considerations, have influenced the establishment of

tariffs.

For example, tariffs are rarely raised in the year prior

to an election. If these circumstances did not apply, it

is quite likely that the history of Postal losses would

be different.

Comments

Greater authority should be given to Post Office manage­

ment in setting tariffs.

In view of the fact that the A.P.O. is substantially a

monopoly operation» it is important that some mechanism

be arranged to ensure that monopoly power is not abused.

170

Personnel and Industrial Relations Policy

Facts

The Public Service Board currently has the responsibility

(under provision of the Public Services Act) for a wide

range of matters which are well described in the A.P.O.

Submission to the Commission of Inquiry.

These responsibilities include mainly salary negotiation,

setting staff ceilings, establishing conditions for

advancement, appointments, determining personnel qualifi­

cations, and promoting efficiency.

These responsibilities go beyond those of Personnel

Services, and are of a kind one would expect to find in

Personnel Departments and Management Services Departments

in large corporations.

Comments

It is difficult from a business viewpoint to support the

policy that such functions should be conducted outside

the authority of senior management.

Consideration should be given to transferring the functions

from the Public Service Board to the Australian Post Office.

171

ORGANIZATION

Facts

The A.P.O. is organized as a Department of State, with

the Director-General, who is described as the permanent

head, directly responsible to the Postmaster-General.

The Director-General has the responsibility for both

the Postal and Telecommunications Services.

State Directors are directly responsible to the Director-

General for regional operations.

The functional arrangement at Central Office consists of

five divisions with a First Assistant Director-General

in charge of each. These officers have functional

authority only in their relationship with their State

counterparts. The divisions are:

Engineering, Planning and

Research

Engineering Works

Postal Services

Management Services

Telecommunications

Other personnel reporting directly to the Director-

General are:

Three Deputy Directors-General

One Deputy Assistant Director-General -

Ministerial and External Relations

One Senior Assistant Director-General -

Industrial Relations

One Director of Public Relations -

(a clerical classification)

172

There is also a Headquarters Secretariat operating in

Canberra, headed by an officer of clerical classification.

and in London a European representative, who is an officer

of engineering classification.

At State level, the functional organization for Engineering,

Postal and Telecommunications is repeated. The Internal

Audit Section, Supply Branch, A.D.P. Branch, Personnel

Branch and Finance and Accounting Branch all report

separately to the State Director. The regional organiza­ tion extends downwards to engineering districts, postal

districts and telephone districts. These districts do

not necessarily coincide.

The more important committees and boards operating within

the A.P.O. are the Director-General's Committee of Heads

of Divisions/Branches, the State Director's Committees,

the Capital Works Working Party, Tender Boards, the Head­

quarters Staff Suggestions Board, the Stamps Advisory

Committee, and the Executive Development and Training

Committee. All of these have been described in the A.P.O. Submission to the Commission of Inquiry.

The Director-General's Committee currently has a member­

ship of 11 made up of three Deputy Directors-General, five

First Assistant Directors-General (functional divisional

heads), the Senior Assistant Director-General Industrial

Relations, the Deputy Assistant Director-General (Minis­

terial and External Relations), and the Director of Public

Relations. The Committee is chaired by the Director-

General. The role of this Committee is purely an advisory

one to the Director-General.

173

The responsibility of all officers in the A.P.O. is

described in the functional statements issued by the

Personnel Branch. Descriptions of delegations and

authorities are contained in the Departmental Personnel

Instructions. We have not examined these.

Comments

There is need for greater management autonomy and the

need for this is referred to earlier under Organization

and Management Policies.

The organization structure has serious weaknesses.

Greater devolution of the responsibilities of the

Director-General is needed.

There are 20 personnel reporting directly to the Director-

General, including staff in Central Office, the States,

Canberra, and the United Kingdom. The range of subjects

being handled and the geographical spread of personnel

concerned indicates that a narrow span of control would

be appropriate.

The fact that three Deputy Directors-General have been

appointed is another indication of an unsatisfactory

organization structure.

It seems desirable that particular senior executives should

have responsibilities for the operation of Telecommuni­

cations or Postal Services individually.

The level of management which has responsibilities wholly

for either Postal or Telecommunications is at the level

of Assistant Director (State level). This is two levels

below Director-General and in terms of the hierarchy of

classifications of management positions, it is the fourth

level.

This last point illustrates the logic of dividing Postal and Telecommunications Services, and placing each under

the control of a separate Chief Executive.

Such a proposal needs investigation, from the points of

view of both division of common services, and of impli­

cations in terms of operating costs.

Most functions however, serve either Postal Services or

Telecommunications so that a separation would not seem

to be difficult.

Common services are provided by the Management Services

Division which provides functions in the fields of

accounting, finance, automatic data processing, personnel,

supply, security and internal audit.

The validity of basing a regional organization on the State basis should be questioned.

The reasons for States and regions being coincidental

are historical, and precede Federation. However, it

seems quite illogical to arrange a regional operation in areas, for example, as small as Tasmania and as large as

New South Wales. It is understood that A.P.O. manage­

ment explains this on the basis that a close working

arrangement with State Government Departments is

necessary. We are not in a position to evaluate this.

- 175 -

10345/ 75— 14

A policy of present management is to ensure a high level

of delegation of responsibility to State Directors.

States operate with considerable independence, and

effective control by the senior management group is

difficult.

The study of co-ordination of work at Central Office

level, State Director level, down to the lowest levels

of the organization in Postal, Engineering and Tele­

communications districts is needed.

Co-ordination is apparently a problem and has given rise

to the concept of area management - described in the

A.P.O. Submission. .

A re-organization should incorporate a provision for

introducing business direction and advice from a board

or committee which could be interposed between senior

management and the Minister.

Although in theory such a board could be incorporated in

a new arrangement, it may be difficult to achieve this

without introduction of a corporate philosophy. However,

the main requirement is to introduce changes in organiz­

ation. A new organization should introduce firm business

direction, greater autonomy of management, and more dele­

gation of responsibility, thereby enabling a more practical

arrangement for pursuit of commercial goals.

1 76

Appendix 2

SUGGESTED PRESENTATION FOR ANNUAL REPORT

AUSTRALIAN POST OFFICE SERVICES

STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED 30 JUNE 1972

1971 ($ Million) 1972

T cle Postal Total Note Tele Postal Total

REVENUE 1

312.1 312.1 Telephone calls 387.5 387.5

153.7 153.7 Telephone rentals 185.0 185.0

171.5 171.5 Postages 196.4 196.4

64.2 14.1 78.3 Other revenue 72.6 17.0 89.6

530.0 185.6 715. 6 Total revenue 645.1 213.4 858.5

EXPENDITURE

135.3 144.4 279.7 Operating 154.6 155.3 309.9

121.7 121.7 Maintenance 138.1 138.1

37.7 37.7 Carriage of m ail 34.9 34.9

123.5 4.3 127.8 Depreciation 1 135.2 4.5 139.7

16.8 10.0 26.8 Superannuation 1 21.1 11.9 33.0

5.7 3.4 9.1 Long Service Leave 1 7.5 4.2 11.7

103.1 11.3 114.4 Interest 2 117.6 13.8 131.4

506.1 211.1 717.2 574.1 224.6 798.7

23.!) (25.5) (1.6) PROFIT/(LOSS) FROM TRADING 71.0 (11.2) 59.8

Exceptional items 4

23.9 (25.5) (1.6) 71.0 (H .2 ) 59.8

1 77

AU S T R ALI AN P O S T O F FI C E S E RVI C E S

Tele

1971

Postal

BAL ANC E S HE ET AT 30 JUNE 1972

1972

Total ^ Million) Note Tele _____ PostaI _______ Total

NET ASSETS

Fixed assets 5

307.6 Land and buildings 357.6

2, 100.9

Plant, equipment and vehicles 2,333.1

2,408.5

Current assets

2, 690.7

40.1 Cash 6 42.1

99.3 Stores 7 115.0

22.5 Debtors 8 31.5

127.1 Accrued earnings 161.9

.7 Prepayments 0.8

289.7 351.3

Current liabilities

40.9 Creditors 40.9

3.3 Accrued superannuation 9 1.2

5.8

Uncashed postal and money orders 4.4

28.7 Agency services 31 .1

42.8 Advance receipts 48.9

Long service leave provision 10

121.5 126.5

168.2 Net current assets 224.8

2,576.7

Long term liability

2, 915.5

55.8 Long service leave provision 64.9

$2,520.9 $2,850.6

FINANCED BY:

2,484.8 Advanced from treasury 2 2, 754.8

36.1 Accumulated profits 3 95.8

$2,520.9 $2, 850.6

178

AUSTRALIAN POST OFFICE SERVICES

SOURCE AND DISPOSITION OF FUNDS

DURING THE YEAR ENDED 30 JUNE 1972

($ million)

FUNDS WERE PROVIDED FROM THE FOLLOWING SOURCES:

By the Treasury

From trading activities:

Net profit from trading activities

Non-cash charges -Depreciation

Excess of liability over cash payments for long service leave

59.8

139.8

5.2

THESE FUNDS WERE USED TO:

Increase fixed assets

Gross expenditure

Less, Non-cash charges capitalised -Depreciation Liability for long service

leave

442.8

5.1

3.9

Increase current assets over current liabilities

Total

270.0

204.8

$474.8

433.8

41.0

$474.8

AUSTRALIAN POST OFFICE SERVICES

NOTES TO AND FORMING PART OF THE ACCOUNTS

Summary of accounting policies and terminology.

The major accounting policies and explanation of

terminology used by the Post Office are:

(a) Revenue

Post Office revenue comprises the value of all

services provided during the year together

with interest and sundry income earned. Charges

to Government Departments are made"at ........

(b) Superannuation

(Accounting policy to be stated)

(c) Long Service Leave

Long service leave is provided by an amount

equivalent to 2^f/<, of salary and wage payments

for the year and with interest at the rate of

S^S/o per annum.

(d) Fixed assets

(Accounting policy to be stated in relation to

capitalisation of expenditure and method of

depreciation.)

(e) Valuation of stores

Stores are valued at cost except for slowly

moving or obsolete items which are subject to

valuation. (To be expanded)

(f) Conversion of foreign currencies

(Accounting policy to be stated)

(g) Insurance

Generally, the Commonwealth acts as its own

insurer. The Post Office carried its own

risks and any losses are charged against the

accounts of the year concerned.

(h) Terminology

Accrued earnings represents ......... .......

Agency services represents ................

Advance receipts represents ................

etc.

2. Advances from Treasury

Advances represent funds, or borrowings, which are

required in addition to receipts from Post Office

Services to meet expenditure.

In 1971-72 borrowings of $M270 (1971 $M247.0) were

provided from the Consolidated Revenue Fund for

expenditure under the Post and Telegraph Act.

181

The interest rates in respect of amounts advanced by

the Treasury for expenditure on Post Office Services

are determined by the Treasurer under Sections 96C

(3) (b) and 96G (1) (b) of the Post and Telegraph

Act.

The average rate of interest on funds provided to

30 June 1971 was 5.4% (5.28%) and interest was

chargeable on funds advanced during 1971-72 at the

long term bond rates of 7% to 17 November 1971, 6.7%

from 18 November 1971 to 9 February 1972 and 6% for

the remainder of the year.

Of the total interest charge, $131.4 (1971 $M114.9)

was included in the profit and loss account and

$M10.5 (1971 $M9.3) being interest on funds applied

to major works in progress was charged to fixed

asset accounts.

ACCUMULATED PROFITS

Postal Total I S MILLION) Tele Postal Total

1971 1972

37.7 Opening balance 36.0

(1.6) Net profit/(loss) for the 59.8

year

$ $36.1 Closing Balance $ $ $95.8

Exceptional Items

Exceptional items comprises

5. FI XED AS S E T S

1971 ($ MILLION) 1972

Written Written

Cost Depreciation Down Value Land and Buildings

Cost Depreciation Down Value

32.7 Land 41.4 41.4

245.6 Buildings 343.3 57.2 286.1

29.1 Buildings under construction 30.1 30.1

307.4 414.8 57.2 357.6

Plant Equipment and Vehicles 1876.1 Telecommunications Plant 2858.3 777.2 2081.1

14.5 Postal Plant 23.1 6.9 16.2

31.7 Engineering Movable Plant 51.8 17.8 34.0

30.9 Other Plant and Equipment 53.7 19. 1 34.6

128.6 Plant Under Construction 143.0 143.0

19. 1 Motor Vehicles 37.3 13.1 24.2

2100.9 3167.2 834.1 2333.1

$2408.3 $3582.0 $891.3 $2690.7

1971 1972

Tele Postal Total Tele Postal Total

The value of fixed asset expenditure $ written out during the year was $

Fixed Asset movements

1971 1972

Land and Plant and Land and Plant and

Buildings Equipment Buildings Equipment

Opening balance at beginning of year 307.4 2100.9

Net additions during the year

Net depreciation and other write-offs

$307.4 $2100.9 Closing balance at end of year $357.6 $2333.1

1971 1972

T ele Postal Total Tele Postal Total

Depreciation provided for the year 127.8 Charged against revenue 139.7

5.6 Capitalised to fixed assets 5.1

$133.4 $144.8

83

6. CASH

Tele

1971

Postal Total

($ MILLION)

Tele

1972

Postal Total

.9 Post Office Trust Account 1.2

38.5 Cash and bank balances 39.9

.7 Monies in trust (Contra included 1.0

in Creditors)

$ $ $40.1 $ $ $42.1

7. STORES

Stores in stock includes $M9.1 (1971 $M9.0) which is the value of

work in progress in departmental workshops on the repair and manu­

facture of plant and equipment.

8. DEBTORS

1971 1972

Tele Postal Total Tele Postal Total

25.1 (2.6)

Accounts receivable DEDUCT Provision for doubtful debts

35.0 (3.5)

$22.5 $31.5

The amount charged against revenue for debts considered doubtful

during the year was $M1.9 (1971 $M1.1)

The increase in telephone debtors is mainly due to the tariff

valuations from 1 October 1971 and accounting changes consequent

upon the computerisation of telephone debtor records in two States.

184

9. SUPERANNUATION

The superannuation liability is met by a payment to the

Treasury as provided for under Section 96F (1) of the Post

and Telegraph Act. Post-retirement pension increases,

operative from 1 October 1971, were announced during the

year.

The existing arrangements in relation to the assessment of

the accruing superannuation liability are currently under

consideration by the Department of the Treasury, the Common­

wealth Actuary and the Post Office and any adjustment in

respect of the pension increases has been deferred pending

the outcome of the investigation.

The charge brought to account in 1971-72 was $M43.9 (1971

$M36.3). Of this amount $M33.0 (1971 $M26.9) was included

in the profit and loss account and $M10.9 (1971 $M9.4)

relating to staff employed on new construction work was

charged to asset accounts.

10. LONG SERVICE LEAVE

During the year an investigation was made by the Common­

wealth Actuary into the adequacy of the Provision. The

examination disclosed that as at 30 June 1970 the Provision

was deficient to the extent of $M4.8; at that time the

balance stood at $M49.3. The Actuary recommended that a

further investigation be made as at 30 June 1973 and that

no action be taken in respect of the deficiency pending

the results of that review.

185

The provision is credited with an amount equivalent to 2^%

of salary and wage payments for the year and with interest

at the rate of 5%% per annum. Included in the amount pro­

vided for the year is $M1.0 as a result of the increase in

the rate of interest from 4ί$% from 1 July 1970, as recommended

by the Actuary.

11. CONTRACTUAL LIABILITIES

At 30 June 1972, commitments in respect of contracts let for

the supply of materials amounted to approximately $M133.5

(1971 $M134.8). Of this amount it is estimated that $M126.1

(1971 $M128.4) relates to telecommunications works.

186

AUSTRALIAN POST OFFICE

COMMISSION OF INQUIRY

Study of the Organisation of

the Postmaster-General's Department

Cresap, McCormick and Paget Inc December 1973

.

C r e s a p , M c C o r m i c k a n d P a g e t m e M r3 n a q a m « n t G o n s o l i . u n t s

4 0 W I L L I A M S T R E E T , M E L B O U R N E , V I C T O R I A , 3 0 0 0 , A U S T R A L I A · T e l e p h o n e G 7 S 1 3 7 · T e l e x A A 3 3 4 8 1

S i r J a m e s V e r n o n

C h a i r m a n

T h e A u s t r a l i a n P o s t O f f i c e

C o m m i s s i o n o f I n q u i r y

9 9 E l i z a b e t h S t r e e t

S y d n e y , N e w S o u t h W a l e s , 2 0 0 1

D e a r S i r J a m e s :

I n a c c o r d a n c e w i t h o u r l e t t e r o f p r o p o s a l d a t e d A u g u s t 9 , 1 9 7 3 ,

a n d a s s u b s e q u e n t l y a u t h o r i s e d b y t h e A u s t r a l i a n P o s t O f f i c e

C o m m i s s i o n o f I n q u i r y , w e s u b m i t h e r e w i t h o u r r e p o r t e n t i t l e d

" S t u d y O f T h e O r g a n i s a t i o n O f T h e P o s t m a s t e r - G e n e r a l ' s

D e p a r t m e n t . "

F o r c o n v e n i e n c e , o u r p r i n c i p a l f i n d i n g s a n d r e c o m m e n d a t i o n s

a r e s u m m a r i s e d i n C h a p t e r I I . F o r c o m p l e t e u n d e r s t a n d i n g o f t h e s e

f i n d i n g s a n d r e c o m m e n d a t i o n s , h o w e v e r , t h e r e p o r t s h o u l d b e r e a d

i n i t s e n t i r e t y .

T h r o u g h o u t t h e s t u d y , w e r e c e i v e d e x c e l l e n t c o - o p e r a t i o n a n d

g e n e r o u s a s s i s t a n c e f r o m a l l m a n a g e m e n t p e r s o n n e l o f t h e A u s t r a l i a n

P o s t O f f i c e w i t h w h o m w e c a m e i n c o n t a c t .

I t h a s b e e n a p r i v i l e g e t o s e r v e t h e C o m m i s s i o n o f I n q u i r y i n

t h i s m o s t i m p o r t a n t a n d i n t e r e s t i n g u n d e r t a k i n g . W e w o u l d b e p l e a s e d

t o d i s c u s s t h e r e p o r t w i t h y o u t o t h e e x t e n t d e s i r e d .

N e w Y o r k · W a s h i n g t o n · C h i c a g o · S a n F r a n c i s c o · L o s A n g e l a s

B r u s s e l s · M e l b o u r n e » M e x ic o C i ty · S a o P a u l o

D e c e m b e r 2 0 , 1 9 7 3

V e r y t r u l y y o u r s ,

/ f i-E-,. v

C R E S A P , M c C O R M I C K a n d P A G E T I n c .

T H E A U S T R A L I A N P O S T O F F I C E

C O M M I S S I O N O F I N Q U I R Y

S T U D Y O F T H E O R G A N I S A T I O N

O F T H E P O S T M A S T E R - G E N E R A L ' S

D E P A R T M E N T

T A B L E O F C O N T E N T S

C h a p t e r P a g e

I I N T R O D U C T I O N

O b j e c t i v e s A n d S c o p e O f T h e S t u d y 1

A p p r o a c h T o T h e S t u d y 3

T o n e O f T h i s R e p o r t 3

A r r a n g e m e n t O f T h i s R e p o r t 4

I I S U M M A R Y

F i n d i n g s 1

R e c o m m e n d a t i o n s 2

I I I G E N E R A L O R G A N I S A T I O N A L M A T T E R S

A - P r e s e n t O r g a n i s a t i o n 1

C e n t r a l A d m i n i s t r a t i o n 1

S t a t e A d m i n i s t r a t i o n s 7

B - O b s e r v a t i o n s 9

R e f e r e n c e O n e : E f f i c i e n c y A n d E f f e c t i v e n e s s

O f P r e s e n t O r g a n i s a t i o n S t r u c t u r e 9

R e f e r e n c e T w o : S e p a r a t i o n O f P o s t a l S e r v i c e s

A n d T e l e c o m m u n i c a t i o n s 1 6

R e f e r e n c e T h r e e : D e l e g a t i o n O f A u t h o r i t y

A n d R e s p o n s i b i l i t y 2 1

R e f e r e n c e F o u r : P o s s i b l e A d v a n t a g e s O f

C o m b i n i n g R e s p o n s i b i l i t y F o r N a t i o n a l A n d

I n t e r n a t i o n a l T e l e c o m m u n i c a t i o n s I n A

S i n g l e A u t h o r i t y 2 5

R e f e r e n c e F i v e : C o - o r d i n a t i o n O f P l a n n i n g

A n d R e s e a r c h , I n c l u d i n g T e c h n o l o g y A n d

M a r k e t R e s e a r c h 2 7

C - R e c o m m e n d a t i o n s 2 9

C h a p t e r P a S e

I V T E L E C O M M U N I C A T I O N S

A - O b s e r v a t i o n s 1

B - R e c o m m e n d a t i o n s 1 1

V P O S T A L S E R V I C E S

A - O b s e r v a t i o n s 1

B - R e c o m m e n d a t i o n s 1 0

Exhibit

III—1

III- 2

HI- 3

III-4

III- 5

HI- 7

III- 8

III— 9

IV-1

IV-4

Mu; ‘<_ l i

TABLE OF EXHIBITS

Present Plan Of Organisation, Basic Structure,

Postmaster-General‘s Departnlent

Present Plan Of Organisation, Engineering Plannirig And Research Division, Postmaster-General's

Department

Present Plan Of Organisation, Engineering Works

Division, Postmaster-General's Department

Present Plan Of Organisation, Telecommuhications Division, Postmaster-General's Department

Present Plan Of Organisation, Postal Services Division, Postmaster-General‘s Department

Present Plan Of Organisation, Management

Services Division, Postmaster-General‘s Department

Present Plan Of Organisation, Industrial Relations Branch, Postmaster-General's Department

Present Plan Of Organisation, Typical State

Administration, Postmaster-General's Department

Present Plan Of Organisation, Basic Structure,

Overseas Telecommunications Commission

(Australia)

Recommended Plan Of Organisation, Basic Structure,

Telecommunications

Recommended Plan Of Organisation, Managing Director's lrnmediate Staff. Telecommunications

Recmnmended Plan Of Organisation, Chief General

Manager's Immediate Staff, Teleconununications

Recommended Plan Of Organisation For A Typical

State, Telecommunications

Following Page

111- 1

111-3

111- 3

III—4

III— 5

III- '0

III- 6

III— 8

III- 26

IV—ll

IV—13

IV— 20

Following

Exhibit _P;a‘g£_

V—l Selected Central Administration-State Postal Services Relationships, Postmaster-General's Department V—5

V-Z Present Plan Of Organisation, Post Offices Field

Structure, Postmaster—General's Department V-5

V—3 Career Paths, Salary Levels, And Current

Establishments, Post Offices Field Organisation, Postmaster—General's Department V-7

V-4 Recommended Plan Of Organisation, Basic

Structure, Postal Services V-lO

V-S Recommended Plan Of Organisation, Managing

Director's lrnmediate Staff, Postal Services V-ll

V-b Recommended Plan Of Organisation, Chief General

Manager’s Immediate Staff, Postal Services V-13

V-7 Recommended Plan Of Organisation, Initial Phase,

State Structure, Postal Services V-16

V-8 Recommended Plan Of Organisation, Cus‘. mer

Services Field Structure, Postal Services V-18

I - I N T R O D U C T I O N

I n A u g u s t 1 97 3 , T h e A u s t r a l i a n P o s t O f f i c e C o m m i s s i o n of I n q u i r y -

r e q u e s t e d C r e s a p , M c C o r m i c k a n d P a g e t I n c . ( C M P ) t o c o n d u c t a n i n d e ­

p e n d e n t s t u d y o f t h e m a n a g e m e n t o r g a n i s a t i o n a l a r r a n g e m e n t s of t h e

P o s t m a s t e r - G e n e r a l ' s D e p a r t m e n t ( r e f e r r e d t o h e r e a f t e r a s t h e D e p a r t ­

m e n t , t h e A u s t r a l i a n P o s t O f f i c e , o r t h e A P O ) ,

T h i s i n t r o d u c t o r y c h a p t e r s e t s f o r t h t h e o b j e c t i v e s a n d s c o p e of t h e

s t u d y , t h e a p p r o a c h t a k e n i n c o n d u c t i n g i t , a n o t e o n t h e t o n e of t h i s

r e p o r t , a n d a d e s c r i p t i o n o f h o w t h e r e p o r t i s a r r a n g e d .

O B J E C T I V E S A N D

S C O P E O F T H E S T U D Y * 1 2 3 4

S i x t e r m s o f r e f e r e n c e w e r e s e t f o r t h i n C M P 1 s p r o p o s a l , d a t e d

A u g u s t 9, 1 9 7 3 , a s f o l l o w s :

" T o e x a m i n e , c o m m e n t o n a n d m a k e r e c o m m e n d a t i o n s w i t h r e g a r d t o

s u c h m a t t e r s a s :

(1) " T h e e f f i c i e n c y a n d e f f e c t i v e n e s s of t h e e x i s t i n g o r g a n i s a t i o n a l

a r r a n g e m e n t s i n p r o v i d i n g a n i n t e g r a t e d s t r u c t u r e t h r o u g h

w h i c h t h e A u s t r a l i a n P o s t O f f i c e c a n a c h i e v e i t s o b j e c t i v e s

(2) " T h e n e c e s s i t y o r d e s i r a b i l i t y , f r o m a m a n a g e m e n t s t a n d p o i n t ,

of s e p a r a t i n g t h e a d m i n i s t r a t i o n of p o s t a l s e r v i c e s f r o m t h e

a d m i n i s t r a t i o n o f t e l e c o m m u n i c a t i o n s s e r v i c e s

(3) " T h e e x t e n t t o w h i c h r e s p o n s i b i l i t y a n d a u t h o r i t y is a n d s h o u l d

b e d e l e g a t e d f r o m c e n t r a l o r s t a t e o f f i c e s t o l o c a l m a n a g e r s

of a r e a s o r r e g i o n s

(4) " T h e a d v a n t a g e s , if a n y , t h a t m i g h t a c c r u e i n t e r m s of m a n a g e ­

m e n t e f f i c i e n c y a n d c o n t r o l if r e s p o n s i b i l i t y f o r n a t i o n a l a n d

i n t e r n a t i o n a l t e l e c o m m u n i c a t i o n s w e r e c o m b i n e d i n a s i n g l e

a u t h o r i t y

(5) " T h e a d e q u a c y o f a r r a n g e m e n t s f o r t h e c o - o r d i n a t i o n o f p l a n n i n g

a n d r e s e a r c h f u n c t i o n s , i n c l u d i n g m a r k e t r e s e a r c h a n d t e c h ­

n o l o g y r e s e a r c h

(6) " T h e m o s t a p p r o p r i a t e o r g a n i s a t i o n a l s t r u c t u r e s t o g i v e e f f e c t

t o r e c o m m e n d a t i o n s u n d e r t h e t e r m s o f r e f e r e n c e s p e c i f i e d i n

i t e m s (1) t h r o u g h (5) a b o v e . "

T h e s c o p e o f t h e s t u d y e n c o m p a s s e d t h e A u s t r a l i a n P o s t O f f i c e , t h e

O v e r s e a s T e l e c o m m u n i c a t i o n s C o m m i s s i o n ( A u s t r a l i a ) i n t e r m s o f n e c e s ­

s a r y A P O - O T C r e l a t i o n s h i p s , a n d o t h e r g o v e r n m e n t a l e n t i t i e s i n s o f a r a s

a u t h o r i t i e s e x e r c i s e d b y t h e m a f f e c t t h e D e p a r t m e n t . W i t h i n t h e A P O , t h e

s c o p e o f t h e s t u d y g e n e r a l l y i n c l u d e d m a n a g e m e n t f u n c t i o n s a t t h e f i r s t

t h r e e o r f o u r l e v e l s i n C e n t r a l A d m i n i s t r a t i o n , a n d a t t h e f i r s t t w o o r t h r e e

l e v e l s i n s t a t e a d m i n i s t r a t i o n s . I n c e r t a i n a r e a s , h o w e v e r , d e t a i l e d f a c t ­

f i n d i n g w a s c o n d u c t e d a t l o w e r l e v e l s , w h e r e i t w a s n e c e s s a r y e i t h e r t o

g a i n a t h o r o u g h u n d e r s t a n d i n g o f t o p m a n a g e m e n t r e q u i r e m e n t s , o r t o

c o n t r i b u t e t o s o l v i n g l o w e r - l e v e l , b u t n o n e t h e l e s s i m p o r t a n t , m a n a g e m e n t

o r g a n i s a t i o n p r o b l e m s .

T h e s c o p e o f t h e w o r k s p e c i f i c a l l y e x c l u d e d f o r m a l c o n s i d e r a t i o n of,

o r r e c o m m e n d a t i o n s o n , w h e t h e r p o s t a l o r t e l e c o m m u n i c a t i o n s s e r v i c e s

s h o u l d b e a d m i n i s t e r e d t h r o u g h a D e p a r t m e n t o f S t a t e o r b y a s t a t u t o r y

c o r p o r a t i o n . A l t h o u g h o p i n i o n s o n t h i s i s s u e a r e o f f e r e d t o a s s i s t t h e

C o m m i s s i o n ' s d e l i b e r a t i o n s , t h e f o r m a l r e c o m m e n d a t i o n s i n t h i s r e p o r t ,

e x c e p t t h o s e c o n c e r n i n g t h e A P O - O T C r e l a t i o n s h i p , a r e l i m i t e d t o o r g a n i s a ­

t i o n a l c o n s i d e r a t i o n s t h a t a p p l y r e g a r d l e s s o f t h e l e g a l o r q u a s i - l e g a l s t a t u s

u l t i m a t e l y a c c o r d e d p o s t a l a n d t e l e c o m m u n i c a t i o n s s e r v i c e s .

O n e f i n a l p o i n t s h o u l d b e m a d e . A m a n a g e m e n t o r g a n i s a t i o n s t u d y o f

t h i s t y p e i n e v i t a b l y y i e l d s c e r t a i n r e c o m m e n d a t i o n s w h i c h a r e f i r m r e g a r d ­

i n g t h e i r b a s i c c o u r s e o f d i r e c t i o n , b u t w h i c h r e q u i r e f u r t h e r d e t a i l e d

s t u d y p r i o r t o i m p l e m e n t a t i o n . S e v e r a l o f t h e r e c o m m e n d a t i o n s p r e s e n t e d

h e r e f a l l i n t o t h i s c a t e g o r y - s p e c i f i c a l l y , s u c h m a t t e r s a s d e l e g a t i o n s o f

a u t h o r i t y ( o r t h e l a c k t h e r e o f ) f r o m o t h e r a g e n c i e s , o r g a n i s a t i o n a l i m p l i c a ­

t i o n s f o r t h e P o s t a l I n s t i t u t e , p r e c i s e g e o g r a p h i c b o u n d a r i e s o f f i e l d o p e r a ­

t i o n s a n d o r g a n i s a t i o n a r r a n g e m e n t s a t l o w e r s u p e r v i s o r y l e v e l s . A l l o f

t h e s e r e c o m m e n d a t i o n s i n v o l v e d e t a i l s t h a t c o u l d n o t b e w o r k e d o u t w i t h i n

t h e s c o p e o f t h i s s t u d y , a n d t h u s w i l l r e q u i r e f u r t h e r a n a l y s i s . H o w e v e r ,

t h i s s h o u l d n o t p r e c l u d e r e a c h i n g d e c i s i o n s o n t h e p r i n c i p l e s e m b o d i e d in

t h e s e r e c o m m e n d a t i o n s .

1-2

A P P R O A C H T O T H E S T U D Y

A f t e r r e c e i v i n g t h e C o m m i s s i o n ' s a u t h o r i s a t i o n t o p r o c e e d , t h e c o n s u l t ­

a n t s a p p r o a c h e d t h e s t u d y i n t h e f o l l o w i n g s e v e n s t e p s .

1. P e r t i n e n t w r i t t e n m a t e r i a l s w e r e o b t a i n e d , p r i m a r i l y f r o m C o m ­

m i s s i o n s t a f f a n d t h e A P O , a n d w e r e r e v i e w e d p r i o r t o o n - s i t e f a c t - f i n d i n g .

2. P r i n c i p a l l y t h r o u g h i n d i v i d u a l i n t e r v i e w s , f a c t - f i n d i n g w a s c o n d u c t e d

w i t h i n t h e A P O a n d t h e O T C , a n d t h r o u g h c o n t a c t s w i t h o t h e r i n d i v i d u a l s a n d

o r g a n i s a t i o n s . I n a l l , d i s c u s s i o n s w e r e h e l d w i t h 129 p e r s o n s . W i t h i n t h e

A P O , 117 p e r s o n s w e r e i n t e r v i e w e d , a n u m b e r o f t h e m m o r e t h a n o n c e a n d

b y m o r e t h a n o n e m e m b e r o f t h e s t u d y t e a m . T h e i n t e r v i e w s i n c l u d e d

66 p e r s o n s i n C e n t r a l A d m i n i s t r a t i o n , a n d 51 p e r s o n s i n t h e s i x s t a t e

a d m i n i s t r a t i o n s .

3. T h e i n f o r m a t i o n g a i n e d f r o m i n t e r v i e w s a n d w r i t t e n m a t e r i a l s w a s

a n a l y s e d i n d e t a i l , a n d p r e l i m i n a r y o b s e r v a t i o n s w e r e f o r m u l a t e d .

4. P r e l i m i n a r y o b s e r v a t i o n s w e r e d i s c u s s e d i n f o r m a l l y w i t h t h e C o m ­

m i s s i o n i n m i d - O c t o b e r , a n d s u b s e q u e n t l y w i t h k e y e x e c u t i v e s o f t h e A P O .

5. T h e a n a l y s i s w a s c o m p l e t e d a n d p r e l i m i n a r y r e c o m m e n d a t i o n s

w e r e d e v e l o p e d .

. 6. T h e m a j o r p r e l i m i n a r y r e c o m m e n d a t i o n s w e r e i n f o r m a l l y d i s c u s s e d

w i t h t h e C o m m i s s i o n i n m i d - N o v e m b e r , a n d s u b s e q u e n t l y w i t h s e l e c t e d A P O

e x e c u t i v e s .

7. T h i s r e p o r t w a s t h e n p r e p a r e d , a n d w a s d i s c u s s e d w i t h t h e

C o m m i s s i o n o f I n q u i r y i n m i d - D e c e m b e r .

T O N E O F

T H I S R E P O R T

T h e m a n a g e m e n t o r g a n i s a t i o n o f p o s t a l a n d t e l e c o m m u n i c a t i o n s s e r v i c e s

d o e s n o t l a c k f o r p r i o r s t u d y a n d e x a m i n a t i o n , b o t h w i t h i n t h e A P O a n d m o r e

g e n e r a l l y i n A u s t r a l i a , a n d i n m a n y o t h e r c o u n t r i e s a s w e l l . S e l d o m h a s a n y

C M P s t u d y t e a m e n c o u n t e r e d a g r e a t e r v o l u m e o f p r i o r w r i t t e n d e s c r i p t i v e

a n d a n a l y t i c a l m a t e r i a l s o n t h e t o p i c s a t h a n d .

1-3

I n t h i s r e p o r t , n o a t t e m p t i s m a d e t o c i t e a l l o f t h i s p r i o r m a t e r i a l , o r to

q u o t e t h e b r o a d r a n g e o f o p i n i o n s , b e n e f i t s a n d d r a w b a c k s e x p r e s s e d b y o t h e r

a u t h o r s . I n s t e a d , t h e o b j e c t i v e h a s b e e n t o p r o d u c e f o r t h e C o m m i s s i o n a

s u c c i n c t d o c u m e n t t h a t d e a l s w i t h t h e m a j o r a n d c r i t i c a l l y r e l e v a n t o r g a n i s a ­

t i o n a l i s s u e s .

A s a n a t u r a l o u t g r o w t h o f t h e t e r m s o f r e f e r e n c e , t h i s r e p o r t d o e s n o t

d w e l l o n m a t t e r s t h a t d o n o t r e q u i r e c h a n g e , a n d c o n s e q u e n t l y i t m a y s e e m

c r i t i c a l i n t o n e . T h i s b y n o m e a n s i m p l i e s t h a t t h e A P O s u f f e r s f r o m m o r t a l

w e a k n e s s e s . O n t h e c o n t r a r y , t h e A P O p r o v i d e s s t a n d a r d s o f p o s t a l s e r v i c e

t h a t s h o u l d b e t h e e n v y o f o t h e r n a t i o n s , i n c l u d i n g t h e U n i t e d S t a t e s ; a n d i t i s

p l a n n i n g , e x p a n d i n g a n d o p e r a t i n g a m o d e r n a n d u p - t o - d a t e t e l e c o m m u n i c a t i o n s

s y s t e m . T h e D e p a r t m e n t h a s m a n y a n d s i g n i f i c a n t p o s i t i v e a t t r i b u t e s . T h e

f o c u s o f t h i s r e p o r t i s d i r e c t e d a t o r g a n i s a t i o n a l m e a n s o f e n h a n c i n g t h e s e

a t t r i b u t e s s t i l l f u r t h e r .

A R R A N G E M E N T O F T H I S R E P O R T -

T h i s r e p o r t i s a r r a n g e d i n f i v e c h a p t e r s :

I - I n t r o d u c t i o n ( t h i s c h a p t e r )

I I - S u m m a r y - w h i c h o u t l i n e s t h e m a j o r f i n d i n g s a n d r e c o m m e n d a ­

t i o n s r e s u l t i n g f r o m t h e s t u d y

I I I - G e n e r a l O r g a n i s a t i o n a l M a t t e r s - w h i c h s u m m a r i s e s t h e

e x i s t i n g o r g a n i s a t i o n o f t h e A P O a n d c o n t a i n s o b s e r v a t i o n s

a n d o v e r a l l r e c o m m e n d a t i o n s a p p l i c a b l e t o b o t h t e l e c o m m u n i c a ­

t i o n s a n d p o s t a l s e r v i c e s

IV - T e l e c o m m u n i c a t i o n s - w h i c h p r e s e n t s o b s e r v a t i o n s a n d r e c o m ­

m e n d a t i o n s s p e c i f i c a l l y c o n c e r n i n g t e l e c o m m u n i c a t i o n s

s e r v i c e s V

V - P o s t a l S e r v i c e s - w h i c h s e t s f o r t h o b s e r v a t i o n s a n d r e c o m ­

m e n d a t i o n s a p p l i c a b l e t o p o s t a l s e r v i c e s .

1-4

II - S U M M A R Y

T h i s c h a p t e r p r e s e n t s a b r i e f s u m m a r y of t h e c o n s u l t a n t s ' f i n d i n g s a n d

r e c o m m e n d a t i o n s . S u p p o r t i n g e v i d e n c e a n d a n a l y s e s a r e c o n t a i n e d i n

C h a p t e r s III, I V a n d V.

F I N D I N G S

T h e A u s t r a l i a n P o s t O f f i c e f u r n i s h e s t w o b a s i c a n d e s s e n t i a l s e r v i c e s

t o t h e c o u n t r y - d o m e s t i c t e l e c o m m u n i c a t i o n s , a n d p o s t a l s e r v i c e s . T h e s e

t w o s e r v i c e s a r e p r o v i d e d t h r o u g h a s i n g l e o r g a n i s a t i o n s t r u c t u r e , w i t h a

Di r e c t o r - G e n e r a l o f P o s t s a n d T e l e g r a p h s a s t h e p e r m a n e n t e x e c u t i v e a n d

o p e r a t i n g h e a d o f t h e D e p a r t m e n t , a n d S t a t e D i r e c t o r s of P o s t s a n d T e l e g r a p h s

r e s p o n s i b l e f o r b o t h t e l e c o m m u n i c a t i o n s a n d p o s t a l s e r v i c e s i n t h e i r r e s p e c t i v e

s t a t e s .

T h e A P O h a s r e a c h e d a s i z e a n d c o m p l e x i t y t h a t i s e x e r t i n g s e v e r e s t r a i n s

on t h i s p l a n o f o r g a n i s a t i o n . M o r e o v e r , t h e i n c r e a s i n g s c o p e o f t h e A P O i n

s p e n d i n g , e m p l o y m e n t a n d d i v e r s i t y o f s e r v i c e s , t h e a c c e l e r a t i n g p a c e of

t e c h n o l o g i c a l c h a n g e , a n d t h e i m p a c t o f i n d u s t r i a l r e l a t i o n s - a l l o f t h e s e w i l l

p l a c e v i r t u a l l y u n m a n a g e a b l e b u r d e n s o n t h e p r e s e n t s t r u c t u r e u n l e s s f u n d a ­

m e n t a l a n d f a r - r e a c h i n g c h a n g e s a r e m a d e .

A l t h o u g h t h e h i s t o r i c a l r e a s o n s f o r c o m b i n i n g p o s t a l s e r v i c e s a n d t e l e ­

c o m m u n i c a t i o n s i n t h e s a m e m a n a g e m e n t s t r u c t u r e a r e u n d e r s t o o d , t h e l o g i c

of t h i s a r r a n g e m e n t a t t h i s p o i n t i n t i m e m u s t b e s e r i o u s l y c h a l l e n g e d . T h e

t w o s e r v i c e s a r e i n h e r e n t l y a n d f u n d a m e n t a l l y d i f f e r e n t - a f a c t w h i c h h a s b e e n

r e c o g n i s e d o r g a n i s a t i o n a l l y i n m a n y a r e a s w i t h i n t h e A P O b u t n o t , a s n o t e d ,

a t e i t h e r t h e t o p m a n a g e m e n t l e v e l o r a t t h e s t a t e l e v e l , w h e r e t h e t w o s e r v i c e s

a r e c o m b i n e d u n d e r c o m m o n e x e c u t i v e d i r e c t i o n . M o r e o v e r , t h e e f f e c t i v e n e s s

o f t h e t w o s e r v i c e s i s h a m p e r e d b y t h e c o m b i n e d m a n a g e m e n t a n d f i n a n c i n g

d i c t a t e d b y t h e c u r r e n t s t r u c t u r e . I n a m a n a g e m e n t s e n s e , t h e o r g a n i s a t i o n

s t r u c t u r e i s u n w i e l d y a n d p l a c e s o n t h e D i r e c t o r - G e n e r a l a b u r d e n w h i c h i s

u n r e a s o n a b l e f o r a n y o n e e x e c u t i v e , r e g a r d l e s s o f h i s e x p e r i e n c e o r c a p a b i l i t y .

In a f i n a n c i a l s e n s e , c o m b i n i n g t h e t w o s e r v i c e s i n t o a s i n g l e s t r u c t u r e o b s c u r e s

i m p o r t a n t i s s u e s s u c h a s t h e c o n s i d e r a t i o n o f a p p r o p r i a t e f i s c a l g o a l s , p u b l i c

s e r v i c e e l e m e n t s w a r r a n t i n g s u b s i d y , p r o f i t o r l o s s g e n e r a t e d by e a c h o f t h e

t w o b a s i c s e r v i c e s , a n d s i m i l a r m a t t e r s w h i c h a r e n e i t h e r s u f f i c i e n t l y c l e a r

n o r p u b l i c l y c o n s i d e r e d i n t h e c u r r e n t s i t u a t i o n .

A s i d e f r o m t h e p r o b l e m s c r e a t e d t h r o u g h c o m b i n i n g t h e t w o s e r v i c e s i n

a s i n g l e m a n a g e m e n t s t r u c t u r e , t h e r e a r e o t h e r o r g a n i s a t i o n a l i m p e d i m e n t s .

S o m e o f t h e s e a r e o u t s i d e t h e c o n t r o l o f t h e A P O ; d e s p i t e t h e f a c t t h a t , i n

m a n y r e s p e c t s , t h e A P O o p e r a t e s t w o b u s i n e s s e s , i m p o r t a n t d e t e r m i n a t i o n s

f u n d a m e n t a l t o a c h i e v i n g r e s u l t s a r e i n t h e p u r v i e w o f e x t e r n a l a u t h o r i t i e s ,

p r i n c i p a l l y t h e P u b l i c S e r v i c e B o a r d .

O p p o r t u n i t i e s f o r o r g a n i s a t i o n a l i m p r o v e m e n t i n o t h e r r e s p e c t s w e r e a l s o

n o t e d . P e r h a p s t h e m o s t i m p o r t a n t i s t h e i n a d e q u a t e d i s t i n c t i o n b e t w e e n t w o

d i f f e r e n t l y o r i e n t e d t y p e s o f r e s p o n s i b i l i t y : t h e r e s p o n s i b i l i t y f o r l o n g - r a n g e

p l a n n i n g a n d u p w a r d - a n d - o u t w a r d r e l a t i o n s h i p s o n t h e o n e h a n d , a n d t h e r e s p o n ­

s i b i l i t y f o r d a y - t o - d a y o p e r a t i o n s o n t h e o t h e r . U n d e r t h e p r e s e n t a r r a n g e m e n t s

t h e D i r e c t o r - G e n e r a l s e r v e s i n e a c h o f t h e s e r o l e s , b o t h f o r t e l e c o m m u n i c a t i o n s

a n d f o r p o s t a l s e r v i c e s .

T h e r e a r e a l s o o p p o r t u n i t i e s f o r o r g a n i s a t i o n a l i m p r o v e m e n t w i t h i n e a c h

of t h e t w o s e r v i c e s i n d i v i d u a l l y . I n t e l e c o m m u n i c a t i o n s , s t r a t e g i c p l a n n i n g

a n d t e c h n i c a l a c t i v i t i e s a t t h e C e n t r a l A d m i n i s t r a t i o n l e v e l a r e n o t p r o p e r l y

o r g a n i s e d , n o r i s t h e r e e f f e c t i v e i n t e g r a t i o n o f m a r k e t i n g a c t i v i t i e s i n t o t h e

s t r u c t u r e . I n t h e f i e l d , a f u n d a m e n t a l d e f i c i e n c y e x i s t s , i n t h a t r e s p o n s i b i l i t y

a n d a c c o u n t a b i l i t y f o r t h e t e l e c o m m u n i c a t i o n s b u s i n e s s i n a g e o g r a p h i c a r e a

c a n n o t b e d e l e g a t e d b e l o w t h e l e v e l o f t h e S t a t e D i r e c t o r .

O n t h e p o s t a l s e r v i c e s s i d e , t h e m a j o r o p p o r t u n i t i e s f o r o r g a n i s a t i o n a l

i m p r o v e m e n t l i e i n t h e f i e l d m a n a g e m e n t s t r u c t u r e b e l o w t h e s t a t e l e v e l .

A f i n a l o b s e r v a t i o n c o n c e r n s t h e r e l a t i o n b e t w e e n t h e A P O 1 s d o m e s t i c

t e l e c o m m u n i c a t i o n s a c t i v i t i e s a n d t h e i n t e r n a t i o n a l t e l e c o m m u n i c a t i o n s s e r v i c e s

p r o v i d e d b y t h e O v e r s e a s T e l e c o m m u n i c a t i o n s C o m m i s s i o n ( A u s t r a l i a ) . T h e

O T C i s a l m o s t u n i v e r s a l l y r e g a r d e d a s a w e l l - m a n a g e d , d y n a m i c e n t e r p r i s e ,

b u t t h e r e i s a n e e d f o r b e t t e r c o - o r d i n a t i o n b e t w e e n i t a n d t h e t e l e c o m m u n i c a ­

t i o n s b u s i n e s s o f t h e A P O .

R E C O M M E N D A T I O N S

F o u r f u n d a m e n t a l r e c o m m e n d a t i o n s a r e m a d e c o n c e r n i n g t h e A P O a s a

w h o l e . T h e s e a r e o u t l i n e d b e l o w , f o l l o w e d b y a b r i e f s u m m a r y o f r e c o m m e n ­

d a t i o n s c o n c e r n e d w i t h t e l e c o m m u n i c a t i o n s a n d w i t h p o s t a l s e r v i c e s i n d i v i d u a l l y .

1 · S e p a r a t e T o t a l l y T h e E x e c u t i v e D i r e c t i o n A n d M a n a g e m e n t Of

T e l e c o m m u n i c a t i o n s F r o m T h a t Of P o s t a l S e r v i c e s

T h e A P O s h o u l d b e s e p a r a t e d i n t o t w o e n t i t i e s , e a c h w i t h i t s o w n e x e c u ­

t i v e d i r e c t i o n a n d o p e r a t i n g m a n a g e m e n t c a p a b i l i t y , a s w e l l a s n e c e s s a r y

p r o v i s i o n f o r s t a f f s e r v i c e s .

I I - 2

C o m p l e t e s e p a r a t i o n o f e x e c u t i v e r e s p o n s i b i l i t i e s i s s t r o n g l y r e c o m m e n d e d ,

b e c a u s e ; t h e m a g n i t u d e a n d s o c i o - e c o n o m i c i m p o r t a n c e o f e a c h s e r v i c e m a n i ­

f e s t l y w a r r a n t t h a t i t s p o l i c i e s a n d o b j e c t i v e s b e d e t e r m i n e d i n d e p e n d e n t l y of

t h e o t h e r , a n d t h a t t h e t w o s e r v i c e s b e g i v e n a n - q u a l c o m p e t i t i v e o p p o r t u n i t y

f o r f u n d i n g t h r o u g h p u b l i c p o l i t i c a l d e t e r m i n a t i - i o f F e d e r a l G o v e r n m e n t f i s c a l

p r i o r i t i e s . M o r e o v e r , c o m p l e t e s e p a r a t i o n o f e x e c u t i v e r e s p o n s i b i l i t y w o u l d

r e d u c e t o m a n a g e a b l e p r o p o r t i o n s t h e s c o p e a n d v a r i e t y of i s s u e s w i t h w h i c h

t o p e x e c u t i v e s , b o t h c e n t r a l l y a n d i n t h e f i e l d , m u s t d e a l ; a n d t h r o u g h t h e e l i m ­

i n a t i o n o f t h e p r e s e n t S t a t e D i r e c t o r p o s i t i o n s r e s p o n s i b l e f o r b o t h s e r v i c e s ,

o p e r a t i o n a l d i r e c t i o n a n d c o m m u n i c a t i o n s c h a n n e l s b e t w e e n c e n t r a l a n d f i e l d

o f f i c e s w o u l d b e s i m p l i f i e d .

2. E s t a b l i s h A C h i e f E x e c u t i v e O f f i c e r - C h i e f O p e r a t i n g O f f i c e r

A r r a n g e m e n t F o r E a c h S e r v i c e T o A c c o m m o d a t e T h e T o t a l

T o p M a n a g e m e n t T a s k

T h e s i z e a n d c o m p l e x i t y o f t h e t w o b a s i c b u s i n e s s e s o f t h e A P O , c o m b i n e d

w i t h t h e n e e d f o r g r e a t e r a t t e n t i o n t o p l a n n i n g t h e f u t u r e o f e a c h b u s i n e s s ,

r e q u i r e a d u a l t o p m a n a g e m e n t c o n c e p t f o r e a c h , w i t h a c h i e f e x e c u t i v e o f f i c e r

r e s p o n s i b l e f o r s t r a t e g i c a n d e x t e r n a l m a t t e r s , a n d a c h i e f o p e r a t i n g o f f i c e r

r e s p o n s i b l e f o r t a c t i c a l a n d d a y - t o - d a y i n t e r n a l m a n a g e m e n t m a t t e r s .

S e v e r a l a d v a n t a g e s s h o u l d a c c r u e f r o m a d o p t i n g t h i s c o n c e p t . S e p a r a t i o n

o f e x t e r n a l , p o l i c y a n d s t r a t e g i c c o n s i d e r a t i o n s f r o m t h e p r e s s u r e s o f d a y - t o ­

d a y m a t t e r s w o u l d a l l o w t h e c h i e f e x e c u t i v e o f f i c e r t o c o n c e n t r a t e o n f u n d a m e n t a l

q u e s t i o n s a n d a n s w e r s a b o u t t h e o b j e c t i v e s o f t h e o r g a n i s a t i o n . T h e i n c u m b e n t

w o u l d h a v e t h e t i m e t o c o n c e i v e l o n g - t e r m s t r a t e g i e s f r o m w h i c h t o e x e r t s t r o n g

l e a d e r s h i p o v e r t h e d i r e c t i o n o f t h e e n t e r p r i s e . H e w o u l d b e a b l e t o e m p h a s i s e

t h e f i n a n c i a l a n d b u s i n e s s p l a n n i n g c o m p o n e n t s of t h e e n t e r p r i s e f r o m a v a n t a g e

p o i n t r e m o v e d f r o m t h e d a y - t o - d a y d e m a n d s o f t e c h n o l o g i c a l a n d o p e r a t i o n a l

p r o b l e m - s o l v i n g .

T h e c h i e f o p e r a t i n g o f f i c e r a s s i g n m e n t w o u l d a l l o w a s e n i o r e x e c u t i v e t o

c o n c e n t r a t e o n d a y - t o - d a y o p e r a t i n g p r o b l e m s . S u b o r d i n a t e m a n a g e r s c o u l d

t h u s t u r n t o a l i n e e x e c u t i v e w h o w o u l d b e a v a i l a b l e o n a r e g u l a r b a s i s f o r

d e c i s i o n s , a n d w h o w o u l d s e l d o m b e d r a w n a w a y u n e x p e c t e d l y i n r e s p o n s e t o

t h e p r e s s u r e s o f e x t e r n a l a f f a i r s . I n t h e l o n g t e r m , t h i s a s s i g n m e n t o f o p e r ­

a t i n g r e s p o n s i b i l i t y w o u l d a l s o p r o v i d e a s o u n d e r b a s i s f o r t o p m a n a g e m e n t

d e v e l o p m e n t a n d s u c c e s s i o n .

3. O b t a i n R e l i e f F r o m E x t e r n a l l y I m p o s e d A u t h o r i t i e s

I n t h e e s s e n t i a l m a n a g e m e n t m a t t e r s o f o r g a n i s a t i o n s t r u c t u r e , e s t a b ­

l i s h m e n t s , a n d m a n a g e m e n t c l a s s i f i c a t i o n s a n d p a y , t h e t w o s e r v i c e s s h o u l d

h a v e a u t h o r i t y t o m a k e f i n a l d e t e r m i n a t i o n s w h i c h a r e n o w i n t h e p u r v i e w o f

II-3

t h e P u b l i c S e r v i c e B o a r d . I n o t h e r m a t t e r s w h i c h a r e s o m e w h a t l e s s k e y t o

t h e f u l f i l l m e n t o f t h e m a n a g e m e n t t a s k , s u c h a s f i r s t - l e v e l s u p e r v i s o r y a n d

n o n - s u p e r v i s o r y c l a s s i f i c a t i o n a n d p a y m a t t e r s , t h e A P O a n d s u c c e s s o r o r g a n i ­

s a t i o n s s h o u l d b e p e r m i t t e d t o e x e r c i s e a s m u c h i n d e p e n d e n t a u t h o r i t y a s t h e

c o m m o n g o o d w i l l p e r m i t , t a k i n g i n t o c o n s i d e r a t i o n t h e d o m i n a n t p o s i t i o n of

t h e A P O i n F e d e r a l G o v e r n m e n t e m p l o y m e n t ,

4. A s s u m i n g T h a t T h e T e l e c o m m u n i c a t i o n s B u s i n e s s I s E s t a b l i s h e d

U n d e r S t a t u t o r y C o r p o r a t i o n G o v e r n a n c e , H a v e T h e P T C R e p o r t

T o T h e S a m e G o v e r n i n g B o a r d

A c o m m o n g o v e r n i n g b o a r d w o u l d a c h i e v e t h e c o - o r d i n a t i o n n e c e s s a r y

b e t w e e n d o m e s t i c a n d i n t e r n a t i o n a l t e l e c o m m u n i c a t i o n s w i t h o u t r u n n i n g t h e

r i s k o f s u b m e r g i n g t h e O T C i n t h e l a r g e s t r u c t u r e o f A P O t e l e c o m m u n i c a t i o n s -

w h i c h , i n a l l p r o b a b i l i t y , w i l l b e i n a s i t u a t i o n o f o r g a n i s a t i o n a l c h a n g e f o r

s e v e r a l y e a r s .

> ; < > i < * > ! <

S p e c i f i c r e c o m m e n d a t i o n s a r e a l s o m a d e t o s t r e n g t h e n m a n a g e m e n t of t h e

t e l e c o m m u n i c a t i o n s a n d p o s t a l s e r v i c e s b u s i n e s s e s t h e m s e l v e s . I n t e l e c o m ­

m u n i c a t i o n s , p r o v i s i o n s h o u l d b e m a d e f o r m o r e e f f e c t i v e c o - o r d i n a t i o n of

h e a d q u a r t e r s t e c h n i c a l a c t i v i t i e s a n d f o r a u g m e n t a t i o n o f h e a d q u a r t e r s m a r k e t ­

i n g s e r v i c e s . P e r h a p s m o s t i m p o r t a n t , a m a j o r r e s t r u c t u r i n g o f t h e f i e l d

o r g a n i s a t i o n s h o u l d b e c a r r i e d o u t i n o r d e r t o e n a b l e d e l e g a t i o n o f g e o g r a p h i c

r e s p o n s i b i l i t y a n d a c c o u n t a b i l i t y , w i t h i n t h e s t a t e o r g a n i s a t i o n s , f o r p r o f i t

c o n t r i b u t i o n a n d c u s t o m e r s e r v i c e .

O n t h e p o s t a l s e r v i c e s s i d e , r e c o m m e n d a t i o n s a r e m a d e w h i c h w o u l d m o r e

a p p r o p r i a t e l y s t r u c t u r e h e a d q u a r t e r s a n d s t a t e a d m i n i s t r a t i o n s , a n d w h i c h w o u l d

r e - a r r a n g e a n d s t r e n g t h e n f i e l d m a n a g e m e n t b e l o w t h e s t a t e l e v e l t o p e r m i t

d e l e g a t i o n o f g r e a t e r m a n a g e m e n t a u t h o r i t y a n d r e s p o n s i b i l i t y , a l o n g w i t h t h e

c o l l a t e r a l b e n e f i t s of i m p r o v e d e m p l o y e e d e v e l o p m e n t a n d c a r e e r p r o g r e s s i o n .

I I - 4

I l l - G E N E R A L O R G A N I S A T I O N A L M A T T E R S

T h i s c h a p t e r b r i e f l y d e s c r i b e s t h e o r g a n i s a t i o n o f t h e A P O a n d t h e n p r e ­

s e n t s o b s e r v a t i o n s a n d r e c o m m e n d a t i o n s , i n t h e c o n t e x t of t h e t e r m s o f

r e f e r e n c e s e t f o r t h i n C h a p t e r I.

T h i s c h a p t e r d e a l s o n l y w i t h m a t t e r s w h i c h i n f l u e n c e b o t h t e l e c o m m u n i c a ­

t i o n s a n d p o s t a l s e r v i c e s . T h e s t u d y a l s o i d e n t i f i e d a n u m b e r o f o p p o r t u n i t i e s

f o r o r g a n i s a t i o n a l i m p r o v e m e n t w h i c h a r e u n i q u e t o e i t h e r t h e t e l e c o m m u n i c a ­

t i o n s o r t h e p o s t a l s e r v i c e s a c t i v i t i e s o f t h e A P O ; t h e s e o p p o r t u n i t i e s a n d

r e l a t e d r e c o m m e n d a t i o n s a r e d i s c u s s e d i n C h a p t e r s IV a n d V.

A - P R E S E N T O R G A N I S A T I O N

T h e A u s t r a l i a n P o s t O f f i c e i s a D e p a r t m e n t of S t a t e a n d r e p o r t s t o t h e

F e d e r a l G o v e r n m e n t a n d P a r l i a m e n t t h r o u g h i t s C a b i n e t M i n i s t e r , t h e P o s t m a s t e r -

G e n e r a l . T h e A P O p l a n s , c o n s t r u c t s , o p e r a t e s a n d m a i n t a i n s t h e d o m e s t i c

t e l e c o m m u n i c a t i o n s a n d p o s t a l s y s t e m s o f t h e c o u n t r y a n d i s , by s e v e r a l

m e a s u r e s , t h e l a r g e s t e n t e r p r i s e i n A u s t r a l i a . F o r e x a m p l e , i t i s t h e l a r g e s t

e m p l o y e r , w i t h a w o r k f o r c e t o t a l l i n g s o m e 1 1 5 , 4 0 0 p e r s o n s a s o f J u n e 1 97 3 .

It a l s o m a i n t a i n s , p r i n c i p a l l y f o r t e l e c o m m u n i c a t i o n s , t h e L a r g e s t c a p i t a l

e x p e n d i t u r e p r o g r a m m e i n A u s t r a l i a - a p r o g r a m m e t h a t a d d e d m o r e t h a n $ 4 8 0

m i l l i o n t o p l a n t a n d e q u i p m e n t i n t h e y e a r e n d e d J u n e 30, 1 9 7 3.

T h e D i r e c t o r - G e n e r a l o f P o s t s a n d T e l e g r a p h s (DG) r e p o r t s t o t h e P o s t ­

m a s t e r - G e n e r a l a n d i s t h e p e r m a n e n t e x e c u t i v e a n d o p e r a t i n g h e a d o f t h e A P O .

H e d i r e c t s a n o r g a n i s a t i o n c o m p o s e d o f a C e n t r a l A d m i n i s t r a t i o n , l o c a t e d i n

M e l b o u r n e , a n d s i x s t a t e a d m i n i s t r a t i o n s , a s s h o w n i n s u m m a r y f o r m ( w i t h

s t a f f i n g l e v e l s ) i n E x h i b i t I I I - 1, f o l l o w i n g t h i s p a g e . T h e t w o b a s i c c o m p o n e n t s

o f t h e s t r u c t u r e a r e d e s c r i b e d i n t h e p a r a g r a p h s w h i c h f o l l o w .

C E N T R A L

A D M I N I S T R A T I O N

R e p o r t i n g t o t h e D i r e c t o r - G e n e r a l , t h e C e n t r a l A d m i n i s t r a t i o n c o n s i s t s o f

h i s i m m e d i a t e o f f i c e , f i v e d i v i s i o n s , a n d o n e b r a n c h . T h e o f f i c e o f t h e D G,

i L i u s t r a t e d o n t h e f i r s t l i n e ο i E x h i b i t III - 1, i n c l u d e s t h r e e D e p u t y D i r e c t o r s -

G e n e r a l ( D D s G ) , a D e p u t y A s s i s t a n t D i r e c t o r - G e n e r a l ( D A D G ) f o r M i n i s t e r i a l n d

' « Λ ί

P R E S E N T P L A N O F O R G A N I S A T I O N

B A S I C S T R U C T U R E

N O V E M B E R 1973

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l a ) T O T A L C O N T A I N S A D D I T I O N A L P O S I T I O N S N O T C L E A R L Y A S S I G N E D T O A N Y S I N G L E O R G A N I S A T I O N A L U N I T

m I CO

E x t e r n a l R e l a t i o n s , a D i r e c t o r o f P u b l i c R e l a t i o n s , a n d t h e A P O E u r o p e a n

R e p r e s e n t a t i v e , p o s t e d i n L o n d o n . A l t h o u g h t h e p o s i t i o n s a r e n o t s h o w n o n

t h e c h a r t , t h e D C s o f f i c e a l s o i n c l u d e s a n A d m i n i s t r a t i v e A s s i s t a n t a n d t h e

H e a d q u a r t e r s S e c r e t a r i a t i n C a n b e r r a .

T h e D D s G h a v e n o c o n t i n u i n g o r p e r m a n e n t l y d e f i n e d s p h e r e s o f r e s p o n ­

s i b i l i t y i n e i t h e r l i n e o r s t a f f c a p a c i t i e s . I n s t e a d , t h e y u n d e r t a k e , o n a n

a s s i g n m e n t b a s i s , p r o j e c t s a n d p r o g r a m m e s f o r t h e D G , a n d a r e e x p e c t e d

a l s o t o b e c o m e a n d r e m a i n i n f o r m e d o n c u r r e n t o r p r o s p e c t i v e i s s u e s a s

a d v i s e r s t o t h e D G . A s c i r c u m s t a n c e s r e q u i r e , t h e D D s G a r e a u t h o r i s e d t o

a c t f o r t h e D G . T h e f u n c t i o n s o f o t h e r m e m b e r s o f t h e o f f i c e o f t h e D i r e c t o r -

G e n e r a l a r e r e f l e c t e d i n t h e p o s i t i o n t i t l e s u s e d .

A l t h o u g h t h e y a r e n o t s t r i c t l y c o m p o n e n t s o f h i s o f f i c e a n d a r e n o t s h o w n

i n E x h i b i t III - 1, t w o s t a n d i n g c o m m i t t e e s ( t h e S t a m p A d v i s o r y C o m m i t t e e a n d

t h e D i r e c t o r - G e n e r a l 1 s C o m m i t t e e o f H e a d s o f D i v i s i o n s / B r a n c h e s ) a n d t w o

b o a r d s ( t h e A P O T e n d e r B o a r d a n d t h e H e a d q u a r t e r s S t a f f S u g g e s t i o n s B o a r d )

a l s o r e p o r t t o t h e D i r e c t o r - G e n e r a l . T h e D G ' s C o m m i t t e e o f H e a d s o f D i v i s i o n s

B r a n c h e s , w h i c h i s c o m p o s e d o f a l l C e n t r a l A d m i n i s t r a t i o n m a n a g e m e n t o f f i c e r s

w h o r e p o r t d i r e c t l y t o t h e D G (11 i n a l l , n o t i n c l u d i n g t h e A P O E u r o p e a n R e p r e ­

s e n t a t i v e ) , " a s s i s t s t h e D i r e c t o r - G e n e r a l i n a n e x a m i n a t i o n o f m a t t e r s r e q u i r i n g

t o p m a n a g e m e n t c o n s i d e r a t i o n . " ( 1 ) T h e s e m a t t e r s r a n g e o v e r : p o s t a l a n d t e l e ­

c o m m u n i c a t i o n s p o l i c i e s a n d o b j e c t i v e s ; o r g a n i s a t i o n ; o p e r a t i n g a n d a d m i n i s t r a ­

t i v e e f f i c i e n c y ; e x t e r n a l r e l a t i o n s ;’ a n d l o n g - t e r m p l a n n i n g . I n e s s e n c e , t h e

C o m m i t t e e s e r v e s a s a f o r u m o f d e l i b e r a t i o n o n t h e s e m a t t e r s p r i o r t o t o p

m a n a g e m e n t d e c i s i o n , a n d a s a m e a n s o f r a p i d , u n i f o r m d o w n w a r d c o m m u n i c a ­

t i o n w i t h i n t h e C e n t r a l A d m i n i s t r a t i o n s e n i o r m a n a g e m e n t g r o u p .

T h e f i v e d i v i s i o n s a n d o n e b r a n c h c o n s t i t u t i n g t h e b a l a n c e o f C e n t r a l A d m i n ­

i s t r a t i o n a r e a r r a n g e d o n t h e s e c o n d l i n e o f E x h i b i t I I I - 1. T h r e e o f t h e d i v i s i o n s

( E n g i n e e r i n g P l a n n i n g a n d R e s e a r c h , E n g i n e e r i n g W o r k s , a n d T e l e c o m m u n i c a ­

t i o n s ) a r e r e l a t e d e x c l u s i v e l y , o r n e a r l y s o , t o t h e t e l e c o m m u n i c a t i o n s s y s t e m ;

o n e d i v i s i o n ( P o s t a l S e r v i c e s ) i s r e l a t e d e x c l u s i v e l y t o p o s t a l m a t t e r s , a n d t h e

r e m a i n i n g d i v i s i o n a n d b r a n c h ( M a n a g e m e n t S e r v i c e s a n d I n d u s t r i a l R e l a t i o n s ,

r e s p e c t i v e l y ) p r o v i d e s t a f f s u p p o r t t o b o t h t e l e c o m m u n i c a t i o n s a n d p o s t a l s e r v ­

i c e s , a n d t o t o p m a n a g e m e n t . T h e s t r u c t u r e s a n i e s t a b l i s h m e n t s o f e a c h o f

t h e s e f i v e d i v i s i o n s a n d t h e I n d u s t r i a l R e l a t i o n s B r a n c h a r e i l l u s t r a t e d i n

E x h i b i t s III - 2 t h r o u g h I I I - 7 , a n d f u n c t i o n a l s u m m a r i e s a r e s e t f o r t h i n t h e f o l ­

l o w i n g p a r a g r a p h s .

(1) A P O s u b m i s s i o n t o t h e C o m m i s s i o n o f I n q u i r y , V o l . 2 C h a p t e r 4 , p. 107.

Ill-2

T c l e c o m m u n i c a t i o n s

T h e t h r e e d i v i s i o n s o r i e n t e d t o t h e t e l e c o m m u n i c a t i o n s s y s t e m a r e :

- E n g i n e e r i n g P l a n n i n g a n d R e s e a r c h

- E n g i n e e r i n g W o r k s

- T e l e c o m m u n i c a t i o n s .

T h e E n g i n e e r i n g P l a n n i n g a n d R e s e a r c h D i v i s i o n ( E x h i b i t I I I - 2 ) " i s r e s p o n ­

s i b l e f o r e n s u r i n g t h a t t h e D e p a r t m e n t m a i n t a i n s a p o s i t i o n a t t h e f o r e f r o n t of

k n o w l e d g e i n c o m m u n i c a t i o n s s c i e n c e a n d t e c h n o l o g y . . . . " ( 2 ) T o a c h i e v e t h i s

o b j e c t i v e , t h e R e s e a r c h S u b - D i v i s i o n c o n d u c t s v a r i o u s r e s e a r c h s t u d i e s a n d

c o n c e p t u a l d e v e l o p m e n t a n d d e s i g n p r o j e c t s t o g a i n a n d a p p l y s u c h k n o w l e d g e .

T h e P l a n n i n g a n d P r o g r a m m i n g S u b - D i v i s i o n , t h r o u g h i t s b r a n c h e s w h i c h a r e

o r i e n t e d t o p a r t i c u l a r e l e m e n t s o f t h e t e l e c o m m u n i c a t i o n s s y s t e m , g u i d e s a n d

o v e r s e e s i n t e r m e d i a t e - a n d s h o r t - t e r m s y s t e m p l a n n i n g (3 t o 10 y e a r s ) p e r ­

f o r m e d b y t h e s t a t e a d m i n i s t r a t i o n s a n d c o m p i l e s n a t i o n - w i d e s y s t e m p l a n s f o r

t h e s e t i m e f r a m e s . It a l s o p a r t i c i p a t e s i n l o n g e r - r a n g e f e a s i b i l i t y a n a l y s e s o f

n e w t e c h n o l o g i e s . T h e N a t i o n a l T e l e c o m m u n i c a t i o n s P l a n B r a n c h , f o r m e d

d u r i n g t h e p a s t y e a r , i s r e s p o n s i b l e f o r d e v e l o p i n g a l o n g - r a n g e s y s t e m p l a n

t a r g e t e d a t t h e y e a r s 1 9 9 0 - 2 0 0 0 a n d i n t e n d e d t o s e r v e , o n c e a p p r o v e d , a s a

f r a m e w o r k f o r i n t e r m e d i a t e - a n d s h o r t - t e r m p l a n n i n g a n d r e s e a r c h a c t i v i t i e s .

T h e E n g i n e e r i n g W o r k s D i v i s i o n ( E x h i b i t III· 3) i s r e s p o n s i b l e " f o r t h e d e s i g n of

e q u i p m e n t . . . , t e c h n i c a l a s p e c t s o f p r o c u r e m e n t , o v e r a l l c o - o r d i n a t i o n o f t h e e n g i ­

n e e r i n g w o r k s e f f o r t , p o l i c y a n d s t a n d a r d s f o r i n - s e r v i c e t e c h n i c a l p e r f o r m a n c e

o f t h e n e t w o r k , a n d e n g i n e e r i n g p r a c t i c e s f o r t h e i n s t a l l a t i o n a n d m a i n t e n a n c e o f t h e

p l a n t . " ( 3 ) A s s h o w n i n t h e e x h i b i t , t h e w o r k o f t h e D i v i s i o n i s c a r r i e d o u t

t h r o u g h 11 b r a n c h e s , e a c h r e s p o n s i b l e f o r a p a r t i c u l a r e l e m e n t o f t h e t e l e c o m ­

m u n i c a t i o n s s y s t e m , b u i l d i n g s a n d R a d i o A u s t r a l i a , o r f o r i n t e r n a l s u p p o r t t o

t h e o t h e r b r a n c h e s . B e c a u s e o f t h e w i d e s p a n o f h i s s u p e r v i s o r y r e s p o n s i b i l i t y ,

t h e F A D G i s a s s i s t e d b y t h r e e S e n i o r A s s i s t a n t D i r e c t o r s - G e n e r a l ( S A D s G ) ,

e a c h o f w h o m o v e r v i e w s t h o s e p o r t i o n s of t h e D i v i s i o n ' s a c t i v i t y i m p l i e d b y

h i s t i t l e : T e c h n i c a l a n d D e s i g n P o l i c y , W o r k s P r o g r a m m e C o - o r d i n a t i o n , a n d

M a n a g e m e n t P o l i c y a n d R e v i e w . A l t h o u g h n o t f o r m a l l y p r o v i d e d f o r i n t h e

( 2) i b i d - p p . 100 - 101.

( 3 ) i b i d - p. 100.

Il l - 3

P R E S E N T P L A N O F O R G A N I S A T I O N

E N G I N E E R I N G P L A N N I N G A N D R E S E A R C H D I V I S I O N

PO STM A STER-G EN ERA L'S D EPARTM ENT

N O V E M B E R 1973

S A T E L L I T E

C O M M U N I C A T I O N S

S E C T I O N

S W I T C H I N G

P R O G R A M M I N G

S U B - D I V I S I O N

E N G I N E E R I N G P L A N N I N G

A N D R E S E A R C H

F I R S T A S S I S T A N T

D I R E C T O R - G E N E R A L

N A T I O N A L

T E L E C O M M U N I C A T I O N S

B R A N C H

F U N D A M E N T A L S W I T C H I N G A N D

S I G N A L L I N G S Y S T E M S A N D L A B O R A T O R Y

P R E S E N T P L A N O F O R G A N I S A T I O N

E N G I N E E R I N G W O R K S D I V I S I O N

N O V E M B E R 1973

POSTM ASTER G E N E R A L 'S D EPARTM ENT

S P E C I A L P R O J E C T

E N G I N E E R S

T E C H N I C A L

W O R K S P R O G R A M M E

C O O R D I N A T I O N

( B U I L D I N G S & S E R V I C E S

S U B D I V I S I O N )

M A N A G E M E N T P O L I C Y

A N D R E V I E W

( P E R F O R M A N C E

O P E R A T I O N S

S U B - D I V I S I O N )

E N G I N E E R I N G W O R K S

D I R E C T O R - G E N E R A L

B U I L D I N G S

S U P P O R T

S E R V I C E S

P E R F O R M A N C E

A N D O P E R A T I O N S

T E L E P O W E R S W I T C H I N G

B R A N C H

S U B S C R I B E R S '

T E L E G R A P H S A N D

D A T A E Q U I P M E N T

B R A N C H

R A D I O

i l l ± i 8 i h :

a p p r o v e d s t r u c t u r e , i n p r a c t i c e t h e t h r e e S A D s G s e r v e , i n e f f e c t , a s l i n e

s u p e r v i s o r s o v e r t h e v a r i o u s b r a n c h e s . S p e c i f i c a l l y , t h e S A D G - T e c h n i c a l

a n d D e s i g n P o l i c y g u i d e s t h e L i n e s , L o n g L i n e a n d T e l e p o w e r E q u i p m e n t ,

R a d i o , T e l e p h o n e S w i t c h i n g E q u i p m e n t , T e l e p h o n e S u b s c r i b e r s ' E q u i p m e n t ,

T e l e g r a p h s a n d D a t a E q u i p m e n t , a n d R a d i o A u s t r a l i a B r a n c h e s . T h e S A D G -

W o r k s P r o g r a m m e C o - o r d i n a t i o n g u i d e s t h e B u i l d i n g s a n d S u p p o r t S e r v i c e s

B r a n c h e s ; a n d t h e S A D G - M a n a g e m e n t P o l i c y a n d R e v i e w g u i d e s t h e N e t w o r k

P e r f o r m a n c e a n d O p e r a t i o n s B r a n c h a n d a s p e c i a l p r o j e c t s g r o u p .

T h e T e l e c o m m u n i c a t i o n s D i v i s i o n ( E x h i b i t I I I - 4 ) i s r e s p o n s i b l e f o r " o v e r ­

s i g h t i n g s t a n d a r d s a n d s e r v i c e s p r o v i d e d b y t h e t e l e c o m m u n i c a t i o n s s y s t e m

a n d t h e c o m m e r c i a l v i a b i l i t y o f t e l e c o m m u n i c a t i o n s o p e r a t i o n s ; r e v i e w , d e v e l ­

o p m e n t a n d r e c o m m e n d a t i o n o f t a r i f f s ; a n d a s s e s s m e n t o f c u s t o m e r n e e d s a n d

t h e m a r k e t i n g p o t e n t i a l o f t e l e c o m m u n i c a t i o n s s e r v i c e s a n d f a c i l i t i e s . " ( 4 )

T h e s t r u c t u r e o f t h i s D i v i s i o n , r e c e n t l y m o d i f i e d , c o n s i s t s o f t w o s u b - d i v i s i o n s ,

e a c h h e a d e d by a n A s s i s t a n t D i r e c t o r - G e n e r a l ( A D G ) r e p o r t i n g t o t h e F i r s t

A s s i s t a n t D i r e c t o r - G e n e r a l ( F A D G ) . O n e s u b - d i v i s i o n i s c o n c e r n e d w i t h s a l e s

a n d s e r v i c e o f t e l e c o m m u n i c a t i o n s s e r v i c e s a n d e q u i p m e n t ; t h e o t h e r s u b - d i v i s i o n

h a n d l e s m a r k e t - o r i e n t e d a c t i v i t i e s , i n c l u d i n g m a r k e t f o r e c a s t i n g a n d r e s e a r c h ,

t a r i f f s , a n d p r o m o t i o n a l p l a n n i n g f o r c o m m e r c i a l f a c i l i t i e s a n d e q u i p m e n t .

>!< j|< ;|c i\<

E a c h o f t h e t h r e e f o r e g o i n g d i v i s i o n s c a l l s f o r a s s i s t a n c e f r o m t h e o t h e r s

t o v a r y i n g e x t e n t s . T h u s , t h e T e l e c o m m u n i c a t i o n s D i v i s i o n m u s t c o l l a b o r a t e

w i t h t h e E n g i n e e r i n g P l a n n i n g a n d R e s e a r c h D i v i s i o n a n d t h e E n g i n e e r i n g W o r k s

D i v i s i o n i n f u l f i l l i n g i t s r e s p o n s i b i l i t y t o d e v e l o p a n d r e v i e w p o l i c i e s a n d p r o c e ­

d u r e s g o v e r n i n g s a l e s a n d o p e r a t i o n o f t e l e c o m m u n i c a t i o n s s e r v i c e s . S i m i l a r l y ,

t h e E n g i n e e r i n g P l a n n i n g a n d R e s e a r c h D i v i s i o n c o l l a b o r a t e s w i t h t h e o t h e r t w o

i n f o r m u l a t i n g p o l i c y o n t h e d e v e l o p m e n t o f n a t i o n a l t e l e c o m m u n i c a t i o n s s e r v i c e s .

T h e p a r t i c u l a r l y c l o s e c o l l a b o r a t i o n r e q u i r e d b e t w e e n t h e E n g i n e e r i n g P l a n n i n g

a n d R e s e a r c h D i v i s i o n a n d t h e E n g i n e e r i n g W o r k s D i v i s i o n i s e v i d e n t i n t h e i r

r e s p e c t i v e r e s p o n s i b i l i t i e s , a s f o l l o w s :

- " A s s i s t s i n e s t a b l i s h i n g b a s i c o b j e c t i v e s , p r e p a r e s p l a n s a n d p r o ­

g r a m m e s , a n d d e t e r m i n e s b a s i c t e c h n i c a l s t a n d a r d s f o r o v e r a l l

t r a n s m i s s i o n , s i g n a l l i n g a n d s w i t c h i n g " ( 5) _ E n g i n e e r i n g P l a n n i n g

a n d R e s e a r c h

(4) i b i d - p . 101.

(5) i b i d - p. 100.

Ill-4

P R E S E N T P L A N O F O R G A N I S A T I O N

T E L E C O M M U N I C A T I O N S D I V I S I O N

F A C I L I T I E S

D E V E L O P M E N T

F A C I L I T I E S

S E C T I O N

F A C I L I T I E S A N D

S E C T I O N

T E L E C O M M U N I C A T I O N S

F I R S T A S S I S T A N T

P L A N N I N G

S E C T I O N

C O O R D I N A T I O N

S E C T I O N

S E C T I O N

H I B I T 1 1 1 - 4

- " R e s p o n s i b i l i t y ( w i t h o t h e r s ) f o r c o n t i n u i n g p r o g r a m m e s o f t e c h n o ­

l o g i c a l i n n o v a t i o n n e c e s s a r y t o p r o v i d e a m o d e r n , v i a b l e t e l e c o m m u ­

n i c a t i o n s n e t w o r k ' ' (5) - E n g i n e e r i n g W o r k s .

S i n c e e a c h o f t h e t h r e e d i v i s i o n s o r i e n t e d t o w a r d s t e l e c o m m u n i c a t i o n s

r e p o r t s d i r e c t l y t o t h e D i r e c t o r - G e n e r a l , t h e s e a r e a s o f c o l l a b o r a t i o n i m p l y

a n e e d f o r t o p m a n a g e m e n t i n v o l v e m e n t . T h e y a l s o n e c e s s i t a t e n u m e r o u s o n ­

g o i n g w o r k i n g r e l a t i o n s h i p s f o r m a l i s e d t h r o u g h c o m m i t t e e s o r s i m i l a r d e v i c e s .

A n i n t e r n a l r e v i e w c o n d u c t e d b y t h e A P O i n J a n u a r y 1 9 7 2 i d e n t i f i e d 51 c o m m i t ­

t e e s c h a i r e d b y r e p r e s e n t a t i v e s o f t h e s e t h r e e d i v i s i o n s . T h e e x t e n t o f t h e

r e l a t i o n s h i p s b e t w e e n t h e t h r e e d i v i s i o n s w a s r e f l e c t e d i n t h e f a c t t h a t 3 1 o f

t h e s e 5 1 c o m m i t t e e s i n c l u d e d r e p r e s e n t a t i v e s f r o m o n e o r b o t h o f t h e o t h e r t w o

d i v i s i o n s ( i n a d d i t i o n t o r e p r e s e n t a t i v e s o n m a n y o f t h e c o m m i t t e e s f r o m s t i l l

o t h e r d i v i s i o n s a n d s t a t e a d m i n i s t r a t i o n s ) .

P o s t a l S e r v i c e s

T h e P o s t a l S e r v i c e s D i v i s i o n ( E x h i b i t I I I - 5) " d e v e l o p s p o l i c y , p r a c t i c e s a n d

p r o c e d u r e s i n r e l a t i o n t o a l l p o s t a l s e r v i c e s a n d n o n - e n g i n e e r i n g t r a n s p o r t

a c t i v i t i e s , m a k e s r e c o m m e n d a t i o n s o n t a r i f f s a n d s e r v i c e s t a n d a r d s , a n d i s

r e s p o n s i b l e f o r t h e d e s i g n a n d d e v e l o p m e n t o f m a i l h a n d l i n g e q u i p m e n t . " ( 6 )

E x c e p t f o r p o s t a l r e s e a r c h ( p e r f o r m e d b y t h e E n g i n e e r i n g P l a n n i n g a n d R e s e a r c h

D i v i s i o n ) , t h e P o s t a l S e r v i c e s D i v i s i o n e s s e n t i a l l y i n c o r p o r a t e s t h e r a n g e , o f

f u n c t i o n s f o r p o s t a l s e r v i c e s t h a t a r e p e r f o r m e d f o r t e l e c o m m u n i c a t i o n s b y t h e

t h r e e d i v i s i o n s j u s t d i s c u s s e d . T h e D i v i s i o n ' s s t r u c t u r e p r o v i d e s a g r o u p i n g in

a s u b - d i v i s i o n , h e a d e d b y a S e n i o r A s s i s t a n t D i r e c t o r - G e n e r a l , o f t h e P o s t a l

E n g i n e e r i n g a n d P o s t a l P l a n n i n g B r a n c h e s , h e a d e d b y a n A s s i s t a n t D i r e c t o r -

G e n e r a l a n d a D e p u t y A s s i s t a n t D i r e c t o r - G e n e r a l , r e s p e c t i v e l y . O t h e r b r a n c h e s ,

e a c h h e a d e d b y a D A D G r e p o r t i n g t o t h e F i r s t A s s i s t a n t D i r e c t o r - G e n e r a l - P o s t a l

S e r v i c e s , a r e c o n c e r n e d w i t h m a i l p r o c e s s i n g a n d t r a n s p o r t , p o s t o f f i c e s o p e r a ­

t i o n s , a n d c o m m e r c i a l , f i n a n c i a l a n d e x t e r n a l r e l a t i o n s e l e m e n t s o f t h e p o s t a l

s e r v i c e s .

T h e p r e v i o u s l y c i t e d i n t e r n a l r e v i e w o f c o m m i t t e e s r e v e a l e d t h e r e l a t i v e l y

s t r a i g h t f o r w a r d a r r a n g e m e n t s f o r o r g a n i s a t i o n a n d i n t e r n a l r e l a t i o n s h i p s f o r

p o s t a l s e r v i c e s a s c o n t r a s t e d w i t h t e l e c o m m u n i c a t i o n s , a n d a l s o t h e r e l a t i v e

l a c k o f r e l a t i o n s h i p s b e t w e e n t h e t w o b a s i c s e r v i c e s . I n J a n u a r y 1 9 7 2 , t h e

P o s t a l S e r v i c e s D i v i s i o n c h a i r e d 13 c o m m i t t e e s ( i n c l u d i n g t h e S t a m p A d v i s o r y

C o m m i t t e e m e n t i o n e d p r e v i o u s l y ) . O n l y 2 o f t h e 13 c o m m i t t e e s i n c l u d e d r e p r e ­

s e n t a t i v e s f r o m t h e E n g i n e e r i n g P l a n n i n g a n d R e s e a r c h , t h e E n g i n e e r i n g W o r k s

( 5 ) i b i d - p. 100.

( 6 ) i b i d - p. 102.

I l l - 5

P R E S E N T P L A N O F O R G A N I S A T I O N

P O S T A L S E R V I C E S D I V I S I O N

N O V E M B E R 1973

POSTMASTER-GENERAL’S DEPARTMENT

S E C T I O N

o r t h e T e l e c o m m u n i c a t i o n s D i v i s i o n . O n e o f t h e s e t w o c o m m i t t e e s w a s c o n ­

c e r n e d w i t h L e t t e r - s o r t i n g e q u i p m e n t , a n d t h e o t h e r w i t h m o t o r t r a n s p o r t .

S t a f f S u p p o r t

T h e M a n a g e m e n t S e r v i c e s D i v i s i o n ( E x h i b i t I I I - 6) " i s r e s p o n s i b l e f o r t h e

d e v e l o p m e n t o f p o l i c y , p r a c t i c e s a n d p r o c e d u r e s i n t h e f i n a n c i a l a n d g e n e r a l

a d m i n i s t r a t i v e m a n a g e m e n t " ( 7 ) o f t h e A P O . A s m a y b e s e e n i n t h e e x h i b i t ,

t h e D i v i s i o n i s c o n c e r n e d w i t h a v a r i e t y o f f u n c t i o n s : p e r s o n n e l m a n a g e m e n t

a n d a d m i n i s t r a t i o n , i n t e r n a l a u d i t i n g , s u p p l y , a u t o m a t i c d a t a p r o c e s s i n g

(A D P ) , a n d f i n a n c i a l m a n a g e m e n t a n d a c c o u n t i n g . E a c h o f t h e s e f u n c t i o n s i s

t h e c o n c e r n o f a b r a n c h ( a s e c t i o n f o r I n t e r n a l A u d i t ) r e p o r t i n g t o t h e D i v i s i o n

h e a d , a F i r s t A s s i s t a n t D i r e c t o r - G e n e r a l . G e n e r a l l y s p e a k i n g , t h e D i v i s i o n

p r o v i d e s d i r e c t s t a f f s u p p o r t s e r v i c e s t o t h e D i r e c t o r - G e n e r a l a n d o t h e r

c o m p o n e n t s o f C e n t r a l A d m i n i s t r a t i o n , w h i l e i t e x e r c i s e s f u n c t i o n a l c o n t r o l

o v e r c o u n t e r p a r t s t a f f s e r v i c e s p r o v i d e d w i t h i n t h e s t a t e a d m i n i s t r a t i o n s .

B e c a u s e o f i t s s u p p o r t r o l e , t h e M a n a g e m e n t S e r v i c e s D i v i s i o n n a t u r a l l y

m a i n t a i n s r e l a t i o n s w i t h o t h e r d i v i s i o n s a n d t h e s t a t e a d m i n i s t r a t i o n s . I n

J a n u a r y 1 9 7 2 , t h e D i v i s i o n w a s c h a i r i n g 28 c o m m i t t e e s , o f w h i c h 19 i n c l u d e d

r e p r e s e n t a t i o n o f o n e o r m o r e o t h e r C e n t r a l A d m i n i s t r a t i o n d i v i s i o n s . ( T h e

b a l a n c e o f t h e c o m m i t t e e s c o n s i s t e d m a i n l y o f D i v i s i o n a n d s t a t e a d m i n i s t r a ­

t i o n m e m b e r s h i p . ) T h e D i v i s i o n w a s a l s o r e p r e s e n t e d o n 26 c o m m i t t e e s

c h a i r e d by o t h e r C e n t r a l A d m i n i s t r a t i o n d i v i s i o n s , a n d t h u s w a s m a i n t a i n i n g

m e m b e r s h i p s o n 54 c o m m i t t e e s i n a l l .

T h e I n d u s t r i a l R e l a t i o n s B r a n c h ( E x h i b i t I I I - 7) " i s r e s p o n s i b l e f o r a d v i c e

a n d a s s i s t a n c e t o m a n a g e m e n t o n i n d u s t r i a l m a t t e r s . "(&) H e a d e d by a S e n i o r

A s s i s t a n t D i r e c t o r - G e n e r a l , t h e B r a n c h c o n d u c t s n e g o t i a t i o n s a t t h e f e d e r a l

l e v e l , a n d p e r f o r m s i n v e s t i g a t i o n s a n d o t h e r b a c k - u p s e r v i c e s r e g a r d i n g

n e g o t i a t i o n s a n d i n s u p p o r t of c o u n t e r p a r t f u n c t i o n s a t l o w e r l e v e l s . T h e

B r a n c h w a s c r e a t e d s e v e r a l y e a r s a g o t o p l a c e i n d u s t r i a l r e l a t i o n s ( w h i c h w a s

p r e v i o u s l y p a r t o f t h e P e r s o n n e l B r a n c h o f t h e M a n a g e m e n t S e r v i c e s D i v i s i o n )

c l o s e t o t h e DG b e c a u s e o f t h e l e v e l a n d s e n s i t i v i t y o f i n d u s t r i a l i n c i d e n t s , a n d

t o r e l i e v e t h e F A D G - M a n a g e m e n t S e r v i c e s o f a t l e a s t o n e o f h i s v e r y b r o a d

r a n g e o f r e s p o n s i b i l i t i e s .

In J a n u a r y 1 9 7 2 , t h e B r a n c h c h a i r e d 8 c o m m i t t e e s o f m a n a g e m e n t o r m a n ­

a g e m e n t a n d s t a f f a s s o c i a t i o n m e m b e r s h i p s , a n d w a s r e p r e s e n t e d o n 10 c o m ­

m i t t e e s c h a i r e d by o t h e r C e n t r a l A d m i n i s t r a t i o n d i v i s i o n s .

(7) i b i d - p . 102.

(8) i b i d - p. 10 3.

Ill - 6

P R E S E N T P L A N O F O R G A N I S A T I O N

M A N A G E M E N T S E R V I C E S D I V I S I O N

N O V E M B E R 1973

PO STM A STER-G EN ERA L'S D EPA RTM EN T

E S T A B L I S H M E N T S

S E C T I O N

A C C O U N T I N G

S E C T I O N

S Y S T E M S

D E V E L O P M E N T

S E C T I O N

D E V E L O P M E N T

S E C T I O N

D E V E L O P M E N T

M A N A G E M E N T

S E C T I O N A N A L Y S I S

P E R S O N N E L S U P P L Y

F I N A N C E A N D

B R A N C H

S E C T I O N

S E C T I O N A S E C T I O N B

P L A N N I N G A N D

S E R V I C E S

EXHIBIT 111-7

POSTMASTER-GENERAL'S DEPARTMENT

PRESENT PLAN OF ORGANISATION INDUSTRIAL RELATIONS BRANCH NOVEMBER 1973

S P E C I A L I N V E S T I G A T I O N S S E C T I O N

N E G O T I A T I O N A N D C O N D I T I O N S O F S E R V I C E S E C T I O N

I N D U S T R I A L R E L A T I O N S B R A N C H

S E N I O R A S S I S T A N T D I R E C T O R - G E N E R A L

G e n e r a l C h a r a c t e r i s t i c s Of C e n t r a l A d m i n i s t r a t i o n

W i t h i n t h e f r a m e w o r k o f t h e A P O , t h e C e n t r a l A d m i n i s t r a t i o n w o r k s

e s s e n t i a l l y t o d e f i n e o v e r a l l p o l i c y a n d o t h e r g u i d e l i n e s , t o d e v e l o p b a s i c

t e c h n o l o g i c a l s y s t e m c o m p o n e n t s a n d s t a n d a r d o p e r a t i n g p r a c t i c e s , a n d t o

a p p r o v e t h e p l a n s a n d m o n i t o r t h e a c c o m p l i s h m e n t s o f t h e s t a t e a d m i n i s t r a ­

t i o n s . T h e g e n e r a l A P O p h i l o s o p h y i s t h a t t h e C e n t r a l A d m i n i s t r a t i o n o r g a n i ­

s a t i o n a l u n i t s a r e m a i n l y t h e " l o n g - t e r m p l a n n e r s , r e v i e w e r s a n d a p p r o v e r s , "

w h i l e t h e s t a t e s a r e t h e " s h o r t - t e r m p l a n n e r s a n d d o e r s . " H o w e v e r , C e n t r a l

A d m i n i s t r a t i o n r e t a i n s t h e p r i m a r y o p e r a t i n g r o l e i n s e v e r a l f u n c t i o n s ; p a r ­

t i c u l a r e x a m p l e s a r e r e s e a r c h , n a t i o n a l t e l e c o m m u n i c a t i o n s p l a n n i n g , e q u i p ­

m e n t d e s i g n , a n d m a j o r c o n s t r u c t i o n p r o v i s i o n i n g - c e n t r a l i s e d f u n c t i o n s

w h i c h d o n o t h a v e c o u n t e r p a r t s i n t h e s t a t e a d m i n i s t r a t i o n s .

C o u n t e r p a r t d i v i s i o n a n d b r a n c h f u n c t i o n s a t C e n t r a l A d m i n i s t r a t i o n a n d

a t t h e s t a t e l e v e l a r e e x p e c t e d t o , a n d d o , w o r k c l o s e l y t o g e t h e r . H o w e v e r ,

t h e f o r m a l c h a n n e l f o r c e n t r a l d i r e c t i o n of s t a t e a c t i v i t i e s p a s s e s t h r o u g h

t h e D G a n d t h e D i r e c t o r s o f P o s t s a n d T e l e g r a p h s ( S t a t e D i r e c t o r s ) . T h i s

f o r m a l c h a n n e l b e t w e e n t h e D G a n d a S t a t e D i r e c t o r m u s t be k e p t i n m i n d i n

v i e w i n g C e n t r a l A d m i n i s t r a t i o n - s t a t e r e l a t i o n s h i p s .

T h e e x h i b i t s d i s p l a y e d t h u s f a r a r e p u r p o s e l y s u m m a r i s e d , a n d d o n o t

r e f l e c t t h e f u l l s c o p e a n d d e t a i l o f t h e e x i s t i n g o r g a n i s a t i o n s t r u c t u r e . In

c o m m o n w i t h m a n y l a r g e u t i l i t y - t y p e o r g a n i s a t i o n s , e a c h o f t h e A P O C e n t r a l

A d m i n i s t r a t i o n d i v i s i o n s i s r e s p o n s i b l e f o r j u s t o n e ( o r a n a r r o w r a n g e ) of

a l l o f t h e f u n c t i o n s r e q u i r e d t o o p e r a t e t h e w h o l e . A n d , b e c a u s e m a n y o f

t h e s e f u n c t i o n s i n d i v i d u a l l y a r e c o m p l e x a n d r e q u i r e s i z e a b l e s t a f f s , s e v e r a l

o f t h e m a j o r o r g a n i s a t i o n c o m p o n e n t s e a c h h a v e a n u m b e r o f s u b - c o m p o n e n t s

a n d s u p e r v i s o r y l e v e l s w i t h i n t h e m . S u c h a n o r g a n i s a t i o n p a t t e r n w o r k s t o

d e f i n e r e s p o n s i b i l i t i e s n a r r o w l y , a n d c a n p r o d u c e v e r y l o n g a n d i n v o l v e d

c o m m u n i c a t i o n c h a n n e l s , p a r t i c u l a r l y i n s t r e s s s i t u a t i o n s . C o m m i t t e e s a r e

o f t e n u s e d t o o v e r c o m e t h e s e i n h e r e n t d i f f i c u l t i e s : i n J a n u a r y 1 9 7 2 , t h e

C e n t r a l A d m i n i s t r a t i o n i n c o r p o r a t e d 1 00 c o m m i t t e e s o r t h e e q u i v a l e n t . T h i s

n u m b e r w o u l d r e p r e s e n t o n e c o m m i t t e e f o r e v e r y 33 c u r r e n t e m p l o y e e s i n

t h e C e n t r a l A d m i n i s t r a t i o n d i v i s i o n s a n d t h e I n d u s t r i a l R e l a t i o n s B r a n c h . In

1 9 72 , t h e 100 c o m m i t t e e s i n c o r p o r a t e d a n a g g r e g a t e m e m b e r s h i p o f 5 0 6 , o r

o n e m e m b e r s h i p f o r e v e r y s i x o r s e v e n C e n t r a l A d m i n i s t r a t i o n e m p l o y e e s .

S T A T E A D M I N I S T R A T I O N S

E a c h o f t h e s i x s t a t e a d m i n i s t r a t i o n s i s h e a d e d by a D i r e c t o r o f P o s t s a n d

T e l e g r a p h s ( S t a t e D i r e c t o r ) , w h o r e p o r t s t o t h e D i r e c t o r - G e n e r a l , a s n o t e d

III - 7

p r e v i o u s l y . E x h i b i t I I I - 8 d e p i c t s a t y p i c a l s t a t e o r g a n i s a t i o n ( t h e a c t u a l

o r g a n i s a t i o n s d i f f e r , b u t n o t m a t e r i a l l y , f r o m s t a t e t o s t a t e ) .

A s t h e e x h i b i t i n d i c a t e s , t h e S t a t e D i r e c t o r t y p i c a l l y m a n a g e s f o u r o r

f i v e s t a f f s e r v i c e s ( o n l y N e w S o u t h W a l e s a n d V i c t o r i a h a v e A D P B r a n c h e s ,

a n d t h e s e r e p o r t f u n c t i o n a l l y t o t h e C e n t r a l A d m i n i s t r a t i o n A D P B r a n c h )

a n d t h r e e l i n e o p e r a t i n g d i v i s i o n s . T h e s t a f f s e r v i c e s , r e p r e s e n t i n g c o u n t e r ­

p a r t s o f t h e b r a n c h e s i n t h e M a n a g e m e n t S e r v i c e s D i v i s i o n a n d o f t h e I n d u s t r i a l

R e l a t i o n s B r a n c h , i n c l u d e f i n a n c e a n d a c c o u n t i n g , i n t e r n a l a u d i t , s u p p l y , a n d

p e r s o n n e l a n d i n d u s t r i a l r e l a t i o n s .

T h e l i n e d i v i s i o n s i n c l u d e e n g i n e e r i n g a n d t e l e c o m m u n i c a t i o n s ( b o t h

o r i e n t e d t o t e l e c o m m u n i c a t i o n s s e r v i c e s ), a n d p o s t a l s e r v i c e s . In t h e s t a t e -

l e v e l P o s t a l S e r v i c e s D i v i s i o n , c e r t a i n f u n c t i o n s a r e f u r t h e r s u b - d i v i d e d

a l o n g g e o g r a p h i c l i n e s t o l o w e r o r g a n i s a t i o n l e v e l s . T h e p o s t o f f i c e s f u n c t i o n ,

f o r e x a m p l e , p r o c e e d s t h r o u g h a g e o g r a p h i c d i s t r i c t l e v e l t o t h e i n d i v i d u a l

p o s t m a s t e r . M a i l e x c h a n g e s , t r a n s p o r t a n d p o s t a l p l a n n i n g , o n t h e o t h e r h a n d ,

a r e m a n a g e d d i r e c t l y f r o m t h e s t a t e l e v e l .

C e r t a i n f u n c t i o n s o f t h e s t a t e - l e v e l E n g i n e e r i n g a n d T e l e c o m m u n i c a t i o n s

D i v i s i o n s a r e a l s o e a c h s u b - d i v i d e d g e o g r a p h i c a l l y . T h e e f f o r t s o f t h e t w o

d i v i s i o n s m u s t b § c o m b i n e d t o p r o v i d e u n i f i e d t e l e c o m m u n i c a t i o n s s e r v i c e s t o

t h e c u s t o m e r . S i n c e t h e t w o d i v i s i o n s r e p o r t d i r e c t l y t o t h e S t a t e D i r e c t o r ,

h e r e p r e s e n t s t h e l o w e s t l e v e l o f m a n a g e m e n t a t w h i c h u n i f i e d r e s p o n s i b i l i t y

f o r t e l e c o m m u n i c a t i o n s c a n b e a s s i g n e d . T h e D e p a r t m e n t i n t r o d u c e d a n a r e a

m a n a g e m e n t s c h e m e i n 1 9 7 1 t o c a r r y t h i s t o t a l r e s p o n s i b i l i t y c l o s e r t o t h e

o p e r a t i n g l e v e l b u t , f o r a v a r i e t y o f r e a s o n s , t h e s c h e m e h a s n o t b e e n i m p l e ­

m e n t e d .

Ill-8

P O S T M A S T E R - G E N E R A L ' S D E P A R T M E N T

PRESENT PLAN OF ORGANISATION TYPICAL STATE ADMINISTRATION NOVEMBER 1973

F I N A N C E A ND A C C O U N T I N G BR A N C H

P O S T A L S E R V I C E S DI VI SI ON

I N T E R N A L A U D I T S EC T I O N

E N G I N E E R I N G D I VI S I O N

A DR BR A N C H

S UP P L Y BR A N C H

T E L E C O M M U N I C A T I O N S D I VI SI ON

P E R S O N N E L A N D I N D U S T R I A L R E L A T I O N S BR A N C H

D I R E C T O R OF P O S T S A N D T E L E G R A P H S

(a) At pr es ent , N e w S o u t h Wales a n d Vi ct o r ia onl y.

B - O B S E R V A T I O N S

I n r e t a i n i n g t h e c o n s u l t a n t s t o c o n d u c t t h i s s t u d y , t h e C o m m i s s i o n of

I n q u i r y l a i d d o w n t h e s i x g e n e r a l t e r m s of r e f e r e n c e d e s c r i b e d i n C h a p t e r I.

F i v e o f t h e s e t e r m s o f r e f e r e n c e c a l l f o r o b s e r v a t i o n s o n o p p o r t u n i t i e s f o r

o r g a n i s a t i o n i m p r o v e m e n t , a n d t h e s e t e r m s of r e f e r e n c e a r e t h e f r a m e w o r k

w i t h i n w h i c h t h e f o l l o w i n g g e n e r a l o b s e r v a t i o n s a r e o f f e r e d . T h e s i x t h t e r m

of r e f e r e n c e c a l l s f o r r e c o m m e n d a t i o n s , w h i c h a r e p r e s e n t e d i n S e c t i o n C of

t h i s c h a p t e r a n d i n C h a p t e r s I V a n d V. T h e s e t w o c h a p t e r s s e t f o r t h o p p o r ­

t u n i t i e s f o r o r g a n i s a t i o n a l i m p r o v e m e n t a n d r e c o m m e n d a t i o n s r e g a r d i n g

t e l e c o m m u n i c a t i o n s a n d p o s t a l s e r v i c e s , r e s p e c t i v e l y .

T h e t e r m s o f r e f e r e n c e a r e s t a t e d i n f u l l o n p a g e s I - 1 a n d 1 - 2. I n t h e

h e a d i n g s b e l o w , t h e y a r e s u m m a r i s e d t o c o n v e y t h e m a i n p o i n t s c o v e r e d .

A t t h e o u t s e t , i t s h o u l d b e m e n t i o n e d t h a t m a n y m a n a g e m e n t p e r s o n n e l

w i t h i n t h e A P O a r e c o n c e r n e d a b o u t t h e d i f f i c u l t i e s a r i s i n g o u t o f t h e c u r r e n t

o r g a n i s a t i o n a r r a n g e m e n t s . T h e i n t e r v i e w s m a d e i t c l e a r t h a t m a n y of t h e

p o i n t s r a i s e d h e r e i n a r e t r o u b l i n g t o i n d i v i d u a l m a n a g e r s , a n d h a v e f o r m e d

t h e b a s i s f o r a n u m b e r of i n t e r n a l s t u d i e s a n d p r o p o s a l s f o r c h a n g e .

R E F E R E N C E O N E :

E F F I C I E N C Y A N D E F F E C T I V E N E S S O F

P R E S E N T O R G A N I S A T I O N S T R U C T U R E

• T h e e f f i c i e n c y a n d e f f e c t i v e n e s s of t h e A P O a r e i n f l u e n c e d b y c o n d i t i o n s

l a r g e l y b e y o n d i t s c o n t r o l , a s w e l l a s b y f a c t o r s o v e r w h i c h i t c a n e x e r c i s e

a t l e a s t p a r t i a l c o n t r o l . T h e s e a r e d i s c u s s e d b e l o w .

T h e I n d u s t r i a l R e l a t i o n s C l i m a t e A n d I n d u s t r i a l P r a c t i c e s I n A u s t r a l i a

I m p o s e S e v e r e L i m i t a t i o n s O n T h e E f f i c i e n c y Of T h e A P O

T h e p e r s i s t e n t i n d u s t r i a l d i f f i c u l t i e s o c c u r r i n g a t t h e R e d f e r n M a i l

E x c h a n g e i n S y d n e y o v e r t h e l a s t f e w y e a r s h a v e d e m o n s t r a t e d v i v i d l y t h e

n e g a t i v e e f f e c t o f i n d u s t r i a l r e l a t i o n s u p o n t h e e f f i c i e n c y of t h e p o s t a l s y s ­

t e m . O n t h e b a s i s of t h i s e x p e r i e n c e , A P O m a n a g e m e n t h a s i d e n t i f i e d a n d

i s p u r s u i n g a p r o g r a m m e t o d e v e l o p m a i l c e n t r e s . It i s h o p e d t h a t t h e

s m a l l e r a n d m o r e " p e o p l e - o r i e n t e d " m a i l c e n t r e , a s c o m p a r e d w i t h a l a r g e ,

m o r e a u t o m a t e d m a i l e x c h a n g e s u c h a s R e d f e r n , w i l l o f f e r a f a r m o r e p o s i ­

t i v e e n v i r o n m e n t f o r i n d u s t r i a l r e l a t i o n s . It i s a l s o h o p e d t h a t i n t r o d u c t i o n

of m a i l c e n t r e s w i l l r e d u c e t h e s y s t e m ' s d e p e n d e n c e o n s o f e w c e n t r a l i s e d

f a c i l i t i e s .

I II - 9

A s i d e f r o m t h e m a i l e x c h a n g e v e r s u s m a i l c e n t r e s i t u a t i o n , h u m a n p r o ­

d u c t i v i t y i s v i t a l t o e f f i c i e n c y i n b o t h p o s t a l a n d t e l e c o m m u n i c a t i o n s s e r v i c e s .

P o s t a l s e r v i c e s i s l a b o u r - i n t e n s i v e ; t e l e c o m m u n i c a t i o n s i s c a p i t a l - i n t e n s i v e ,

b u t a l s o e m p l o y s a v e r y l a r g e w o r k f o r c e t o c o n s t r u c t , o p e r a t e a n d m a i n t a i n

t h e s y s t e m a n d t o p r o v i d e c u s t o m e r s e r v i c e s . C u r r e n t l y , c o n v e r s i o n o f o f f i ­

c i a l p o s t o f f i c e s t o n o n - o f f i c i a l s t a t u s , d i s c o n t i n u a n c e o f m a r g i n a l n o n - o f f i c i a l

p o s t o f f i c e s , p r o c e s s i n g of p o s t a l o r d e r s , a n d c o n v e r s i o n f r o m m a n u a l t o

a u t o m a t e d t e l e p h o n e e x c h a n g e s r e p r e s e n t f o u r a r e a s i n w h i c h e f f i c i e n c y a n d

i n d u s t r i a l a n d / o r p o l i t i c a l c o n s i d e r a t i o n s c o n f l i c t .

T h e r e i s e v e r y r e a s o n t o b e l i e v e t h a t t h e w o r k f o r c e c o n c e r n e d w i l l

r e m a i n v i t a l l y i n t e r e s t e d i n a n y p l a n s t o i m p r o v e e f f i c i e n c y t h a t a f f e c t t h e i r

w o r k . No r e c o m m e n d a t i o n s a r e o f f e r e d t o r e s o l v e o r e l i m i n a t e t h i s i n d u s t r i a l

f a c t o r ; r a t h e r , t h e p o i n t t o b e s t r e s s e d i s t h a t i n d u s t r i a l c o n s i d e r a t i o n s a r e a

s i g n i f i c a n t l i m i t i n g e l e m e n t l a r g e l y b e y o n d t h e D e p a r t m e n t ' s c o n t r o l , a n d t h a t

c o n t i n u e d e m p h a s i s m u s t b e g i v e n t o h u m a n e n g i n e e r i n g a n d t o s t a f f c o l l a b o r a ­

t i o n i n d e v i s i n g a n d i n s t a l l i n g p r o d u c t i v i t y i m p r o v e m e n t s . S i m i l a r e m p h a s i s

m u s t a l s o b e g i v e n t o g e n e r a l e m p l o y e r - e m p l o y e e c o m m u n i c a t i o n s a n d t o

r e l a t e d p u b l i c p r o n o u n c e m e n t s i f l o g i c a l o p e r a t i n g m o d i f i c a t i o n s a r e t o

r e c e i v e a n o b j e c t i v e h e a r i n g i n p o l i t i c a l a n d b r o a d e r c i r c l e s .

A s A D e p a r t m e n t Of S t a t e , T h e A P O A l s o F i n d s I t s E f f e c t i v e n e s s L i m i t e d

B y G o v e r n m e n t a l F a c t o r s B e y o n d I t s C o n t r o l .

I n m a i n t a i n i n g t h e d o m e s t i c t e l e c o m m u n i c a t i o n s a n d p o s t a l s y s t e m s i n

A u s t r a l i a , t h e A P O i s e s s e n t i a l l y o p e r a t i n g a b u s i n e s s - o r b u s i n e s s e s . I t i s

p r o v i d i n g , o n a m a s s i v e s c a l e , s e r v i c e s f o r w h i c h v a r y i n g p r i c e s a r e c h a r g e d ,

a n d i t i s e x p e c t e d , a s a p r a c t i c a l m a t t e r , t o m a i n t a i n r e v e n u e s a t a l e v e l

h i g h e r t h a n e x p e n s e s . S o c i e t y r e q u i r e s , b o t h s o c i a l l y a n d e c o n o m i c a l l y , t h a t

t h e s e r v i c e s b e f u n d a m e n t a l l y p e r m a n e n t a n d o r a - g o i n g , a n d a l o n g p l a n n i n g a n d

c o m m i t m e n t h o r i z o n i s n e c e s s a r y , p a r t i c u l a r l y f o r t e l e c o m m u n i c a t i o n s .

A d m i t t e d l y t h e r e i s n o e n t r e p r e n e u r i a l r i s k , b u t o t h e r w i s e t h e c h a r a c t e r i s t i c s

c i t e d a r e m o r e a k i n t o a s e r v i c e b u s i n e s s o r a r e g u l a t e d u t i l i t y t h a n t o a

g o v e r n m e n t p r o g r a m m e , w h i c h i s o f t e n a m a t t e r o f g o v e r n m e n t d i s c r e t i o n

t o c o n t i n u e o r s t o p , a n d h e n c e l a c k s i n h e r e n t p e r m a n e n c e .

W i t h i n t h e l a w , b u s i n e s s e s g e n e r a l l y h a v e v i t a l r i g h t s o f s e l f - d e t e r m i n a t i o n ;

t h e s e i n c l u d e t h e s e t t i n g o f p r i c e s , o r g a n i s a t i o n a r r a n g e m e n t s , s t a f f i n g l e v e l s

a n d w a g e r a t e s ( a n d t h e s k i l l l e v e l s a t t r a c t e d b y w a g e s ) , f i n a n c i a l m a n a g e m e n t

a n d r e l a t e d c o m m i t m e n t s , a n d p r o p e r t y a c q u i s i t i o n . A P O m a n a g e m e n t c a n n o t

e x e r c i s e a n y o f t h e s e r i g h t s . I n s t e a d , f i n a l d e t e r m i n a t i o n s a r e i n t h e p u r v i e w

of e x t e r n a l a u t h o r i t i e s , p r i n c i p a l l y t h e P u b l i c S e r v i c e B o a r d ( P S B ) , t h e T r e a s u r y ,

I I I - 10

t h e T a x a t i o n O f f i c e , a n d t h e D e p a r t m e n t o f S e r v i c e s a n d P r o p e r t i e s . T h u s ,

m a n a g e m e n t i s e x p e c t e d t o a c h i e v e r e s u l t s w i t h l i t t l e o r n o u l t i m a t e c o n t r o l

of t h e f u n d a m e n t a l i n p u t s . T h e r e s u l t i s a r e s p o n s i b i l i t y w i t h o n l y a s c a n t

m e a s u r e of t h e a u t h o r i t y n e e d e d t o f u l f i l l it.

A s a p r a c t i c a l m a t t e r , s e v e r a l o f t h e s e f e t t e r s w i l l i n a l l l i k e l i h o o d

r e m a i n . T a r i f f s f o r s u c h v i t a l a n d b a s i c s e r v i c e s c a n n o t r e a l i s t i c a l l y b e s e t

s o l e l y b y m a n a g e m e n t . F u r t h e r , t h e C o m m i s s i o n ' s f i n a n c i a l c o n s u l t a n t s

h a v e r e c o m m e n d e d c o n t i n u i n g r e l i a n c e o n t h e T r e a s u r y f o r f u n d i n g , a l b e i t

w i t h g r e a t e r f o r w a r d c o m m i t m e n t s .

In t h e v i e w o f C r e s a p , M c C o r m i c k a n d P a g e t I n c . , h o w e v e r , t h e n e e d

f o r c e r t a i n c o n t r o l s n o w v e s t e d w i t h t h e P S B s h o u l d b e s c r u t i n i s e d v e r y

c l o s e l y . T h e s e c o n c e r n p a r t i c u l a r l y o r g a n i s a t i o n s t r u c t u r e , e s t a b l i s h m e n t s ,

a n d m a n a g e r i a l c l a s s i f i c a t i o n s a n d p a y , i n a s m u c h a s t h e r e i s l i t t l e r e a s o n

f o r t h e s e m a t t e r s w i t h i n t h e A P O t o c o n f o r m t o r a t i o s , p r a c t i c e s , o r o t h e r

g u i d e l i n e s a p p l i c a b l e w i t h i n t h e F e d e r a l G o v e r n m e n t g e n e r a l l y . A l s o o f c o n ­

c e r n a r e g u i d e l i n e s o r c o n t r o l s o v e r m a n a g e r i a l p r o m o t i o n s a n d t e m p o r a r y

o r s p e c i a l a s s i g n m e n t s , h o u r s o f d u t y , a n d t r a i n e e q u o t a s . F r o m t h e s t a n d ­

p o i n t o f b u s i n e s s o p e r a t i o n , t h e p u r v i e w of t h e P S B i n t h e s e m a t t e r s h a s t h e

a p p e a r a n c e o f c o n t r o l f o r i t s o w n s a k e , a n d c r e a t e s a s i g n i f i c a n t i n c r e m e n t

of e x t r a s t a f f w o r k i n t h e A P O . T h i s c o n t r o l d e l a y s m a n a g e m e n t a c t i o n ,

s t i f l e s i n i t i a t i v e a n d u n d e r c u t s m o r a l e . It m a y a l s o p r e v e n t d e s i r a b l e c h a n g e ,

a l t h o u g h no d e f i n i t e e x a m p l e c a n b e c i t e d . U n q u e s t i o n a b l y , i t c o n t r i b u t e s t o

o b f u s c a t i o n a n d i n a c t i o n , b o t h w i t h i n t h e A P O a n d b e t w e e n i t a n d t h e P S B .

. R e g a r d i n g f i r s t - l e v e l s u p e r v i s o r y a n d n o n - s u p e r v i s o r y c l a s s i f i c a t i o n

a n d p a y m a t t e r s , t h e A P O s h o u l d h a v e a s m u c h i n d e p e n d e n t a u t h o r i t y a s t h e

c o m m o n g o o d w i l l p e r m i t - r e c o g n i s i n g t h a t t h e A P O i s a n e m p l o y e r o f v e r y

c o n s i d e r a b l e m a g n i t u d e i n A u s t r a l i a , e s p e c i a l l y i n c e r t a i n p r o f e s s i o n a l a n d

t e c h n i c a l c l a s s i f i c a t i o n s , a n d i n m a n y c l e r i c a l c l a s s i f i c a t i o n s a s w e l l . A l s o

t o b e t a k e n i n t o c o n s i d e r a t i o n i s t h e f a c t t h a t m a n y c l a s s i f i c a t i o n s i n t h e A P O

a r e c o m m o n t o o t h e r F e d e r a l G o v e r n m e n t d e p a r t m e n t s , a n d t h a t t h e c l a s s i f i c a ­

t i o n a n d p a y of f i r s t - l e v e l s u p e r v i s o r y a n d n o n - s u p e r v i s o r y e m p l o y e e s a r e l e s s

i n t i m a t e l y r e l a t e d t o m a n a g e m e n t p r e r o g a t i v e t h a n a r e o r g a n i s a t i o n s t r u c t u r e

a n d m a t t e r s o f m a n a g e r i a l c l a s s i f i c a t i o n a n d p a y .

T h e O r g a n i s a t i o n S t r u c t u r e Of T h e A u s t r a l i a n P o s t O f f i c e Is U n w i e l d y

A n d D i f f i c u l t T o M a n a g e

T h i s o b s e r v a t i o n c a p s u l i s e s a s e r i e s of m o r e d e t a i l e d p o i n t s d e s c r i b e d

i n t h e p a r a g r a p h s w h i c h f o l l o w .

Ill- 1 1

a. T h e r e s p o n s i b i l i t i e s o f t h e p o s i t i o n o f D i r e c t o r - G e n e r a l a r e t o o

d i v e r s e t o b e c a r r i e d o u t b y a s i n g l e p e r s o n . U n d e r t h e e x i s t i n g o r g a n i s a t i o n a l

a r r a n g e m e n t s , t h e D i r e c t o r - G e n e r a l s e r v e s i n t h r e e r o l e s : a s t h e p e r m a n e n t

h e a d o f t h e A P O , a n d a l s o a s t h e i m m e d i a t e o p e r a t i n g h e a d o f e a c h o f t h e t w o

b a s i c s e r v i c e s t h e A P O p r o v i d e s . I n h i s r o l e o f p e r m a n e n t h e a d , h e m u s t

m a i n t a i n r e l a t i o n s h i p s u p w a r d w i t h t h e M i n i s t e r a n d C a b i n e t , a n d o u t w a r d w i t h

a v a r i e t y o f e n t i t i e s w h i c h r e q u i r e a t t e n t i o n f r o m t h e A P O a t t h e s e n i o r e x e c u ­

t i v e l e v e l . H e m u s t a l s o c o n c e r n h i m s e l f w i t h p l a n n i n g , p a r t i c u l a r l y a s it

a f f e c t s s t r a t e g i c d e c i s i o n s , w i t h t h e f o r m u l a t i o n o f b a s i c p o l i c y , a n d w i t h h i s

l e a d e r s h i p r o l e .

T h e o r g a n i s a t i o n s t r u c t u r e o f t h e A P O f o r c e s t h e D G i n t o a n i m m e d i a t e

o p e r a t i n g r o l e a s w e l l . T h e e s s e n t i a l f u n c t i o n s o f t h e t e l e c o m m u n i c a t i o n s s e r v ­

i c e , r e p r e s e n t e d b y t h r e e C e n t r a l A d m i n i s t r a t i o n d i v i s i o n s a n d t h e s i x s t a t e

a d m i n i s t r a t i o n s , a l l r e p o r t d i r e c t l y t o h i m . T h e s a m e i s t r u e f o r p o s t a l s e r v ­

i c e s , s i n c e t h e f o r m a l r e l a t i o n s h i p b e t w e e n t h e P o s t a l S e r v i c e s D i v i s i o n a t

C e n t r a l A d m i n i s t r a t i o n a n d t h e s t a t e a d m i n i s t r a t i o n s p a s s e s t h r o u g h t h e DG.

T h e p a t t e r n i s r e p e a t e d f o r s t a f f s e r v i c e s , w h e r e a g a i n t h e a u t h o r i t a t i v e

r e l a t i o n s h i p s b e t w e e n s t a f f a n d l i n e p a s s t h r o u g h t h e DG. T h e s t a f f s e r v i c e s

r e p r e s e n t a p a r t i c u l a r l y t r o u b l e s o m e b u r d e n o n t h e D G i n t h e i n d u s t r i a l r e l a t i o n s

a r e a , w h e r e i s s u e s a r e a c u t e a n d t h e f u n c t i o n a l s t a f f r e p o r t s d i r e c t l y t o h i m .

T h e r e s u l t i s p r e - e m p t i o n o f h i s t i m e i n s i z e a b l e a n d i n h e r e n t l y u n p l a n n e d b l o c k s

A l t h o u g h t h e s i z e a n d d i v e r s i t y o f t h e A P O a l s o c o n t r i b u t e t o t h i s

p r o b l e m , t h e m a j o r p r o b l e m i s t h e o r g a n i s a t i o n s t r u c t u r e i t s e l f . V a s t a n d

d i v e r s e o r g a n i s a t i o n s c a n b e a n d a r e l e d b y o n e m a n , b u t t h e s e o r g a n i s a t i o n s

a r e a r r a n g e d t o p e r m i t d e l e g a t i o n s o f s i g n i f i c a n t m u l t i - f u n c t i o n a l o p e r a t i n g

r e s p o n s i b i l i t i e s t o o n e o r s e v e r a l s u b o r d i n a t e e x e c u t i v e s . S u c h d e l e g a t i o n i s

n o t p o s s i b l e w i t h i n t h e A P O s t r u c t u r e .

S i n c e t h e b a s i c c h a r a c t e r i s t i c s o f t h e A P O s t r u c t u r e h a v e n o t c h a n g e d

f o r s o m e t i m e , i t i s o b v i o u s t h a t t h e r o l e o f t h e D G h a s n o t a l w a y s b e e n u n m a n ­

a g e a b l e h i s t o r i c a l l y , d e s p i t e s t r u c t u r a l w e a k n e s s e s . H o w e v e r , t h e i n c r e a s i n g

s c o p e o f t h e A P O ( i n s p e n d i n g , e m p l o y m e n t , a n d d i v e r s i t y o f s e r v i c e s ) , t h e

a c c e l e r a t i n g p a c e o f t e c h n o l o g i c a l c h a n g e , a n d t h e h e i g h t e n e d i m p a c t o f i n d u s t r i a l

m a t t e r s h a v e a l l m a g n i f i e d t h e h i s t o r i c s t r u c t u r a l w e a k n e s s e s t o t h e p o i n t w h e r e

t h e r e s p o n s i b i l i t i e s o f t h e D G a r e a n u n r e a s o n a b l e l o a d f o r a n y e x e c u t i v e , r e g a r d ­

l e s s o f e x p e r i e n c e o r c a p a b i l i t y . T h i s s i t u a t i o n e m e r g e d c l e a r l y d u r i n g t h e

i n t e r v i e w s ; e x a m p l e a f t e r e x a m p l e w a s c i t e d i n w h i c h t h e D G s i m p l y w a s n o t

a v a i l a b l e t o m a k e a t i m e l y d e c i s i o n , o r w a s p r e c l u d e d f r o m s t r a t e g i c c o n s i d e r ­

a t i o n s b y t h e p r e s s o f o p e r a t i n g p r o b l e m s o r e x t e r n a l d e m a n d s , o r b o t h .

Ill- 12

b. T h e p o t e n t i a l c a p a c i t y r e p r e s e n t e d b y t h e D e p u t y D i r e c t o r - G e n e r a l

p o s i t i o n s i s n o t w e l l u s e d . T h e t h r e e D D G p o s i t i o n s i n t h e c u r r e n t s t r u c t u r e

n o m i n a l l y r a n k n e x t t o t h e D G i n a u t h o r i t y . A s n o t e d e a r l i e r i n t h i s c h a p t e r ,

t h e s e p o s i t i o n s a r e u s e d a s e x e c u t i v e a s s i s t a n t s r a t h e r t h a n b e i n g g i v e n a c o n ­

t i n u i n g s p h e r e o f l i n e m a n a g e m e n t r e s p o n s i b i l i t y . T h i s s i t u a t i o n i s p a r t i c u l a r l y

u n d e s i r a b l e i n v i e w o f t h e m a j o r b u r d e n s p l a c e d o n t h e D G . I n t h i s c o n n e c t i o n ,

t h e h i s t o r i c e x p e r i e n c e o f t h e A P O s u g g e s t s t h a t m o s t e f f e c t i v e m a n a g e m e n t h a s

c o m e d u r i n g p e r i o d s w h e n t h e D G a n d o n e o r m o r e D D s G a s s u m e d e x e c u t i v e a n d

o p e r a t i o n a l r o l e s r e s p e c t i v e l y .

T h e c u r r e n t s i t u a t i o n h a s s e v e r a l n e g a t i v e i m p l i c a t i o n s . F o r e x a m p l e ,

i t d o e s n o t f u l l y u t i l i s e t h e c a p a b i l i t i e s o f s e n i o r e x e c u t i v e s . M o r e o v e r , i t d o e s

n o t p r o v i d e a b r o a d - g a u g e l i n e m a n a g e m e n t d e v e l o p m e n t o p p o r t u n i t y a t t h e D D G

l e v e l - p a r t i c u l a r l y u n f o r t u n a t e s i n c e t h e f u n c t i o n a l l y o r i e n t e d A P O s t r u c t u r e

p r o v i d e s e s s e n t i a l l y n o s u c h d e v e l o p m e n t o p p o r t u n i t i e s o t h e r t h a n i n a D D G o r

S t a t e D i r e c t o r p o s i t i o n . F i n a l l y , t h e f l u i d i t y a n d i n d e f i n i t e n e s s o f t h e c u r r e n t

D D G a s s i g n m e n t s s e e m s i n g u l a r l y i n a p p r o p r i a t e t o a s t r u c t u r e a l r e a d y r e p l e t e

w i t h a n e x c e s s o f c r o s s - f u n c t i o n a l r e l a t i o n s h i p s , c o m m i t t e e s , a n d o t h e r

i n f o r m a l c o - o r d i n a t i v e o r g a n i s a t i o n a r r a n g e m e n t s .

c . E x i s t i n g s t r u c t u r e s o f t h e s t a t e a d m i n i s t r a t i o n s e n g e n d e r o r g a n i s a ­

t i o n i n e f f e c t i v e n e s s i n t w o f u n d a m e n t a l w a y s . F i r s t , t h e s t r u c t u r e s o f t h e s t a t e

a d m i n i s t r a t i o n s p l a c e t h e S t a t e D i r e c t o r s i n s i t u a t i o n s a n a l o g o u s t o t h a t o f t h e

D G, a l t h o u g h o n a s m a l l e r s c a l e - t h a t i s , t h e f u n c t i o n s t h a t ' m a k e u p t h e t o t a l i t y

of t e l e c o m m u n i c a t i o n s r e p o r t t h r o u g h t w o d i r e c t c h a n n e l s t o a S t a t e D i r e c t o r a n d

t h u s r e n d e r h i m t h e i m m e d i a t e o p e r a t i n g h e a d o f t h a t s e r v i c e a s w e l l a s t h e e x e c ­

u t i v e o v e r p o s t a l s e r v i c e s a n d r e l a t e d s t a f f s e r v i c e s . I n t h e l a r g e r s t a t e s , a n d

p a r t i c u l a r l y i n N e w S o u t h W a l e s , t h i s p l a c e s a n u n d u e b u r d e n o n t h e S t a t e D i r e c t o r .

In a l l s t a t e s , i t c o n s o l i d a t e s t h e r e s p o n s i b i l i t y f o r t e l e c o m m u n i c a t i o n s a t t o o

h i g h a n o r g a n i s a t i o n a l l e v e l .

S e c o n d , f o r p o s t a l s e r v i c e s , t h e a u t h o r i t a t i v e r o l e o f a S t a t e D i r e c t o r

c a n c r e a t e i n e f f i c i e n c y i n a n o t h e r w a y . A s n o t e d , t h e f o r m a l r e l a t i o n s h i p s

b e t w e e n d i v i s i o n s i n C e n t r a l A d m i n i s t r a t i o n a n d t h e i r s t a t e c o u n t e r p a r t s p a s s

t h r o u g h t h e D i r e c t o r - G e n e r a l a n d t h e S t a t e D i r e c t o r . T h e r e i s a s i n g l e d i v i s i o n

c e n t r a l l y a n d a s i n g l e d i v i s i o n i n e a c h s t a t e f o r p o s t a l s e r v i c e s , a n d h e n c e t h e

p o t e n t i a l e x i s t s f o r a n u n c o m p l i c a t e d f u n c t i o n a l r e l a t i o n s h i p . H o w e v e r , t h i s

p o t e n t i a l l y s t r a i g h t f o r w a r d r e l a t i o n s h i p c a n b e b r o k e n a n d a t t i m e s f r u s t r a t e d

b y t h e i n t e r - p o s i t i o n o f t h e S t a t e D i r e c t o r , w h o s e m a j o r c o n c e r n n a t u r a l l y l i e s

w i t h t e l e c o m m u n i c a t i o n s , b e c a u s e o f i t s r e l a t i v e s i z e a n d t h e o r g a n i s a t i o n a l

n e e d f o r a S t a t e D i r e c t o r t o c o - o r d i n a t e t h e t e l e c o m m u n i c a t i o n s a c t i v i t i e s

r e p o r t i n g t o h i m .

I l l - 13

10345/ 75— 17

d. O r g a n i s a t i o n a l p r o v i s i o n f o r m a n a g e m e n t s e r v i c e s i s i n e f f i c i e n t .

I n C e n t r a l A d m i n i s t r a t i o n , t h e M a n a g e m e n t S e r v i c e s D i v i s i o n i s , a t l e a s t

n o m i n a l l y , t h e c e n t r a l i s e d s o u r c e o f n e a r l y a l l m a n a g e m e n t s e r v i c e s s t a f f

a c t i v i t y . It i s u n d e r s t o o d t h a t t h e s t r u c t u r e o f t h e D i v i s i o n w a s e s t a b l i s h e d

l a r g e l y a t t h e b e h e s t o f t h e P S B a b o u t t e n y e a r s a g o .

T h i s s t r u c t u r e f o r m a n a g e m e n t s e r v i c e s i s q u e s t i o n a b l e o n t w o

c o u n t s . F i r s t , i t i n c o r p o r a t e s t o o b r o a d a r a n g e o f s p e c i a l i s e d s e r v i c e s ,

w i t h t h e r e s u l t t h a t i t i s v i r t u a l l y i m p o s s i b l e f o r t h e D i v i s i o n h e a d t o b e

e x p e r t i n a l l o r e v e n m o s t o f t h e s e r v i c e s c o n c e r n e d . Y e t i n s t a f f s e r v i c e s ,

t h e f u n c t i o n a l e x p e r t i s e o f t h e t o p m a n a g e r i s a m a j o r f a c t o r f o r s u c c e s s .

I n t h e a b s e n c e o f s u c h e x p e r t i s e , t h e r e i s l i t t l e r e a s o n f o r a g g r e g a t i n g d i s ­

p a r a t e s t a f f s e r v i c e s t o g e t h e r b e l o w t h e t o p m a n a g e m e n t l e v e l e x c e p t t o

r e d u c e t h e n u m b e r o f f u n c t i o n s r e p o r t i n g t o t o p m a n a g e m e n t .

S e c o n d , t h e g r o u p i n g t o g e t h e r o f t h e s e s e r v i c e s c a n c r e a t e a n o r g a ­

n i s a t i o n m a s s w h i c h i m p e d e s s t a f f - l i n e r e l a t i o n s h i p s i n s t e a d o f f o s t e r i n g

t h e m . A l t h o u g h t h e F i r s t A s s i s t a n t D i r e c t o r - G e n e r a l - M a n a g e m e n t S e r v i c e s

h a s e m p h a s i s e d r e s p o n s i v e n e s s o f s t a f f t o l i n e n e e d s a n d h a s s o u g h t t o a v o i d

i n t e r p o s i n g h i s o f f i c e u n n e c e s s a r i l y i n s t a f f - l i n e r e l a t i o n s h i p s , t h e v e r y s i z e

o f t h e D i v i s i o n c a n u n d u l y c o m p l i c a t e l i n e - s t a f f r e l a t i o n s h i p s ( a t t h e i n s t i g a ­

t i o n o f e i t h e r p a r t y ) , a n d c a n i n s u l a t e s t a f f t h i n k i n g f r o m t h e r e a l i t i e s o f

o p e r a t i n g r e q u i r e m e n t s .

T h e P e r s o n n e l B r a n c h r e p r e s e n t s a s p e c i f i c e x a m p l e o f t h i s o r g a ­

n i s a t i o n a l d i s a b i l i t y . T h e p r o g r a m m e s d e v e l o p e d a n d p r o m u l g a t e d b y t h i s

B r a n c h a r e m a n a g e m e n t ' s p r i m a r y t o o l s f o r m a n a g e m e n t - s t a f f r e l a t i o n s h i p s ,

a n d t h u s c r i t i c a l l y a f f e c t t h e q u a l i t y o f i n d u s t r i a l r e l a t i o n s . O p e r a t i n g

m a n a g e m e n t m u s t a l s o d e p e n d o n t h e e f f e c t i v e n e s s o f t h e m a n p o w e r p l a n s

t h a t a r e d e v e l o p e d ; h u n d r e d s o f e m p l o y e e s m u s t b e r e c r u i t e d a n d e f f e c t i v e l y

t r a i n e d u n d e r D e p a r t m e n t a l p r o g r a m m e s e a c h y e a r , a n d a n y s h o r t - f a l l o f

s t a f f t o u n d e r t a k e f i e l d w o r k c a n a f f e c t t h e D e p a r t m e n t ' s a b i l i t y t o r e d u c e

u n s a t i s f i e d t e l e c o m m u n i c a t i o n s d e m a n d a s m u c h a s c a n a s h o r t a g e o f f u n d s .

M o r e o v e r , m a n a g e m e n t d e v e l o p m e n t a n d t r a i n i n g i s p a r t i c u l a r l y i m p o r t a n t

i n a b u s i n e s s w h i c h h a s d e v e l o p e d , a n d p r o b a b l y w i l l c o n t i n u e t o d e v e l o p ,

m u c h o f i t s o w n m a n a g e r i a l e x p e r t i s e i n t e r n a l l y . A l l o f t h e s e p o i n t s a r g u e

f o r a h i g h e r o r g a n i s a t i o n a l p l a c e m e n t o f t h e p e r s o n n e l f u n c t i o n , t o p e r m i t a

d i r e c t r e l a t i o n s h i p ( a s w e l l a s a n i n f o r m a l r e l a t i o n s h i p , a s a t p r e s e n t ) w i t h

o t h e r C e n t r a l A d m i n i s t r a t i o n d i v i s i o n s a n d w i t h t h e s t a t e s .

A n o t h e r i s s u e q u i t e d i s t i n c t f r o m t h e s t r u c t u r e o f t h e M a n a g e m e n t

S e r v i c e s D i v i s i o n i s t h e d i s p e r s i o n o f v a r i o u s m a n a g e m e n t s e r v i c e s w i t h i n

C e n t r a l A d m i n i s t r a t i o n a n d , t o a l e s s e r e x t e n t , w i t h i n s t a t e a d m i n i s t r a t i o n s .

S e l e c t e d e x a m p l e s o f t h i s d i s p e r s i o n i n C e n t r a l A d m i n i s t r a t i o n i n c l u d e :

I II- 14

- T e c h n i c a l a n d m a n a g e m e n t t r a i n i n g , w h i c h i s n o w b e i n g p r o ­

v i d e d o r a n a l y s e d b y t h e M a n a g e m e n t S e r v i c e s D i v i s i o n a n d

t h e E n g i n e e r i n g W o r k s D i v i s i o n ( t w o s e p a r a t e g r o u p s i n

E n g i n e e r i n g W o r k s )

- M a n p o w e r u t i l i s a t i o n , w h i c h i s b e i n g s t u d i e d b o t h b y M a n a g e ­

m e n t S e r v i c e s a n d b y E n g i n e e r i n g W o r k s ( t w o s e p a r a t e g r o u p s

i n E n g i n e e r i n g W o r k s )

- B u s i n e s s p l a n n i n g a n d r e l a t e d e c o n o m i c a n d c o s t i n g s t u d i e s ,

w h i c h a r e n o w b e i n g p e r f o r m e d b y t h e M a n a g e m e n t S e r v i c e s ,

P o s t a l S e r v i c e s , E n g i n e e r i n g W o r k s a n d T e l e c o m m u n i c a t i o n s

D i v i s i o n s

- M e t h o d s i m p r o v e m e n t , w h i c h i s u n d e r s t u d y b y t h e M a n a g e ­

m e n t S e r v i c e s , P o s t a l S e r v i c e s a n d E n g i n e e r i n g W o r k s

D i v i s i o n s ( t h r e e g r o u p s i n E n g i n e e r i n g W o r k s ) .

T h i s d i s p e r s i o n h a s s e v e r a l m a j o r a n d u n f a v o u r a b l e c o n s e q u e n c e s .

F i r s t , a t l e a s t a m e a s u r e o f d u p l i c a t i o n s e e m s i n e v i t a b l e , s i n c e i n s e v e r a l

a r e a s g r o u p s a r e u n d e r t a k i n g s i m i l a r t a s k s w i t h o u t s u f f i c i e n t c o - o r d i n a t i o n .

S e c o n d , p r o f e s s i o n a l e n g i n e e r s , a l r e a d y i n s h o r t s u p p l y , a r e b e i n g u s e d t o

p e r f o r m t a s k s f o r w h i c h t h e i r q u a l i f i c a t i o n s a r e n o t n e e d e d , p a r t i c u l a r l y i n

t h e E n g i n e e r i n g W o r k s D i v i s i o n . F i n a l l y , t h e e x i s t e n c e o f s e p a r a t e g r o u p s

t o p r o v i d e e s s e n t i a l l y i d e n t i c a l s e r v i c e s u n d e r m i n e s t h e r o l e o f t h e M a n a g e m e n t

S e r v i c e s D i v i s i o n a s a s o u r c e o f e x p e r t i s e , a n d i n v i t e s w a s t e f u l c o m p e t i t i o n .

, I n M a t t e r s Of O r g a n i s a t i o n S t r u c t u r e , T o o M u c h E m p h a s i s S e e m s T o B e

P l a c e d O n U n i f o r m i t y

W h i l e t h e o r g a n i s a t i o n s o f t h e s t a t e a d m i n i s t r a t i o n s d o d i f f e r s o m e w h a t

f r o m s t a t e t o s t a t e , t h e p r o c e s s e s o f o r g a n i s a t i o n d e t e r m i n a t i o n w i t h i n t h e A P O ,

a n d p e r h a p s b e t w e e n t h e A P O a n d t h e P S B , a p p e a r t o p l a c e u n d u e e m p h a s i s o n

u n i f o r m i t y w h e r e n e e d s a r e n o t e q u a l .

F o r e x a m p l e , w i t h i n t h e p a s t y e a r , o n e o f t h e s t a t e a d m i n i s t r a t i o n s p r o ­

p o s e d m o d i f y i n g t h e s t r u c t u r e o f t w o b r a n c h e s t o s e r v e n e e d s u n i q u e t o t h a t

s t a t e . T h e p r o p o s a l s w e r e f o r w a r d e d t o C e n t r a l A d m i n i s t r a t i o n a n d t h e n c e

t o t h e o t h e r s t a t e s , a s i s n o r m a l p r a c t i c e , f o r r e v i e w a n d c o m m e n t . W h i l e

u n d o u b t e d l y n o t s o i n t e n d e d , t h i s r e v i e w - a n d - c o m m e n t p r o c e s s a p p e a r s t o

f u n c t i o n a s a p l e b i s c i t e t h a t c a n y i e l d o n e o f t w o u n f a v o u r a b l e o u t c o m e s :

III- 15

- R e v i e w e r s d i s a g r e e w i t h t h e p r o p o s a l b e c a u s e i t h a s n o a p p l i c a ­

b i l i t y t o t h e i r s i t u a t i o n s a n d / o r b e c a u s e i t i s p e r c e i v e d a s p r o ­

v i d i n g t h e p r o p o s e r w i t h a n " u n f a i r " a d v a n t a g e ,

- R e v i e w e r s a g r e e w i t h t h e p r o p o s a l , n o t b e c a u s e t h e y h a v e a

s i m i l a r n e e d b u t r a t h e r b e c a u s e i t g i v e s t h e m a n o p p o r t u n i t y t o

a g g r a n d i s e u n n e c e s s a r i l y .

I n t h e p a r t i c u l a r s i t u a t i o n n o t e d , t h e s e c o n d o u t c o m e a p p e a r s t o h a v e

o c c u r r e d . S e v e r a l s t a t e s n o t n e e d i n g t h e m o d i f i c a t i o n s n e v e r t h e l e s s e n d o r s e d

t h e m f o r t h e m s e l v e s , a n d C e n t r a l A d m i n i s t r a t i o n a d v i s e d t h e p r o p o s i n g s t a t e

o f i t s d i s a p p r o v a l o n t h e l e g i t i m a t e ( e x c e p t t o t h e p r o p o s e r ) g r o u n d s t h a t i m p l e

m e n t a t i o n i n a l l s t a t e s w o u l d b e u n e c o n o m i c a l .

A n o t h e r e x a m p l e o f e x c e s s i v e u n i f o r m i t y ( p o t e n t i a l l y , r a t h e r t h a n a c t u a l l y !

w a s t h e t e l e c o m m u n i c a t i o n s " a r e a m a n a g e m e n t " s c h e m e , w h i c h p r o p o s e d

v i r t u a l l y i d e n t i c a l f u n c t i o n s a n d s t r u c t u r e s f o r a l l a r e a s . A n u m b e r o f s p o k e s ­

m e n c o m m e n t e d i n t h e s t u d y i n t e r v i e w s t h a t t h e r e s u l t s w o u l d h a v e b e e n u n e c o ­

n o m i c a l i n t h a t i n s u f f i c i e n t n e e d w o u l d h a v e e x i s t e d i n m a n y a r e a s f o r o n e o r

m o r e o f t h e f u n c t i o n s p r o p o s e d .

T h e e x t e n t t o w h i c h t h i s t e n d e n c y t o w a r d e x c e s s i v e u n i f o r m i t y r e s u l t s

f r o m p h i l o s o p h i e s w i t h i n t h e A P O , a s o p p o s e d t o A P O p e r c e p t i o n s o f P S B

r e q u i r e m e n t s , i s n o t c l e a r . T h e r e v i e w - a n d - c o m m e n t p r o c e s s w a s o b v i o u s l y

i n t e n d e d t o s e r v e a l e g i t i m a t e i n f o r m a t i o n a l p u r p o s e a n d , r e s t r i c t e d t o t h a t

p u r p o s e , i s a p p r o p r i a t e . H o w e v e r , a s s h o w n a b o v e , i t c a n b e m i s u s e d .

R E F E R E N C E T W O :

S E P A R A T I O N O F P O S T A L S E R V I C E S

A N D T E L E C O M M U N I C A T I O N S

I n s u m m a r y , p o s t a l s e r v i c e s a n d t e l e c o m m u n i c a t i o n s s e r v i c e s a r e :

- I n h e r e n t l y a n d f u n d a m e n t a l l y d i f f e r e n t

- A l r e a d y q u i t e s e p a r a t e a n d d i s t i n c t o p e r a t i o n a l l y a n d , t o a c o n ­

s i d e r a b l e e x t e n t , i n s t a f f s u p p o r t s e r v i c e s a s w e l l

- R e n d e r e d l e s s t h a n d e s i r a b l y e f f e c t i v e b y t h e c o m b i n e d m a n a g e ­

m e n t a n d f i n a n c i n g d i c t a t e d b y t h e c u r r e n t s t r u c t u r e .

T h e s e v i e w s a r e d e t a i l e d i n t h e f o l l o w i n g o b s e r v a t i o n s .

Ill-16

P o s t a l A n d T e l e c o m m u n i c a t i o n s S e r v i c e s A r e F u n d a m e n t a l l y D i f f e r e n t

T h e n o t i o n t h a t b o t h s e r v i c e s a r e e n g a g e d i n " c o m m u n i c a t i o n " a n d t h a t

t h i s r e n d e r s t h e m s i m i l a r i s o n l y a s u p e r f i c i a l t r u t h . P o s t a l s e r v i c e s i s

c o n c e r n e d w i t h t h e m o v e m e n t o f p h y s i c a l o b j e c t s , a n d w i l l c o n t i n u e t o b e s o

c o n c e r n e d . F a c s i m i l e t r a n s m i s s i o n , i f a n d w h e n i n t r o d u c e d , i s f a r m o r e

l i k e l y t o b e a w r i t t e n e x t e n s i o n o f t e l e c o m m u n i c a t i o n s t h a n a n e l e c t r i c a l

e x t e n s i o n o f p o s t a l s e r v i c e s . T e l e c o m m u n i c a t i o n s i s c o n c e r n e d w i t h t h e

m o v e m e n t o f e l e c t r i c a l i m p u l s e s b y w i r e o r t h r o u g h t h e a i r . S i m i l a r i t y

b e t w e e n t h e t w o s e r v i c e s b e g i n s a n d e n d s w i t h t h e f a c t t h a t b o t h c o m m u n i c a t e

i n f o r m a t i o n .

T h e b a s i c d i f f e r e n c e s b e t w e e n t h e t w o s e r v i c e s a l o n g a n u m b e r o f d i m e n ­

s i o n s h a v e b e e n w e l l d o c u m e n t e d i n o t h e r s u b m i s s i o n s t o t h e C o m m i s s i o n o f

I n q u i r y a n d i n t h e a c t i v i t i e s o f s i m i l a r c o m m i s s i o n s a n d r e l a t e d o p e r a t i n g

a g e n c i e s i n o t h e r n a t i o n s w i t h w h i c h t h e C o m m i s s i o n of I n q u i r y i s f a m i l i a r .

A c c o r d i n g l y , t h i s d i s c u s s i o n t o u c h e s o n l y o n t h o s e d i m e n s i o n s w h i c h y i e l d

p a r t i c u l a r l y f u n d a m e n t a l d i f f e r e n c e s f r o m a m a n a g e m e n t v i e w p o i n t .

T o a c c o m p l i s h i t s p u r p o s e s , m a n a g e m e n t m a n i p u l a t e s t w o b a s i c r e s o u r c e s

h u m a n t a l e n t ( i n c l u d i n g t e c h n o l o g y , w h i c h i s a c c u m u l a t e d k n o w l e d g e ) , a n d

m o n e y . R e g a r d i n g h u m a n t a l e n t , b o t h s e r v i c e s e m p l o y v a s t n u m b e r s o f p e o p l e

b u t r e q u i r e f u n d a m e n t a l l y d i f f e r e n t o p e r a t i n g w o r k f o r c e s k i l l s . T e l e p h o n i s t ,

p o s t m a n a n d l i n e m a n a r e t h r e e m a j o r c a t e g o r i e s o f e m p l o y m e n t w h i c h r e p r e ­

s e n t n o o v e r l a p w h a t s o e v e r b e t w e e n t h e t w o s e r v i c e s . E n g i n e e r i n g s k i l l s a r e

s i m i l a r l y q u i t e d i s t i n c t : e l e c t r i c a l e n g i n e e r i n g , f o r e x a m p l e , i s b a s i c t o t e l e ­

c o m m u n i c a t i o n s a n d o n l y a n c i l l a r y t o p o s t a l s e r v i c e s . G e n e r a l l y , t e l e c o m ­

m u n i c a t i o n s r e q u i r e s a h i g h e r p r o p o r t i o n o f t e c h n i c a l l y t r a i n e d p e r s o n s t h a n

d o e s p o s t a l s e r v i c e s .

T h e t e c h n o l o g i e s i n v o l v e d a r e c o m p l e t e l y d i f f e r e n t . O p t i m u m s c h e d u l i n g

o f t r a n s p o r t v e h i c l e s i s n o m o r e f u n d a m e n t a l t o t h e b a s i c o p e r a t i o n s of

t e l e c o m m u n i c a t i o n s t h a n e l e c t r i c a l s w i t c h i n g i s t o p o s t a l s e r v i c e s . F u r t h e r ­

m o r e , p o s t a l s e r v i c e s r e q u i r e s a p h y s i c a l t r a n s a c t i o n w i t h t h e c u s t o m e r

( t wo p e r s o n s c o m i n g t o t h e s a m e p l a c e , s e p a r a t e l y o r s i m u l t a n e o u s l y ) ,

w h i l e t e l e c o m m u n i c a t i o n s d o e s n o t . T h e l o g i s t i c a l i m p l i c a t i o n s of t h i s

d i f f e r e n c e a r e o b v i o u s , a n d d e c i s i v e l y i n f l u e n c e o p e r a t i n g o r g a n i s a t i o n a n d

s t a f f i n g a r r a n g e m e n t s . T e c h n o l o g y i s i m p o r t a n t t o b o t h s e r v i c e s ; t h e r a t e

o f t e c h n o l o g i c a l c h a n g e , h o w e v e r , i s a l r e a d y h i g h a n d a c c e l e r a t i n g i n t e l e ­

c o m m u n i c a t i o n s , w h e r e a s s u c h a r a t e o f c h a n g e , a n d t h e l e v e l o f s o p h i s t i c a ­

t i o n o f t e c h n o l o g y , a r e l i k e l y t o b e o f c o n s i d e r a b l y l e s s m a g n i t u d e i n p o s t a l

s e r v i c e s .

I l l - 17

B o t h s e r v i c e s r e q u i r e v e r y c o n s i d e r a b l e a m o u n t s o f m o n e y , b u t t h e u s e s

a r e d i f f e r e n t a n d s o t o o m u s t b e t h e p l a n n i n g f o r s u c h u s e a n d i t s c o n t r o l .

T e l e c o m m u n i c a t i o n s i s c a p i t a l - i n t e n s i v e : m o n e y m u s t b e p l a n n e d f o r o v e r

a r e l a t i v e l y l o n g p e r i o d o f t i m e , p r o j e c t e x p e n d i t u r e c o n t r o l i s v i t a l , a n d

r e t u r n o n a s s e t s i s t h e k e y f i n a n c i a l r e s u l t . P o s t a l s e r v i c e s s h o u l d b e m o r e

c a p i t a l - i n t e n s i v e t h a n h i s t o r i c p a t t e r n s i n d i c a t e , b u t n o n e t h e l e s s w i l l p r o b a b l y

n e v e r r e q u i r e t h e m a g n i t u d e o f c a p i t a l e x p e n d i t u r e t h a t i s c h a r a c t e r i s t i c o f

t e l e c o m m u n i c a t i o n s . A c c o r d i n g l y , t h e f i n a n c i a l p l a n n i n g f o r p o s t a l s e r v i c e s

i s m o r e i m m e d i a t e a n d o p e r a t i o n a l , a n d o p e r a t i n g m a r g i n i s m o r e t h e k e y

f i n a n c i a l r e s u l t .

F r o m a m a n a g e m e n t s t a n d p o i n t , t h e r e f o r e , t h e b a s i c r e s o u r c e s a n d t h e

w a y s t h e y a r e a p p l i e d a r e v e r y d i f f e r e n t , w i t h p o s t a l s e r v i c e s f u l f i l l i n g a

s t a b l e a n d e s s e n t i a l l y s a t i s f i e d d e m a n d , w h i l e t e l e c o m m u n i c a t i o n s g r a p p l e s

w i t h a n e x p a n d i n g a n d c r i t i c a l l y u n s a t i s f i e d d e m a n d . R e s o u r c e s a n d m a r k e t s

a r e t h e m e a n s a n d e n d s o f m a n a g e m e n t . T h e i n e s c a p a b l e c o n c l u s i o n i s t h a t

t h e t w o s e r v i c e s r e p r e s e n t w h o l l y d i f f e r e n t m a n a g e m e n t e n v i r o n m e n t s .

B e l o w T o p M a n a g e m e n t L e v e l s , T h e D i f f e r e n c e s B e t w e e n T e l e c o m ­

m u n i c a t i o n s A n d P o s t a l S e r v i c e s A r e A l r e a d y W e l l R e c o g n i s e d

O r g a n i s a t i o n a l l y

A s d e s c r i b e d e a r l i e r , C e n t r a l A d m i n i s t r a t i o n i n c o r p o r a t e s t h r e e , d i v i ­

s i o n s c o n c e r n e d w i t h t e l e c o m m u n i c a t i o n s a n d o n e w i t h p o s t a l s e r v i c e s . T h e

s h a r p l y d e f i n e d f u n c t i o n s a n d d e e p s t r u c t u r e s o f t h e d i v i s i o n s c o n c e r n e d w i t h

t e l e c o m m u n i c a t i o n s r e q u i r e a l a b y r i n t h o f c o m m i t t e e s a n d o t h e r i n f o r m a l

d e v i c e s t o p e r m i t a f u n c t i o n i n g o f t h e w h o l e . T h e d i s t i n c t s e p a r a t i o n o f

p o s t a l s e r v i c e s a n d t e l e c o m m u n i c a t i o n s a c t i v i t i e s i s e v i d e n t i n t h e r e l a t i v e

a b s e n c e o f s u c h c o m m i t t e e s ( a s a l r e a d y n o t e d ) l i n k i n g t h e P o s t a l S e r v i c e s

D i v i s i o n a n d t h e t h r e e t e l e c o m m u n i c a t i o n s - o r i e n t e d d i v i s i o n s . W i t h n o

o p e r a t i n g r e l a t i o n s h i p , t h e r e i s n o n e e d f o r s u c h c o - o r d i n a t i o n d e v i c e s .

T h i s s a m e p a t t e r n o f s e p a r a t i o n e x i s t s i n t h e s t a t e a d m i n i s t r a t i o n s b e l o w

t h e S t a t e D i r e c t o r l e v e l .

T h e r e a r e , o f c o u r s e , n u m e r o u s e x a m p l e s o f o p e r a t i n g s u p p o r t b e i n g

p r o v i d e d b y o n e s e r v i c e t o t h e o t h e r , s u c h a s t h e p l a c e m e n t o f m a n u a l

e x c h a n g e s i n p o s t o f f i c e s , t h e c o n d u c t of t e l e c o m m u n i c a t i o n s c u s t o m e r

s e r v i c e a c r o s s t h e p o s t o f f i c e c o u n t e r , a n d p o s t m a s t e r d u t i e s r e g a r d i n g

t e l e p h o n e b i l l p a y m e n t s . T h e s e a c t i v i t i e s , h o w e v e r , h a v e l i t t l e o r n o

m a n a g e m e n t s i g n i f i c a n c e . T h e y a r e m e r e l y v e s t i g e s o f p h y s i c a l c o n v e n ­

i e n c e , a l r e a d y a c c o u n t e d f o r f i s c a l l y t h r o u g h t r a n s f e r m e c h a n i s m s w i t h i n

t h e A P O , a n d a r e p r e s u m a b l y s u i t a b l e f o r i n t e r - a g e n c y p r i c i n g i f t h e t w o

b a s i c s e r v i c e s w e r e t o b e m a n a g e r i a l l y s e p a r a t e d .

I l l - 18

R e g a r d l e s s o f o p e r a t i o n a l d i f f e r e n c e s , t h e p r o v i s i o n o f c o m m o n s t a f f

s e r v i c e s t o t e l e c o m m u n i c a t i o n s a n d p o s t a l s e r v i c e s m i g h t t h e o r e t i c a l l y be

a r g u e d t o b e a m a j o r e c o n o m y - o f - s c a l e b e n e f i t o f t h e e x i s t i n g o r g a n i s a t i o n a l

s t r u c t u r e . I n f a c t , a n y s u c h b e n e f i t a p p e a r s t o b e m i n o r , b e c a u s e m a n y

s t a f f s e r v i c e s a r e o r i e n t e d t o t a l l y t o o n e o p e r a t i o n o r t h e o t h e r . F i n a n c e

a n d a c c o u n t i n g s e r v i c e s , f o r e x a m p l e , h a v e s e p a r a t e u n i t s f o r p o s t o f f i c e

a c c o u n t i n g a n d t e l e c o m m u n i c a t i o n s b i l l i n g ; n e i t h e r f u n c t i o n r e l a t e s t o t h e

o t h e r .

A t t h e r e q u e s t o f t h e C o m m i s s i o n o f I n q u i r y , a n A P O t a s k f o r c e r e c e n t l y

e s t i m a t e d t h a t f u l l s e p a r a t i o n o f p o s t a l s e r v i c e s a n d t e l e c o m m u n i c a t i o n s

w o u l d i n c r e a s e o v e r a l l e m p l o y m e n t b y 140 p o s i t i o n s , w i t h a n a s s o c i a t e d

a n n u a l c o s t o f r o u g h l y $1 m i l l i o n . T h i s e n t i r e e s t i m a t e w a s r e l a t e d c h i e f l y

t o s t a f f s e r v i c e s , a n d t h e t a s k f o r c e n o t e d t h a t v i r t u a l l y a l l of t h e a d d i t i o n a l

p o s i t i o n s w o u l d b e r e q u i r e d b y t h e D e p a r t m e n t w i t h i n a y e a r o r t w o e v e n i f

p o s t a l s e r v i c e s a n d t e l e c o m m u n i c a t i o n s w e r e n o t s e p a r a t e d . I n t h e o p i n i o n

of t h e c o n s u l t a n t s , t h e e s t i m a t e a p p e a r s t o b e o n t h e h i g h s i d e ; s t a f f i n g

i n c r e a s e s (i f a n y ) r e s u l t i n g f r o m s e p a r a t i o n w o u l d b e m u c h l o w e r i f s e p a r a ­

t i o n w e r e a c c o m p a n i e d b y r e a l i s t i c , s t r i n g e n t e x p e n s e c o n t r o l s . O n e m a j o r

r e a s o n f o r t h i s v i e w i s t h e c u r r e n t d i s p e r s i o n o f s t a f f s e r v i c e s , a s n o t e d

e a r l i e r . A n o t h e r r e a s o n i s t h a t t h e h e i g h t e n e d m a n a g e m e n t a c c o u n t a b i l i t y

l i k e l y t o a c c o m p a n y s e p a r a t i o n o f t h e b a s i c s e r v i c e s w o u l d w o r k t o r e d u c e

t h e n u m b e r of p e r s o n n e l n e c e s s a r y f o r s t a f f s e r v i c e s . N e v e r t h e l e s s , a n d

r e g a r d l e s s o f e s t i m a t i n g a c c u r a c y o r a c c o u n t a b i l i t y , t h e 140 p o s i t i o n s

r e p r e s e n t l e s s t h a n 1. 5 p e r c e n t o f c u r r e n t s t a f f i n g f o r m a n a g e m e n t s e r v i c e s

a c t i v i t i e s ; t h u s , i t w o u l d a p p e a r t h a t t h e c u r r e n t p r a c t i c e o f p r o v i d i n g s t a f f

s e r v i c e s u n d e r a c o m m o n s t r u c t u r e y i e l d s l i t t l e i f a n y b e n e f i t i n t e r m s o f

e c o n o m i e s o f s c a l e . I n f a c t , i t m a y w e l l b e t h a t t h e A P O h a s g r o w n p a s t

t h e p o i n t o f g a i n i n g e c o n o m i e s o f s c a l e f r o m c o m m o n s t a f f s e r v i c e s .

T h e U n i f i e d M a n a g e m e n t A n d F i n a n c i n g Of P o s t a l S e r v i c e s A n d T e l e ­

c o m m u n i c a t i o n s D i c t a t e d B y C u r r e n t A r r a n g e m e n t s H i n d e r s B o t h

S e r v i c e s

A s a l r e a d y n o t e d , t h e c u r r e n t o r g a n i s a t i o n s t r u c t u r e r e q u i r e s s i m u l t a n e ­

o u s d i r e c t i o n o f b o t h s e r v i c e s , a n d r a t h e r i n t i m a t e o p e r a t i n g m a n a g e m e n t o f

t e l e c o m m u n i c a t i o n s , b y t h e D i r e c t o r - G e n e r a l a n d t h e S t a t e D i r e c t o r s . T h i s

i s a n u n r e a s o n a b l e a r r a n g e m e n t o n s e v e r a l c o u n t s . It d e m a n d s , f o r e x a m p l e ,

a r a n g e o f m a n a g e m e n t e x p e r i e n c e , i n s i g h t a n d s k i l l t h a t i s m a g n i f i e d b y t h e

d i f f e r e n c e s b e t w e e n p o s t a l s e r v i c e s a n d t e l e c o m m u n i c a t i o n s , a n d t h a t a

s i n g l e i n d i v i d u a l i s n o t l i k e l y t o p o s s e s s . A s a p r a c t i c a l m a t t e r , a n i n c u m ­

b e n t o f a D G o r S t a t e D i r e c t o r p o s i t i o n w i l l p r o b a b l y b e s k i l l e d i n o n e s e r v i c e

o r t h e o t h e r , b u t n o t i n b o t h . T h i s p r o b a b i l i t y i s s t r e n g t h e n e d b y t h e s t r u c t u r e

I I I - 19

a n d a d v a n c e m e n t p r a c t i c e s o f t h e A P O , w h i c h o f f e r o p p o r t u n i t y f o r m a n a g e ­

m e n t d e v e l o p m e n t , b u t g e n e r a l l y o n l y i n p o s t a l s e r v i c e s o r i n t e l e c o m m u n i c a

t i o n s , a n d s e l d o m i n b o t h . I n S e p t e m b e r 1 9 7 3 , f o r e x a m p l e , o n l y 6 o f t h e 4 4

S e c o n d D i v i s i o n o f f i c e r s i n C e n t r a l A d m i n i s t r a t i o n ( e x c l u d i n g M a n a g e m e n t

S e r v i c e s a n d I n d u s t r i a l R e l a t i o n s ) h a d o b t a i n e d b o t h t e l e c o m m u n i c a t i o n s a n d

p o s t a l s e r v i c e s e x p e r i e n c e o v e r t h e p r e c e d i n g 20 y e a r s . ( " S e c o n d D i v i s i o n ”

r e f e r s t o a g r o u p i n g o f c l a s s i f i c a t i o n s i n t h e P u b l i c S e r v i c e . ) T h u s , a D G

o r S t a t e D i r e c t o r i s l i k e l y t o b e g i n h i s i n c u m b e n c y w i t h t h o r o u g h k n o w l e d g e

o f o n l y a p o r t i o n o f h i s r e s p o n s i b i l i t i e s a n d w i t h m o s t o f h i s c l o s e i n t e r ­

p e r s o n a l r e l a t i o n s h i p s s t e m m i n g f r o m t h o s e s a m e a r e a s .

S i n c e t h e r e i s n o t h i n g u n u s u a l i n a n e w c h i e f e x e c u t i v e ' s h a v i n g t o l e a r n

s o m e o f h i s r e s p o n s i b i l i t i e s o n t h e j o b , o t h e r d i m e n s i o n s m u s t b e a d d e d .

T h r e e o f t h e s e a r e t h e r e l a t i v e s i z e s , c o m p l e x i t i e s a n d p r e s s u r e s o f t e l e ­

c o m m u n i c a t i o n s a n d p o s t a l s e r v i c e s . T e l e c o m m u n i c a t i o n s o u t w e i g h s p o s t a l

s e r v i c e s o n a l l t h r e e c o u n t s , a n d w h i l e t h e o r g a n i s a t i o n s t r u c t u r e f o s t e r s a

t o p m a n a g e m e n t p r e o c c u p a t i o n w i t h t e l e c o m m u n i c a t i o n s , s u c h a p r e o c c u p a ­

t i o n w o u l d i n a l l p r o b a b i l i t y e x i s t e v e n i f s t r u c t u r a l r e s p o n s i b i l i t i e s w e r e

b a l a n c e d . T h e f a c t s a r e t h a t a n i n c u m b e n t D G o r S t a t e D i r e c t o r i s m o r e

l i k e l y t o b e e x p e r i e n c e d i n t e l e c o m m u n i c a t i o n s , a n d t h e d e m a n d s o f t h a t

s e r v i c e , s u p p o r t e d b y h i s n a t u r a l i n c l i n a t i o n s t o w a r d i t , w i l l t e n d t o i n f l u ­

e n c e t h e a l l o c a t i o n o f h i s t i m e . E x c e p t i o n s o c c u r , p r i n c i p a l l y b e c a u s e of

p o s t a l s e r v i c e s i n d u s t r i a l s t r i f e , d u r i n g w h i c h t e l e c o m m u n i c a t i o n s i s s u e s

q u e u e u p u n t i l t h e e m e r g e n c y p a s s e s , O v e r a l l , h o w e v e r , t h e e v i d e n c e s u g ­

g e s t s t h a t p o s t a l s e r v i c e s s u f f e r s f r o m l a c k o f t o p m a n a g e m e n t a t t e n t i o n a n d

i n s i g h t .

T h e w e a k n e s s e s c i t e d t h u s f a r c o u l d a l l b e o v e r c o m e , a t l e a s t t h e o r e t ­

i c a l l y , b y s t r u c t u r a l r e - a r r a n g e m e n t s w h i c h w o u l d a c c o m m o d a t e a n d b e t t e r

b a l a n c e t h e e x e c u t i v e w o r k l o a d s , a n d w h i c h w o u l d r e t a i n a s i n g l e e x e c u t i v e

h e a d . A s a p r a c t i c a l m a t t e r , h o w e v e r , c r e a t i n g a s t r u c t u r e t h a t p r o v i d e d

s e p a r a t e m a n a g e m e n t f o r t e l e c o m m u n i c a t i o n s a n d p o s t a l s e r v i c e s , r e s p e c ­

t i v e l y , w o u l d l e a v e a s i n g l e e x e c u t i v e h e a d o v e r t h e t w o b u s i n e s s e s w i t h f e w

m e a n i n g f u l d u t i e s t o p e r f o r m .

T h e r e i s o n e f u r t h e r w e a k n e s s w h i c h i s a f u n c t i o n o f h a v i n g a s i n g l e

h e a d a n d w o u l d b e s t b e r e s o l v e d t h r o u g h c o m p l e t e s e p a r a t i o n o f t h e t w o

s e r v i c e s - t h e a l l o c a t i o n o f f u n d s .

T h e A P O c o m p e t e s f o r f u n d i n g w i t h o t h e r F e d e r a l G o v e r n m e n t d e p a r t ­

m e n t s a n d a g e n c i e s . S i n c e t h e A P O i s a s i n g l e e n t i t y f o r b u d g e t p u r p o s e s ,

t h i s s i t u a t i o n m e a n s t h a t t e l e c o m m u n i c a t i o n s a n d p o s t a l s e r v i c e s - b o t h v e r y

l a r g e c o n s u m e r s o f f u n d s - m u s t c o m p e t e w i t h e a c h o t h e r i n a n a d m i n i s t r a t i v e

I I I - 20

d e c i s i o n p r o c e s s w i t h i n t h e A P O i t s e l f , r a t h e r t h a n w i t h o t h e r g o v e r n m e n t

p r o g r a m m e s t h r o u g h a p o l i t i c a l d e c i s i o n p r o c e s s . It s e e m s u n d e s i r a b l e

t h a t t h e n e e d s o f t e l e c o m m u n i c a t i o n s a n d p o s t a l s e r v i c e s s h o u l d b e p i t t e d

a g a i n s t e a c h o t h e r a t a l e v e l b e l o w p u b l i c a n d p o l i t i c a l v i s i b i l i t y w h i l e t h e

a g g r e g a t e o f t h e A P O c o m p e t e s i n a p u b l i c p o l i t i c a l f o r u m w i t h o t h e r

F e d e r a l G o v e r n m e n t p r o g r a m m e s . T h e s o c i a l a n d e c o n o m i c i m p o r t a n c e o f

e a c h s e r v i c e a n d t h e f i s c a l m a g n i t u d e s i n v o l v e d s u g g e s t t h a t a f a r m o r e

a p p r o p r i a t e p r o c e s s w o u l d b e t o b a l a n c e e a c h s e r v i c e s e p a r a t e l y a g a i n s t

a l l o t h e r p r o g r a m m e s i n t h e p u b l i c p o l i t i c a l p r o c e s s o f d e t e r m i n i n g F e d e r a l

G o v e r n m e n t f i s c a l p r i o r i t i e s .

T h e c u r r e n t f i s c a l a r r a n g e m e n t s c r e a t e o t h e r i m p o r t a n t , a l t h o u g h l e s s

f u n d a m e n t a l , p r o b l e m s . S i n c e i t i s w e l l k n o w n , f o r e x a m p l e , t h a t t e l e c o m ­

m u n i c a t i o n s i s " p r o f i t a b l e " a n d p o s t a l s e r v i c e s " u n p r o f i t a b l e , " i n t e r n a l

f r i c t i o n s a n d d i s p u t e s d e v e l o p . A r g u m e n t s c o n c e r n i n g t h e e x t e n t t o w h i c h

e i t h e r s e r v i c e i s o r o u g h t t o b e c o n s i d e r e d a b u s i n e s s , w h e t h e r f u n d s n e e d e d

f o r t e l e c o m m u n i c a t i o n s p l a n t a r e b e i n g s i p h o n e d of f t o a " l o s e r , " a n d s o

f o r t h , a b o u n d a n d a r e c o n t r i b u t i n g n o t h i n g t o t h e p e r f o r m a n c e o f e i t h e r

s e r v i c e .

R E F E R E N C E T H R E E :

D E L E G A T I O N O F A U T H O R I T Y

A N D R E S P O N S I B I L I T Y

A s a D e p a r t m e n t o f S t a t e , t h e A P O d o e s n o t h a v e c o n t r o l o v e r m a n y o f

t h e d e l e g a t i o n s o f a u t h o r i t y w i t h i n w h i c h i t m u s t w o r k . I n s t e a d , t h e s e d e l e ­

g a t i o n s f l o w f r o m s u c h a u t h o r i t i e s a s t h e P u b l i c S e r v i c e B o a r d , t h e T r e a s u r y ,

t h e D e p a r t m e n t o f S e r v i c e s a n d P r o p e r t i e s , a n d o t h e r s . C e r t a i n o f t h e s e

d e l e g a t i o n s a r e a s o u r c e o f d i f f i c u l t y a n d a r e c o m m e n t e d o n b e l o w .

D e l e g a t i o n s e s t a b l i s h e d b y t h e A P O m a y b e c a t e g o r i s e d i n t o t h o s e

e x p r e s s e d s p e c i f i c a l l y ( s u c h a s u p t o a f i s c a l l i m i t ) , a n d t h o s e i m p l i e d

o r e x p r e s s e d m o r e g e n e r a l l y t h r o u g h o r g a n i s a t i o n s t r u c t u r e , a s s i g n e d

f u n c t i o n s , a p p r o v e d p r o c e d u r e s , a n d s o f o r t h . G e n e r a l l y , d e l e g a t i o n s f a l l ­

i n g i n t o t h e s p e c i f i c c a t e g o r y a r e n o t a m a j o r i s s u e . S o m e d e l e g a t i o n s i n

t h e m o r e g e n e r a l c a t e g o r y , h o w e v e r , a r e t r o u b l e s o m e , a s d e s c r i b e d b e l o w .

A u t h o r i t i e s R e t a i n e d B y O t h e r G o v e r n m e n t E n t i t i e s H i n d e r T h e E f f e c ­

t i v e n e s s Of T h e A P O

E a r l i e r i n t h i s c h a p t e r , o b s e r v a t i o n s w e r e o f f e r e d c o n c e r n i n g t h e a u t h o r ­

i t y o f t h e P S B i n A P O o r g a n i s a t i o n , s t a f f i n g a n d o t h e r d e t e r m i n a t i o n s . It w a s

p o i n t e d o u t t h a t t h i s l a c k o f d e l e g a t i o n t o A P O m a n a g e m e n t i s o f l i t t l e i f a n y

I I I - 21

b e n e f i t , s e r i o u s l y i m p e d e s n a t u r a l a n d d e s i r a b l e m a n a g e m e n t i n i t i a t i v e

w i t h i n t h e A P O , a d d s t o t h e a m o u n t o f s t a f f w o r k p e r f o r m e d , a n d p r o v i d e s

a n u n d e s i r a b l e p o t e n t i a l f o r o b f u s c a t i o n .

A n u m b e r o f T r e a s u r y - a u t h o r i s e d e x p e n d i t u r e d e l e g a t i o n s a r e p l a c e d

u p o n t h e A P O . It w a s b e y o n d t h e s c o p e o f t h i s s t u d y t o a n a l y s e t h e s e i n

d e p t h , a n d t o d e t e r m i n e t h e u n d e r l y i n g r a t i o n a l e s f o r t h e m . H o w e v e r ,

s o m e o f t h e s e d e l e g a t i o n s a p p e a r t o b e m i n u t e w h e n v i e w e d a g a i n s t t h e

f i s c a l s c a l e o f t h e A P O . F o r e x a m p l e , a S t a t e D i r e c t o r c a n n o t a u t h o r i s e

t h e w r i t e - o f f o f a n u n r e c o v e r a b l e d e b t o f m o r e t h a n $ 5 0 0 ( t h e D i r e c t o r - G e n e r a l

i s l i m i t e d t o $ 5 , 0 0 0 ) , a n d n o o n e i n t h e A P O c a n a p p r o v e e n t r i e s t o c o v e r

m i s c e l l a n e o u s m o n e t a r y l o s s e s o v e r $ 5 0 . T h e s e l i m i t a t i o n s d o n o t i m p e d e

m a n a g e m e n t , b u t t h e y d o c r e a t e w h a t w o u l d s e e m t o b e a n u n n e c e s s a r y w o r k

b u r d e n i n d o c u m e n t i n g e a c h s i t u a t i o n a n d s o l i c i t i n g a u t h o r i s a t i o n f r o m t h e

T r e a s u r y .

T h e r e d o e s a p p e a r t o b e a n i m p e d i m e n t t o m a n a g e m e n t i n t h e p r o c e s s

of p r o p e r t y a c q u i s i t i o n , w h i c h i n v o l v e s t h e D e p a r t m e n t o f S e r v i c e s a n d

P r o p e r t i e s a n d t h e T a x a t i o n O f f i c e a s w e l l a s t h e A P O . W h e n t h e A P O

w i s h e s t o p u r c h a s e p r o p e r t y , i t m u s t r e q u e s t t h a t t h e D e p a r t m e n t o f S e r v ­

i c e s a n d P r o p e r t i e s a p p r o a c h t h e o w n e r a n d e s t a b l i s h t e r m s . B e f o r e s u c h

a n a p p r o a c h , S e r v i c e s a n d P r o p e r t i e s m u s t o b t a i n a n a p p r a i s a l f r o m t h e

T a x a t i o n O f f i c e . T h e e n t i r e p r o c e s s g e n e r a l l y t a k e s s e v e r a l m o n t h s a n d

h a s t a k e n a s l o n g a s a y e a r , d u r i n g w h i c h t i m e t h e A P O c a n n o t i t s e l f a p p r o a c h

t h e o w n e r o r s e l l e r . ( P a r t o f t h e l e n g t h o f t h e p r o c e s s i s c a u s e d b y r e v i e w s

w i t h i n t h e A P O , a p o i n t d i s c u s s e d l a t e r . ) S o m e t i m e s , b y t h e t i m e a p p r o v a l s

a r e o b t a i n e d , p r o p e r t i e s a r e n o l o n g e r a v a i l a b l e . G i v e n t h e m a g n i t u d e o f t h e

A P O ' s p r o p e r t y a c q u i s i t i o n p r o g r a m m e , i t w o u l d a p p e a r d e s i r a b l e e i t h e r t o

d e l e g a t e m o r e a u t h o r i t y t o t h e A P O o r , a l t e r n a t i v e l y , t o s i m p l i f y a n d s p e e d

t h e e x e r c i s e o f a u t h o r i t i e s r e t a i n e d e l s e w h e r e .

O r g a n i s a t i o n A r r a n g e m e n t s A n d P r o c e s s e s W i t h i n T h e A P O U n d e s i r a b l y

L i m i t D e l e g a t i o n s O f A u t h o r i t y

T h i s o b s e r v a t i o n b u i l d s o n t h e i n d i v i d u a l , m o r e d e t a i l e d p o i n t s s e t f o r t h

b e l o w .

a. T h e r e i s i n s u f f i c i e n t d e l e g a t i o n o f a u t h o r i t y b e l o w t h e s t a t e l e v e l

i n b o t h t e l e c o m m u n i c a t i o n s a n d p o s t a l s e r v i c e s . A s h a s b e e n o b s e r v e d e a r l i e r ,

t h e e x i s t i n g s t r u c t u r e p r e v e n t s d e l e g a t i o n o f g e n e r a l m a n a g e m e n t ( o r m u l t i ­

f u n c t i o n a l ) r e s p o n s i b i l i t y a n d a u t h o r i t y f o r t e l e c o m m u n i c a t i o n s b e l o w t h e l e v e l

o f S t a t e D i r e c t o r . T h i s i s a m a j o r a n d w i d e l y r e c o g n i s e d d e f i c i e n c y . T h e

" a r e a m a n a g e m e n t " s c h e m e w a s a n a t t e m p t t o r e c t i f y i t . O t h e r s c h e m e s h a v e

b e e n p u t f o r w a r d t o a c c o m p l i s h t h e s a m e p u r p o s e , b u t c u r r e n t l y t h e r e i s n o

a p p r o v e d p l a n t o r e m e d y t h e s i t u a t i o n .

Ill-22

I n t e r e s t i n g l y e n o u g h , t h i s i s a q u i t e d i f f e r e n t i s s u e i n p o s t a l s e r v ­

i c e s . T h e r e , a r e a s o n a b l y u n i f i e d f i e l d s t r u c t u r e d o e s e x i s t , b u t t h e

m a n a g e r s i n i t d o n o t r e c e i v e s u f f i c i e n t d e l e g a t i o n s o f a u t h o r i t y t o f u n c t i o n

a s m u c h m o r e t h a n p h y s i c a l l y d i s p e r s e d r e p r e s e n t a t i v e s o f s t a t e o r h i g h e r -

l e v e l a u t h o r i t y .

b. D e s p i t e a p h i l o s o p h y o f i n c r e a s i n g d e l e g a t i o n s t o t h e s t a t e s ,

C e n t r a l A d m i n i s t r a t i o n s t i l l e x e r c i s e s q u e s t i o n a b l e a u t h o r i t i e s . I n r e c e n t

y e a r s , t h e A P O h a s c l e a r l y p u r s u e d a p h i l o s o p h y o f g r a n t i n g i n c r e a s i n g

d e l e g a t i o n s o f a u t h o r i t y t o t h e s t a t e a d m i n i s t r a t i o n s . E x a m p l e s of t h i s

p h i l o s o p h y i n c l u d e :

- G r e a t e r r e s p o n s i b i l i t y a t t h e s t a t e l e v e l f o r r e g i o n a l p l a n s ,

a n d a l o n g e r t i m e - h o r i z o n f o r t h e s e p l a n s

- E n l a r g e d h i r i n g a u t h o r i t y , u n d e r t h e B u l k E s t a b l i s h m e n t s

A u t h o r i s a t i o n p r o g r a m m e

- I n c r e a s e d f i s c a l a u t h o r i t y t o a p p r o v e s i t e p u r c h a s e s a n d

c o n s t r u c t i o n c o n t r a c t s .

M e a n w h i l e , t h e n u m b e r o f C e n t r a l A d m i n i s t r a t i o n s t a f f c o n c e r n e d

w i t h r e v i e w i n g s t a t e p r o p o s a l s h a s g r o w n s u b s t a n t i a l l y . T h u s , w h i l e t h e

A P O h a s p u r s u e d a p h i l o s o p h y o f i n c r e a s e d d e l e g a t i o n o f a u t h o r i t y , i t s

c e n t r a l r e s o u r c e s ( a n d h e n c e p r o p e n s i t y ) f o r b e f o r e - t h e - f a c t r e v i e w a n d

a n a l y s i s h a v e b e e n i n c r e a s i n g . T h e r e s u l t i s a n a p p e a r a n c e o f m o r e a u t h o r ­

i t y b e i n g e x e r c i s e d a t t h e s t a t e l e v e l , b u t i n f a c t t h e a u t h o r i t y c a n b e e x e r ­

c i s e d o n l y a f t e r l e n g t h e n e d a n d i n t e n s i f i e d c e n t r a l r e v i e w . P e r i o d s of t w o

t o t h r e e m o n t h s f o r c e n t r a l r e v i e w a r e c o m m o n , a n d c a n l e n g t h e n t o f o u r ,

s i x o r e v e n t w e l v e m o n t h s i f o t h e r F e d e r a l G o v e r n m e n t d e p a r t m e n t s a r e

i n v o l v e d . F u n c t i o n a l l y , t h e m o s t s e r i o u s s i t u a t i o n s a p p e a r t o o c c u r i n t h e

a r e a s o f a c c o u n t i n g , p e r s o n n e l a n d s u p p l y .

In a n e a r l i e r o b s e r v a t i o n c o n c e r n i n g o r g a n i s a t i o n s t r u c t u r e , r e f e r ­

e n c e w a s m a d e t o t h e r e v i e w - a n d - c o m m e n t p r o c e s s t o w h i c h s t a t e p r o p o s a l s

a r e s u b j e c t e d c e n t r a l l y a n d i n t h e o t h e r s t a t e s . T h e u n f o r t u n a t e " p l e b i s c i t e "

c h a r a c t e r i s t i c s o f t h e p r o c e s s c l e a r l y l i m i t a n d c o m p r o m i s e s t a t e - l e v e l

i n i t i a t i v e a n d a u t h o r i t y i n o r g a n i s a t i o n m a t t e r s , a n d i n o t h e r m a t t e r s a s w e l l .

F o r e x a m p l e , a r e c e n t s t a t e p r o p o s a l f o r a l o c a l l y r e q u i r e d A D P a p p l i c a t i o n

w a s d i s a p p r o v e d c e n t r a l l y b e c a u s e t h e a p p l i c a t i o n o f f e r e d l i t t l e b e n e f i t t o t h e

A P O a s a w h o l e . D e c i s i o n p r o c e s s e s s u c h a s t h e s e r e f l e c t t e n d e n c i e s t o w a r d

a u n i f o r m i t y s y n d r o m e w h i c h i s i n a p p r o p r i a t e t o a n e n t e r p r i s e a s l a r g e a n d

d i v e r s e a s t h e A P O .

Ill- 23

S t a t e D i r e c t o r s ' a u t h o r i t i e s f o r s i t e a c q u i s i t i o n a n d b u i l d i n g c o n s t r u c ­

t i o n w e r e r e c e n t l y r a i s e d s u b s t a n t i a l l y , t o $ 4 0 , 0 0 0 a n d $ 7 5 0 , 0 0 0 , r e s p e c t i v e l y .

T h e $7 5 0 , 0 0 0 l i m i t f o r b u i l d i n g c o n s t r u c t i o n a p p e a r s q u i t e w o r k a b l e , i n t h a t

r o u g h l y 75 p e r c e n t o f t h e b u i l d i n g p r o j e c t s i n t h e s t a t e s ' w o r k s p r o g r a m m e s

a r e w i t h i n t h i s a m o u n t . O n t h e o t h e r h a n d , $ 4 0 , 0 0 0 f o r s i t e a c q u i s i t i o n s m a y

b e s u f f i c i e n t f o r o p t i o n o r p u r c h a s e o f m o s t t e l e p h o n e e x c h a n g e s i t e s , b u t w i l l

p r o b a b l y n o t b e s u f f i c i e n t f o r l i n e d e p o t o r m a i l c e n t r e s i t e s . S i n c e n e e d s a n d

f e a t u r e s o f s u c h s i t e s w o u l d b e d e l i n e a t e d i n t h e c e n t r a l l y a p p r o v e d a n n u a l

S i t e s a n d P r o p e r t i e s D e v e l o p m e n t P l a n , t h e c e n t r a l n e e d f o r p o s t - p l a n s i t e

a p p r o v a l s a s l o w a s $ 4 0 , 0 0 1 s e e m s q u e s t i o n a b l e .

E v e n w i t h t h e r e c e n t l y e n l a r g e d a u t h o r i t y d e l e g a t i o n s , c e n t r a l

a p p r o v a l f o r m a j o r s i t e s a n d b u i l d i n g s w i l l s t i l l b e r e q u i r e d . W h i l e t h e c o n ­

c e p t o f t h i s r e q u i r e m e n t ( s u b j e c t , p e r h a p s , t o a l e s s s t r i n g e n t s i t e l i m i t )

a p p e a r s s o u n d , t h e c u r r e n t r e v i e w p r o c e s s e s w i t h i n C e n t r a l A d m i n i s t r a t i o n

s e e m o v e r l y c o m p l e x a n d l e n g t h y . T h e s e p r o c e s s e s i n v o l v e m u l t i - b r a n c h

r e v i e w w i t h i n E n g i n e e r i n g W o r k s ( u s u a l l y t h r e e t o f i v e b r a n c h e s ) a n d s u b s e ­

q u e n t r e v i e w i n M a n a g e m e n t S e r v i c e s . T h e p r o c e s s t y p i c a l l y c o n s u m e s t w o

t o t h r e e m o n t h s w i t h i n C e n t r a l A d m i n i s t r a t i o n , a n d a n e v e n l o n g e r s u b s e q u e n t

p e r i o d i n o t h e r F e d e r a l G o v e r n m e n t d e p a r t m e n t s , a s n o t e d a b o v e .

I n p r o p e r t y a n d o t h e r m a t t e r s , t h e u n i f o r m i t y o f c e n t r a l r e v i e w

p r o c e s s e s m a y b e a c a u s e o f i n e f f i c i e n c y a n d u n n e c e s s a r y d e l a y . T h a t i s ,

a l l p r o p o s a l s a p p e a r t o r e c e i v e a b o u t t h e s a m e d e p t h o f c e n t r a l s c r u t i n y ,

r e g a r d l e s s o f t h e c a p a b i l i t i e s o f t h e p r o p o s i n g s t a t e . F o r o b v i o u s r e a s o n s ,

t h e s i z e s o f f u n c t i o n a l s t a f f s v a r y s i g n i f i c a n t l y f r o m o n e s t a t e t o a n o t h e r ,

a n d l a r g e r s t a t e s p o s s e s s f a r m o r e c a p a b i l i t y f o r i n - d e p t h a n a l y s i s t h a n d o

t h e s m a l l e r o n e s . H o w e v e r , e v e r y s t a t e e n c o u n t e r s c o m p l i c a t e d i s s u e s .

It w o u l d s e e m m o r e e f f i c i e n t t o v a r y t h e d e p t h o f c e n t r a l s c r u t i n y a c c o r d i n g

t o t h e c a p a c i t y o f t h e p r o p o s e r t o d e a l w i t h t h e i s s u e a t h a n d .

R e g a r d l e s s Of F o r m a l A u t h o r i t y D e l e g a t i o n s , A c t u a l P r a c t i c e s W i t h i n

T h e A P O M a y A l l o w S t a t e D i r e c t o r s T o o M u c h I n d e p e n d e n c e

W h i l e t h e r e a r e a n u m b e r o f m a t t e r s i n w h i c h f u r t h e r d e l e g a t i o n s t o t h e

s t a t e s o r s t i l l l o w e r l e v e l s w o u l d b e h e l p f u l , a s i m u l t a n e o u s c o u n t e r - p a t t e r n

w i t h i n t h e A P O w a r r a n t s c o m m e n t . T h i s p a t t e r n i s a t e n d e n c y , p a r t i c u l a r l y

o n t h e p a r t o f t h e l a r g e r s t a t e s , t o d i s r e g a r d a t t i m e s a p p r o p r i a t e a n d d e s i r ­

a b l e f u n c t i o n a l d i r e c t i o n e m a n a t i n g f r o m C e n t r a l A d m i n i s t r a t i o n . M a n y f u n c ­

t i o n a l t o p i c a r e a s c o u l d b e m e n t i o n e d ; e x a m p l e s i n c l u d e t r a i n i n g p r o g r a m m e s ,

m e t h o d s a n d p r o c e d u r e s , m a i n t e n a n c e s t a n d a r d s , i n d u s t r i a l r e l a t i o n s , a n d a

v a r i e t y o f t e c h n i c a l m a t t e r s .

Ill-24

S e v e r a l f a c t o r s u n d o u b t e d l y c o n t r i b u t e t o t h i s t e n d e n c y . T h e u n m a n a g e a b l e

s c o p e o f t h e D i r e c t o r - G e n e r a l p o s i t i o n i s a k e y f a c t o r , s i n c e i t o f t e n r e n d e r s

t h e D G i n a c c e s s i b l e t o s u p p o r t o r e n f o r c e C e n t r a l A d m i n i s t r a t i o n f u n c t i o n a l

g u i d a n c e . T h e s c o p e o f t h e S t a t e D i r e c t o r p o s i t i o n i s a l s o a f a c t o r , s i n c e i n

l a r g e r s t a t e s h e m u s t d e p e n d h e a v i l y o n h i s s u b o r d i n a t e s ' o p i n i o n s , a n d h e n c e

c a n b e c o m e a n u n w i t t i n g s u p p o r t e r of p a r o c h i a l v i e w s w i t h i n h i s o w n s t a f f .

H i s t o r y u n d o u b t e d l y i s a l s o a f a c t o r , i n t h a t s t a t e p o s t a l a n d t e l e g r a p h a c t i v i t i e s

c o m m e n c e d w e l l b e f o r e F e d e r a t i o n . A f a r m o r e i m m e d i a t e a n d c o m p e l l i n g

f a c t o r i s t h e m a g n i t u d e o f A P O a c t i v i t i e s i n N e w S o u t h W a l e s ; C e n t r a l A d m i n ­

i s t r a t i o n r e l a t i o n s w i t h a s t a t e a d m i n i s t r a t i o n a c c o u n t i n g f o r m o r e t h a n 40 p e r

c e n t o f t h e w h o l e c a l l f o r f l e x i b i l i t y i n a n y s i t u a t i o n . I n t h e A P O , t h e u n i f o r m -

d e p t h a n d u n i f o r m i t y - f o r - i t s - o w n - s a k e c h a r a c t e r i s t i c s o f c e n t r a l r e v i e w a n d

d e c i s i o n - m a k i n g h a r d l y c o n s t i t u t e a f l e x i b l e a p p r o a c h .

F r o m a n i m p a r t i a l p o i n t o f v i e w , b o t h p a r t i e s t o t h i s i s s u e a r e a t f a u l t ,

a n d c h a n g e s o f p h i l o s o p h y a n d p r a c t i c e a r e i n o r d e r o n b o t h s i d e s . F u n d a ­

m e n t a l l y , p o s t a l a n d t e l e c o m m u n i c a t i o n s s e r v i c e s a r e n a t i o n a l o p e r a t i o n s .

E a c h s e r v i c e ( l e t a l o n e t h e t w o c o m b i n e d ) r e q u i r e s a l a r g e , d i s p e r s e d o r g a ­

n i s a t i o n t h a t m u s t a c c e p t a n d f o l l o w k n o w l e d g e a b l e a n d p r a c t i c a l c e n t r a l

d i r e c t i o n .

R E F E R E N C E F O U R :

P O S S I B L E A D V A N T A G E S O F C O M B I N I N G R E S P O N S I B I L I T Y F O R N A T I O N A L A N D

I N T E R N A T I O N A L T E L E C O M M U N I C A T I O N S I N A S I N G L E A U T H O R I T Y

B e f o r e m a k i n g o b s e r v a t i o n s r e g a r d i n g t h i s t e r m o f r e f e r e n c e , i t w o u l d

s e e m u s e f u l t o o u t l i n e b r i e f l y t h e f u n c t i o n s a n d o r g a n i s a t i o n of t h e O v e r s e a s

T e l e c o m m u n i c a t i o n s C o m m i s s i o n ( A u s t r a l i a ) ( O T C ) , b o t h o f w h i c h h a v e b e e n

t h o r o u g h l y d o c u m e n t e d i n s u b m i s s i o n s t o t h e C o m m i s s i o n o f I n q u i r y b y t h e

A P O a n d t h e O T C .

T h e O T C w a s c r e a t e d i n 1 9 4 6 " t o p r o v i d e f o r t h e c o n d u c t o f A u s t r a l i a ' s

p u b l i c i n t e r n a t i o n a l t e l e c o m m u n i c a t i o n s s e r v i c e s u n d e r C o m m o n w e a l t h

G o v e r n m e n t o w n e r s h i p a n d t h e r e b y t o e n s u r e t h e p r o v i s i o n t o t h e A u s t r a l i a n

p u b l i c o f h i g h q u a l i t y t e l e c o m m u n i c a t i o n s s e r v i c e s t o a l l c o u n t r i e s of t h e

w o r l d a t t h e l o w e s t p r i c e c o n s i s t e n t w i t h e f f i c i e n c y a n d t h e f i n a n c i a l o b l i g a t i o n s

of t h e b u s i n e s s . " T o d a y , i t s p r i m a r y f u n c t i o n i s t o p r o v i d e t h e p h y s i c a l a n d

(9) F i r s t s u b m i s s i o n b y t h e O T C t o t h e C o m m i s s i o n o f I n q u i r y , p. 1.

I l l - 2 5

o p e r a t i n g f a c i l i t i e s f o r i n t e r n a t i o n a l t e l e x a n d t e l e g r a p h , i n c l u d i n g b i l l i n g ,

a n d t h e p h y s i c a l f a c i l i t i e s f o r i n t e r n a t i o n a l t e l e p h o n e ( i n t e r n a t i o n a l t e l e ­

p h o n e o p e r a t o r s a r e A P O e m p l o y e e s , a n d c u s t o m e r s a r e b i l l e d f o r o v e r s e a s

t e l e p h o n e c a l l s b y t h e A P O ) .

E x h i b i t I I I - 9 i l l u s t r a t e s t h e c u r r e n t p l a n o f o r g a n i s a t i o n o f t h e O T C ,

w h i c h r e f l e c t s a r e s t r u c t u r i n g m a d e i n O c t o b e r 1 9 7 3 . T h e G e n e r a l M a n a g e r

s e r v e s a s t h e c h i e f e x e c u t i v e , a n d i s s u p p o r t e d b y f o u r k e y s u b o r d i n a t e s : a

D e p u t y G e n e r a l M a n a g e r , a n A s s i s t a n t G e n e r a l M a n a g e r ( C o r p o r a t e S e r v i c e s ) ,

a n A s s i s t a n t G e n e r a l M a n a g e r ( O p e r a t i o n s ) , a n d a n A s s i s t a n t G e n e r a l M a n a g e r

( I n t e r n a t i o n a l ) . T w o D i r e c t o r s , o n e f o r S e c r e t a r i a l S e r v i c e s a n d o n e f o r

A d m i n i s t r a t i o n , a l s o r e p o r t d i r e c t l y t o t o p m a n a g e m e n t . A s s h o w n o n t h e

c h a r t , e a c h o f t h e A s s i s t a n t G e n e r a l M a n a g e r s h a s r e p o r t i n g t o h i m D i r e c t o r

p o s i t i o n s r e s p o n s i b l e f o r f u n c t i o n s d e l i n e a t e d i n t h e p o s i t i o n t i t l e s . I n t o t a l ,

t h e O T C e m p l o y s a p p r o x i m a t e l y 2, 0 0 0 p e r s o n s .

A s a s t a t u t o r y c o r p o r a t i o n , t h e O T C i s o u t s i d e t h e c o n t r o l o f t h e P u b l i c

S e r v i c e B o a r d b u t d o e s c o n s u l t w i t h i t o n r e l e v a n t p e r s o n n e l m a t t e r s .

S a l a r i e s o v e r a c e r t a i n l e v e l m u s t b e s u b m i t t e d t o t h e M i n i s t e r ( t h e P o s t m a s t e r -

G e n e r a l ) b u t , i n t h e m a i n , t h e O T C c a n d e t e r m i n e i t s o r g a n i s a t i o n s t r u c t u r e ,

e s t a b l i s h m e n t l e v e l s , a n d c l a s s i f i c a t i o n s f o r m a n a g e r i a l p o s i t i o n s .

T w o o b s e r v a t i o n s a r e o f f e r e d r e g a r d i n g t h e O T C .

T h e O v e r s e a s T e l e c o m m u n i c a t i o n s C o m m i s s i o n ( A u s t r a l i a ) I s A l m o s t

U n i v e r s a l l y R e g a r d e d A s A W e l l - M a n a g e d , D y n a m i c E n t e r p r i s e

T h e r e i s a w i d e s p r e a d a g r e e m e n t , n o t o n l y w i t h i n t h e O T C b u t w i t h i n t h e

A P O a s w e l l , t h a t t h e O T C i s a c l o s e l y - k n i t , w e l l - r u n b u s i n e s s . M o r e o v e r ,

t h e g e n e r a l i m p r e s s i o n w a s g a i n e d t h a t t h e O T C i s w e l l r e g a r d e d i n o v e r s e a s

c i r c l e s . I t s s i z e a n d c o n s t i t u t i o n a s a s t a t u t o r y c o r p o r a t i o n e n a b l e i t t o

m a i n t a i n c l o s e m a n a g e m e n t - s t a f f r e l a t i o n s h i p s a n d t h e f l e x i b i l i t y i n h e r e n t

i n a s m a l l e r e n t i t y . T h i s f l e x i b i l i t y i s r e g a r d e d b y t h e O T C a s h a v i n g

p a r t i c u l a r a d v a n t a g e s i n i n t e r n a t i o n a l n e g o t i a t i o n s a n d e n a b l i n g i t t o c a p i t a l i s e

o n o v e r s e a s t e l e c o m m u n i c a t i o n s t e c h n o l o g y o n a t i m e l y b a s i s .

T h e r e A r e N e e d s F o r C o - o r d i n a t i o n B e t w e e n T h e O T C A n d T h e

T e l e c o m m u n i c a t i o n s B u s i n e s s Of T h e A P O

V i e w e d i n i t s b r o a d e s t c o n t e x t , t h e O T C c a n b e r e g a r d e d a s a n e x t e n s i o n

o f t h e n a t i o n a l t e l e c o m m u n i c a t i o n s n e t w o r k . I n t h i s c o n t e x t , t h e r e a r e

s e v e r a l a r e a s w h i c h r e q u i r e c o - o r d i n a t i o n a t p o l i c y a n d o p e r a t i n g l e v e l s .

Ill-26

O V E R S E A S T E L E C O M M U N I C A T I O N S C O M MISSI ON (AUSTRALIA)

P R E S E N T P L A N O F O R G A N I S A T I O N

B A S I C S T R U C T U R E

N O V E M B E R 1973

C O M M I S S I O N

C H A I R M A N

G E N E R A L M A N A G E R

S E R V I C E S )

( P L A N N I N G ) ( E N G I N E E R I N G )

( O P E R A T I O N S )

A S S I S T A N T

( O P E R A T I O N S )

D I R E C T O R

( C O M M E R C I A L )

D I R E C T O R

( A C C O U N T S )

G E N E R A L M A N A G E R

( I N T E R N A T I O N A L )

D I R E C T O R

( C O M M O N W E A L T H )

D I R E C T O R

( F O R E I G N )

D I R E C T O R

( A D M I N I S T R A T I O N )

-------- J m

I I I I I

.

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■

F o r t h e m o s t p a r t , t h i s c o - o r d i n a t i o n h a s b e e n r e a s o n a b l y w e l l a c h i e v e d

t h r o u g h t h e u s e o f s e v e r a l l i a i s o n c o m m i t t e e s . T h e p r i n c i p a l c o m m i t t e e i s

t h e P o l i c y L i a i s o n C o m m i t t e e , o n w h i c h s i t s a s e n i o r m e m b e r of t h e A P O

( c u r r e n t l y , t h e F A D G - E n g i n e e r i n g P l a n n i n g a n d R e s e a r c h ) . N e v e r t h e l e s s ,

s o m e q u e s t i o n s h a v e n o t b e e n e n t i r e l y s a t i s f a c t o r i l y r e s o l v e d , i n t h e m i n d s

of t h e A P O , t h e O T C , o r b o t h . T h e s e i n c l u d e :

- W h a t s h o u l d b e t h e b a s i s o n w h i c h t h e O T C i s c h a r g e d f o r a c c e s s

t o t h e n a t i o n a l n e t w o r k ?

- S h o u l d t h e O T C m a i n t a i n s e p a r a t e g a t e w a y e x c h a n g e s , a s d o m o s t

c o u n t r i e s o f t h e w o r l d , o r i s t e c h n o l o g y d e v e l o p i n g i n a w a y w h i c h

s u g g e s t s i n t e g r a t e d e x c h a n g e s f o r t h e n a t i o n a l a n d i n t e r n a t i o n a l

s y s t e m s ?

- S h o u l d t h e O T C a s s u m e r e s p o n s i b i l i t y f o r o p e r a t i n g f u n c t i o n s

( t e l e p h o n i s t s , b i l l i n g a n d c o m p l a i n t s ) c o n c e r n e d w i t h i n t e r n a t i o n a l

t e l e p h o n e s e r v i c e , s o t h a t i t c a n b e h e l d r e s p o n s i b l e f o r t h e t o t a l

q u a l i t y o f t h e s e r v i c e p r o v i d e d t o i t s c u s t o m e r s ?

A r e c o m m e n d a t i o n f o r a c h i e v i n g a b e t t e r f o c a l p o i n t f o r r e s o l v i n g t h e s e

a n d r e l a t e d m a t t e r s i s s e t f o r t h o n p a g e I I I - 3 2 .

R E F E R E N C E F I V E :

C O - O R D I N A T I O N O F P L A N N I N G A N D

R E S E A R C H , I N C L U D I N G T E C H N O L O G Y A N D M A R K E T R E S E A R C H

W h e n t h e C o m m i s s i o n o f I n q u i r y i s s u e d t h i s t e r m o f r e f e r e n c e a t t h e

o u t s e t o f t h e s t u d y , i t w a s a n t i c i p a t e d t h a t o p p o r t u n i t i e s s u b s e q u e n t l y i d e n ­

t i f i e d w o u l d r e l a t e t o b o t h t e l e c o m m u n i c a t i o n s a n d p o s t a l s e r v i c e s . T h i s

a n t i c i p a t i o n h a s n o t b e e n b o r n e o u t . R a t h e r , m o s t o f t h e o p p o r t u n i t i e s f o r

i m p r o v e m e n t i n c o - o r d i n a t i o n r e l a t e t o t e l e c o m m u n i c a t i o n s o n l y . A c c o r d i n g l y ,

o b s e r v a t i o n s a n d r e c o m m e n d a t i o n s s t e m m i n g f r o m t h i s t e r m o f r e f e r e n c e a r e

p r e s e n t e d i n C h a p t e r IV.

* * * * *

T h e r e i s o n e g e n e r a l o b s e r v a t i o n t h a t l i e s b e y o n d t h e s c o p e o f t h e t e r m s

o f r e f e r e n c e , b u t t h a t i s f u n d a m e n t a l t o l o n g - t e r m i m p r o v e m e n t o f A P O m a n a g e ­

m e n t e f f e c t i v e n e s s .

I l l - 27

10)45/75— 18

M a n a g e m e n t C o m m u n i c a t i o n M e c h a n i s m s W i t h i n T h e A P O A r e D e f i c i e n t

A s s e e m s t r u e f o r a n y o r g a n i s a t i o n ( l a r g e o r s m a l l ) i n t h e l a t e t w e n t i e t h

c e n t u r y , A P O m a n a g e r s a r e i n u n d a t e d w i t h c o m m u n i c a t i o n s . T h e l o n g p a t h s

o f c o m m u n i c a t i o n r e q u i r e d b y t h e f o r m a l s t r u c t u r e h a v e a l r e a d y b e e n n o t e d ,

a s w e l l a s t h e i n f o r m a l m e c h a n i s m s ( s u c h a s c o m m i t t e e s ) n e e d e d t o o p e r a t e

t h e p r e s e n t f u n c t i o n a l s t r u c t u r e . N o r i s t h e r e a n y l a c k o f w r i t t e n i n f o r m a t i o n .

Y e t , d e s p i t e t h i s w e a l t h o f i n f o r m a t i o n , t h e r e s e e m t o b e f r e q u e n t b r e a k ­

d o w n s i n c o m m u n i c a t i o n . T h e D i r e c t o r - G e n e r a l , f o r e x a m p l e , h a s f o u n d it

n e c e s s a r y t o b y p a s s s e v e r a l l e v e l s i n t h e c h a i n o f c o m m a n d t o f i n d t h e f a c t s

a n d f o r e c a s t s h e n e e d s t o m a k e k e y d e c i s i o n s . T h i s i s a p a r t i c u l a r l y s e r i o u s

s i t u a t i o n , i n v i e w o f t h e b u r d e n s w i t h w h i c h t h e D G m u s t c o n t e n d .

T h e p r o b l e m s e e m s t o l i e p r i n c i p a l l y i n t h e a b s e n c e of d i s c i p l i n e a n d

p u r p o s e i n m a n a g e m e n t c o m m u n i c a t i o n s . S t a t e d a n o t h e r w a y : c o m m u n i c a ­

t i o n s b e t w e e n m a n a g e m e n t l e v e l s d o n o t f o c u s p r e c i s e l y e n o u g h o n w h a t t h e

s u b o r d i n a t e h a s c o m m i t t e d h i m s e l f t o a c c o m p l i s h a n d , m o s t i m p o r t a n t , o n

h i s c u r r e n t v i e w o f w h e t h e r t h e c o m m i t m e n t c a n a n d w i l l b e r e a l i s e d . I n s t e a d ,

m o s t w r i t t e n c o m m u n i c a t i o n s a p p e a r e i t h e r t o c o n v e y o p e r a t i n g s t a t i s t i c s o r

t o r e c i t e p a s t e v e n t s . T o b e s u r e , f o r e c a s t s a n d b u d g e t s a r e c o n v e y e d , a s

a r e a d h o c i n - d e p t h t r e a t m e n t s of p a r t i c u l a r p r o b l e m s , b u t o n c e t h e s e a r e

s u b m i t t e d , t h e m a t t e r s e e m s t o e n d t h e r e . M o s t o r a l c o m m u n i c a t i o n s g i v e

a s i m i l a r i m p r e s s i o n : t h e y a r e g e n e r a l l y t o o b l a n d , a n d t h e y t e n d t o a v o i d

t h e k e r n e l o f c o m m i t m e n t s a n d p r o g r e s s m a d e t o w a r d t h e s e c o m m i t m e n t s ,

e x c e p t w h e n a n e m e r g e n c y i s r e c o g n i s e d .

I n e s s e n c e , a m a n a g e m e n t c o m m u n i c a t i o n t o a s u p e r i o r o u g h t t o i n f o r m

h i m w h e t h e r c o m m i t m e n t s m a d e w i l l b e f u l f i l l e d , a n d i f n o t , w h a t i m p l i c a ­

t i o n s a n d o p t i o n s e x i s t . T o o o f t e n , t h i s b a s i c p u r p o s e i s n o t s a t i s f i e d . i n t h e

A P O .

T h i s m a t t e r i s s e r i o u s , a n d i s r a i s e d h e r e b e c a u s e n o a m o u n t o f o r g a n i s a ­

t i o n a l a d j u s t m e n t w i l l i m p r o v e m a n a g e m e n t c o m m u n i c a t i o n s a u t o m a t i c a l l y .

L a c k i n g s u c h i m p r o v e m e n t , o r g a n i s a t i o n c h a n g e r u n s t h e r i s k o f c r e a t i n g

f o r m w i t h o u t s u b s t a n c e . C o n s e q u e n t l y , i m p r o v e m e n t i n m a n a g e m e n t c o m ­

m u n i c a t i o n s m u s t b e t r e a t e d a s a n a l l i e d b u t s e p a r a t e i s s u e , a n d m u s t t a k e

i n t o a c c o u n t n o t o n l y i n f o r m a t i o n n e e d s , f l o w s , m a n i p u l a t i o n s , a n d f o r m a t s

o r a g e n d a , b u t , m o r e f u n d a m e n t a l l y , t h e h u m a n p e r c e p t i o n s o f r e s p o n s i b i l i t y

a n d a c c o u n t a b i l i t y o n w h i c h m a n a g e m e n t c o m m u n i c a t i o n s r e s t .

Ι Π - 2 8

C - R E C O M M E N D A T I O N S

T h e f o r e g o i n g o b s e r v a t i o n s , s t e m m i n g f r o m t h e t e r m s o f r e f e r e n c e ,

s u g g e s t t h e g e n e r a l p a t t e r n o f t h e c h a n g e s n e e d e d t o i n c r e a s e t h e o r g a n i s a t i o n a l

e f f e c t i v e n e s s o f t h e A P O . T h i s g e n e r a l p a t t e r n i s l a i d o u t i n t h e r e c o m m e n d a ­

t i o n s p r e s e n t e d b e l o w . S p e c i f i c d e t a i l s o f t h e s t r u c t u r e s a n d o t h e r m a t t e r s

r e c o m m e n d e d f o r t e l e c o m m u n i c a t i o n s a n d p o s t a l s e r v i c e s w h i c h m i r r o r t h e s e

g e n e r a l r e c o m m e n d a t i o n s a n d c o r r e s p o n d t o o b s e r v a t i o n s r e l a t e d w h o l l y t o

o n e s e r v i c e o r t h e o t h e r a r e c o n t a i n e d i n C h a p t e r s I V a n d V.

S e p a r a t e T o t a l l y T h e E x e c u t i v e D i r e c t i o n A n d M a n a g e m e n t O f T e l e ­

c o m m u n i c a t i o n s F r o m T h a t O f P o s t a l S e r v i c e s

F o r a l l o f t h e r e a s o n s d e s c r i b e d e a r l i e r i n t h i s c h a p t e r , t h e A P O s h o u l d

b e s e p a r a t e d i n t o t w o e n t i t i e s , e a c h w i t h i t s o w n e x e c u t i v e d i r e c t i o n a n d

o p e r a t i n g m a n a g e m e n t c a p a b i l i t y a s w e l l a s n e c e s s a r y p r o v i s i o n f o r s t a f f

s e r v i c e s . S u c h s e p a r a t i o n w o u l d s i m p l y e x t e n d t o t h e e x e c u t i v e a n d o p e r a t i n g

m a n a g e m e n t l e v e l s ( a n d t o s t a f f s e r v i c e s , i n a m i n o r w a y ) t h e d i v i s i o n o f a l l

f u n c t i o n a l o p e r a t i n g a n d m a n y s t a f f r e s p o n s i b i l i t i e s t h a t a l r e a d y e x i s t s b e c a u s e

o f t h e f u n d a m e n t a l d i f f e r e n c e s b e t w e e n t h e t w o s e r v i c e s .

P a r t i c u l a r s t r e s s i s p l a c e d o n t h e s e p a r a t i o n o f e x e c u t i v e r e s p o n s i b i l i t i e s

b e c a u s e t h e m a g n i t u d e a n d s o c i o - e c o n o m i c i m p o r t a n c e o f e a c h s e r v i c e m a n i ­

f e s t l y w a r r a n t t h a t t h e p o l i c i e s a n d o b j e c t i v e s o f e a c h s e r v i c e b e d e t e r m i n e d

i n d e p e n d e n t l y o f t h e o t h e r , a n d t h a t b o t h s e r v i c e s b e g i v e n a n e q u a l c o m p e t i t i v e

o p p o r t u n i t y f o r f u n d i n g t h r o u g h p u b l i c p o l i t i c a l d e t e r m i n a t i o n o f F e d e r a l

G o v e r n m e n t f i s c a l p r i o r i t i e s . C o m p l e t e s e p a r a t i o n w o u l d p e r m i t t h e s e c o n ­

d i t i o n s a n d w o u l d f o s t e r a f u l l e r c o n s i d e r a t i o n o f a p p r o p r i a t e f i s c a l g o a l s ,

p u b l i c s e r v i c e e l e m e n t s w a r r a n t i n g s u b s i d y , s o u r c e s o f p r o f i t a n d l o s s , a n d

a h o s t o f o t h e r f i s c a l m a t t e r s t h a t a r e n e i t h e r s u f f i c i e n t l y c l e a r n o r p u b l i c l y

c o n s i d e r e d i n t h e c u r r e n t s i t u a t i o n .

C o m p l e t e s e p a r a t i o n w o u l d y i e l d m a n y v i t a l b e n e f i t s i n o t h e r t h a n f i s c a l

m a t t e r s . P e r h a p s t h e m o s t f u n d a m e n t a l i s t h a t t h e s c o p e a n d v a r i e t y of

i s s u e s w i t h w h i c h t o p e x e c u t i v e s ( b o t h c e n t r a l l y a n d i n t h e f i e l d ) m u s t d e a l

w o u l d b e n a r r o w e d t o m a n a g e a b l e p r o p o r t i o n s . No l o n g e r w o u l d e x e c u t i v e s

b e c o n f r o n t e d w i t h i s s u e s i n w h i c h t h e y h a v e l i t t l e e x p e r i e n c e , o r p r e s s e d b y

a d h e r e n t s w h o h a v e no r e a s o n f o r c o n c e r n w i t h t h e " o t h e r " s e r v i c e . M o r e ­

o v e r , e l i m i n a t i o n o f S t a t e D i r e c t o r s r e s p o n s i b l e f o r b o t h s e r v i c e s w o u l d s i m ­

p l i f y o p e r a t i o n a l d i r e c t i o n a n d c o m m u n i c a t i o n s c h a n n e l s b e t w e e n c e n t r a l a n d

f i e l d o f f i c e s .

Ill-29

C o m p l e t e s e p a r a t i o n c o u l d i n c r e a s e c o s t s , a t l e a s t t e m p o r a r i l y . T h e

e s t i m a t e o f i n c r e a s e d l a b o u r e x p e n s e s p r e p a r e d b y t h e A P O t a s k f o r c e h a s

a l r e a d y b e e n c o m m e n t e d o n ; i t i s v e r y l o w i n r e l a t i o n t o t o t a l c o s t s a n d

p r o b a b l y t o o h i g h i n a b s o l u t e t e r m s . A n y i m p l e m e n t a t i o n e f f o r t t o w a r d s e p ­

a r a t i o n s h o u l d i n c l u d e d e t a i l e d s c r u t i n y o f t h e r e q u i r e m e n t s f o r s t a f f s u p p o r t

b y o p e r a t i n g m a n a g e r s a s w e l l a s b y s t a f f . I d e a l l y , t h i s s c r u t i n y s h o u l d

o c c u r i n c o n c e r t w i t h t h e d e t a i l e d r e v i e w o f a r r a n g e m e n t s f o r m a n a g e m e n t

s e r v i c e s r e c o m m e n d e d l a t e r i n t h i s s e c t i o n .

A g e n c y r e l a t i o n s h i p s . A l t h o u g h t h e t w o s e r v i c e s s h o u l d b e s e p a r a t e d ,

t h e r e w o u l d b e n o r e a s o n t o d i s c o n t i n u e t h e m a n y k i n d s o f f i e l d o p e r a t i n g

s u p p o r t n o w p r o v i d e d b y o n e t o t h e o t h e r , i n o r d e r n o t t o d u p l i c a t e s u p p o r t

a c t i v i t i e s n e e d l e s s l y . S e p a r a t i o n w o u l d n o t , f o r e x a m p l e , r e q u i r e a c e s s a t i o n

o f t h e t e l e c o m m u n i c a t i o n s a c c o u n t c o l l e c t i o n a c t i v i t i e s o f p o s t m a s t e r s . I t i s

r e c o g n i s e d t h a t , g i v e n s e p a r a t i o n , p o s t a l e m p l o y e e s m i g h t b e l e s s i n t e r e s t e d

i n p e r f o r m i n g d u t i e s r e l a t e d t o t e l e c o m m u n i c a t i o n s , b u t t h i s s h o u l d n o t b e a

m a j o r p r o b l e m . S e p a r a t i o n a l s o w o u l d n o t n e c e s s i t a t e t h e c o n s t r u c t i o n o f

v e h i c l e s e r v i c e g a r a g e s o r t h e a c q u i s i t i o n o f A D P f a c i l i t i e s b y p o s t a l s e r v i c e s .

I n s t e a d , e a c h o p e r a t i o n w o u l d b e f r e e t o p u r c h a s e s u c h s u p p o r t s e r v i c e s f r o m

t h e o t h e r o r , w h e r e a p p r o p r i a t e , f r o m o t h e r p u b l i c a g e n c i e s o r f r o m c o m ­

m e r c i a l s o u r c e s .

S i n c e a n u m b e r o f t h e s e a g e n c y r e l a t i o n s h i p s w o u l d p r o b a b l y e x i s t , a n d

t h e r e w o u l d n o t b e a c o m m o n a u t h o r i t a t i v e b o d y t o c o - o r d i n a t e t h e m , c o n s i d ­

e r a t i o n s h o u l d b e g i v e n t o e s t a b l i s h i n g a n a d v i s o r y p a n e l o r g r o u p . C o n c e p ­

t u a l l y , t h i s g r o u p w o u l d b e m a d e u p o f e q u a l r e p r e s e n t a t i o n f r o m e a c h s e r v i c e ,

p e r h a p s t h r e e o r f o u r p e r s o n s e a c h . T h e g r o u p w o u l d f a c i l i t a t e a g e n c y

r e l a t i o n s h i p s a n d c h a r g e s f o r s e r v i c e s , a n d w o u l d s e r v e a s a p o i n t f o r

c o - o r d i n a t i o n a n d a s a s o u r c e o f r e c o m m e n d a t i o n s f o r s u b s e q u e n t a u t h o r i t a ­

t i v e a c t i o n b y e i t h e r o r b o t h m a n a g e m e n t s .

S t a t u s o f o r g a n i s a t i o n . F o r m a l r e c o m m e n d a t i o n s o n c o r p o r a t e f o r m

( D e p a r t m e n t o f S t a t e v e r s u s s t a t u t o r y c o r p o r a t i o n ) l i e b e y o n d t h e s c o p e o f

t h i s s t u d y . N e v e r t h e l e s s , t h e q u e s t i o n o f s t a t u s o f o r g a n i s a t i o n i s a n i m p o r ­

t a n t o n e , a n d t h e c o n s u l t a n t s h a v e c e r t a i n v i e w s w h i c h m a y a i d t h e d e l i b e r a ­

t i o n s o f t h e C o m m i s s i o n o f I n q u i r y .

O n b a l a n c e , t h e c o n s u l t a n t s f a v o u r a s t a t u t o r y c o r p o r a t i o n f o r m o f

o r g a n i s a t i o n f o r e a c h s e r v i c e . T h r o u g h i t s c o m m i s s i o n e r s o r d i r e c t o r s , a

s t a t u t o r y c o r p o r a t i o n w o u l d b r i n g t o t h e g o v e r n a n c e o f e a c h s e r v i c e a r a n g e

o f i n s i g h t s t h a t w o u l d b e m o s t h e l p f u l . S e p a r a t e s t a t u t o r y c o r p o r a t i o n s w o u l d

a l s o p e r m i t a m e a s u r e o f d i s e n g a g e m e n t f r o m c e r t a i n F e d e r a l G o v e r n m e n t

a u t h o r i t i e s , n o t a b l y t h e P u b l i c S e r v i c e B o a r d , w h i c h h a v e h a d a n i n h i b i t i n g

I I I - 30

e f f e c t o n t h e m a n a g e m e n t o f t h e s e b u s i n e s s - t y p e s e r v i c e s . A s t a t u t o r y

c o r p o r a t i o n f o r m c o u l d a l s o i n s u l a t e t h e o p e r a t i o n s o f e a c h s e r v i c e f r o m

d i r e c t p o l i t i c a l c o n c e r n ; h o w e v e r , t h i s w o u l d h o l d t r u e o n l y i f t h e F e d e r a l

G o v e r n m e n t o f f i c i a l s c o n c e r n e d w e r e e s s e n t i a l l y d i s i n c l i n e d t o p r o b e a n d

t h e s t a t u t o r y c o r p o r a t i o n f o r m t h e r e b y f a c i l i t a t e d t h e i r o w n i n c l i n a t i o n s .

F i n a l l y , a s t a t u t o r y c o r p o r a t i o n f o r m f o r t e l e c o m m u n i c a t i o n s w o u l d f a c i l i ­

t a t e a c l o s e r r e l a t i o n s h i p b e t w e e n t h a t s e r v i c e a n d t h e O T C .

T h e r e w o u l d , o f c o u r s e , b e n o r e a s o n t o t r e a t e a c h s e r v i c e i d e n t i c a l l y

r e g a r d i n g o r g a n i s a t i o n a l s t a t u s . A s t a t u t o r y c o r p o r a t i o n f o r m f o r t e l e ­

c o m m u n i c a t i o n s w o u l d s e e m p a r t i c u l a r l y b e n e f i c i a l , i n t h a t v i t a l i n s i g h t s

c o u l d b e p r o v i d e d b y d i r e c t o r s o r c o m m i s s i o n e r s c o n c e r n i n g m a n a g e m e n t

a n d a p p l i c a t i o n o f t e c h n o l o g y , c a p i t a l s p e n d i n g s t r a t e g i e s , c o m p l e x p l a n n i n g ,

a n d s o f o r t h , a n d a c l o s e r r e l a t i o n s h i p w i t h t h e O T C w o u l d b e f a c i l i t a t e d P o s t a l

s e r v i c e s w o u l d a l s o b e n e f i t f r o m a s t a t u t o r y c o r p o r a t i o n f o r m , b u t t o a

l e s s e r e x t e n t b e c a u s e i t s m a n a g e m e n t i s s u e s a r e l e s s v a r i e d a n d t h e r e a r e

f e w e r o p t i o n s o n f u t u r e d i r e c t i o n .

If a s t a t u t o r y c o r p o r a t i o n f o r m i s a d o p t e d , c o n s i d e r a t i o n s h o u l d b e g i v e n

t o t h e a d v a n t a g e s o f e a c h o r g a n i s a t i o n ' s h a v i n g i t s o w n l e g a l c o u n s e l f u n c t i o n

i n s t e a d o f r e l y i n g o n t h e A t t o r n e y - G e n e r a l ' s D e p a r t m e n t , a s a t p r e s e n t .

P o s t a l I n s t i t u t e . T h e P o s t a l I n s t i t u t e i s a n o r g a n i s a t i o n o f A P O e m p l o y e e s

w h i c h e n g a g e s i n a v a r i e t y o f p r o g r a m m e s a n d s e r v i c e s o f b e n e f i t t o e m p l o y e e s .

T h e I n s t i t u t e i s g o v e r n e d b y i t s e m p l o y e e m e m b e r s , b u t l a c k s l e g a l f o r m . A s

a r e s u l t , t h e A P O a s s u m e s c e r t a i n f u n c t i o n s o n b e h a l f o f t h e I n s t i t u t e .

B e c a u s e t h e s e r v i c e s t h a t t h e I n s t i t u t e p r o v i d e s d e p e n d i n p a r t o n i t s

l a r g e m e m b e r s h i p , t h e e f f e c t i v e n e s s o f t h e I n s t i t u t e c o u l d b e u n d e r m i n e d if

t h e s e p a r a t i o n o f t e l e c o m m u n i c a t i o n s a n d p o s t a l s e r v i c e s f o r c e d t h e s u b ­

s t i t u t i o n o f t w o s m a l l e r o r g a n i s a t i o n s f o r t h e c u r r e n t s i n g l e e n t i t y . If t h e

s i n g l e e n t i t y w e r e c o n t i n u e d , i t w o u l d a l s o n e e d s o m e m e a n s o f e x e r c i s i n g

t h e l e g a l p o w e r s n o w e x e r c i s e d f o r i t b y t h e A P O .

P r e s u m i n g a s e p a r a t i o n o f p o s t a l s e r v i c e s a n d t e l e c o m m u n i c a t i o n s , o n e

a p p r o a c h w o u l d b e t o c o n t i n u e a s i n g l e P o s t a l I n s t i t u t e i n a n i n c o r p o r a t e d

f o r m w i t h m e m b e r s h i p o p e n t o a l l e m p l o y e e s o f t h e t w o s u c c e s s o r o r g a n i s a ­

t i o n s o f t h e A P O . T h e r e d o u b t l e s s a r e s e v e r a l o t h e r a l t e r n a t i v e s . T h e

q u e s t i o n o f h o w b e s t t o p e r p e t u a t e t h e b e n e f i t s o f t h e I n s t i t u t e s h o u l d b e g i v e n

t h o r o u g h s t u d y a f t e r a b a s i c d e c i s i o n h a s b e e n m a d e t o s e p a r a t e t e l e c o m m u n i c a t i o n s

a n d p o s t a l s e r v i c e s .

I l l - 31

A s s u m i n g T h a t T e l e c o m m u n i c a t i o n s I s E s t a b l i s h e d U n d e r S t a t u t o r y

C o r p o r a t i o n G o v e r n a n c e , H a v e T h e O T C R e p o r t T o T h e S a m e G o v e r n ­

i n g B o a r d

I n t h e o p i n i o n o f t h e c o n s u l t a n t s , t h e n a t i o n w o u l d b e n e f i t i f i t s d o m e s t i c

a n d i n t e r n a t i o n a l t e l e c o m m u n i c a t i o n s r e c e i v e d c o m m o n g o v e r n a n c e o n p o l i c i e s ,

f i s c a l o b j e c t i v e s a n d r e l a t i o n s h i p s , a n d o p e r a t i n g l i n k a g e s . A c o m m o n b o a r d

w o u l d a c h i e v e t h e n e c e s s a r y c o - o r d i n a t i o n .

I t i s n o t b e l i e v e d t h a t c a r r y i n g t h i s o r g a n i s a t i o n a l c o n s o l i d a t i o n d o w n t o a

l o w e r l e v e l w o u l d b e b e n e f i c i a l , f o r a t l e a s t s o m e t i m e t o c o m e . A s n o t e d

e a r l i e r , t h e O T C a p p e a r s t o o p e r a t e e f f e c t i v e l y , a n d t h e r e s e e m s t o b e no

r e a s o n t o r i s k s u b m e r g i n g i t i n t h e l a r g e s t r u c t u r e o f A P O t e l e c o m m u n i c a t i o n s ,

w h i c h i n a l l p r o b a b i l i t y w i l l b e i n a s i t u a t i o n o f o r g a n i s a t i o n a l c h a n g e f o r s e v ­

e r a l y e a r s .

If t e l e c o m m u n i c a t i o n s i s n o t s e p a r a t e d f r o m p o s t a l s e r v i c e s , o r i f i t i s

s e p a r a t e d b u t c o n s t i t u t e d a s a D e p a r t m e n t o f S t a t e , t h e O T C s h o u l d r e m a i n a

s e p a r a t e s t a t u t o r y c o r p o r a t i o n .

S t r u c t u r e T h e A P O A n d S u c c e s s o r O r g a n i s a t i o n s I n R e c o g n i t i o n O f S o u n d

O r g a n i s a t i o n P r i n c i p l e s

A l t h o u g h l e s s c o m p l e x s e p a r a t e l y t h a n w h e n c o m b i n e d , t e l e c o m m u n i c a ­

t i o n s a n d p o s t a l s e r v i c e s a r e b o t h l a r g e , f a r - f l u n g e n t e r p r i s e s . T h e A P O a n d

s u c c e s s o r o r g a n i s a t i o n s s h o u l d r e c o g n i s e t h e i m p l i c a t i o n s o f t h e s e c h a r a c t e r ­

i s t i c s i n s t r u c t u r i n g m a n a g e m e n t r e s p o n s i b i l i t i e s .

T o p m a n a g e m e n t s t r u c t u r e . A d e q u a t e p r o v i s i o n s h o u l d b e m a d e f o r t h e

e n t i r e t o p m a n a g e m e n t j o b t h r o u g h a n e w c o n c e p t o f t o p m a n a g e m e n t o r g a n i s a

t i o n . I m p l e m e n t a t i o n o f t h i s c o n c e p t w o u l d r e q u i r e t w o f u n d a m e n t a l c h a n g e s

i n t o p - l e v e l s t r u c t u r e .

F i r s t , r e s p o n s i b i l i t i e s f o r g o v e r n m e n t a l r e l a t i o n s , e x t e r n a l r e l a t i o n s h i p s

a n d p u b l i c r e l a t i o n s w o u l d b e c o m b i n e d w i t h r e s p o n s i b i l i t i e s f o r l o n g - t e r m

p l a n n i n g a n d f o r d i r e c t i o n a n d c o n t r o l o f e c o n o m i c a n d f i n a n c i a l m a n a g e m e n t ,

t o f o r m t h e b a s i s f o r a n e w c h i e f e x e c u t i v e p o s i t i o n . T h e b a s i c o r i e n t a t i o n

o f t h i s p o s i t i o n w o u l d b e t o f o r w a r d , o u t w a r d a n d u p w a r d m a t t e r s - i n s h o r t ,

a c h i e f e x e c u t i v e o f f i c e r .

S e c o n d , a n i m m e d i a t e s u b o r d i n a t e w o u l d b e e s t a b l i s h e d a s a l i n e o p e r a ­

t i o n s o f f i c e r r e s p o n s i b l e f o r s h o r t - t e r m p l a n n i n g a n d f o r o r g a n i s a t i o n ,

c o - o r d i n a t i o n , a n d c o n t r o l o f a l l d a y - t o - d a y m a n a g e m e n t a c t i v i t i e s . T h e n e w

I I I - 32

p o s i t i o n , e s s e n t i a l l y a c h i e f o p e r a t i n g o f f i c e r , w o u l d b e p r i m a r i l y r e s p o n s i b l e

f o r s o l v i n g d a y - t o - d a y p r o b l e m s o f a d m i n i s t r a t i o n , f o r m a k i n g d e c i s i o n s b e a r ­

i n g o n o p e r a t i o n s w i t h i n a f r a m e w o r k o f p o l i c y , a n d f o r d e f i n i n g a n d r e v i e w i n g

i s s u e s w h i c h a f f e c t p o l i c i e s w i t h t h e c h i e f e x e c u t i v e o f f i c e r f o r t h e p u r p o s e s of

m o d i f i c a t i o n , d e l e t i o n , o r s u b s t i t u t i o n .

S e v e r a l a d v a n t a g e s s h o u l d b e g a i n e d f r o m a d o p t i o n o f t h i s c o n c e p t .

S e p a r a t i o n o f e x t e r n a l , p o l i c y a n d s t r a t e g i c c o n s i d e r a t i o n s f r o m t h e p r e s s of

d a y - t o - d a y m a t t e r s w o u l d a l l o w t h e c h i e f e x e c u t i v e o f f i c e r t o c o n c e n t r a t e o n

f u n d a m e n t a l q u e s t i o n s a n d a n s w e r s a b o u t t h e o b j e c t i v e s o f t h e o r g a n i s a t i o n .

T h e i n c u m b e n t w o u l d h a v e t h e t i m e t o c o n c e i v e l o n g - t e r m s t r a t e g i e s f r o m w h i c h

to e x e r t s t r o n g l e a d e r s h i p o v e r t h e d i r e c t i o n o f t h e e n t e r p r i s e . S i m i l a r l y ,

he w o u l d b e a b l e t o e m p h a s i s e t h e f i n a n c i a l a n d b u s i n e s s p l a n n i n g c o m p o n e n t s

of t h e e n t e r p r i s e f r o m a v a n t a g e p o i n t r e m o v e d f r o m t h e d a y - t o - d a y p r e s s o f

t e c h n o l o g i c a l a n d o p e r a t i o n a l p r o b l e m - s o l v i n g .

T h e c h i e f o p e r a t i n g o f f i c e r p o s i t i o n w o u l d a l l o w a s e n i o r e x e c u t i v e t o c o n ­

c e n t r a t e o n d a y - t o - d a y o p e r a t i n g p r o b l e m s . T h u s , s u b o r d i n a t e m a n a g e r s

w o u l d r e l a t e t o a l i n e e x e c u t i v e w h o w o u l d b e a v a i l a b l e o n a r e g u l a r b a s i s f o r

d e c i s i o n s a n d w h o w o u l d s e l d o m b e d r a w n a w a y u n e x p e c t e d l y i n r e s p o n s e t o t h e

p r e s s u r e s o f e x t e r n a l a f f a i r s . T h i s a s s i g n m e n t o f o p e r a t i n g r e s p o n s i b i l i t y

w o u l d a l s o p r o v i d e , i n t h e l o n g t e r m , a s o u n d e r b a s i s f o r t o p m a n a g e m e n t

d e v e l o p m e n t a n d s u c c e s s i o n .

It i s s u g g e s t e d , a l t h o u g h n o t p r e s c r i b e d , t h a t t h e c h i e f e x e c u t i v e o f f i c e r

b e t i t l e d M a n a g i n g D i r e c t o r , a n d t h a t t h e c h i e f o p e r a t i n g o f f i c e r b e g i v e n t h e

t i t l e o f C h i e f G e n e r a l M a n a g e r . T h e s e d e s i g n a t i o n s s e e m a p p r o p r i a t e t o t h e i r

r e s p o n s i b i l i t i e s , a n d a r e u s e d i n t h e b a l a n c e o f t h i s r e p o r t .

O r g a n i s a t i o n a l d e l e g a t i o n s o f a u t h o r i t y . A s d e s c r i b e d i n C h a p t e r s I V

a n d V, t h e s u c c e s s o r o r g a n i s a t i o n s f o r t e l e c o m m u n i c a t i o n s a n d p o s t a l s e r v i c e s

w o u l d e a c h p e r m i t t h e d e l e g a t i o n o f m u l t i : - f u n c t i o n a l m a n a g e m e n t a u t h o r i t y a n d

r e s p o n s i b i l i t y t o t h e l o w e s t p r a c t i c a l o p e r a t i n g l e v e l .

M a n a g e m e n t p r o c e s s e s a n d u n i f o r m i t y . T h e A P O a n d a n y s u c c e s s o r o r g a n i ­

s a t i o n s s h o u l d e n s u r e t h a t u n i f o r m i t y i s r e q u i r e d o n l y w h e r e i t m a k e s o p e r a ­

t i o n a l g o o d s e n s e . F u r t h e r , i n t e r n a l p e e r r e v i e w s o f p r o p o s e d o r g a n i s a t i o n

c h a n g e s s h o u l d s e r v e a s i n f o r m a t i o n a l m e c h a n i s m s , i n p l a c e o f " p l e b i s c i t e s . "

In e i t h e r s e r v i c e , t h e r e i s s i m p l y n o r e a s o n t o o r g a n i s e s i m i l a r f u n c t i o n s o r

l e v e l s u n i f o r m l y o r n e a r l y s o t h r o u g h o u t t h e o r g a n i s a t i o n , n o r s h o u l d t h e

l e g i t i m a t e n e e d s o f o n e o r g a n i s a t i o n a l u n i t b e d e n i e d f o r l a c k o f s i m i l a r n e e d

e l s e w h e r e .

Ill - 33

C e n t r a l r e v i e w s o f n o n - t e c h n i c a l s t a t e p r o p o s a l s s h o u l d b e f u r t h e r

s t r e a m l i n e d a n d b e t t e r t a i l o r e d t o m e e t t h i s n e e d . A s a n e x a m p l e o f s t r e a m ­

l i n i n g , t h e T a s m a n i a n P e r s o n n e l B r a n c h g e n e r a l l y p r e - s c r e e n s o r g a n i s a t i o n a l

o r e s t a b l i s h m e n t p r o p o s a l s w i t h t h e C e n t r a l P e r s o n n e l B r a n c h , b e f o r e u n d e r ­

t a k i n g f o r m a l p r e p a r a t i o n a n d d o c u m e n t a t i o n . I n g e n e r a l , t h e i n q u i r i e s a n d

r e s p o n s e s a r e t h r o u g h b r i e f l e t t e r s o r t e l e p h o n e c o n v e r s a t i o n s , a n d t h e y h a v e

h e l p e d m a t e r i a l l y t o s t r e a m l i n e t h e C e n t r a l A d m i n i s t r a t i o n - s t a t e r e l a t i o n s h i p .

T h i s c o n c e p t o f a q u i c k , i n d i v i d u a l i s e d p r e l i m i n a r y i n q u i r y a n d r e s p o n s e

s h o u l d b e e x t e n d e d a s f a r a s p o s s i b l e , a n d a l l h e a d q u a r t e r s m a n a g e r s w h o a r e

a c c o u n t a b l e f o r r e v i e w s s h o u l d p r e p a r e s y s t e m s f o r q u i c k e n i n g t h e p a c e o f t h e

c e n t r a l r e v i e w p r o c e s s .

T o g a i n m a x i m u m a d v a n t a g e f r o m a s t r e a m l i n e d r e v i e w p r o c e s s , s t a t e s

s h o u l d g e n e r a l l y n o t s u b m i t f u l l - b l o w n s t u d i e s w i t h o u t p r e l i m i n a r y r e v i e w o f

t h e b a s i c p r e m i s e s a n d t h e i n - p r i n c i p l e o b j e c t i v e s o f t h e p r o p o s a l . U n f o r t u ­

n a t e l y , t h e m o r e d e t a i l e d t h e s u b m i s s i o n , t h e g r e a t e r t h e n e c e s s i t y f o r

l e n g t h y s t a f f a n a l y s i s a n d t h e h i g h e r t h e l i k e l i h o o d o f a s s i g n m e n t t o a s t a f f

a s s i s t a n t f o r t h e f i r s t o f t w o o r t h r e e r e v i e w s . I f t h e r e q u e s t i s k e p t a t a

p r e l i m i n a r y l e v e l o f a n a l y s i s , h o w e v e r , S t a t e D i r e c t o r s a n d t h e i r s u b o r d i n a t e s

s h o u l d e x p e c t t o r e c e i v e d e t e r m i n a t i o n s w i t h i n t w o w e e k s o f t h e t i m e h e a d ­

q u a r t e r s r e c e i v e s p r o p o s a l s . T h e s e d e t e r m i n a t i o n s s h o u l d i n d i c a t e y e s , n o ,

o r f u r t h e r s t u d y .

H e a d q u a r t e r s s h o u l d s e e k t o l i m i t i t s c o n c e r n s t o t h e s u b s t a n t i v e m e r i t s

o f t h e s t a t e ' s c a s e . H e a d q u a r t e r s m a n a g e r s s h o u l d c o u n s e l s t a t e p e r s o n n e l

o n t h e q u a l i t y o f p r e s e n t a t i o n s r a t h e r t h a n p a r t i c i p a t e i n e d i t i n g , u n l e s s t h e

u l t i m a t e p r o p o s a l i s t o b e t a k e n o v e r b y h e a d q u a r t e r s f o r e i t h e r b u s i n e s s a s

a w h o l e . A s a p a r t o f t h e s t r e a m l i n i n g p r o c e s s , a S t a t e D i r e c t o r a n d h i s k e y

s t a f f s h o u l d b e d e l e g a t e d t h e a c c o u n t a b i l i t y f o r s u p p o r t i n g h i s o w n p r o p o s a l s

b e f o r e o t h e r c o n t r o l d e p a r t m e n t s ( s u c h a s t h e D e p a r t m e n t o f S e r v i c e s a n d

P r o p e r t i e s ) a n d P a r l i a m e n t a r y b o d i e s , a s l o n g a s t h e p r o p o s a l s e s s e n t i a l l y

c o n c e r n o n l y h i s s t a t e .

H e a d q u a r t e r s r e v i e w s s h o u l d a l s o b e t a i l o r e d t o t h e c a p a c i t i e s o f t h e

p r o p o s i n g s t a t e . A l a r g e s t a t e s h o u l d b e e x p e c t e d t o e x p l o r e i s s u e s t h o r o u g h l y

a n d p r o p o s e t h e m s u c c i n c t l y , w h i l e s m a l l e r s t a t e s m a y o f t e n r e q u i r e c o n s i d ­

e r a b l e a s s i s t a n c e b e f o r e r e v i e w a s w e l l a s d u r i n g it.

F i n a l l y , i t i s r e c o m m e n d e d t h a t i m p l i e d s i t e p u r c h a s e a p p r o v a l s b e g r a n t e d

d u r i n g t h e b u d g e t i n g o f t h e s t a t e p r o g r a m m e s f o r s i t e s a n d p r o p e r t i e s d e v e l o p ­

m e n t . T h e i m p l i e d a p p r o v a l s s h o u l d b e n o t e d i n t h e S i t e s a n d P r o p e r t i e s

D e v e l o p m e n t P l a n , a c c o r d i n g t o t y p e s o f s i t e s r a t h e r t h a n d o l l a r l i m i t a t i o n s .

Ill-34

T h i s w o u l d h e l p e l i m i n a t e o n e o f t h e m o s t t i m e - c o n s u m i n g a n d c o n t r o v e r s i a l

r e v i e w s o f s t a t e r e q u e s t s . T h e a d d i t i o n a l f r e e d o m p r o p o s e d f o r p u r c h a s e o f

p r o p e r t y i s j u s t i f i e d o n t w o b a s e s . F i r s t , c e n t r a l p u r c h a s i n g o f f e r s no

s p e c i a l a d v a n t a g e s i n t h e p u r c h a s e o f l a n d . ( I n d e e d , i n l a r g e g o v e r n m e n t a l

o r g a n i s a t i o n s , t h i s p r a c t i c e m a y r e s u l t i n h i g h e r c o s t s . ) S e c o n d , s l o w

r e a c t i o n s t o a t t r a c t i v e p r o p e r t i e s c a n l e a d t o t h e l o s s o f s i t e s t h a t o t h e r w i s e

m i g h t h a v e h e l p e d t o a c h i e v e o b j e c t i v e s o n t h e b e s t p o s s i b l e s c h e d u l e . U n d e r

t h i s r e c o m m e n d a t i o n , a S t a t e D i r e c t o r w o u l d b e a b l e t o p u r c h a s e s i t e s f r o m

h i s b u d g e t e d s i t e p u r c h a s e f u n d , o n c e t h e a p p r o v a l o f t h e D e p a r t m e n t of

S e r v i c e s a n d P r o p e r t i e s i s r e c e i v e d . H i s j u d g e m e n t r e g a r d i n g t h e u s e o f

h i s s i t e p u r c h a s e f u n d w o u l d t h e n b e r e v i e w e d b y t o p m a n a g e m e n t a t t h e e n d

o f t h e y e a r w h e n w o r k s p r o g r a m m e r e s u l t s a r e c o m p l e t e .

M a n a g e m e n t s e r v i c e s . I n t h e s u c c e s s o r o r g a n i s a t i o n s , t h e i n d i v i d u a l

f u n c t i o n s t h a t n o w c o n s t i t u t e m a n a g e m e n t s e r v i c e s s h o u l d b e a s s i g n e d t o

w h i c h e v e r s e n i o r e x e c u t i v e ( M a n a g i n g D i r e c t o r o r C h i e f G e n e r a l M a n a g e r )

h a s t h e r e s p o n s i b i l i t i e s a n d l i n e s u b o r d i n a t e s m o s t i n n e e d o f t h e s e r v i c e

c o n c e r n e d . T h e t r a d i t i o n o f c o n s o l i d a t i n g a l l s u p p o r t s e r v i c e s i n t o a l a r g e ,

s i n g l e s t r u c t u r e h a s l i t t l e o r n o v a l u e a n d s h o u l d c e a s e . M o r e o v e r , p r o v i ­

s i o n s f o r t h e s e s e r v i c e s s h o u l d b e p l a n n e d a n d c a r r i e d o u t i n t h e c o n t e x t o f

r e a l i s t i c b u t s t r i n g e n t p r o f i t o r c o s t g o a l s , a s w e l l a s c o n g r u e n t e x e c u t i v e

d i r e c t i o n r e g a r d i n g s o u r c e s a n d u s e s o f s t a f f s e r v i c e s , o n a f u n c t i o n - b y ­

f u n c t i o n b a s i s .

M o r e i m m e d i a t e l y , t h e A P O s h o u l d u n d e r t a k e a c o m p r e h e n s i v e r e v i e w

o f t h e o r g a n i s a t i o n a r r a n g e m e n t s f o r , a n d s t a f f i n g o f , m a n a g e m e n t a d v i s o r y

a n d a d m i n i s t r a t i v e s e r v i c e s i n a l l l i n e a n d s t a f f a c t i v i t i e s . T h e r a p i d g r o w t h

a n d d i s p e r s i o n o f s t a f f s e r v i c e s i n C e n t r a l A d m i n i s t r a t i o n w a r r a n t s d e t a i l e d

s t u d y . T h i s i s p a r t i c u l a r l y u r g e n t i n v i e w o f t h e a p p a r e n t a b s e n c e o f a n

i n t e g r a t e d , D e p a r t m e n t - w i d e a n a l y s i s o f t h e c o s t s a n d b e n e f i t s o f t h e s e s e r v ­

i c e s d u r i n g r e c e n t y e a r s . B o t h t h e c o m m e n t s of s e v e r a l m a n a g e r s a n d t h e

p r e v i o u s l y n o t e d a n a l y s i s o f t h e A P O t a s k f o r c e c o n c e r n i n g s e p a r a t i o n c o s t s

s u g g e s t t h a t a t h o r o u g h r e v i e w m i g h t r e s u l t i n a s t r e a m l i n i n g a n d a r e d e f i n i ­

t i o n o f s e r v i c e s , a s w e l l a s t h e r e a s s i g n m e n t o f r e s p o n s i b i l i t i e s b e t w e e n

d i v i s i o n s a n d b r a n c h e s .

I m p l e m e n t a t i o n o f t h i s r e c o m m e n d a t i o n w o u l d r e q u i r e t h a t t h e D e p a r t ­

m e n t c o n d u c t a n i n - d e p t h s t u d y o f t h e t a s k s o f a l l p o s i t i o n s a s s i g n e d t o t h i s

t y p e o f s t a f f w o r k . T h e t a s k s s h o u l d b e c a t e g o r i s e d a n d c o m p a r a t i v e l y

a n a l y s e d i n t e r m s o f t h e a p p r o p r i a t e m i s s i o n s f o r e a c h o f t h e o r g a n i s a t i o n

e n t i t i e s r e c e i v i n g a n d d e l i v e r i n g s e r v i c e s , a n d o f t h e v o l u m e o f s e r v i c e s w h i c h

a r e o r i g i n a t e d a n d r e c e i v e d i n v a r i o u s p a r t s o f t h e D e p a r t m e n t . U l t i m a t e l y ,

t h e a n a l y s i s s h o u l d y i e l d a n e v a l u a t i o n o f t h e n e e d s f o r t h e s e s e r v i c e s i n

r e l a t i o n t o a l t e r n a t i v e d e p l o y m e n t s o f t i m e a n d e f f o r t .

Ill-3 5

O b t a i n R e l i e f F r o m E x t e r n a l l y i m p o s e d A u t h o r i t i e s

S t u d y o b s e r v a t i o n s s h o w t h a t t h e p r i n c i p a l q u e s t i o n s i n t h i s a r e a c o n c e r n

a u t h o r i t i e s n o w e x e r c i s e d b y t h e - P u b l i c S e r v i c e B o a r d , t h e D e p a r t m e n t of

S e r v i c e s a n d P r o p e r t i e s , a n d t h e T a x a t i o n O f f i c e . ( I n t h e e n s u i n g d i s c u s s i o n ,

u s e o f t h e t e r m " A P O " s h o u l d b e t a k e n t o m e a n " s u c c e s s o r o r g a n i s a t i o n s ), " i f

t h e r e c o m m e n d a t i o n s c o n t a i n e d i n t h i s r e p o r t a r e a d o p t e d . )

P u b l i c S e r v i c e B o a r d . R e g a r d l e s s o f t h e s t a t u s o f o r g a n i s a t i o n a d o p t e d

f o r e a c h o f t h e t w o s e r v i c e s , i t i s r e c o m m e n d e d t h a t t h e A P O b e g r a n t e d f u l l

a u t h o r i t y t o d e t e r m i n e s t a f f i n g l e v e l s a n d t r a i n e e q u o t a s . I n t h e A P O , s t a f f i n g

a n d t h e p r o v i s i o n o f t r a i n e e s a r e n o t n o w l a r g e l y d i s c r e t i o n a r y , a s t h e y o f t e n

a r e w i t h p u b l i c p r o g r a m m e s . I n s t e a d , s u c h i s s u e s a r e a l m o s t e n t i r e l y a

f u n c t i o n o f c u r r e n t o r a n t i c i p a t e d m a r k e t d e m a n d a s e x p e r i e n c e d b y o p e r a t i o n s

o r i n p l a n t c o n s t r u c t i o n f o r f u t u r e o p e r a t i o n s . T h e c o n s u l t a n t s s e e n o j u s t i f i c a ­

t i o n f o r a n a u t h o r i t y o t h e r t h a n A P O m a n a g e m e n t t o d e t e r m i n e s u c h i s s u e s ,

g o v e r n e d b y a p p r o v e d f i s c a l o b j e c t i v e s . I n t h o s e s u p p o r t a r e a s w h e r e s t a f f i n g

i s d i s c r e t i o n a r y , A P O m a n a g e m e n t s h o u l d h a v e t h e a u t h o r i t y t o u s e i t s o w n

d i s c r e t i o n , a g a i n g o v e r n e d b y f i s c a l o b j e c t i v e s .

I t i s f u r t h e r r e c o m m e n d e d t h a t t h e A P O b e g r a n t e d f u l l a u t h o r i t y t o d e t e r ­

m i n e o r g a n i s a t i o n s t r u c t u r e , e s t a b l i s h m e n t s , a n d t h e m a n a g e m e n t c l a s s i f i c a ­

t i o n s a n d p a y t h r o u g h w h i c h a s t r u c t u r e i s i m p l e m e n t e d . R e l a t e d m a t t e r s

i n c l u d e m a n a g e r i a l p r o m o t i o n s , c r i t e r i a f o r m a k i n g t e m p o r a r y o r s p e c i a l

a s s i g n m e n t s , a n d d u t y h o u r s . I n e x e r c i s i n g i t s m a n a g e r i a l c l a s s i f i c a t i o n

a u t h o r i t y , t h e A P O s h o u l d s e l e c t f r o m e x i s t i n g F e d e r a l G o v e r n m e n t c l a s s e s

a n d a s s o c i a t e d p a y g r a d e s , w h e r e v e r p o s s i b l e . W h e r e a n e w c l a s s i f i c a t i o n i s

r e q u i r e d , t h e A P O s h o u l d a s s i g n i t t o a n e x i s t i n g F e d e r a l G o v e r n m e n t p a y

g r a d e . F u l f i l l m e n t o f t h e s e r e c o m m e n d a t i o n s w o u l d p e r m i t t h e A P O t o

d e t e r m i n e i t s o w n o r g a n i s a t i o n a r r a n g e m e n t s a n d m a n a g e m e n t q u a l i f i c a t i o n s ,

a g a i n g o v e r n e d b y f i s c a l o b j e c t i v e s . T h e o r g a n i s a t i o n o f m a n a g e r i a l r e s o u r c e s

i s s o b a s i c t o a c h i e v e m e n t o f o p e r a t i n g a n d f i s c a l o b j e c t i v e s t h a t f u r t h e r j u s t i ­

f i c a t i o n s h o u l d n o t b e n e c e s s a r y .

T h e r e a r e o t h e r m a t t e r s i n w h i c h t h e P S B n o w e x e r c i s e s a s e n i o r , o r

u l t i m a t e , a u t h o r i t y o v e r t h e A P O , a n d w h i c h , a l t h o u g h i m p o r t a n t , a r e s o m e ­

w h a t l e s s c r i t i c a l t o t h e f u l f i l l m e n t o f t h e m a n a g e m e n t t a s k t h a n t h o s e a l r e a d y

m e n t i o n e d . T h e s e m a t t e r s i n c l u d e t h e c l a s s i f i c a t i o n a n d p a y o f f i r s t - l e v e l

s u p e r v i s o r y a n d n o n - s u p e r v i s o r y p o s i t i o n s , a n d t h e c o n d u c t o f i n d u s t r i a l

n e g o t i a t i o n s . A s m e n t i o n e d e a r l i e r , t h e r e a r e r e a s o n s f o r c a u t i o n i n d i s ­

s o c i a t i n g t h e A P O f r o m t h e P S B i n m a t t e r s o f c l a s s i f i c a t i o n a n d p a y d e c i ­

s i o n s a f f e c t i n g n o t o n l y t h e b u l k o f A P O e m p l o y m e n t b u t m a n y o t h e r p u b l i c

III-36

a n d p r i v a t e e m p l o y e e s a s w e l l I n d u s t r i a l r e l a t i o n s a n d a t t e n d a n t n e g o t i a t i o n s

a r e a n e x t r e m e l y c o m p l e x a r e a t o w h i c h d e t a i l e d s t u d y c o u l d n o t b e g i v e n

w i t h i n t h e s c o p e o f t h i s o r g a n i s a t i o n a l e x a m i n a t i o n .

In m a t t e r s s u c h a s t h e s e , a s s t a t e d e a r l i e r , t h e A P O s h o u l d b e p e r m i t t e d

t o e x e r c i s e a s m u c h i n d e p e n d e n t a u t h o r i t y a s t h e c o m m o n g o o d w i l l p e r m i t .

T h e s e m a t t e r s d e f i n i t e l y w a r r a n t f u r t h e r a n d m o r e d e t a i l e d a t t e n t i o n j o i n t l y

f r o m t h e A P O a n d t h e P S B , a n d i t i s u r g e d t h a t t h e C o m m i s s i o n o f I n q u i r y

r e c o m m e n d s u c h a n e f f o r t d u r i n g t h e p e r i o d o f d e l i b e r a t i o n s o n o t h e r C o m ­

m i s s i o n f i n d i n g s a n d r e c o m m e n d a t i o n s .

C o n c e r n i n g t h o s e m a t t e r s f o r w h i c h t h e A P O s h o u l d d e f i n i t e l y h a v e a u t h o r ­

i t y a s w e l l a s t h o s e w h e r e l e s s a u t h o r i t y m a y b e a p p r o p r i a t e , t h e r e s h o u l d b e

a m o r e c o m p l e t e a n d c o n t i n u i n g l i a i s o n b e t w e e n t h e A P O a n d t h e P S B . F o r

e x a m p l e , t h e A P O , a s a m a j o r g o v e r n m e n t a l o r g a n i s a t i o n , s u r e l y d e s e r v e s

e x p l a n a t i o n ( o r m o r e c o m p l e t e e x p l a n a t i o n ) o f P S B d e c i s i o n s o n i t s r e q u e s t s ,

a n d o f t h e g u i d e l i n e s a n d d a t a u s e d t o r e a c h s u c h d e c i s i o n s . M o r e o v e r , i t

m a y b e t h a t A P O - i n i t i a t e d p r e l i m i n a r y e x p l o r a t i o n o f p r o s p e c t i v e i s s u e s w i t h

t h e F S B w o u l d s i m p l i f y r e l a t i o n s , i n c r e a s e u n d e r s t a n d i n g , a n d s p e e d a n s w e r s

( t h e s a m e p o i n t a s w a s r a i s e d e a r l i e r c o n c e r n i n g s t a t e - c e n t r a l r e l a t i o n s w i t h i n

t h e A P O ) In a n y e v e n t , s u c h l i a i s o n w o u l d b e p a r t i c u l a r l y d e s i r a b l e i f c e r t a i n

P S B a u t h o r i t i e s w e r e d e l e g a t e d t o t h e A P O , i f o n l y t o e n s u r e s i m i l a r a p p r o a c h e s

t o i s s u e s w h e r e v e r p r a c t i c a l

D e p a r t m e n t o f S e r v i c e s a n d P r o p e r t i e s , a n d t h e T a x a t i o n O f f i c e . T h e

a u t h o r i t i e s c u r r e n t l y e x e r c i s e d b y t h e s e t w o a g e n c i e s d e f i n i t e l y i m p e d e

e f f e c t i v e f u l f i l l m e n t o f t h e A P O p r o p e r t y p r o g r a m m e . T h e d e l a y s a n d m i s s e d

o p p o r t u n i t i e s t h a t r e s u l t h a v e a v e r y r e a l e f f e c t o n t h e o p e r a t i o n a n d e f f i c i e n c y

o f A P O s y s t e m s . A s n o t e d i n t h e p r e v i o u s s e c t i o n o f t h i s c h a p t e r , t h e b e s t

s o l u t i o n t o t h i s p r o b l e m w o u l d a p p e a r t o i n v o l v e e i t h e r d e l e g a t i n g f a r m o r e

a u t h o r i t y t o t h e A P O t o e v a l u a t e p r o p e r t y a n d n e g o t i a t e w i t h o w n e r s o r s e l l e r s ,

o r r e - a r r a n g i n g a c t i v i t i e s i n t h e o t h e r a g e n c i e s t o s p e e d p r o c e s s i n g .

I n v i e w o f t h e m a g n i t u d e o f t h e A P O p r o p e r t y p r o g r a m m e , i t w o u l d a p p e a r

t h a t p r o v i s i o n f o r g r e a t e r a u t h o r i t y a n d t h e s t a f f e x p e r t i s e t o e x e r c i s e it w i t h i n

t h e A P O m i g h t w e l l p r o d u c e t a n g i b l e s a v i n g s , O n t h e o t h e r h a n d , t h e s e m a t t e r s

h a v e n o t b e e n r e v i e w e d w i t h t h e o t h e r a g e n c i e s c o n c e r n e d , a n d t h e r e f o r e t h e i r

v i e w s a r e n o t k n o w n c o n c e r n i n g t h e n e c e s s i t y o r t h e d e s i r a b i l i t y o f c u r r e n t

a u t h o r i t y d e l e g a t i o n s , o r h o w t h e i r p r o c e s s i n g c o u l d b e a c c e l e r a t e d , T h e

e n t i r e p r o c e s s w i t h i n t h e A P O a n d t h e o t h e r a g e n c i e s s h o u l d b e s t u d i e d i n

d e t a i l , a n d r e c o m m e n d a t i o n s s h o u l d b e o f f e r e d t o t h e M i n i s t e r s c o n c e r n e d

f o r f u r t h e r c o n s i d e r a t i o n a n d a c t i o n .

Ill-37

IV - T E L E C O M M U N I C A T I O N S

I n t h e p r e v i o u s c h a p t e r , s e v e r a l o r g a n i s a t i o n a l d e f i c i e n c i e s w e r e p o i n t e d

o u t w h i c h p e r t a i n t o t h e A P O a s a w h o l e b u t w h i c h h a v e o b v i o u s i m p l i c a t i o n s

f o r t h e e f f e c t i v e n e s s o f t h e t e l e c o m m u n i c a t i o n s b u s i n e s s . P e r h a p s t h e m o s t

b a s i c o f t h e s e i s t h a t t h e D i r e c t o r - G e n e r a l s e r v e s i n e f f e c t b o t h a s t h e c h i e f

e x e c u t i v e a n d t h e c h i e f o p e r a t i n g o f f i c e r o f t h e t e l e c o m m u n i c a t i o n s b u s i n e s s ,

m a d d i t i o n t o h i s o t h e r d u t i e s . E v e n t h o u g h h e d e v o t e s t h e g r e a t e r s h a r e o f

h i s t i m e t o t e l e c o m m u n i c a t i o n s m a t t e r s , t h e s c o p e a n d c o m p l e x i t y o f d i r e c t ­

i n g a n y f u n c t i o n a l l y o r g a n i s e d b u s i n e s s t h i s l a r g e i s , i n t h e c o n s u l t a n t s ' o p i n ­

i o n , b e y o n d t h e c a p a b i l i t i e s of a n y o n e p e r s o n .

T h e r e m a i n d e r o f t h i s c h a p t e r s e t s f o r t h o t h e r o b s e r v a t i o n s r e g a r d i n g t h e

p r e s e n t o r g a n i s a t i o n o f t e l e c o m m u n i c a t i o n s a c t i v i t i e s , a n d t h e n p r e s e n t s a

r e c o m m e n d e d p l a n o f m a n a g e m e n t o r g a n i s a t i o n f o r t h e b u s i n e s s .

A - O B S E R V A T I O N S

T h i s s e c t i o n d e v e l o p s a n u m b e r o f s p e c i f i c o b s e r v a t i o n s . T h e f i r s t t h r e e

a r e i n t e r - r e l a t e d , a n d b e a r o n t h e f i f t h t e r m o f r e f e r e n c e - n a m e l y , " T h e

a d e q u a c y of a r r a n g e m e n t s f o r t h e c o - o r d i n a t i o n o f p l a n n i n g a n d r e s e a r c h f u n c ­

t i o n s , i n c l u d i n g m a r k e t r e s e a r c h a n d t e c h n o l o g y r e s e a r c h . " T h e r e m a i n i n g

o b s e r v a t i o n s d e a l w i t h o t h e r o r g a n i s a t i o n a l m a t t e r s w h i c h a r e i m p o r t a n t to

t h e e f f e c t i v e f u n c t i o n i n g o f t h e t e l e c o m m u n i c a t i o n s b u s i n e s s .

S t r a t e g i c P l a n n i n g A c t i v i t i e s F o r T h e T e l e c o m m u n i c a t i o n s B u s i n e s s A r e

F r a g m e n t e d , A n d R e p o r t A t T o o L o w A L e v e l I n T h e O r g a n i s a t i o n

U n d e r t h e p r e s e n t a r r a n g e m e n t s , t h e r e i s n o C e n t r a l A d m i n i s t r a t i o n

e x e c u t i v e a t d i v i s i o n l e v e l o r a b o v e w h o s e p r i n c i p a l c o n c e r n i s w i t h o v e r a l l

s t r a t e g i c p l a n n i n g f o r t h e t o t a l t e l e c o m m u n i c a t i o n s b u s i n e s s . W i t h i n t h e

E n g i n e e r i n g P l a n n i n g a n d R e s e a r c h D i v i s i o n , t h e o r g a n i s a t i o n a l u n i t r e s p o n ­

s i b l e f o r t h e n a t i o n a l t e l e c o m m u n i c a t i o n s p l a n i s a t t h e b r a n c h l e v e l . W i t h i n

t h e T e l e c o m m u n i c a t i o n s D i v i s i o n , m a r k e t p l a n n i n g o c c u r s a t t h e s e c t i o n l e v e l ,

r e p o r t i n g t o t h e C o m m e r c i a l S u b - D i v i s i o n . W i t h i n t h e M a n a g e m e n t S e r v i c e s

D i v i s i o n , t h e d e v e l o p m e n t o f t e l e c o m m u n i c a t i o n s b u s i n e s s p l a n s i s a s s i g n e d a t

t h e b r a n c h l e v e l .

B e c a u s e t h e w o r k i s o r g a n i s e d a t t h e b r a n c h o r l o w e r l e v e l , a n d b e c a u s e

d e v e l o p m e n t o f a c o m p r e h e n s i v e s t r a t e g i c p l a n m u s t b e c o - o r d i n a t e d a c r o s s

s e v e r a l d i v i s i o n a l l i n e s , i t i s a l m o s t i m p o s s i b l e u n d e r t h e p r e s e n t a r r a n g e ­

m e n t s t o p r o v i d e c o - o r d i n a t i n g l e a d e r s h i p a t a s e n i o r l e v e l o t h e r t h a n i n t h e

o f f i c e o f t h e D i r e c t o r - G e n e r a l , w h i c h i s s e v e r a l l e v e l s r e m o v e d f r o m t h e

o r g a n i s a t i o n a l u n i t s p e r f o r m i n g t h e w o r k .

T h e O r g a n i s a t i o n Of C e n t r a l O f f i c e T e c h n i c a l A c t i v i t i e s M a k e s T h e m

D i f f i c u l t T o C o - o r d i n a t e

T h e c u r r e n t s c o p e o f a c t i v i t i e s a n d t h e s h a r e d , i f n o t o v e r l a p p i n g , r e s p o n ­

s i b i l i t i e s b e t w e e n t h e E n g i n e e r i n g P l a n n i n g a n d R e s e a r c h D i v i s i o n a n d t h e

E n g i n e e r i n g W o r k s D i v i s i o n w e r e m e n t i o n e d i n C h a p t e r III. It w a s p o i n t e d

o u t t h a t c l o s e c o l l a b o r a t i o n i s r e q u i r e d b e t w e e n t h e t w o d i v i s i o n s a n d t h a t , a s

o n e m e a n s o f a c h i e v i n g t h i s c o - o r d i n a t i o n , a l a r g e n u m b e r o f c o m m i t t e e s a n d

w o r k g r o u p s h a v e b e e n f o r m e d . O t h e r f a c t o r s w h i c h c o n t r i b u t e t o c o - o r d i n a t i o n

p r o b l e m s a r i s i n g b e t w e e n t h e t e c h n i c a l d i v i s i o n s , a n d a m o n g t h e b r a n c h e s

w i t h i n t h e m , a r e d i s c u s s e d b e l o w . -

a . T h e o r g a n i s a t i o n a l s e p a r a t i o n o f e n g i n e e r i n g p l a n n i n g f r o m

e n g i n e e r i n g w o r k s i s i n a p p r o p r i a t e . B e c a u s e t h e e n g i n e e r i n g p l a n n i n g b r a n c h e s

r e p o r t t h r o u g h t h e P l a n n i n g a n d P r o g r a m m i n g S u b - D i v i s i o n t o t h e F A D G -

E n g i n e e r i n g P l a n n i n g a n d R e s e a r c h , a n d t h e e n g i n e e r i n g w o r k s p l a n t b r a n c h e s

r e p o r t t h r o u g h t h e P l a n t s S u b - D i v i s i o n t o t h e F A D G - E n g i n e e r i n g W o r k s , t h e

D i r e c t o r - G e n e r a l r e p r e s e n t s t h e o n l y p o i n t a t w h i c h d i s p u t e s b e t w e e n t h e s e

g r o u p s c a n b e f o r m a l l y r e s o l v e d .

A l t h o u g h s o m e e n g i n e e r i n g i s s u e s a r e s u f f i c i e n t l y i m p o r t a n t t o s u g ­

g e s t i n v o l v e m e n t o f , o r a t l e a s t r e v i e w b y , t h e D i r e c t o r - G e n e r a l , m a n y o f t h e

m a t t e r s t h a t m u s t b e r e s o l v e d b e t w e e n e n g i n e e r i n g p l a n n i n g a n d e n g i n e e r i n g

w o r k s a r e n o t o f s u f f i c i e n t c o n s e q u e n c e t o w a r r a n t t o p m a n a g e m e n t t i m e a n d

a t t e n t i o n . M o r e o v e r , t h e r e a r e s i m p l y t o o m a n y e n g i n e e r i n g i s s u e s a r i s i n g

b e t w e e n p l a n n i n g a n d w o r k s t o a l l o w a s i g n i f i c a n t n u m b e r o f t h e m t o r e a c h t h e

m o s t s e n i o r l e v e l s i n t h e o r g a n i s a t i o n .

I n p r a c t i c e , r e l a t i v e l y f e w e n g i n e e r i n g i s s u e s a c t u a l l y do f i n d t h e i r

w a y i n t o t h e o f f i c e s o f t h e D i r e c t o r - G e n e r a l o r e v e n t h e F i r s t A s s i s t a n t

D i r e c t o r s - G e n e r a l . I n s t e a d , d e c i s i o n s a r e d e l a y e d o r c o m p r o m i s e s a r e r e a c h e d

w h i c h m a y a p p e a s e t h e s e n s i t i v i t i e s o f b o t h p a r t i e s b u t w h i c h m a y n o t r e p r e s e n t

t h e b e s t s o l u t i o n s a v a i l a b l e .

A n o t h e r a s p e c t o f t h e p r o b l e m i s t h a t i n d i v i d u a l p l a n n i n g e n g i n e e r s

n a t u r a l l y t e n d t o b e c o m e i n v o l v e d i n e n g i n e e r i n g d e s i g n , a n d t h u s e n c r o a c h o n

t h e p l a n t b r a n c h e n g i n e e r ' s d o m a i n - t h e r e s p o n s i b i l i t y f o r d e t a i l e d e n g i n e e r i n g

IV- 2

s p e c i f i c a t i o n s . W i t h t h e p r e s e n t o r g a n i s a t i o n ( i n w h i c h p l a n n i n g a n d w o r k s

r e p o r t i n d e p e n d e n t l y t o t h e D i r e c t o r - G e n e r a l ) , i t i s d i f f i c u l t t o d e f i n e a n d g e t

l a s t i n g a g r e e m e n t o n b o u n d a r i e s b e t w e e n t h e r e s p o n s i b i l i t i e s o f p l a n n i n g

e n g i n e e r s a n d p l a n t b r a n c h e n g i n e e r s , a n d t o a c h i e v e a m u t u a l i n t e r e s t i n

e n f o r c i n g t h e s e b o u n d a r i e s o n a d a y - t o - d a y b a s i s .

b. C o - o r d i n a t i o n p r o b l e m s a r e a l s o c a u s e d b y t h e l a c k o f c o n g r u i t y

a m o n g r e s e a r c h b r a n c h e s , e n g i n e e r i n g p l a n n i n g b r a n c h e s , a n d e n g i n e e r i n g

w o r k s p l a n t b r a n c h e s . F o r e x a m p l e , o n m a t t e r s o f t r a n s m i s s i o n n e t w o r k

d e v e l o p m e n t , t h e r e i s a s i n g l e b r a n c h i n r e s e a r c h ( T r a n s m i s s i o n S y s t e m s

B r a n c h ) , a n d a s i n g l e b r a n c h i n e n g i n e e r i n g p l a n n i n g ( T r a n s m i s s i o n a n d

L i n e P l a n n i n g B r a n c h ) , b u t t h e r e a r e t h r e e b r a n c h e s i n e n g i n e e r i n g w o r k s

( L i n e s B r a n c h , L o n g L i n e a n d T e l e p o w e r E q u i p m e n t B r a n c h , a n d R a d i o

A u s t r a l i a B r a n c h ) . S i m i l a r l y , a p r o j e c t i n v o l v i n g a p o r t a b l e e x c h a n g e

i n v o l v e s a s t r a i g h t f o r w a r d o n e - t o - o n e c o - o r d i n a t i o n b e t w e e n a s i n g l e b r a n c h

i n r e s e a r c h a n d i t s c o u n t e r p a r t b r a n c h i n e n g i n e e r i n g p l a n n i n g , b u t t h e r e a r e

t w o e n g i n e e r i n g w o r k s b r a n c h e s i n v o l v e d ( T e l e p h o n e S w i t c h i n g E q u i p m e n t

B r a n c h , a n d T e l e p h o n e S u b s c r i b e r s ' E q u i p m e n t B r a n c h ) .

T h e t r o u b l e a r i s e s b e c a u s e t h e d e v e l o p m e n t o f a n e w p r o d u c t o r s y s ­

t e m m a y o f t e n i n v o l v e t w o o r m o r e p l a n t b r a n c h e s , e a c h o f w h i c h h a s a d i f f e r ­

e n t s e t o f d e s i g n p r i o r i t i e s a n d e s t a b l i s h e d c o m m i t m e n t s . C o n s e q u e n t l y , w h e n

a p r o j e c t i s c l e a r e d t h r o u g h r e s e a r c h a n d p l a n n i n g , i t i s f r e q u e n t l y d e l a y e d i n

e n g i n e e r i n g w o r k s b e c a u s e o f t h e d i f f i c u l t i e s o f c o - o r d i n a t i n g t h e c o n t r i b u t i o n

o f t h e s e p a r a t e p l a n t b r a n c h e s i n t h i s d i v i s i o n . I n t h e e n d , t h a t b r a n c h a c c o r d ­

i n g t h e l o w e r p r i o r i t y a n d e n c o u n t e r i n g d e l a y s i n a p r o j e c t w i l l , i n e f f e c t , d e t e r ­

m i n e t h e i m p l e m e n t a t i o n d a t e o f t h e p r o j e c t .

In t h e c o n s u l t a n t s ' o p i n i o n , i t i s d i f f i c u l t e n o u g h t o a c h i e v e e f f e c t i v e

c o - o r d i n a t i o n a c r o s s d i v i s i o n l i n e s e v e n w h e n o n l y a o n e - t o - o n e c o - o r d i n a t i o n

w i t h c o u n t e r p a r t b r a n c h e s i s r e q u i r e d . T h i s d i f f i c u l t y i s c o m p o u n d e d s e v e r a l -

f o l d w h e n m u l t i p l e p o i n t s o f c o - o r d i n a t i o n a c r o s s d i v i s i o n s a r e i n v o l v e d , a n d

w h e n no o n e ( o t h e r t h a n t h e DG) h a s r e s p o n s i b i l i t y f o r t h e c o - o r d i n a t i n g e f f o r t .

c. P r e s e n t o r g a n i s a t i o n a l a r r a n g e m e n t s c o n t r i b u t e t o d i f f i c u l t i e s i n

c o - o r d i n a t i n g n e w t e c h n o l o g i c a l d e v e l o p m e n t s . E v a l u a t i o n o f n e w t e c h n o l o g y

a n d i t s t r a n s l a t i o n i n t o o p e r a t i o n a l s u c c e s s h a v e p a r t i c u l a r i m p l i c a t i o n s f o r

o r g a n i s a t i o n . B e c a u s e o f t h e i n h e r e n t t e c h n i c a l a n d e c o n o m i c u n c e r t a i n t i e s

i n v o l v e d , t h e r e a r e f r e q u e n t l y v a l i d d i f f e r e n c e s o f p r o f e s s i o n a l o p i n i o n w h i c h

n e e d t o b e a i r e d a n d e v a l u a t e d a t a s e n i o r l e v e l b e f o r e c o m m i t m e n t s a r e m a d e .

T h e p r e s e n t o r g a n i s a t i o n a l a r r a n g e m e n t s w i t h i n t h e A P O , h o w e v e r ,

a r e n o t c o n d u c i v e t o e a r l y s e n i o r - l e v e l a p p r a i s a l o f n e w t e c h n o l o g y , o r t o

s m o o t h i n g t h e w a y f o r m a j o r p r o j e c t s o n c e c o m m i t m e n t h a s b e e n m a d e . A n

I V - 3

e x a m p l e m a y s e r v e t o i l l u s t r a t e t h e p o i n t . A t p r e s e n t , t h e r e i s d i s a g r e e m e n t

b e t w e e n t h e r e s e a r c h b r a n c h e s a n d t h e e n g i n e e r i n g p l a n n i n g b r a n c h e s r e g a r d ­

i n g t h e e m p h a s i s w h i c h s h o u l d b e p l a c e d o n i n t e g r a t e d s w i t c h i n g a n d t r a n s m i s ­

s i o n (1ST). B e c a u s e o f a l a c k o f v i s i b l e t o p - l e v e l l e a d e r s h i p a n d s u p p o r t , n o

r e s o l u t i o n i s i n s i g h t . I n c o n s e q u e n c e , t h e p r o j e c t m o v e s a l o n g w i t h s t r o n g

s u p p o r t f r o m r e s e a r c h b u t u n d e r h e a v y s n i p i n g f r o m o t h e r s . I n f a c t , i t m i g h t

b e t t e r b e e i t h e r a c c e l e r a t e d o r s h e l v e d .

A n o t h e r c o n s e q u e n c e o f t h e p r e s e n t a r r a n g e m e n t s f o r m a n a g i n g m a j o r

t e c h n o l o g i c a l c h a n g e i s t h a t t h e A P O c a n b e d r a w n i n t o n e w p r o j e c t s m o r e a s

a r e s u l t o f e n e r g e t i c e f f o r t s o f b r a n c h - l e v e l m a n a g e r s t h a n o f c o n s c i o u s s t r a ­

t e g i c c h o i c e , a n d b e c o m e s c o m m i t t e d b e f o r e t o p m a n a g e m e n t h a s h a d a n o p p o r ­

t u n i t y t o a p p r a i s e t h e p r o j e c t p o t e n t i a l c l e a r l y . M o r e o v e r , b e c a u s e c o m m i t m e n t

o n m a n y c u r r e n t p r o j e c t s h a s n o t b e e n e f f e c t i v e l y p r o m u l g a t e d f r o m t h e t o p l e v e l ,

i t i s a l l t h e m o r e d i f f i c u l t f o r s e n i o r m a n a g e m e n t t o i n s i s t o n f u l l c o o p e r a t i o n

f r o m a l l o f t h o s e w h o s h o u l d b e i n v o l v e d i n s u c c e s s f u l l y c o m p l e t i n g t h e s e p r o j e c t s

T h u s , m a i n t a i n i n g s u p p o r t f o r a m a j o r p r o j e c t a p p e a r s t o r e q u i r e c o n t i n u a l n e g o ­

t i a t i o n a m o n g t h e p a r t i e s i n v o l v e d . .

M a r k e t i n g A c t i v i t i e s A r e N o t E f f e c t i v e l y I n t e g r a t e d I n t o T h e T e l e ­

c o m m u n i c a t i o n s B u s i n e s s

I n t h e m i d d l e o f 1 9 7 3 , t h e o r g a n i s a t i o n o f t h e T e l e c o m m u n i c a t i o n s D i v i s i o n

a t C e n t r a l A d m i n i s t r a t i o n w a s r e s t r u c t u r e d w i t h t h e a i m o f i m p r o v i n g t h e A P O ' s

c a p a b i l i t i e s i n t e l e c o m m u n i c a t i o n s m a r k e t i n g a n d s a l e s . W h i l e t h e c o n c e p t s

u n d e r l y i n g t h e c h a n g e s a p p e a r v a l i d , t h e r e h a s u n d e r s t a n d a b l y n o t y e t b e e n a n y

s i g n i f i c a n t i m p r o v e m e n t i n t h e a b i l i t y o f t h e T e l e c o m m u n i c a t i o n s D i v i s i o n t o

i n f l u e n c e t h e t o t a l o r g a n i s a t i o n c o n c e r n e d w i t h t h e t e l e c o m m u n i c a t i o n s b u s i n e s s .

T h e r e a s o n s f o r t h i s s i t u a t i o n a p p e a r t o b e t w o . F i r s t , b e c a u s e o f p r e s ­

s u r e s c r e a t e d b y u n f i l l e d b a s i c s u b s c r i b e r d e m a n d , t h e T e l e c o m m u n i c a t i o n s

D i v i s i o n ' s a t t e n t i o n h a s b e e n f o c u s s e d o n t h e s a l e s a n d s e r v i c e p r o b l e m s o f t h e

b a s i c t e l e p h o n e s y s t e m . U n d e r t h e s e c o n d i t i o n s , t h e r e h a s b e e n l i t t l e r e a s o n

t o u n d e r t a k e v i g o r o u s m a r k e t i n g a n d s a l e s e f f o r t s .

S e c o n d , a n d p e r h a p s m o r e i m p o r t a n t f r o m a l o n g e r - r a n g e s t a n d p o i n t , t h e

t e c h n i c a l o r g a n i s a t i o n u n i t s - p r i m a r i l y t h e e n g i n e e r i n g p l a n n i n g b r a n c h e s a n d

t h e e n g i n e e r i n g w o r k s b r a n c h e s - d o n o t r e g a r d t h e T e l e c o m m u n i c a t i o n s D i v i ­

s i o n a s c a p a b l e o f c o n t r i b u t i n g t o c e r t a i n t e c h n i c a l d e c i s i o n s , e v e n t h o u g h t h e s e

d e c i s i o n s c l e a r l y h a v e m a r k e t i n g i m p l i c a t i o n s . F o r e x a m p l e , t h e w o r k s b r a n c h e s

c o n t i n u e t o b e t h e d o m i n a n t d e c i s i o n - m a k e r s o n s u c h m a t t e r s a s p u s h - b u t t o n

t e l e p h o n e s a n d d a t a s e r v i c e s , d e s p i t e t h e o b v i o u s m a r k e t i n g i m p l i c a t i o n s p r e ­

s e n t e d b y t h e i n t r o d u c t i o n o f t h e s e s e r v i c e s . A s a c o n s e q u e n c e , t h e t e l e c o m ­

m u n i c a t i o n s m a r k e t i n g p r o g r a m m e h a s b e e n , a n d c o n t i n u e s t o b e , m o r e h e a v i l y

i n f l u e n c e d b y t e c h n i c a l h a r d w a r e c a p a b i l i t y t h a n b y c u s t o m e r m a r k e t i n g c o n ­

s i d e r a t i o n s .

I V - 4

D a r i n g t h e s t u d y , t w o m a r k e t i n g a c t i v i t i e s p r o v i d e d f o r i n t h e r e c e n t

T e l e c o m m u n i c a t i o n s D i v i s i o n r e o r g a n i s a t i o n w e r e i d e n t i f i e d a s b e i n g i n p a r ­

t i c u l a r n e e d o f s t r e n g t h e n i n g ; e a c h i s d i s c u s s e d b e l o w .

a. M a r k e t r e s e a r c h . S u p e r i o r p e r f o r m a n c e o f t h i s f u n c t i o n i s m o s t

i m p o r t a n t , e v e n i f t e c h n o l o g i c a l c o n s i d e r a t i o n s a r e u l t i m a t e l y o v e r r i d i n g .

Q u e s t i o n s o f c u s t o m e r a c c e p t a n c e o f n e w i d e a s a n d o f c u s t o m e r p e r c e p t i o n o f

v a l u e a n d h e n c e w i l l i n g n e s s t o p a y f o r n e w o r m o d i f i e d s e r v i c e s a r e p a r t i c u ­

l a r l y i m p o r t a n t i n m a k i n g s t r a t e g i c d e c i s i o n s o n m a j o r i n v e s t m e n t s i n c a p a c i t y

o r i n e q u i p m e n t c h a n g e s . I n m a k i n g s u c h d e c i s i o n s , t o p m a n a g e m e n t n e e d s t o

b e f u r n i s h e d w i t h a b a l a n c e b e t w e e n e n g i n e e r i n g a n d m a r k e t i n g c o n s i d e r a t i o n s .

A s a n e x a m p l e , a n u m b e r o f p e r s o n s i n t e r v i e w e d d u r i n g t h e s t u d y s u g g e s t e d

t h a t g r e a t e r a t t e n t i o n t o m a r k e t r e s e a r c h m i g h t h a v e r e s u l t e d i n t h e D e p a r t m e n t ' s

t a k i n g a d i f f e r e n t c o u r s e o n t h e m e t h o d o f r e c o r d i n g S T D ( s u b s c r i b e r t r u n k

d i a l l i n g ) c h a r g e s . W h e t h e r t h e r i g h t o v e r a l l d e c i s i o n w a s r e a c h e d i s n o t t h e

p o i n t ; w h a t i s q u i t e c l e a r i s t h a t t h e A P O s e r i o u s l y u n d e r e s t i m a t e d t h e e x t e n t

of c u s t o m e r r e s i s t a n c e w h i c h w o u l d b e e n c o u n t e r e d w h e n S T D w a s i n t r o d u c e d

w i t h o u t a f f o r d i n g t h e c u s t o m e r a n y m e a n s o f m a i n t a i n i n g a r e c o r d o f t h e c o s t

o f i n d i v i d u a l S T D c a l l s m a d e .

b. T a r i f f a n a l y s i s . T h e r e i s a n e e d f o r i m p r o v e d a n d m o r e t i m e l y

a n a l y s i s o f p r i c i n g a l t e r n a t i v e s . S u c h a n a l y s i s i n v o l v e s a n a c c u r a t e f o r e c a s t

o f c u s t o m e r r e s p o n s e t o v a r i o u s p r i c i n g p o l i c i e s - c l e a r l y a m a r k e t i n g a c t i v i t y .

M a n y e x a m p l e s w e r e c i t e d w h e r e t h e i n f o r m a t i o n p r o v i d e d b y t h e T e l e c o m ­

m u n i c a t i o n s D i v i s i o n w a s i n a d e q u a t e i n s u b s t a n c e o r i n t i m i n g . A l o g i c a l

r e s p o n s e b y t h e u n i t s n e e d i n g t h i s i n f o r m a t i o n h a s b e e n t o d e v e l o p t h e i r o w n

t a r i f f a s s u m p t i o n s - o f t e n i n a p a r t i a l v a c u u m .

C e r t a i n K e y P o s i t i o n s I n T h e O r g a n i s a t i o n L a c k A d e q u a t e D i r e c t S t a f f

S u p p o r t

T h e a b s e n c e o f s p e c i a l i s e d s t a f f s u p p o r t t o m o n i t o r a c t u a l a n d a n t i c i p a t e d

p r o g r e s s a g a i n s t c o m m i t m e n t s i s p a r t i c u l a r l y n o t i c e a b l e a s a f f e c t i n g t h r e e

p o s i t i o n s : t h e D i r e c t o r - G e n e r a l ( w h o s e o v e r b u r d e n i n g h a s a l r e a d y b e e n d i s ­

c u s s e d ) , t h e F A D G - E n g i n e e r i n g W o r k s , a n d t h e S t a t e D i r e c t o r ( r e g a r d i n g h i s

t e l e c o m m u n i c a t i o n s r e s p o n s i b i l i t i e s ).

A s t h e n u m b e r , v a r i e t y a n d c o m p l e x i t y o f t e l e c o m m u n i c a t i o n s p r o b l e m s

i n t h e A P O h a s i n c r e a s e d , t h e i n c u m b e n t s o f t h e p o s i t i o n s l i s t e d a b o v e h a v e

b e e n f o r c e d e i t h e r t o r e l y h e a v i l y o n d i r e c t s u b o r d i n a t e s f o r i n f o r m a t i o n a b o u t

i s s u e s t h a t a r e b e i n g e n c o u n t e r e d o r , a l t e r n a t i v e l y , t o c r e a t e i n f o r m a l m e a n s

o f a n t i c i p a t i n g a n d r e s o l v i n g i s s u e s - f o r e x a m p l e , t h e v a r i e t y o f s t e e r i n g c o m ­

m i t t e e s , w o r k i n g p a r t i e s a n d c o - o r d i n a t i n g c o m m i t t e e s u s e d e x t e n s i v e l y t h r o u g h o u t

I V- 5

10345/ 75— 19

t h e D e p a r t m e n t , a s d o c u m e n t e d i n C h a p t e r III. T h e f i r s t a p p r o a c h h a s t h e

m a j o r d r a w b a c k o f v i e w i n g p l a n s a n d f o r e c a s t s t h r o u g h t h e e y e s o f p e r s o n s

w h o a r e g e n e r a l l y m o r e p r e o c c u p i e d w i t h d a y - t o - d a y p r o b l e m s t h a n a r e t h e i r

s u p e r i o r s , a n d w h o m a y t h e m s e l v e s h a v e c o n t r i b u t e d t o t h e p r o b l e m . T h e

s e c o n d a p p r o a c h h a s t h e d i s a d v a n t a g e o f n e a r l y a l l i n f o r m a l a r r a n g e m e n t s i h

t h a t i t d i f f u s e s a c c o u n t a b i l i t y a n d f r e q u e n t l y s l o w s d e c i s i o n - m a k i n g .

T h e p o s i t i o n o f F A D G - E n g i n e e r i n g W o r k s w a r r a n t s p a r t i c u l a r m e n t i o n i n

t h a t i t a p p e a r s t o h a v e p r o v e d u n m a n a g e a b l e b y t h e l a s t s e v e r a l i n c u m b e n t s .

M a n y p e r s o n s c o m m e n t e d d u r i n g t h e s t u d y t h a t t h e p e r s o n h e a d i n g t h i s a c t i v i t y

i s c a u g h t u p i n s o m a n y i m m e d i a t e c r i s e s a n d d e m a n d s f o r p r o b l e m - s o l v i n g

t h a t h e h a s l i t t l e o r n o t i m e t o p l a n , t o a n t i c i p a t e p r o b l e m s , o r t o f o l l o w u p o n

d e c i s i o n s t o e n s u r e t h a t t h e y a r e b e i n g i m p l e m e n t e d o n a t i m e l y b a s i s .

T h e p r o b l e m i s n o t a l a c k o f s t a f f g r o u p s i n t h e E n g i n e e r i n g W o r k s D i v i s i o n .

O n t h e c o n t r a r y , s e v e r a l s u c h g r o u p s a r e c o n c e r n e d w i t h t h e a c c u m u l a t i o n of

o p e r a t i n g s t a t i s t i c s , a n d a c t i o n s o r i m p r o v e d s t a n d a r d s h a v e f l o w e d f r o m t h e i r

w o r k . H o w e v e r , t h e s e e f f o r t s a r e p r i m a r i l y o r i e n t e d t o s o l v i n g m i d d l e m a n ­

a g e m e n t p r o b l e m s , a n d t h e n o n l y a f t e r t h e p r o b l e m s h a v e , s u r f a c e d . T h e r e i s

n o u n i t t o g i v e t h e h e a d o f E n g i n e e r i n g W o r k s s u p p o r t i n t h e d y n a m i c p r o c e s s

o f f o r w a r d - m a n a g i n g o n e o f t h e l a r g e s t a n d m o s t s o p h i s t i c a t e d t e c h n i c a l e n g i ­

n e e r i n g o r g a n i s a t i o n s i n A u s t r a l i a . I n s h o r t , t h e h e a d o f t h i s f u n c t i o n d o e s

n o t h a v e a r e s o u r c e d e d i c a t e d t o k e e p i n g h i m o b j e c t i v e l y i n f o r m e d , s o t h a t h e

c a n a n t i c i p a t e p r o b l e m s m o r e e f f e c t i v e l y .

I n t h e a b s e n c e o f o n - g o i n g s u p p o r t , t h e E n g i n e e r i n g W o r k s D i v i s i o n o f t e n

m a k e s s p e c i a l s t a f f a s s i g n m e n t s ( f o r e x a m p l e , t h e h e a d o f t h e E n g i n e e r i n g

S e r v i c e s B r a n c h i s f r e q u e n t l y o n t e m p o r a r y a s s i g n m e n t , u n d e r t a k i n g t o p - l e v e l

s t u d i e s f o r t h e F A D G - E n g i n e e r i n g W o r k s ) . T h i s i s o n l y a t e m p o r i s i n g s o l u t i o n ,

i n t h a t i t r e m o v e s a n e x p e r i e n c e d l i n e m a n a g e r f r o m p r o v i d i n g l e a d e r s h i p t o

h i s u n i t , a n d m a y r e q u i r e a n i n d i v i d u a l t o m a k e s p e c i a l s t u d i e s w h o i s n o t s u f ­

f i c i e n t l y k n o w l e d g e a b l e t o p r o d u c e a w h o l l y s a t i s f a c t o r y r e s u l t .

I n s u m m a r y , i n a n o r g a n i s a t i o n a s l a r g e a s t h e A P O o r i t s t w o s e p a r a t e

a n d d i s t i n c t b u s i n e s s e s , k e y m a n a g e r i a l p o s i t i o n s r e s p o n s i b l e f o r p l a n n i n g ,

o r g a n i s i n g , c o - o r d i n a t i n g a n d c o n t r o l l i n g v a s t u n d e r t a k i n g s n e e d d i r e c t s t a f f

s u p p o r t i n c a r r y i n g o u t t h e s e t a s k s .

T h e O r g a n i s a t i o n a l L o c a t i o n O f T h e D a t a P r o c e s s i n g A c t i v i t y H a s C e r t a i n

D r a w b a c k s

T h e C e n t r a l A d m i n i s t r a t i o n d a t a p r o c e s s i n g a c t i v i t y ( t h e A D P B r a n c h ) w a s

e s t a b l i s h e d w i t h t h e p r i n c i p a l o b j e c t i v e o f d e v e l o p i n g a c o m p u t e r i s e d t e l e p h o n e

c u s t o m e r a c c o u n t i n g s y s t e m . T o f o s t e r t h i s d e v e l o p m e n t e f f o r t , i t w a s a s s i g n e d

t o t h e M a n a g e m e n t S e r v i c e s D i v i s i o n , w h i c h w a s a l s o r e s p o n s i b l e f o r t h e c u s ­

t o m e r a c c o u n t i n g a c t i v i t y .

I V - 6

T h i s o r g a n i s a t i o n a l a r r a n g e m e n t h a s b e c o m e l e s s n e c e s s a r y a s t h e a u t o ­

m a t e d a p p l i c a t i o n h a s d e v e l o p e d a n d m a t u r e d , a n d h e n c e t h e r e q u i r e m e n t f o r

a c l o s e w o r k i n g a r r a n g e m e n t b e t w e e n d a t a p r o c e s s i n g a n d c u s t o m e r a c c o u n t i n g

h a s d i m i n i s h e d . M o r e o v e r , t h e o r g a n i s a t i o n a l l o c a t i o n o f t h e A D P B r a n c h

w i t h i n t h e M a n a g e m e n t S e r v i c e s D i v i s i o n h a s t e n d e d t o m a k e d a t a p r o c e s s i n g

l e s s a c c e s s i b l e t o u s e r s o u t s i d e t h e D i v i s i o n .

In a n a t t e m p t t o o v e r c o m e t h i s d i f f i c u l t y , a c o m m i t t e e ( t h e C o m p u t e r

O p e r a t i o n s a n d M a n a g e m e n t I n f o r m a t i o n S y s t e m s C o m m i t t e e , o r C O M I S ) w a s

e s t a b l i s h e d . A l t h o u g h a l l o f t h e F i r s t A s s i s t a n t D i r e c t o r s - G e n e r a l a r e m e m b e r s

of C O M I S , i t i s c h a i r e d b y t h e F A D G - M a n a g e m e n t S e r v i c e s - a s i t u a t i o n w h i c h

n a t u r a l l y p l a c e s h i m i n a n a w k w a r d p o s i t i o n . T h i s a w k w a r d n e s s i s c o m p o u n d e d

b y t h e f a c t t h a t t h e s u b - c o m m i t t e e o f C O M I S w h i c h i s c h a r g e d w i t h e s t a b l i s h i n g

p r i o r i t i e s a m o n g n u m e r o u s a p p l i c a t i o n s v y i n g f o r A D P d e v e l o p m e n t a n d i m p l e ­

m e n t a t i o n i s c h a i r e d b y t h e A s s i s t a n t D i r e c t o r - G e n e r a l i n c h a r g e o f t h e A D P

B r a n c h .

A s a r e s u l t b o t h o f t h e s e c i r c u m s t a n c e s a n d of t h e b u r g e o n i n g d e m a n d f o r

A D P t h r o u g h o u t t h e D e p a r t m e n t , u s e r d i s s a t i s f a c t i o n h a s a r i s e n . A n u m b e r of

p e r s o n s i n t e r v i e w e d d u r i n g t h e s t u d y s t a t e d t h a t t h e A D P s t a f f w a s u n r e s p o n ­

s i v e t o t h e i r n e e d s , a n d o t h e r s s u g g e s t e d t h a t t h e p r o c e s s i n g a n d m a i n t e n a n c e

of c u r r e n t a p p l i c a t i o n s ( e s p e c i a l l y t h e t e l e p h o n e c u s t o m e r a c c o u n t i n g s y s t e m

a n d t h e i n v e n t o r y c o n t r o l p r o g r a m m e ) w a s s o d e m a n d i n g o n t h e B r a n c h t h a t

t h e r e w a s l i t t l e p r o s p e c t f o r d e v e l o p i n g n e w a p p l i c a t i o n s i n t h e n e a r t e r m . T h e

s i t u a t i o n i s f u r t h e r c o m p l i c a t e d b y t h e f a c t t h a t f e w m a n a g e r s w i t h i n t h e A P O

u n d e r s t a n d t h e f u n d a m e n t a l s o f A D P . T h u s , u s e r s a n d p o t e n t i a l u s e r s t e n d

t o b l a m e t h e A D P g r o u p , a n d a r e n o t e a s i l y s a t i s f i e d w i t h t h e A D P B r a n c h ' s

e x p l a n a t i o n s f o r w h a t i s v i e w e d a s a l a c k o f s e r v i c e .

W h i l e p a r t o f t h e p r o b l e m m a y l i e w i t h t h e i n t e r n a l o r g a n i s a t i o n a n d f u n c ­

t i o n i n g o f t h e A D P B r a n c h i t s e l f (a m a t t e r w h i c h w a s n o t w i t h i n t h e s c o p e of

t h e s t u d y ) , i t s c u r r e n t o r g a n i s a t i o n a l l o c a t i o n a n d t h e g e n e r a l f e e l i n g t h a t i t i s

l i n k e d t o a c c o u n t i n g , a n d t h e f a c t t h a t i t s t i l l s e e m s t o b e t o o f a r r e m o v e d f r o m

t h e t o p m a n a g e m e n t l e v e l , p r o b a b l y c o n t r i b u t e t o a l a r g e e x t e n t t o t h e d i f f i c u l t i e s

c i t e d a b o v e .

i | < > ; < * *

T h e f i n a l t w o o b s e r v a t i o n s c o n c e r n i n g t h e t e l e c o m m u n i c a t i o n s b u s i n e s s

f o c u s o n t h e o r g a n i s a t i o n of f i e l d a c t i v i t i e s , b o t h a t t h e s t a t e l e v e l a n d a t t h e

l o c a l l e v e l .

I V - 7

T h e C u r r e n t G e o g r a p h i c S u b - D i v i s i o n I m m e d i a t e l y B e l o w C e n t r a l

A d m i n i s t r a t i o n I s G e n e r a l l y S a t i s f a c t o r y

I n e v a l u a t i n g t h e a d e q u a c y o f t h e p r e s e n t g e o g r a p h i c s u b - d i v i s i o n o f t e l e ­

c o m m u n i c a t i o n s a c t i v i t i e s i m m e d i a t e l y b e l o w C e n t r a l A d m i n i s t r a t i o n ( w h i c h

g e n e r a l l y f o l l o w s s t a t e b o u n d a r i e s ), t h e c o n s u l t a n t s p o s e d t w o p r i n c i p a l

q u e s t i o n s :

- I s t h e t e l e c o m m u n i c a t i o n s b u s i n e s s a c t i v i t y i n e a c h o f t h e p r e s e n t

s t a t e o r g a n i s a t i o n s o f s u f f i c i e n t s c o p e t o j u s t i f y , o n a n e c o n o m i c

b a s i s , a f u l l - f l e d g e d o r g a n i s a t i o n w h i c h c a n s t a n d a l o n e a n d f u n c t i o n

w i t h m a x i m u m d e l e g a t i o n f r o m C e n t r a l A d m i n i s t r a t i o n ?

- D o e s t h e s c o p e o f p r e s e n t a n d a n t i c i p a t e d t e l e c o m m u n i c a t i o n s

a c t i v i t i e s i n e a c h o f t h e s t a t e s r e p r e s e n t a m a n a g e a b l e r e s p o n s i ­

b i l i t y f o r a s i n g l e e x e c u t i v e ?

T h e a n s w e r t o t h e f i r s t q u e s t i o n i s c l e a r l y y e s i n f i v e o f t h e s i x s t a t e s .

T h e r e i s s o m e d o u b t r e g a r d i n g T a s m a n i a , w h i c h r e p r e s e n t s a r a t h e r m o d e s t

m a n a g e m e n t t a s k . E v e n s o , p o l i t i c a l t r a d i t i o n a n d p e r h a p s o t h e r f a c t o r s ,

i n c l u d i n g g e o g r a p h i c s e p a r a t i o n , w o u l d m a k e i t d i f f i c u l t t o s u g g e s t t h a t

T a s m a n i a b e p a r t o f s o m e l a r g e r g e o g r a p h i c e n t i t y r e p o r t i n g t o C e n t r a l

A d m i n i s t r a t i o n .

T h e a n s w e r t o t h e s e c o n d q u e s t i o n i s c l e a r l y y e s i n f o u r o f t h e s i x s t a t e s -

Q u e e n s l a n d , S o u t h A u s t r a l i a , W e s t e r n A u s t r a l i a a n d T a s m a n i a . I n t h e s e s t a t e s ,

t h e r e i s n o q u e s t i o n t h a t t h e p r e s e n t a n d a n t i c i p a t e d s c o p e o f t e l e c o m m u n i c a t i o n s

a c t i v i t i e s r e p r e s e n t s a m a n a g e a b l e t a s k . A l t h o u g h t h e r e i s s o m e q u e s t i o n c o n ­

c e r n i n g V i c t o r i a , o n b a l a n c e t h i s s t a t e ' s t e l e c o m m u n i c a t i o n s a c t i v i t i e s w o u l d

a l s o a p p e a r m a n a g e a b l e b y a s i n g l e e x e c u t i v e , p a r t i c u l a r l y i f p o s t a l s e r v i c e s

a n d t e l e c o m m u n i c a t i o n s s e r v i c e s a r e s e p a r a t e d . T h i s o p i n i o n i s r e i n f o r c e d

b y t h e c o m p a c t s i z e o f t h e S t a t e o f V i c t o r i a a n d t h e ( a t l e a s t a t p r e s e n t ) l e s s

p r e s s i n g m a n a g e m e n t p r o b l e m s w h i c h r e q u i r e t o p - l e v e l a t t e n t i o n o n a f r e q u e n t

b a s i s . T h u s , t h e r e w o u l d a p p e a r t o b e n o c o m p e l l i n g r e a s o n f o r s u g g e s t i n g

t h a t V i c t o r i a b e s u b - d i v i d e d i n t o t w o o r m o r e g e o g r a p h i c r e g i o n s r e p o r t i n g t o

C e n t r a l A d m i n i s t r a t i o n .

O n t h e o t h e r h a n d , t h e r e i s e v i d e n c e t o s u g g e s t t h a t t h e t e l e c o m m u n i c a t i o n s

a c t i v i t i e s i n N e w S o u t h W a l e s m a y b e t o o l a r g e a n d c o m p l e x f o r e f f e c t i v e m a n ­

a g e m e n t b y a s i n g l e e x e c u t i v e . T h i s j u d g e m e n t i s f o u n d e d o n t h e f a c t t h a t t h e

s t a t e h a s a b o u t 4 0 p e r c e n t o f t h e t e l e c o m m u n i c a t i o n s b u s i n e s s , a n d t h a t i t s

t e l e c o m m u n i c a t i o n s a n n u a l c a p i t a l w o r k s p r o g r a m m e , a l r e a d y a t a l e v e l o f

$ 1 2 0 m i l l i o n , i s g r o w i n g a t a p p r o x i m a t e l y 8 p e r c e n t a y e a r . I n t e r m s o f a

n u m b e r o f d i m e n s i o n s , t h e t e l e c o m m u n i c a t i o n s a c t i v i t i e s i n N e w S o u t h W a l e s

a r e l a r g e r t h a n t h o s e i n t h e f o u r s m a l l e r s t a t e s p u t t o g e t h e r , a n d a r e g r o w i n g

f r o m a m u c h l a r g e r b a s e .

I V - 8

T h e P r e s e n t F u n c t i o n a l P l a n Of O r g a n i s a t i o n F o r T e l e c o m m u n i c a t i o n s

W i t h i n T h e S t a t e A d m i n i s t r a t i o n s I s I n a p p r o p r i a t e

I n e a c h s t a t e o r g a n i s a t i o n , t h e A s s i s t a n t D i r e c t o r - E n g i n e e r i n g a n d t h e

A s s i s t a n t D i r e c t o r - T e l e c o m m u n i c a t i o n s r e p o r t s e p a r a t e l y t o t h e D i r e c t o r o f

P o s t s a n d T e l e g r a p h s , a s n o t e d i n C h a p t e r III. A l t h o u g h t h e E n g i n e e r i n g

D i v i s i o n a n d t h e T e l e c o m m u n i c a t i o n s D i v i s i o n a r e e a c h s u b - d i v i d e d i n t e r n a l l y

o n a g e o g r a p h i c b a s i s ( a n d o f t e n o n p a r a l l e l g e o g r a p h i c b a s e s ) , t h e t e c h n i c a l

a n d c o m m e r c i a l f u n c t i o n s c o n s t i t u t i n g t h e t e l e c o m m u n i c a t i o n s b u s i n e s s i n a

s t a t e a r e b r o u g h t t o g e t h e r o n l y a t t h e l e v e l o f t h e S t a t e D i r e c t o r . T h u s , b e l o w

h i m t h e r e i s n o o n e r e s p o n s i b l e f o r a l l t e l e c o m m u n i c a t i o n s o p e r a t i o n s a c t i v i t i e s

i n a p a r t o f a s t a t e .

I n t h e p r e s e n t s i t u a t i o n , a l l r e s p o n s i b i l i t i e s w h i c h r e q u i r e d e s i g n , i n s t a l ­

l a t i o n o r m a i n t e n a n c e o f t e c h n i c a l e q u i p m e n t a r e m a n a g e d a n d c o n t r o l l e d b y

t h e s t a t e - l e v e l E n g i n e e r i n g D i v i s i o n , w h i l e t h o s e i n v o l v i n g c u s t o m e r s e r v i c e

c o n t a c t , s a l e s a d v i c e o r s e r v i c e s , c o m p l a i n t h a n d l i n g , a n d s t u d i e s of c u s t o m e r

n e e d s a r e t h e r e s p o n s i b i l i t y o f t h e s t a t e - l e v e l T e l e c o m m u n i c a t i o n s D i v i s i o n .

I n t h i s s i t u a t i o n , a d i s a g r e e m e n t o v e r p o l i c y a p p l i c a t i o n o r a n y o t h e r m a t t e r

c a n b e f o r m a l l y r e s o l v e d o n l y b y t h e S t a t e D i r e c t o r .

O b v i o u s l y , i t w o u l d b e i m p r a c t i c a l f o r a S t a t e D i r e c t o r t o b e c o m e p e r s o n ­

a l l y i n v o l v e d i n t h e m a n y i n t e r p l a y s b e t w e e n t e c h n i c a l a n d c o m m e r c i a l a c t i v i t i e s .

A s a r e s u l t , e l a b o r a t e p a p e r - w o r k s y s t e m s h a v e b e e n d e v e l o p e d t o c a r r y i n s t r u c ­

t i o n s , r e q u e s t s a n d a d v i c e b a c k a n d f o r t h b e t w e e n t h e t w o c h a n n e l s .

I n m o s t r o u t i n e s i t u a t i o n s , t h i s p a p e r - w o r k s y s t e m f u n c t i o n s r e a s o n a b l y

w e l l . P r o b l e m s d o o c c u r , h o w e v e r , w h e n t h e i n s t a l l a t i o n i s n o t r o u t i n e a n d

w h e n c l o s e m u t u a l c o - o p e r a t i o n i s i m p o r t a n t , a s f o r s p e c i a l P A B X i n s t a l l a t i o n s .

H e r e , s y n c h r o n i s a t i o n o f s e r v i c e s t o a c u s t o m e r c a n b e c o m e a p r o b l e m , p a r ­

t i c u l a r l y w h e n t e l e c o m m u n i c a t i o n s a n d e n g i n e e r i n g p l a c e d i f f e r e n t p r i o r i t i e s

o n t h e s e r v i c e . T h e r e s u l t i s a p o t e n t i a l l o w e r i n g o f t h e q u a l i t y a n d r e s p o n ­

s i v e n e s s o f s e r v i c e t o c u s t o m e r s , w h i c h c a n , i n t u r n , h a v e a n e g a t i v e i m p a c t

o n t h e i m a g e o f t h e D e p a r t m e n t a n d h e n c e t h e p u b l i c ' s s u p p o r t .

F r o m a m a n a g e m e n t s t a n d p o i n t , t h e p r e s e n t i n a b i l i t y t o b r i n g t o g e t h e r

a l l o p e r a t i o n a l a c t i v i t i e s a t a l e v e l b e l o w t h e S t a t e D i r e c t o r m e a n s t h a t i t i s

i m p o s s i b l e t o d e l e g a t e , b e l o w t h a t l e v e l , r e s p o n s i b i l i t y a n d a c c o u n t a b i l i t y f o r

p e r f o r m a n c e o f t h e s e f u n c t i o n s . I t a l s o d e v e l o p s l o c a l s p e c i a l i s t s o n e i t h e r

t h e t e c h n i c a l o r t h e c o m m e r c i a l s i d e , b u t n o t m a n a g e r s w i t h a t o t a l b u s i n e s s

e x p o s u r e o r v i e w p o i n t .

I V - 9

T h e D e p a r t m e n t r e c o g n i s e d t h e w e a k n e s s e s i n h e r e n t i n t h e s e a r r a n g e ­

m e n t s s o m e t i m e a g o , a n d a t t e m p t e d t o o v e r c o m e t h e m b y i n t r o d u c i n g t h e

" a r e a m a n a g e m e n t " s c h e m e . I t i s i r r e l e v a n t t o r e v i e w h e r e a l l o f t h e r e a s o n s

f o r t h e d e m i s e o f t h i s p l a n ; s u f f i c e i t t o s a y , h o w e v e r , t h a t h a d t h e p l a n b e e n

i m p l e m e n t e d w i t h o n l y 32 a r e a s , m a n y s i z e a b l e l o c a l e s w o u l d s t i l l h a v e r e c e i v e d

n o m o r e c o - o r d i n a t e d s e r v i c e t h a n u n d e r t h e p r e s e n t o r g a n i s a t i o n . F o r e x a m p l e ,

i n s u c h m a j o r c e n t r e s a s M o u n t I s a a n d W h y a l l a , t h e r e w o u l d s t i l l h a v e b e e n

s e p a r a t e t e l e c o m m u n i c a t i o n s a n d e n g i n e e r i n g u n i t s r e p o r t i n g t h r o u g h s e p a r a t e

c h a n n e l s t o a n a r e a h e a d q u a r t e r s e l s e w h e r e .

I V- 10

B - R E C O M M E N D A T I O N S

T h e p r o p o s e d o r g a n i s a t i o n of t h e t e l e c o m m u n i c a t i o n s b u s i n e s s a s s u m e s

t h a t t h e f u n d a m e n t a l r e c o m m e n d a t i o n s c o n t a i n e d i n C h a p t e r II I w i l l b e a c c e p t e d .

T h e s e r e c o m m e n d a t i o n s i n c l u d e t h e e s t a b l i s h m e n t o f t h e t e l e c o m m u n i c a t i o n s

b u s i n e s s a s a n e n t i t y s e p a r a t e f r o m p o s t a l s e r v i c e s , e i t h e r i n a s t a t u t o r y

c o r p o r a t i o n f o r m o r a s a D e p a r t m e n t of S t a t e ; a n d a d u a l t o p m a n a g e m e n t

c o n c e p t , w i t h a c h i e f e x e c u t i v e o f f i c e r r e s p o n s i b l e f o r s t r a t e g i c a n d e x t e r n a l

m a t t e r s , a n d a c h i e f o p e r a t i n g o f f i c e r r e s p o n s i b l e f o r t a c t i c a l a n d d a y - t o - d a y

i n t e r n a l m a n a g e m e n t m a t t e r s . T h e y a l s o i n c l u d e d e l e g a t i o n o f m o r e a u t h o r i t y

t o t h e t e l e c o m m u n i c a t i o n s b u s i n e s s f r o m o u t s i d e a g e n c i e s , p a r t i c u l a r l y i n

m a t t e r s of o r g a n i s a t i o n , e s t a b l i s h m e n t s , a n d m a n a g e r i a l c l a s s i f i c a t i o n s a n d p a y

( c u r r e n t l y c o n t r o l l e d b y t h e P u b l i c S e r v i c e B o a r d ) .

T h e r e c o m m e n d a t i o n s w h i c h f o l l o w a r e d e s i g n e d t o a l l e v i a t e t h e p r o b l e m s

o u t l i n e d i n t h e p r e v i o u s s e c t i o n o f t h i s c h a p t e r . I n s u m m a r y , t h e y p r o v i d e

f o r m o r e e f f e c t i v e c o - o r d i n a t i o n o f h e a d q u a r t e r s t e c h n i c a l a c t i v i t i e s , a u g m e n t

h e a d q u a r t e r s m a r k e t i n g a n d c u s t o m e r s e r v i c e s , a n d e l e v a t e t h e s t a n d i n g of

p e r s o n n e l a n d A D P a c t i v i t i e s . F i n a l l y , t h e y s i g n i f i c a n t l y s t r e n g t h e n t h e f i e l d

o r g a n i s a t i o n f o r t e l e c o m m u n i c a t i o n s .

T h e s p e c i f i c r e c o m m e n d a t i o n s w h i c h f o l l o w a r e p r e s e n t e d w i t h p a r t i c u l a r

e m p h a s i s o n t h o s e a s p e c t s w h i c h a r e n e w o r n o t a b l y m o d i f i e d f r o m a c t i v i t i e s

a l r e a d y p e r f o r m e d w i t h i n t h e A P O .

E s t a b l i s h A C h i e f E x e c u t i v e O f f i c e r - C h i e f O p e r a t i n g O f f i c e r A r r a n g e m e n t

T o A c c o m m o d a t e T h e T o t a l T o p M a n a g e m e n t J o b

E x h i b i t I V - 1, f o l l o w i n g t h i s p a g e , i l l u s t r a t e s t h e r e c o m m e n d e d m a n a g e ­

m e n t o r g a n i s a t i o n s t r u c t u r e of t e l e c o m m u n i c a t i o n s h e a d q u a r t e r s , a n d s h o w s ,

f o r p u r p o s e s o f r e f e r e n c e , t h e D i r e c t o r s - T e l e c o m m u n i c a t i o n s l o c a t e d i n t h e

s t a t e s . T h e h e a d q u a r t e r s s t r u c t u r e r e s t s u p o n t h e t w o k e y p o s i t i o n s of

M a n a g i n g D i r e c t o r ( c h i e f e x e c u t i v e o f f i c e r ) a n d C h i e f G e n e r a l M a n a g e r ( c h i e f

o p e r a t i n g o f f i c e r ) . T h e n e e d s f o r , a n d b e n e f i t s of, t h i s d u a l t o p m a n a g e m e n t

c o n c e p t w e r e d e s c r i b e d i n C h a p t e r III, a n d t h u s a r e n o t r e p e a t e d h e r e .

P r o v i d e T h e M a n a g i n g D i r e c t o r W i t h A n I m m e d i a t e S t a f f T a i l o r e d T o

H i s E x t e r n a l A n d S t r a t e g i c O r i e n t a t i o n

E x h i b i t I V - 2 i l l u s t r a t e s t h e p r o p o s e d o r g a n i s a t i o n of t h e M a n a g i n g

D i r e c t o r ' s i m m e d i a t e s t a f f . E a c h f u n c t i o n i s d e s c r i b e d b r i e f l y i n t h e f o l l o w ­

i n g p a r a g r a p h s .

IV - 11

RECOMMENDED PLAN OF ORGANISATION BASIC STRUCTURE

T E L E C O M M U N IC A T IO N S

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T E L E C O M M U N I C A T I O N S

D I R E C T O R S

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G E N E R A L M A N A G E R

M A N A G I N G D I R E C T O R

RECOMMENDED PLAN OF ORGANISATION MANAGING DIRECTOR'S IMMEDIATE STAFF

T E L E C O M M U N IC A T IO N S

• A d m i n i s t r a t i v e A s s i s t a n t s

• S e c r e t a r i a l a n d A d m i n i s t r a t i v e S u p p o r t

• Legal L i a i s o n W i t h A t t o r n e y - G e n e r a l ' s D e p a r t m e n t

P L A N N I N G

D I R E C T O R D I R E C T O R

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M A N A G I N G D I R E C T O R

■ P u b l i c R e l a t i o n s • F i n a n c i a l O b j e c t i v e s

• Mi n i s t e r i a l R e l a t i o n s A n d P o l i c i es

• D o m e s t i c G o v e r n m e n t a l R e l a t i o n s

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■ N a t i o n a l B u s i n e s s P l a n n i n g

• P r o j e c t M a n a g e m e n t E x p e d i t i n g

- A S e c r e t a r i a t w o u l d c o m p r i s e a d m i n i s t r a t i v e a s s i s t a n t s w h o w o u l d

b e u s e d a t t h e M a n a g i n g D i r e c t o r ' s d i s c r e t i o n f o r s p e c i a l m i s s i o n s

o f r e p r e s e n t a t i o n ( s u c h a s t h e E u r o p e a n R e p r e s e n t a t i v e ) , o r f o r

a s s i s t a n c e o n o t h e r m a t t e r s . T h e S e c r e t a r i a t w o u l d a l s o i n c l u d e

l e g a l l i a i s o n w i t h t h e A t t o r n e y - G e n e r a l 1 s D e p a r t m e n t . If t h e s e r v ­

i c e s o f t h e A t t o r n e y - G e n e r a l 1 s D e p a r t m e n t a r e n o t u s e d , t h e

S e c r e t a r i a t w o u l d n o t i n c l u d e t h i s f u n c t i o n ; i n s t e a d , a L e g a l C o u n s e l

f u n c t i o n w o u l d b e a d d e d t o t h e M a n a g i n g D i r e c t o r ' s s t a f f . If a

s t a t u t o r y c o r p o r a t i o n f o r m o f o r g a n i s a t i o n i s a d o p t e d , a p o s i t i o n o f

S e c r e t a r y w o u l d a l s o b e r e q u i r e d .

- E x t e r n a l R e l a t i o n s w o u l d b e r e s p o n s i b l e f o r t h r e e f u n c t i o n s :

m i n i s t e r i a l r e l a t i o n s , d o m e s t i c g o v e r n m e n t a l r e l a t i o n s , a n d p u b l i c

r e l a t i o n s . T h e s e t h r e e a c t i v i t i e s h a v e b e e n b r o u g h t t o g e t h e r i n a

s i n g l e u n i t t o h e l p e n s u r e t h a t t h e t e l e c o m m u n i c a t i o n s b u s i n e s s

r e l a t e s t o i t s s e v e r a l " p u b l i c s " i n a c o n s i s t e n t a n d c o - o r d i n a t e d

m a n n e r .

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o f c h a n g e s i n t h e f i n a n c i a l e n v i r o n m e n t o r i n g o v e r n m e n t f u n d i n g

p r i o r i t i e s , a n d i n c o - o r d i n a t i n g a l l i n p u t s i n t o b u d g e t a n d t a r i f f s u b ­

m i s s i o n s . T h i s u n i t w o u l d a l s o b e r e s p o n s i b l e f o r r e g u l a r l y i n v e s t i ­

g a t i n g a n d a n a l y s i n g a l t e r n a t i v e f i n a n c i a l p o l i c i e s a n d a d v i s i n g o n .

f i n a n c i a l d e c i s i o n s a f f e c t i n g f i n a n c i a l s t a b i l i t y . I n a d d i t i o n , c a s h

b u d g e t i n g a n d e c o n o m i c a n a l y s i s w o u l d c o n s t i t u t e p r i m e f u n c t i o n s o f

t h e F i n a n c e u n i t . I f t h e t e l e c o m m u n i c a t i o n s b u s i n e s s i s p e r m i t t e d

t o m a n a g e t h e s h o r t - t e r m i n v e s t m e n t o f f u n d s , t h i s f u n c t i o n s h o u l d

a l s o r e p o r t w i t h i n F i n a n c e .

- P l a n n i n g w o u l d p r o v i d e l e a d e r s h i p t o t h r e e a c t i v i t i e s i n v o l v e d i n t h e

l o n g - r a n g e s t r a t e g y o f t h e t e l e c o m m u n i c a t i o n s b u s i n e s s : n a t i o n a l

t e l e c o m m u n i c a t i o n s p l a n n i n g , n a t i o n a l b u s i n e s s p l a n n i n g , a n d p r o j ­

e c t m a n a g e m e n t e x p e d i t i n g . T h e f i r s t t w o a c t i v i t i e s w o u l d c o - o r d i n a t e

t h e e f f o r t s o f o t h e r u n i t s w i t h i n t h e t e l e c o m m u n i c a t i o n s o r g a n i s a t i o n ,

a n d w o u l d i n d e p e n d e n t l y s t u d y s t r a t e g i c i s s u e s w h i c h d o n o t r e a d i l y

f a l l w i t h i n t h e r e s p o n s i b i l i t y o f a n o t h e r u n i t o r u n i t s . N a t i o n a l t e l e ­

c o m m u n i c a t i o n s p l a n n i n g w o u l d h a v e a m i s s i o n p a r a l l e l t o t h a t o f t h e

p r e s e n t N a t i o n a l T e l e c o m m u n i c a t i o n s P l a n B r a n c h , a n d w o u l d

d e v e l o p r e c o m m e n d a t i o n s o n w h a t t e l e c o m m u n i c a t i o n s s e r v i c e s

s h o u l d b e p r o v i d e d i n t h e f u t u r e . T h e n a t i o n a l b u s i n e s s p l a n n i n g

a c t i v i t y , o n t h e o t h e r h a n d , w o u l d t a k e c h a r g e o f l o n g - r a n g e b u s i n e s s

p l a n s , i n c l u d i n g t h e F i v e - Y e a r B u s i n e s s P l a n , a n d c o n c e r n i t s e l f

w i t h t h e q u e s t i o n o f h o w t h e s y s t e m c a n a n d s h o u l d b e d e v e l o p e d .

IV - 12

T h i s l o n g - r a n g e b u s i n e s s p l a n n i n g a c t i v i t y s h o u l d i n c l u d e f i n a n c i a l ,

t e c h n o l o g i c a l , m a r k e t i n g , m a n p o w e r , o r g a n i s a t i o n a l a n d p r o f i t

p l a n n i n g c o m p o n e n t s , t o e n s u r e t h a t p l a n s e x i s t f o r a l l n e c e s s a r y

r e s o u r c e s . T h e f i n a l a c t i v i t y w o u l d b e m a d e u p o f a s m a l l s t a f f

c o n c e r n i n g i t s e l f w i t h t o p - l e v e l n u r t u r i n g o f m a j o r i n n o v a t i o n a l

d e v e l o p m e n t p r o j e c t s . B e c a u s e t h e s e p r o j e ' c t s h a v e t h e p o t e n t i a l

f o r s u b s t a n t i a l l y a f f e c t i n g t h e s y s t e m , t h i s a c t i v i t y s h o u l d b e

s i t u a t e d o n t h e M a n a g i n g D i r e c t o r ' s s t a f f . T h i s p r o p o s e d p r o j e c t

m a n a g e m e n t a c t i v i t y i s d e s c r i b e d i n m o r e d e t a i l b e g i n n i n g o n

p a g e I V - 16.

- I n t e r n a l A u d i t w o u l d b e r e s p o n s i b l e f o r f i s c a l a n d a c c o u n t i n g a u d i t s ,

a s a t p r e s e n t .

O r g a n i s e T h e C h i e f G e n e r a l M a n a g e r ' s I m m e d i a t e S t a f f T o E m p h a s i s e

H i s O p e r a t i n g R e s p o n s i b i l i t i e s

A s s h o w n i n E x h i b i t I V - 3, i t i s r e c o m m e n d e d t h a t t h e f o l l o w i n g f u n c t i o n s

r e p o r t d i r e c t l y t o t h e C h i e f G e n e r a l M a n a g e r ( C G M ) :

- M a n a g e m e n t R e p o r t i n g

- P e r s o n n e l a n d I n d u s t r i a l R e l a t i o n s

- A D P

. - A c c o u n t i n g a n d S u p p l y

- R e s e a r c h

- E n g i n e e r i n g

- C u s t o m e r S e r v i c e s .

S p e c i f i c r e c o m m e n d a t i o n s u n d e r l y i n g a n d e x p l a i n i n g t h i s s t r u c t u r e a r e

p r e s e n t e d b e l o w .

P r o v i d e D i r e c t M a n a g e m e n t S u p p o r t F o r C e r t a i n K e y E x e c u t i v e s

It i s r e c o m m e n d e d t h a t m a n a g e m e n t s u p p o r t u n i t s b e e s t a b l i s h e d f o r t h e

C h i e f G e n e r a l M a n a g e r ( C o - o r d i n a t o r - M a n a g e m e n t R e p o r t i n g S y s t e m ) , t h e

C h i e f E n g i n e e r ( C o - o r d i n a t o r - P r o g r e s s R e p o r t i n g ) a n d , a s s h o w n s u b s e q u e n t l y ,

I V- 13

TELECOMMUNICATIONS

EXHIBIT IV-3

R E C O M M E N D E D P L A N O F O R G A N I S A T I O N

C H I E F G E N E R A L M A N A G E R ' S I M M E D I A T E S T A F F

P E R S O N N E L A N D

I N D U S T R I A L R E L A T I O N S

• I n d u s t r i a l R e l a t i o n s

• S t a f f R e c r u i t m e n t

• E s t a b l i s h m e n t s

• T r a i n i n g A n d D e v e l o p m e n t

• O r g a n i s a t i o n A n d M a n p o w e r P l a n n i n g

• G e n e r a l S e r v i c e s

• P l a n n i n g

• S y s t e m s A n a l y s i s

• O p e r a t i o n s

C O - O R D I N A T O R

M A N A G E M E N T

R E P O R T I N G S Y S T E M

► P r o g r a m m e P l a n n i n g

* V a r i a n c e F o r e c a s t i n g

D I R E C T O R

R E S E A R C H

C H I E F

E N G I N E E R

► A d v a n c e d

T e c h n i q u e s R e s e a r c h

* A p p l i e d S c i e n c e

A n d L a b o r a t o r i e s

* T r a n s m i s s i o n

N e t w o r k R e s e a r c h

► B a s i c T e l e p h o n e

( V o i c e ) R e s e a r c h

» R e c o r d ( D i s c r e t e )

T e l e c o m m u n i c a t i o n s

S y s t e m R e s e a r c h

C O - O R D I N A T O R

P R O G R E S S

R E P O R T I N G

• P r o g r a m m e P l a n n i n g

• V a r i a n c e F o r e c a s t i n g

A C C O U N T I N G

A N D S U P P L Y

• A c c o u n t i n g S y s t e m s D e v e l o p m e n t

• A c c o u n t i n g

• O f f i c e S e r v i c e s

• M e t h o d s I m p r o v e m e n t

• S u p p l y

• O p e r a t i o n s B u d g e t P r e p a r a t i o n

A n d A n a l y s i s

A S S I S T A N T C H I E F A S S I S T A N T C H I E F A S S I S T A N T C H I E F

E N G I N E E R E N G I N E E R E N G I N E E R

P L A N N I N G D E V E L O P M E N T S U P P O R T S E R V I C E S

» T r a n s m i s s i o n

N e t w o r k P l a n n i n g

* B a s i c T e l e p h o n e

( V o i c e ) S y s t e m P l a n n i n g

► R e c o r d ( D i s c r e t e )

T e l e c o m m u n i c a t i o n s

S y s t e m P l a n n i n g

» P l a n n i n g S e r v i c e s

• T r a n s m i s s i o n

N e t w o r k D e v e l o p m e n t

• B a s i c T e l e p h o n e

( V o i c e ) S y s t e m D e v e l o p m e n t

• R e c o r d A n d D a t a S y s t e m

D e v e l o p m e n t

• R a d i o A u s t r a l i a

( B r o a d c a s t i n g )

► E n g i n e e r i n g

S u p p o r t S e r v i c e s

► B u i l d i n g s A n d P o w e r

• N e t w o r k P e r f o r m a n c e

A n d O p e r a t i o n s

C U S T O M E R

S E R V I C E S

► O p e r a t i o n s A n d S e r v i c e S t a n d a r d s

- O p e r a t i o n s

- A d v i s o r y S e r v i c e s

- S e r v i c e S t a n d a r d s

- W o r k s A n d E q u i p m e n t

- A D P - A c c o u n t i n g C o - o r d i n a t i o n

► P r o d u c t M a r k e t i n g A n a l y s i s

- D e m a n d F o r e c a s t s

- T a r i f f S t u d i e s

- M a r k e t R e s e a r c h

- M a r k e t i n g I n f o r m a t i o n

• N a t i o n a l S a l e s

- S e r v i c e D e v e l o p m e n t

- R e s i d e n t i a l A n d

C o m m e r c i a l T e l e p h o n e

D e v e l o p m e n t

- B u s i n e s s S y s t e m s

D e v e l o p m e n t

a p r o g r e s s r e p o r t i n g f u n c t i o n r e p o r t i n g t o e a c h o f t h e D i r e c t o r s - T e l e c o m m u n i ­

c a t i o n s i n t h e f i e l d . E a c h s u p p o r t u n i t w o u l d h a v e t h e s a m e g e n e r a l p u r p o s e ,

b u t i t s e m p h a s i s w o u l d d i f f e r t o t h e e x t e n t t h a t t h e m a n a g e m e n t n e e d s o f t h e

v a r i o u s k e y e x e c u t i v e s d i f f e r . T h e f u n c t i o n s o f t h e u n i t s w o u l d i n c l u d e :

- E n s u r i n g t h a t i m p o r t a n t p e r f o r m a n c e t a r g e t s a n d p r o j e c t m i l e s t o n e s

a r e s u b j e c t e d t o r e g u l a r s e n i o r m a n a g e m e n t r e v i e w

- A c c u m u l a t i n g i n f o r m a t i o n r e g u l a r l y c o n c e r n i n g p r o g r e s s a g a i n s t

p l a n n e d t a r g e t s a n d p r o j e c t m i l e s t o n e s

- E n s u r i n g t h a t k e y e x e c u t i v e s a r e n o t i f i e d o n a n e a r l y - w a r n i n g b a s i s

o f p r o b a b l e s i g n i f i c a n t v a r i a n c e f r o m p l a n s

- M o n i t o r i n g c o r r e c t i v e a c t i o n s a g r e e d u p o n b y k e y e x e c u t i v e s a n d

t h e i r r e s p e c t i v e s u b o r d i n a t e s ; p r e p a r i n g m o d i f i c a t i o n s t o p l a n s a n d

r e p o r t i n g t h e s e c h a n g e s t o a l l g r o u p s a f f e c t e d

- C o n t r o l l i n g a g e n d a f o r k e y e x e c u t i v e s ' s t a f f m e e t i n g s .

A l l o f t h e s e f u n c t i o n s a r e r e l a t e d t o a n e e d e x p r e s s e d e a r l i e r - t h a t o f

i m p r o v e d m a n a g e m e n t i n f o r m a t i o n . S i m p l y s t a t e d : i n o r d e r t o m a i n t a i n

a d e q u a t e c o n t r o l o f t h e w i d e v a r i e t y o f p r o j e c t s , s p e c i a l s t u d i e s a n d a t t e n d a n t

r e l a t i o n s h i p s w h i c h o c c u r , m o r e f o r m a l m e t h o d s o f c o m m u n i c a t i n g a r e

r e q u i r e d . T h e b a s i c i n f o r m a t i o n a n d s t a t i s t i c s a l r e a d y c o l l e c t e d w i t h i n t h e

t e l e c o m m u n i c a t i o n s o r g a n i s a t i o n c a n s e r v e a s a s o l i d s t a r t i n g p o i n t , b u t t h e

s y s t e m s h o u l d n o t b e m e r e l y a d a t a r e p o r t i n g o r d a t a p r o c e s s i n g p r o c e d u r e .

I n s t e a d , i t m u s t b u i l d o n a n d e m p h a s i s e t h o s e k e y e v e n t s t h a t d e t e r m i n e

f u t u r e r e s u l t s , a n d t h a t a r e o f t o p m a n a g e m e n t c o n c e r n . A c c o m p l i s h i n g t h e s e

i m p r o v e m e n t s s h o u l d b e a p r i o r i t y t a s k o f t h e s t a f f s u p p o r t u n i t s d e s c r i b e d

a b o v e .

O r g a n i s e H e a d q u a r t e r s T e c h n i c a l A c t i v i t i e s T o I m p r o v e C o - o r d i n a t i o n

T h e v a r i o u s e l e m e n t s o f t h i s r e c o m m e n d a t i o n a * e d i s c u s s e d o n t h e n e x t

t h r e e p a g e s .

a. E s t a b l i s h t h e p o s i t i o n o f C h i e f E n g i n e e r , r e s p o n s i b l e f o r a l l

h e a d q u a r t e r s t e l e c o m m u n i c a t i o n s e n g i n e e r i n g a c t i v i t i e s . I t i s r e c o m m e n d e d

t h a t t h e p r e s e n t a c t i v i t i e s c o n s t i t u t i n g t h e P l a n n i n g a n d P r o g r a m m i n g S u b ­

D i v i s i o n o f E n g i n e e r i n g P l a n n i n g a n d R e s e a r c h , and" t h e a c t i v i t i e s o f t h e

F A D G - E n g i n e e r i n g W o r k s , b e b r o u g h t t o g e t h e r u n d e r a s i n g l e p o s i t i o n - C h i e f

E n g i n e e r - r e p o r t i n g t o t h e C h i e f G e n e r a l M a n a g e r . T h i s w o u l d p r o v i d e a

I V- 14

f o c a l p o i n t b e l o w t h e l e v e l o f t o p m a n a g e m e n t f o r a r b i t r a t i n g u n d e r s t a n d a b l e

d i f f e r e n c e s o f o p i n i o n b e t w e e n p l a n n i n g e n g i n e e r s a n d p l a n t b r a n c h e n g i n e e r s .

A f u r t h e r a d v a n t a g e of t h i s r e c o m m e n d a t i o n w o u l d b e t h e p o t e n t i a l f o r a c h i e v ­

i n g m o r e l a s t i n g a g r e e m e n t t h a n a t p r e s e n t o n b o u n d a r i e s b e t w e e n t h e

r e s p o n s i b i l i t i e s o f t h e t w o c a t e g o r i e s o f e n g i n e e r s , a n d a m u t u a l i n t e r e s t in

e n f o r c i n g t h e s e b o u n d a r i e s o n a d a y - t o - d a y b a s i s .

A s s h o w n i n E x h i b i t I V - 3, t h e C h i e f E n g i n e e r w o u l d d i r e c t t h e

a c t i v i t i e s o f t h r e e k e y s u b o r d i n a t e s : A s s i s t a n t C h i e f E n g i n e e r - P l a n n i n g ;

A s s i s t a n t C h i e f E n g i n e e r - D e v e l o p m e n t ; a n d A s s i s t a n t C h i e f E n g i n e e r -

S u p p o r t S e r v i c e s ( a s w e l l a s t h e C o - o r d i n a t o r - P r o g r e s s R e p o r t i n g , a p o s i t i o n

d i s c u s s e d o n t h e p r e v i o u s p a g e ) . S u g g e s t e d c o n c e p t s of r e s p o n s i b i l i t i e s f o r

t h e s e t h r e e a r e s e t f o r t h o n t h e c h a r t a n d a r e d i s c u s s e d l a t e r i n t h i s c h a p t e r .

A l s o s h o w n o n t h e c h a r t i s t h e D i r e c t o r - R e s e a r c h , w h o w o u l d r e p o r t

d i r e c t l y t o t h e C h i e f G e n e r a l M a n a g e r . T h e f u n c t i o n s o f t h i s u n i t w o u l d b e

t h o s e o f t h e p r e s e n t R e s e a r c h S u b - D i v i s i o n of t h e E n g i n e e r i n g P l a n n i n g a n d

R e s e a r c h D i v i s i o n , r e o r g a n i s e d s l i g h t l y t o c o n f o r m w i t h t h e o r g a n i s a t i o n a l

s u b - d i v i s i o n s w i t h i n t h e e n g i n e e r i n g u n i t s ( d i s c u s s e d b e l o w ) .

I t i s r e c o g n i s e d t h a t t h e p r o p o s e d e n g i n e e r i n g o r g a n i s a t i o n u n d e r

t h e C h i e f E n g i n e e r w i l l c o n s t i t u t e b y f a r t h e l a r g e s t g r o u p r e p o r t i n g t o t h e

C G M . H o w e v e r , t h e d e s i r a b i l i t y o f c o - o r d i n a t i n g a l l t h e a c t i v i t i e s w i t h i n

t h i s p r o p o s e d o r g a n i s a t i o n a t a l e v e l b e l o w t h e C G M w o u l d a p p e a r t o o v e r ­

r i d e a n y p o s s i b l e b e n e f i t s t h a t m i g h t b e g a i n e d f r o m r e d u c i n g t h e s i z e a n d

s c o p e o f e n g i n e e r i n g . M o r e o v e r , i t s e e m s p r a c t i c a l t o o r g a n i s e u n d e r t h e

C h i e f E n g i n e e r i n a w a y t h a t p e r m i t s t h e i n c u m b e n t t o f u n c t i o n e f f e c t i v e l y .

T h e p o s i t i o n o f C o - o r d i n a t o r - P r o g r e s s R e p o r t i n g r e p r e s e n t s o n e s t e p ;

o t h e r s a r e d i s c u s s e d i n t h e f o l l o w i n g p a r a g r a p h s .

b. O r g a n i s e t h e b a s i c t e c h n i c a l u n i t s i n r e s e a r c h , p l a n n i n g a n d

e n g i n e e r i n g w o r k s t o p a r a l l e l o n e a n o t h e r m o r e c l o s e l y . A s s h o w n o n

E x h i b i t I V - 3 ( a t t h e b o t t o m o f t h e c h a r t ) , i t i s r e c o m m e n d e d t h a t r e s e a r c h ,

p l a n n i n g a n d d e v e l o p m e n t ( e n g i n e e r i n g w o r k s ) s u b - u n i t s e a c h b e o r g a n i s e d

a r o u n d t h r e e b a s i c p a r t s o f t h e s y s t e m : t h e t r a n s m i s s i o n n e t w o r k , t h e b a s i c

t e l e p h o n e ( v o i c e ) s e g m e n t , a n d t h e r e c o r d a n d d a t a s e g m e n t o f t h e s y s t e m .

( T h e t e r m " d i s c r e t e " u s e d i n t h e e x h i b i t m e r e l y c h a r a c t e r i s e s r e c o r d t r a n s ­

m i s s i o n , w h i c h e m p l o y s s e p a r a t e e l e c t r o n i c i m p u l s e s a s d i s t i n g u i s h e d f r o m

v o i c e , o r m o d u l a t e d d i r e c t c u r r e n t . ) T h i s d i v i s i o n o f r e s p o n s i b i l i t i e s i s

b e l i e v e d t o b e l o g i c a l o n t h e b a s i s n o t o n l y o f t e c h n i c a l r e q u i r e m e n t s b u t

a l s o o f m a r k e t i n g r e q u i r e m e n t s . F o r e x a m p l e , t h e t e l e p h o n e ( v o i c e ) c o m ­

p o n e n t i s , a n d w i l l c o n t i n u e t o b e , i n f l u e n c e d s t r o n g l y b y r e l a t i v e l y s t a n d a r d

t e c h n o l o g y , w h e r e a s t h e r e c o r d a n d d a t a s e g m e n t i s i n t h e s t r e a m o f a f a s t -

d e v e l o p i n g a n d c h a n g i n g t e c h n o l o g y . M o r e o v e r , t h e m a r k e t i n g r e q u i r e m e n t s

o f t h e s e t w o s e g m e n t s a r e d i f f e r e n t i n t e r m s o f t e c h n i c a l s k i l l s a n d e n d - u s e r s .

IV - 15

T h e p r o p o s e d p a r a l l e l s u b - u n i t s w o u l d p e r m i t e a c h p r o j e c t t o m o v e

f r o m r e s e a r c h t h r o u g h p l a n n i n g t o d e v e l o p m e n t ( e n g i n e e r i n g w o r k s ) i n a

s i m p l e p r o g r e s s i o n . T h i s s h o u l d a s s i s t i n e s t a b l i s h i n g p r i o r i t i e s a n d s h o u l d

r e d u c e t h e n e e d f o r c o m m i t t e e s a n d w o r k g r o u p s t o p r o v i d e c o n t i n u i n g

c o - o r d i n a t i o n .

c, E s t a b l i s h a p r o j e c t m a n a g e m e n t c a p a b i l i t y f o r o v e r s e e i n g

m a j o r p r o j e c t s . W h i l e c o - o r d i n a t i o n s h o u l d b e i m p r o v e d b y t h e r e o r g a n i s a ­

t i o n o f r e s e a r c h , e n g i n e e r i n g p l a n n i n g a n d e n g i n e e r i n g w o r k s a s d e s c r i b e d

a b o v e , t h e r e w o u l d a p p e a r t o b e a f u r t h e r n e e d - f o r a c t i v e p r o j e c t m a n a g e ­

m e n t o f s u c h m a j o r d e v e l o p m e n t e f f o r t s i n t e l e c o m m u n i c a t i o n s a s n e w

c a b l e s y s t e m s , c o m p u t e r i s e d e x c h a n g e s , a n d i n t e g r a t e d s w i t c h i n g a n d

t r a n s m i s s i o n . E f f o r t s f a l l i n g i n t o t h i s c a t e g o r y h a v e m o s t , i f n o t a l l , o f t h e

f o l l o w i n g c h a r a c t e r i s t i c s .

- T h e p r o j e c t s h a v e s p e c i f i c o b j e c t i v e s a n d p l a n n e d e n d - p o i n t s

( f o r e x a m p l e , i n t r o d u c t i o n o f t h e f i r s t c o m m e r c i a l l y s u c c e s s ­

f u l 1 ST e x c h a n g e i n A u s t r a l i a ) .

- T h e p r o j e c t s f o l l o w g r o w t h a n d d e c a y c y c l e s ; r e s o u r c e c o m ­

m i t m e n t s b e g i n a t a l o w l e v e l , g r o w l a r g e r a s t h e p r o j e c t

m o v e s f r o m f e a s i b i l i t y s t a g e s t o d e v e l o p m e n t , a n d t h e n b e c o m e

s m a l l e r a s t h e p r o j e c t e n t e r s t h e i n s t a l l a t i o n p h a s e .

- M a n a g e m e n t i s f r e q u e n t l y u n f a m i l i a r w i t h t h e n e w t e c h n o l o g y ;

a s a c o n s e q u e n c e , t h e r e i s w i d e l a t i t u d e f o r d i s a g r e e m e n t

a m o n g r e a s o n a b l e a n d t h o u g h t f u l p e r s o n s c o n c e r n i n g s c h e d u l e s ,

r e s o u r c e r e q u i r e m e n t s a n d t h e b e s t s o l u t i o n s t o d e s i g n

p r o b l e m s .

- T h e r e i s c l o s e i n t e r d e p e n d e n c e b e t w e e n g r o u p s w o r k i n g o n

t h e p r o j e c t : d e l a y s o r w e a k e x e c u t i o n i n o n e g r o u p m a y h a v e

a p r o n o u n c e d i m p a c t o n o t h e r s i n m a t t e r s o f s c h e d u l e , c o s t s ,

a n d s e r v i c e t o t h e p u b l i c .

A c c o r d i n g l y , i t i s r e c o m m e n d e d t h a t a p r o j e c t m a n a g e m e n t e x p e d i t ­

i n g u n i t r e p o r t w i t h i n P l a n n i n g ( w h i c h , a s n o t e d i n E x h i b i t I V - 2, w o u l d r e p o r t

t o t h e M a n a g i n g D i r e c t o r ) . T h i s u n i t w o u l d n o t h a v e b u d g e t a r y o r p e r s o n n e l

c o n t r o l o v e r t h e e m p l o y e e s w o r k i n g o n d e v e l o p m e n t t a s k s ; t h i s r e s p o n s i b i l i t y

w o u l d c o n t i n u e t o l i e w i t h t h e r e s e a r c h a n d e n g i n e e r i n g g r o u p s r e p o r t i n g t o

t h e C h i e f G e n e r a l M a n a g e r . R a t h e r , t h e p r o j e c t m a n a g e m e n t u n i t w o u l d

m a i n t a i n c o n t i n u o u s c o m m u n i c a t i o n w i t h a l l p e r s o n s i n v o l v e d i n a m a j o r

d e v e l o p m e n t p r o j e c t a t e a c h s t a g e , m o n i t o r p r o g r e s s a c c o r d i n g t o s c h e d u l e ,

IV - 16

a n d e n s u r e b a l a n c e d c o n s i d e r a t i o n o f t e c h n i c a l , f i n a n c i a l a n d m a r k e t i n g

a s p e c t s a t e a c h i m o o r t a n t d e c i s i o n p o i n t . In s h o r t , t h e u n i t w o u l d s e r v e a s

a c o m m u n i c a t i o n s c e n t r e , r e v i e w i n g t h e p r o j e c t a s a w h o l e , t h u s r e l i e v i n g

t h e M a n a g i n g D i r e c t o r a n d t h e C h i e f G e n e r a l M a n a g e r o f t h e n e e d t o g a t h e r

p e r s o n a l l y t h e d e t a i l s a b o u t i n t e r d e p e n d e n t f a c e t s o f a p r o j e c t .

A n o t h e r i m p o r t a n t f u n c t i o n o f p r o j e c t m a n a g e m e n t w o u l d b e t o p r o ­

v i d e a n o v e r a l l b u s i n e s s v i e w p o i n t t o t h e s c i e n t i f i c , t e c h n o l o g i c a l , t a r i f f ,

m a r k e t i n g a n d p r o f i t i s s u e s i n v o l v e d i n s u c h p r o j e c t s . I n d e e d , a p r o j e c t

m a n a g e r m u s t b e a g e n e r a l i s t i n o r d e r t o a r r i v e a t a b a l a n c e d a s s e s s m e n t

o f a p r o j e c t f r o m m a n y p o i n t s o f v i e w . H i s f a c t u a l k n o w l e d g e o f t h e t o t a l

p r o j e c t a n d t h e u n b i a s e d q u a l i t y o f h i s a d v i c e w o u l d b e i m p o r t a n t r e s o u r c e s

t o t h e t o p m a n a g e r s r e s p o n s i b l e f o r a l l o c a t i n g r e s o u r c e s a n d f o r d i r e c t i n g

t h e s c h e d u l e d d e v e l o p m e n t w o r k .

; ! < ; ! < ;j <

O n e f u r t h e r f e a t u r e o f t h e p r o p o s e d t e c h n i c a l o r g a n i s a t i o n w a r r a n t s a

b r i e f m e n t i o n . I t i s s u g g e s t e d t h a t r e s p o n s i b i l i t y f o r t e l e p o w e r e n g i n e e r i n g

b e a l l i e d w i t h b u i l d i n g s e n g i n e e r i n g u n d e r t h e A s s i s t a n t C h i e f E n g i n e e r -

S u p p o r t S e r v i c e s , r e f l e c t i n g t h e f a c t t h a t t e l e p o w e r t e c h n o l o g y i s m o r e a k i n

t o t h e t e c h n o l o g y f o u n d i n t h e p r e s e n t B u i l d i n g s B r a n c h w i t h i n t h e E n g i n e e r i n g

W o r k s D i v i s i o n t h a n i t i s t o t r a n s m i s s i o n s y s t e m s ( w h e r e i t i s l o c a t e d n o w )

E s t a b l i s h A C u s t o m e r S e r v i c e s U n i t W i t h F u l l R e s p o n s i b i l i t y F o r

M a r k e t i n g A n d C u s t o m e r - R e l a t e d P r o g r a m m e s

T h i s u n i t , s h o w n u n d e r t h e D i r e c t o r - C u s t o m e r S e r v i c e s i n E x h i b i t I V - 3 ,

r e p r e s e n t s a m a r k e d l y u p g r a d e d a n d s o m e w h a t r e o r g a n i s e d v e r s i o n o f t h e

p r e s e n t C e n t r a l A d m i n i s t r a t i o n T e l e c o m m u n i c a t i o n s D i v i s i o n . A p r i n c i p a l

f e a t u r e o f C u s t o m e r S e r v i c e s w o u l d b e a p a r a l l e l i n g o f n a t i o n a l s a l e s a c t i v i t i e s

w i t h t h e r e c o m m e n d e d o r g a n i s a t i o n o f t e c h n i c a l u n i t s , t h e r e b y e n c o u r a g i n g

i m p r o v e d c o - o r d i n a t i o n b e t w e e n m a r k e t i n g a n d e n g i n e e r i n g , a n d h e l p i n g t o

e n s u r e t h a t a p r o f e s s i o n a l m a r k e t i n g v i e w p o i n t i s b r o u g h t t o b e a r o n t e c h n i c a l

d e c i s i o n s . A n o t h e r i m p o r t a n t f e a t u r e i s t h e s t r e n g t h e n i n g o f p r o d u c t m a r k e t ­

i n g a n a l y s i s t o p r o v i d e b e t t e r s o u r c e s o f m a r k e t d a t a , i n c l u d i n g t a r i f f

a n a l y s i s .

F u n d a m e n t a l t o t h e p r o p o s e d C u s t o m e r S e r v i c e s u n i t i s a d e q u a t e s t a f f i n g ,

i n t e r m s o f b o t h n u m b e r s a n d q u a l i t y o f p e r s o n n e l . A c h i e v i n g s u c h a d e q u a c y

w i l l , w i t h o u t q u e s t i o n , r e q u i r e h e a v y a u g m e n t a t i o n o f p r e s e n t T e l e c o m m u n i ­

c a t i o n s D i v i s i o n s t a f f ; e x p e r i e n c e d a n d t a l e n t e d m a r k e t i n g p e r s o n n e l s h o u l d

b e s o u g h t f r o m o u t s i d e t h e A P O t o t h e e x t e n t r e q u i r e d .

I V - 17

10345/75— 20

A r r a n g e S t a f f S u p p o r t F u n c t i o n s U n d e r T h e C h i e f G e n e r a l M a n a g e r T o

R e f l e c t T h e i r R e l a t i v e I m p o r t a n c e A n d R e l a t e d n e s s

S p e c i f i c r e c o m m e n d a t i o n s r e g a r d i n g p e r s o n n e l a n d i n d u s t r i a l r e l a t i o n s : ,

A D P , a n d a c c o u n t i n g a n d s u p p l y a r e d i s c u s s e d b e l o w .

a. C o m b i n e p e r s o n n e l a n d i n d u s t r i a l r e l a t i o n s u n d e r a s i n g l e

p o s i t i o n r e p o r t i n g t o t h e C h i e f G e n e r a l M a n a g e r . I n t h e t e l e c o m m u n i c a t i o n s

b u s i n e s s , i n d u s t r i a l r e l a t i o n s a n d p e r s o n n e l a r e s o i n t e r - r e l a t e d a n d i m p o r ­

t a n t a s t o a r g u e f o r t h e i r b e i n g c o m b i n e d u n d e r a s i n g l e p o s i t i o n . C i r c u m ­

s t a n c e s w h i c h m a y l e a d t o i n d u s t r i a l s t r i f e , f o r e x a m p l e , c a n o f t e n b e

r e s o l v e d b y p e r s o n n e l m a n a g e m e n t a c t i o n s s u c h a s t r a i n i n g , c o m m u n i c a t i o n

a n d o r g a n i s a t i o n a l c h a n g e .

E x h i b i t I V - 3 l i s t s t h e f u n c t i o n s w h i c h w o u l d c o n s t i t u t e p e r s o n n e l a n d

i n d u s t r i a l r e l a t i o n s . M o d i f i c a t i o n s f r o m t h e c u r r e n t a r r a n g e m e n t s i n c l u d e :

- S e p a r a t i o n o f t r a i n i n g a n d d e v e l o p m e n t f r o m r e c r u i t i n g t o h e l p

e m p h a s i s e a n d h i g h l i g h t t h e s e a c t i v i t i e s

- E s t a b l i s h m e n t o f a s e p a r a t e u n i t f o r o r g a n i s a t i o n a n d m a n ­

p o w e r p l a n n i n g , a c c o m p a n i e d b y t h e t r a n s f e r o f t h e a c t i v i t i e s

o f t h e p r e s e n t M a n a g e m e n t A d v i s o r y S e r v i c e s S e c t i o n t o

A c c o u n t i n g a n d S u p p l y ( d e s c r i b e d b e l o w )

- E n l a r g e m e n t o f t h e r e s p o n s i b i l i t y o f G e n e r a l S e r v i c e s t o

i n c l u d e t h e c o m m u n i c a t i o n t o e m p l o y e e s o f i n f o r m a t i o n c o n ­

c e r n i n g m a n a g e m e n t p o l i c i e s a n d p r o g r a m m e s .

It i s e n v i s i o n e d t h a t t h e h e a d o f t h e i n d u s t r i a l r e l a t i o n s u n i t w i t h i n

P e r s o n n e l a n d I n d u s t r i a l R e l a t i o n s w o u l d c o n t i n u e t o m a i n t a i n t h e p r i n c i p a l

d a y - t o - d a y c o n t a c t s w i t h l e a d e r s o f u n i o n s a n d t r a d e a s s o c i a t i o n s . I n a d d i t i o n ,

i n d u s t r i a l r e l a t i o n s s t a f f s h o u l d c o n c e n t r a t e o n a n t i c i p a t i n g a n d c o r r e c t i n g

e m p l o y e e r e l a t i o n s p r o b l e m s , a n d o n p r o v i d i n g i n p u t s f o r t h e t r a i n i n g o f

o t h e r s t o e n a b l e t h e m t o r e s o l v e m i n o r d i s p u t e s t h r o u g h g o o d m a n a g e m e n t

p r a c t i c e s . B y s o d o i n g , t h e h e a d q u a r t e r s i n d u s t r i a l r e l a t i o n s u n i t c a n t h e n

c o n c e n t r a t e o n d e v e l o p i n g a n s w e r s t o t h e m o r e d i f f i c u l t i s s u e s . T h e d e s i r e d

e n d - r e s u l t i s t h a t t h e o n l y i n d u s t r i a l i s s u e s r e a c h i n g g e n e r a l m a n a g e m e n t

w o u l d b e t h o s e c o n c e r n i n g c r i t i c a l l a b o u r d i s p u t e s o r r e q u i r i n g p o l i c y d e t e r ­

m i n a t i o n s ; n o r m a l i n d u s t r i a l r e l a t i o n s m a t t e r s w o u l d b e h a n d l e d a t l o w e r

l e v e l s a s t h e i n d u s t r i a l e x p e r t i s e o f s u p e r v i s o r y p e r s o n n e l i m p r o v e s .

I V - 18

b. P l a c e A D P o n t h e C h i e f G e n e r a l M a n a g e r ' s i m m e d i a t e s t a f f .

In o r d e r t o p r o v i d e t o p m a n a g e m e n t a t t e n t i o n t o A D P , i t s h o u l d r e p o r t d i r e c t l y

t o t h e C G M . T h i s r e p o r t i n g r e l a t i o n s h i p s h o u l d a s s i s t i n r e a l i s i n g t h e a c k n o w l ­

e d g e d p o t e n t i a l f o r A D P i n t h e t e l e c o m m u n i c a t i o n s b u s i n e s s , s h o u l d h e l p e n s u r e

t h a t p r i o r i t i e s a r e p r o p e r l y e s t a b l i s h e d a n d , m o r e g e n e r a l l y , s h o u l d p r o v i d e

t o p m a n a g e m e n t l e a d e r s h i p t o a n a c t i v i t y w h i c h a l l t o o o f t e n l a c k s e f f e c t i v e n e s s .

c. O r g a n i s e a c c o u n t i n g a n d s u p p l y a c t i v i t i e s i n a u n i t r e p o r t i n g t o

t h e C h i e f G e n e r a l M a n a g e r . T h i s u n i t w o u l d c o m p r i s e t h e t e l e c o m m u n i c a t i o n s

a c c o u n t i n g a n d s u p p l y a c t i v i t i e s o f t h e p r e s e n t F i n a n c e a n d A c c o u n t i n g a n d

S u p p l y B r a n c h e s o f M a n a g e m e n t S e r v i c e s , t o w h i c h w o u l d b e a d d e d a n a l y s i s

of i n t e r n a l p a p e r - w o r k s y s t e m s a n d p r o c e d u r e s ( n o w l o d g e d i n t h e P e r s o n n e l

B r a n c h ) . T h e r e c o n s t i t u t e d u n i t w o u l d p r o v i d e s e r v i c e s n o t o n l y t o a c c o u n t i n g

a n d s u p p l y b u t a l s o t o o t h e r o r g a n i s a t i o n a l u n i t s i n t e l e c o m m u n i c a t i o n s , b o t h

a t h e a d q u a r t e r s a n d i n t h e f i e l d .

D i v i d e T e l e c o m m u n i c a t i o n s A c t i v i t i e s I n N e w S o u t h W a l e s I n t o T w o O r

P e r h a p s T h r e e R e g i o n s , R e p o r t i n g D i r e c t l y T o T h e C h i e f G e n e r a l

M a n a g e r

E a r l i e r i n t h i s c h a p t e r , i t w a s c o n c l u d e d t h a t , w i t h t h e p o s s i b l e e x c e p t i o n

o f N e w S o u t h W a l e s , t h e r e w e r e n o c o m p e l l i n g r e a s o n s f r o m a m a n a g e m e n t

s t a n d p o i n t t o a l t e r t h e p r e s e n t g e o g r a p h i c s u b - d i v i s i o n s o f t h e f i e l d o r g a n i s a ­

t i o n f o r t e l e c o m m u n i c a t i o n s , w h i c h g e n e r a l l y f o l l o w s t a t e b o u n d a r i e s .

H o w e v e r , t h e p r e s e n t a n d a n t i c i p a t e d s i z e a n d c o m p l e x i t y o f N e w S o u t h

W a l e s s u g g e s t t h a t i t c a n a n d s h o u l d b e s u b - d i v i d e d i n t o t w o o r p e r h a p s t h r e e

r e g i o n s . E a c h o f t h e s e r e g i o n s s h o u l d b e o f s u f f i c i e n t s i z e a n d s c o p e t o

j u s t i f y t h e v a r i o u s s t a f f a c t i v i t i e s n e e d e d f o r e a c h t o o p e r a t e a s i n d e p e n d e n t l y

a s t h e f i v e r e m a i n i n g s t a t e - o r i e n t e d t e l e c o m m u n i c a t i o n s a d m i n i s t r a t i o n s .

A l t h o u g h e a c h o f t h e r e g i o n s i n N e w S o u t h W a l e s s h o u l d b e a s s e l f - s u f f i c i e n t

a s p o s s i b l e , i t m a y p r o v e d e s i r a b l e t o m a i n t a i n s u c h a c t i v i t i e s a s c e n t r a l w o r k ­

s h o p s o r t r a i n i n g f a c i l i t i e s i n a s i n g l e r e g i o n , a n d f o r t h a t r e g i o n t o p r o v i d e

t h e s e s e r v i c e s t o t h e o t h e r ( s ) . H o w e v e r , t h e n u m b e r o f c r o s s - s e r v i c i n g

a r r a n g e m e n t s t h a t m i g h t b e r e q u i r e d s h o u l d n o t p r e c l u d e t o p m a n a g e m e n t

f r o m h o l d i n g t h e N e w S o u t h W a l e s D i r e c t o r s - T e l e c o m m u n i c a t i o n s a c c o u n t a b l e

f o r t h e t o t a l p e r f o r m a n c e o f t h e i r a s s i g n e d g e o g r a p h i c a r e a s .

A l t h o u g h d e f i n i n g t h e s p e c i f i c b o u n d a r i e s o f t h e p r o p o s e d r e g i o n s f o r N e w

S o u t h W a l e s w a s b e y o n d t h e s c o p e o f t h i s s t u d y , i n c l u d i n g a p a r t o f s o u t h e r n

N e w S o u t h W a l e s i n V i c t o r i a o r , c o n v e r s e l y , i n c l u d i n g a p a r t o f n o r t h e r n

I V- 19

V i c t o r i a i n a s o u t h e r n N e w S o u t h W a l e s r e g i o n , m i g h t b e c o n s i d e r e d , i n o r d e r

t o a c c o m m o d a t e t h e w h o l e o f s u c h a d e v e l o p i n g u r b a n c o m p l e x a s t h e A l b u r y -

W o d o n g a a r e a .

R e s t r u c t u r e S t a t e - L e v e l T e l e c o m m u n i c a t i o n s A c t i v i t i e s

E x h i b i t I V - 4 i l l u s t r a t e s t h e p r o p o s e d o r g a n i s a t i o n s t r u c t u r e f o r t e l e ­

c o m m u n i c a t i o n s a c t i v i t i e s i n a t y p i c a l s t a t e ( r e g i o n i n N e w S o u t h W a l e s ) . T h e

f u n d a m e n t a l c h a n g e f r o m t h e e x i s t i n g a r r a n g e m e n t s i s t h e e s t a b l i s h m e n t o f

D i s t r i c t T e l e c o m m u n i c a t i o n s M a n a g e r s , e a c h w i t h a f i n a n c i a l a n d m a n a g e m e n t

r e s p o n s i b i l i t y f o r a l l o p e r a t i o n a l a c t i v i t i e s i n h i s a s s i g n e d g e o g r a p h i c a r e a .

D i s c u s s i o n o f t h i s c o n c e p t a n d o t h e r e l e m e n t s o f t h e p r o p o s e d s t a t e s t r u c t u r e

c o n s t i t u t e t h e r e m a i n d e r o f t h i s c h a p t e r .

S t a t e h e a d q u a r t e r s . A s s h o w n i n E x h i b i t I V - 4 , n i n e p o s i t i o n s w o u l d

r e p o r t t o t h e D i r e c t o r - T e l e c o m m u n i c a t i o n s . T h e C o - o r d i n a t o r - P r o g r e s s

R e p o r t i n g w o u l d b e a n e w p o s i t i o n , w h i c h h a s a l r e a d y b e e n d e s c r i b e d i n s o m e

d e t a i l e a r l i e r i n t h i s c h a p t e r , b e g i n n i n g a t t h e b o t t o m o f p a . g e I V - 13. T h e

f i v e s t a f f p o s i t i o n s s h o w n o n t h e l i n e i m m e d i a t e l y b e l o w t h e C o - o r d i n a t o r -

P r o g r e s s R e p o r t i n g w o u l d e m b r a c e t e l e c o m m u n i c a t i o n s s u p p o r t a c t i v i t i e s

c u r r e n t l y a s s i g n e d t o p o s i t i o n s w i t h t h e s a m e f u n c t i o n a l t i t l e s .

T h e p l a n a l s o p r o v i d e s f o r t h r e e A s s i s t a n t D i r e c t o r s a t t h e s t a t e h e a d ­

q u a r t e r s .

- T h e A s s i s t a n t D i r e c t o r - E n g i n e e r i n g w o u l d h a v e t h e s a m e r e s p o n ­

s i b i l i t i e s a s a t p r e s e n t , w i t h t h e i m p o r t a n t e x c e p t i o n t h a t t h e

D i s t r i c t E n g i n e e r s w o u l d b e c o m e p r o f e s s i o n a l p r o b l e m - s o l v e r s .

T h e i r r e s p o n s i b i l i t y f o r s u p e r v i s i n g t e c h n i c a l p e r s o n n e l i n v o l v e d

i n l o c a l i n s t a l l a t i o n a n d m a i n t e n a n c e o f s t a n d a r d i s e d e q u i p m e n t

w o u l d b e c o m e p a r t o f t h e D i s t r i c t T e l e c o m m u n i c a t i o n s o r g a n i s a ­

t i o n , d e s c r i b e d s u b s e q u e n t l y . A s s h o w n i n t h e e x h i b i t , D i s t r i c t

E n g i n e e r s w o u l d c o n t i n u e t o r e p o r t w i t h i n t h e s t a t e e n g i n e e r i n g

u n i t , i n o r d e r t o p e r m i t p u r e l y e n g i n e e r i n g a c t i v i t i e s t o b e o r g a n i s e d

g e o g r a p h i c a l l y a s b e s t s u i t s t h e i r p a r t i c u l a r n e e d s ( a n o r g a n i s a t i o n

w h i c h w o u l d n o t a l w a y s p a r a l l e l D i s t r i c t T e l e c o m m u n i c a t i o n s ) , a n d

t o p r o v i d e a f o c a l p o i n t f o r t h e d e v e l o p m e n t o f e n g i n e e r i n g t a l e n t

w i t h i n t h e s t a t e o r g a n i s a t i o n s .

- T h e A s s i s t a n t D i r e c t o r - C u s t o m e r S e r v i c e s w o u l d p r o v i d e s t a f f

s u p p o r t t o t h e D i r e c t o r - T e l e c o m m u n i c a t i o n s a n d t o o t h e r k e y

s t a t e - l e v e l e x e c u t i v e s i n t h e d e v e l o p m e n t a n d i m p l e m e n t a t i o n o f

m a r k e t i n g a n d c u s t o m e r s e r v i c e p o l i c i e s a n d p r o g r a m m e s .

IV - 20

TEL ECOMMUNICATIONS

R E C O M M E N D E D P L A N O F O R G A N I S A T I O N

F O R A T Y P I C A L S T A T E

E N G I N E E R S

A C C O U N T I N G

S E R V I C E S

P E R S O N N E L A N D

• T e c h n i c a l S e r v i c e s

• C o m m e r c i a l O p e r a t i o n s

• A d m i n i s t r a t i o n

- T h e A s s i s t a n t D i r e c t o r - O p e r a t i o n s w o u l d b e r e s p o n s i b l e t o t h e

s t a t e D i r e c t o r - T e l e c o m m u n i c a t i o n s f o r t h e p e r f o r m a n c e o f

D i s t r i c t T e l e c o m m u n i c a t i o n s o p e r a t i o n s t h r o u g h o u t t h e s t a t e , a n d

w o u l d h a v e r e p o r t i n g t o h i m t h e D i s t r i c t T e l e c o m m u n i c a t i o n s

M a n a g e r s i n t h a t s t a t e . H e w o u l d e n s u r e p r o p e r i m p l e m e n t a t i o n

o f n a t i o n a l a n d s t a t e p o l i c i e s i n t h e d i s t r i c t s . H e s h o u l d b e

d e l e g a t e d f i s c a l a n d p e r s o n n e l a u t h o r i t i e s c o m m e n s u r a t e w i t h h i s

r e s p o n s i b i l i t i e s , a n d s h o u l d b e j u d g e d o n q u a l i t y o f s e r v i c e

r e n d e r e d t o c u s t o m e r s a n d o n p r o f i t c o n t r i b u t i o n a s c o m p a r e d

w i t h a p p r o v e d b u d g e t s . It i s e n v i s i o n e d t h a t t h e A s s i s t a n t D i r e c t o r -

O p e r a t i o n s w o u l d u t i l i s e s u c h s t a t e - l e v e l s t a f f s e r v i c e s a s p e r s o n ­

n e l a n d i n d u s t r i a l r e l a t i o n s , i n s t e a d o f b u i l d i n g a l a r g e s t a f f o f h i s

o w n .

D i s t r i c t T e l e c o m m u n i c a t i o n s . It i s r e c o m m e n d e d t h a t t h e t e c h n i c a l a n d

c o m m e r c i a l a c t i v i t i e s r e l a t e d t o s t a n d a r d i s e d t e l e c o m m u n i c a t i o n s s e r v i c e s

be b r o u g h t t o g e t h e r u n d e r a n u m b e r o f D i s t r i c t T e l e c o m m u n i c a t i o n s M a n a g e r s

i n e a c h s t a t e , t o w h o m c o u l d b e d e l e g a t e d r e s p o n s i b i l i t y a n d a c c o u n t a b i l i t y

f o r p r o f i t c o n t r i b u t i o n a n d c u s t o m e r s e r v i c e i n a g e o g r a p h i c a r e a . In t h i s

r o l e , a D i s t r i c t T e l e c o m m u n i c a t i o n s M a n a g e r w o u l d b e r e s p o n s i b l e f o r t h e

f o l l o w i n g f u n c t i o n s :

- T e c h n i c a l s e r v i c e s - i n s t a l l a t i o n o f s t a n d a r d i s e d e q u i p m e n t ,

s y s t e m s a n d e x c h a n g e s i n t h e l o c a l r e t i c u l a t i o n n e t w o r k , a n d

m a i n t e n a n c e o f a l l e l e m e n t s o f t h e s y s t e m w h i c h f a l l w i t h i n t h e

g e o g r a p h i c b o u n d a r i e s o f t h e d i s t r i c t . ( C o n s t r u c t i o n o f m a j o r

t r a n s m i s s i o n l i n k a g e s a n d i n s t a l l a t i o n o f s p e c i a l i s e d e q u i p m e n t

w o u l d c o n t i n u e t o b e t h e r e s p o n s i b i l i t y o f t h e c o n s t r u c t i o n u n i t

w i t h i n t h e s t a t e e n g i n e e r i n g o r g a n i s a t i o n . ) In c a r r y i n g o u t t h e s e

r e s p o n s i b i l i t i e s , a D i s t r i c t T e l e c o m m u n i c a t i o n s o f f i c e w o u l d s e e k

t h e a s s i s t a n c e o f t h e s t a t e e n g i n e e r i n g o r g a n i s a t i o n i n s o l v i n g

e n g i n e e r i n g p r o b l e m s o r i n u n d e r t a k i n g m a j o r m a i n t e n a n c e p r o ­

g r a m m e s .

- C o m m e r c i a l o p e r a t i o n s - o p e r a t i o n o f t e l e c o m m u n i c a t i o n s e q u i p ­

m e n t b y t e l e p h o n i s t s a n d t e l e g r a p h i s t s .

- S a l e s a n d s e r v i c e - h a n d l i n g o f a l l s a l e s o r d e r s ; a p p l i c a t i o n o f

f e e s a n d d e t e r m i n a t i o n o f s e r v i c e a g r e e m e n t s ; i m p l e m e n t a t i o n o f

d i s t r i c t s a l e s a n d a d v e r t i s i n g p r o g r a m m e s ; p r o v i s i o n o f a d v i s o r y

s e r v i c e s t o c u s t o m e r s ; h a n d l i n g o f c o m p l a i n t s a n d s e t t l e m e n t s

w i t h i n g u i d e l i n e s ; a n d r e s p o n s i b i l i t y f o r d i f f i c u l t c o l l e c t i o n s .

I V - 21

- A d m i n i s t r a t i o n - p r e p a r a t i o n o f b u d g e t s a n d p r o v i s i o n o f s u p p o r t

s e r v i c e s w h i c h c a n b e j u s t i f i e d o n a d i s t r i c t b a s i s ( s u c h a s m a i n ­

t e n a n c e o f p e r s o n n e l r e c o r d s ). I t i s e n v i s i o n e d t h a t s o m e d i s t r i c t s

w i l l r e q u i r e d i f f e r e n t s u p p o r t s e r v i c e s t h a n w i l l o t h e r s ; i n m a k i n g

t h e s e d e t e r m i n a t i o n s , d i s t r i c t s i z e a n d p a r t i c u l a r d i s t r i c t n e e d s

s h o u l d b e t a k e n i n t o c o n s i d e r a t i o n .

I n - d e p t h d i s c u s s i o n s w e r e h e l d w i t h t h e A P O t o d e t e r m i n e t h e i n d u s t r i a l

r e l a t i o n s i m p l i c a t i o n s o f t h e D i s t r i c t T e l e c o m m u n i c a t i o n s M a n a g e r ( D T M )

c o n c e p t . F r o m t h e s e d i s c u s s i o n s , i t i s c l e a r t h a t h e a d s o f f u n c t i o n s r e p o r t ­

i n g t o t h e D T M - t h a t i s , F o u r t h D i v i s i o n t e c h n i c a l o f f i c e r s , a n d T h i r d

D i v i s i o n c l e r i c a l o f f i c e r s - m u s t b e e l i g i b l e t o f i l l t h e p o s i t i o n o f D T M . ( T h e

t e r m s " F o u r t h D i v i s i o n " a n d " T h i r d D i v i s i o n " r e f e r t o c l a s s i f i c a t i o n s i n t h e

P u b l i c S e r v i c e . )

A l t h o u g h c o n s i d e r a b l e t h o u g h t w a s g i v e n t o t h e n u m b e r a n d l o c a t i o n o f

t e l e c o m m u n i c a t i o n s d i s t r i c t s , m o r e d e t a i l e d a n a l y s i s i s r e q u i r e d b e f o r e a

d e f i n i t i v e c o n c l u s i o n c a n b e r e a c h e d . O n e a p p r o a c h w h i c h a p p e a r s t o b e

l o g i c a l w o u l d o r i e n t t h e d i s t r i c t s a r o u n d : (1) t h e p l a n n e d m a n u a l a s s i s t a n c e

c e n t r e s ( o f w h i c h t h e r e w i l l b e a b o u t 7 0 b y 1 9 8 0 ) ; (2) o t h e r p o p u l a t i o n c e n t r e s

l a r g e e n o u g h t o s u p p o r t a D i s t r i c t T e l e c o m m u n i c a t i o n s o f f i c e ; a n d (3) c o n ­

v e r s i o n o f e x i s t i n g s a l e s d i s t r i c t s i n e a c h c a p i t a l c i t y t o D i s t r i c t T e l e c o m ­

m u n i c a t i o n s o f f i c e s . O n t h i s b a s i s , a t o t a l o f s o m e 1 0 0 d i s t r i c t s m i g h t

e v o l v e .

I V - 22

V - P O S T A L S E R V I C E S

T h i s c h a p t e r m a k e s o b s e r v a t i o n s c o n c e r n i n g t h e c u r r e n t o r g a n i s a t i o n o f

p o s t a l s e r v i c e s a n d t h e n p r e s e n t s a r e c o m m e n d e d c o n c e p t o f o r g a n i s a t i o n f o r

p o s t a l s e r v i c e s , b a s e d b o t h o n t h e s e o b s e r v a t i o n s a n d o n t h e m o r e g e n e r a l

o r g a n i s a t i o n a l r e c o m m e n d a t i o n s o u t l i n e d i n C h a p t e r III.

A - O B S E R V A T I O N S

I n g e n e r a l t e r m s , t h e o r g a n i s a t i o n a l i s s u e s u n i q u e t o p o s t a l s e r v i c e s a r e

n o t a s c r i t i c a l t o i t s f u n c t i o n i n g a s a r e t h o s e i s s u e s r a i s e d b y t h e c o m b i n i n g

of p o s t a l s e r v i c e s w i t h t e l e c o m m u n i c a t i o n s ( d i s c u s s e d i n C h a p t e r I I I ) . N e v e r ­

t h e l e s s , s e v e r a l o r g a n i s a t i o n m a t t e r s w i t h i n p o s t a l s e r v i c e s w a r r a n t a t t e n t i o n .

T h e s e m a t t e r s i n c l u d e : t h e e x c e s s i v e b u r d e n s p l a c e d o n s e n i o r m a n a g e m e n t ;

o r g a n i s a t i o n a n d r e l a t e d d i f f i c u l t i e s s u r r o u n d i n g t h e b a s i c s t r u c t u r e o f b r a n c h e s

i n t h e C e n t r a l A d m i n i s t r a t i o n P o s t a l S e r v i c e s D i v i s i o n ( e s p e c i a l l y t h e P o s t a l

P l a n n i n g B r a n c h ); a n d f i n a l l y , i n s u f f i c i e n t d e l e g a t i o n o f f i e l d a u t h o r i t y a n d

r e s p o n s i b i l i t y b e l o w t h e s t a t e l e v e l . A l s o , e f f e c t i v e n e s s i s h i n d e r e d b y t h e

r e s t r i c t e d c a r e e r o p p o r t u n i t i e s w h i c h s t e m f r o m t h e o r g a n i s a t i o n s t r u c t u r e ,

c o m p e n s a t i o n l e v e l s a n d p r o m o t i o n p r a c t i c e s . T h e s e m a t t e r s a r e d e t a i l e d

i n t h e f o l l o w i n g p a r a g r a p h s .

T h e P o s i t i o n O f F A D G - P o s t a l S e r v i c e s I s O v e r b u r d e n e d

E x i s t i n g o r g a n i s a t i o n a r r a n g e m e n t s r e q u i r e t h a t t h e F i r s t A s s i s t a n t

D i r e c t o r - G e n e r a l - P o s t a l S e r v i c e s , a s t h e p r i n c i p a l f u n c t i o n a l s t a f f a d v i s e r

t o t h e D i r e c t o r - G e n e r a l , b e r e s p o n s i b l e f o r p l a n n i n g a n d c o n d u c t i n g a n e f f e c ­

t i v e p o s t a l s e r v i c e i n A u s t r a l i a . T h e s t r u c t u r e o f t h e D i v i s i o n i s i n t e n d e d t o

p r o v i d e t h e F A D G w i t h t h e s t a f f e x p e r t i s e n e e d e d t o f u l f i l l t h i s r e s p o n s i b i l i t y ,

w i t h p a r t i c u l a r e m p h a s i s o n l o n g e r - t e r m p l a n n i n g a n d i n t e r - s t a t e , n a t i o n - w i d e

a n d i n t e r n a t i o n a l c o n s i d e r a t i o n s .

T h e o v e r b u r d e n i n g o f t h e F A D G p o s i t i o n i s e v i d e n t i n t e r m s o f t h e t y p i c a l

w o r k s c h e d u l e , a n d r e s u l t s i n l e s s t h a n s u f f i c i e n t t i m e t o d e v o t e t o p l a n n i n g

a n d p o l i c y m a t t e r s , o r g a n i s a t i o n a l c o n s i d e r a t i o n s ( i n c l u d i n g t h e t o p i c s d i s ­

c u s s e d h e r e i n ) a n d t h e m a i n t e n a n c e o f n e c e s s a r y e x t e r n a l r e l a t i o n s h i p s . T h e

e x i s t i n g A P O s t r u c t u r e c o n t r i b u t e s t o t h i s s i t u a t i o n i n s e v e r a l w a y s . A m o n g

t h e s e a r e p o i n t s m e n t i o n e d i n C h a p t e r II I - n a m e l y , i n s u f f i c i e n t a c c e s s t o t h e

D i r e c t o r - G e n e r a l , n e c e s s a r y t o p m a n a g e m e n t p r e o c c u p a t i o n w i t h t e l e c o m ­

m u n i c a t i o n s , a n d t h e i n t e r - p o s i t i o n o f S t a t e D i r e c t o r s i n t h e o t h e r w i s e r a t h e r

s t r a i g h t f o r w a r d r e l a t i o n s h i p b e t w e e n t h e C e n t r a l A d m i n i s t r a t i o n P o s t a l S e r v ­

i c e s D i v i s i o n a n d i t s c o u n t e r p a r t s t a t e d i v i s i o n s .

A n o t h e r e l e m e n t o f t h e e x i s t i n g s t r u c t u r e a l s o c o n t r i b u t e s n o t a b l y t o t h e

o v e r b u r d e n . U n l i k e t h e F i r s t A s s i s t a n t D i r e c t o r s - G e n e r a l c o n c e r n e d w i t h

t e l e c o m m u n i c a t i o n s , t h e F A D G - P o s t a l S e r v i c e s i s t h e o n l y s e n i o r f u n c t i o n a l

s p o k e s m a n a n d a u t h o r i t y f o r o n e o f t h e t w o A P O " b u s i n e s s e s . " I n t h i s r o l e ,

h e m u s t m a i n t a i n r e l a t i o n s h i p s w i t h t h e M i n i s t e r a n d w i t h e x t e r n a l e n t i t i e s ,

b o t h d o m e s t i c a n d f o r e i g n . T h u s , w h i l e t h e p o s i t i o n d o e s n o t h a v e t h e a u t h o r i t y ,

i t d o e s h a v e m a n y o f t h e c o m b i n e d r e s p o n s i b i l i t i e s o f a c h i e f e x e c u t i v e a n d c h i e f

o p e r a t i n g o f f i c e r a s r e l a t e d t o p o s t a l s e r v i c e s . T h e s e r e s p o n s i b i l i t i e s t a k e

t i m e , i n c l u d i n g a s i g n i f i c a n t a m o u n t o f t i m e o u t s i d e A u s t r a l i a , a n d o f t e n c a n n o t

b e d e l e g a t e d , p o s t p o n e d o r s e t a s i d e .

O r g a n i s a t i o n a l A n d O t h e r F a c t o r s A r e S e v e r e l y L i m i t i n g T h e E f f e c t i v e n e s s

O f T h e P o s t a l P l a n n i n g B r a n c h

A s n o t e d i n C h a p t e r I I I , t h e P o s t a l P l a n n i n g B r a n c h a n d t h e P o s t a l E n g i ­

n e e r i n g B r a n c h ( h e a d e d b y a D e p u t y A s s i s t a n t D i r e c t o r - G e n e r a l a n d a n

A s s i s t a n t D i r e c t o r - G e n e r a l , r e s p e c t i v e l y ) m a k e u p t h e P o s t a l P l a n n i n g a n d

E n g i n e e r i n g S u b - D i v i s i o n o f t h e C e n t r a l A d m i n i s t r a t i o n P o s t a l S e r v i c e s D i v i ­

s i o n . T h e S u b - D i v i s i o n i s m a n a g e d b y a S e n i o r A s s i s t a n t D i r e c t o r - G e n e r a l .

T h e P o s t a l P l a n n i n g B r a n c h :

- P e r f o r m s b u i l d i n g s p a c e p l a n n i n g ( g e n e r a l l y f o r p o s t o f f i c e s ) .

- D e v e l o p s l o n g e r - t e r m a r e a n e t w o r k p l a n s .

- P r e p a r e s t h e P o s t a l S e r v i c e s ' F i v e - Y e a r B u s i n e s s P l a n a n d p e r ­

f o r m s r e l a t e d l o n g - r a n g e p l a n n i n g .

- C o n c e i v e s n e e d s f o r m a n a g e m e n t i n f o r m a t i o n a n d d e v e l o p s m e t h o d s

f o r p r o d u c i n g i t .

a. O r g a n i s a t i o n a l a r r a n g e m e n t s h i n d e r t h e p o s t a l p l a n n i n g f u n c t i o n

i n s e v e r a l w a y s . F i r s t , t h e r e i s l i t t l e i f a n y w o r k i n g r e l a t i o n s h i p b e t w e e n

p o s t a l p l a n n i n g a n d p o s t a l e n g i n e e r i n g , a n d t h e r e f o r e n o i n h e r e n t a d v a n t a g e

t o e i t h e r f u n c t i o n i n t h e c u r r e n t , a r r a n g e m e n t . O n t h e c o n t r a r y , t h i s a r r a n g e ­

m e n t r e l e g a t e s p l a n n i n g t o a l e v e l o n c e r e m o v e d f r o m t h e F i r s t A s s i s t a n t

D i r e c t o r - G e n e r a l , i n s p i t e o f t h e f a c t t h a t , o f a l l o f t h e f u n c t i o n s p e r f o r m e d

i n t h e D i v i s i o n , p l a n n i n g i s p e r h a p s t h e m o s t i n t i m a t e l y s u p p o r t i v e o f t h e

F A D G ' s r e s p o n s i b i l i t i e s a n d o u g h t l o g i c a l l y t o b e a t h i s i m m e d i a t e c a l l .

T h e q u e s t i o n a b l e e f f e c t i v e n e s s o f t h e p l a c e m e n t o f p l a n n i n g i s h e i g h t ­

e n e d b y t h e S e n i o r A s s i s t a n t D i r e c t o r - G e n e r a l p o s i t i o n t h r o u g h w h i c h p l a n n i n g

r e p o r t s t o t h e F A D G . A s n o t e d , t h e S A D G d i r e c t s p o s t a l e n g i n e e r i n g a s w e l l

V - 2

a s p o s t a l p l a n n i n g , a n d t h e e n g i n e e r i n g f u n c t i o n i s h e a d e d b y a n A D G w h i l e

p l a n n i n g i s m a n a g e d b y a D A D G , o n e h i e r a r c h i c a l r a n k b e l o w . T h e p e r v a s i v e

s e n i o r i t y of e n g i n e e r i n g t h r o u g h o u t t h e A P O a n d t h e u n e q u a l r a n k s o f t h e t w o

b r a n c h h e a d s s u g g e s t s t r o n g l y t h a t t h e S A D G p o s i t i o n , a s a r u l e , w i l l b e f i l l e d

f r o m t h e e n g i n e e r i n g r a t h e r t h a n t h e p l a n n i n g f u n c t i o n . T h u s , t h e l e v e l b e t w e e n

p l a n n i n g a n d t h e F A D G c o u l d w e l l b e o c c u p i e d b y a n i n c u m b e n t n e i t h e r p a r t i c u ­

l a r l y s k i l l e d i n p l a n n i n g n o r o r i e n t e d t o w a r d s it.

F i n a l l y , t h e c o m b i n a t i o n o f p o s t a l p l a n n i n g a n d p o s t a l e n g i n e e r i n g

i n t o a s i n g l e s u b - d i v i s i o n a p p e a r s t o h a v e p r o d u c e d a n u n n e e d e d m a n a g e m e n t

p o s i t i o n - t h a t o f t h e S A D G . N e i t h e r s u b o r d i n a t e b r a n c h r e q u i r e s t h e d i r e c ­

t i o n o f t h i s p o s i t i o n t o o p e r a t e e f f e c t i v e l y .

b. N o n - o r g a n i s a t i o n a l f a c t o r s a l s o a r e l i m i t i n g t h e e f f e c t i v e n e s s of

t h e P o s t a l P l a n n i n g B r a n c h . A l t h o u g h t h e B r a n c h e s t a b l i s h m e n t h a s i n c r e a s e d

f r o m 2 0 p o s i t i o n s t o 2 7 p o s i t i o n s ( o r 35 p e r c e n t ) i n t h e l a s t t w o - a n d - o n e - h a l f

y e a r s , B r a n c h a c t i v i t i e s a p p e a r t o f a l l w e l l s h o r t o f e x p e c t a t i o n s . S e v e r a l

i m p o r t a n t m i l e s t o n e s a s s i g n e d t o s e c t i o n s w i t h i n t h e B r a n c h h a v e n o t b e e n

a t t a i n e d ; t h e s e i n c l u d e t h e d e v e l o p m e n t a n d p r o m u l g a t i o n o f p o s t o f f i c e f a c i l i ­

t i e s p l a n n i n g g u i d e l i n e s , w i t h o u t w h i c h d e s i r a b l e d e l e g a t i o n s t o t h e s t a t e s

c a n n o t b e m a d e , a n d d e v e l o p m e n t a n d i s s u a n c e of s e r v i c e s t a n d a r d s f o r n e t ­

w o r k p l a n n i n g .

L a c k o f a c c o m p l i s h m e n t i s p e r h a p s m o s t n o t a b l e i n t h e M a n a g e m e n t

I n f o r m a t i o n S e c t i o n . D a t a c o l l e c t i o n g u i d e l i n e s f o r m a n a g e m e n t i n f o r m a t i o n

a r e l o n g o v e r d u e , a n d t h e e n t i r e f u n c t i o n a p p e a r s t o b e s u f f e r i n g f r o m a s u b ­

s t a n t i a l l a c k o f f o r e t h o u g h t . A g a i n s t t h e r e s p o n s i b i l i t y f o r c o n c e i v i n g i n f o r m a ­

t i o n n e e d s a n d w a y s o f p r o d u c i n g t h e i n f o r m a t i o n r e q u i r e d , t h e r e h a s b e e n n o

c o m p r e h e n s i v e c a n v a s s o r a n a l y s i s o f n e e d s , a n d n o i n v e n t o r y o f a v a i l a b l e

d a t a h a s b e e n d e v e l o p e d . F u r t h e r , i n s t a n c e s o f o v e r l a p p i n g d a t a r e q u e s t s

a n d a n a l y s e s h a v e b e e n n o t e d d u r i n g t h i s s t u d y , r e f l e c t i n g a n u n d e s i r a b l y a d

h o c a p p r o a c h i n S e c t i o n a c t i v i t i e s .

T h e B r a n c h g e n e r a l l y a p p e a r s t o b e s u f f e r i n g f r o m a l a c k o f s p e c i f i c ,

d o c u m e n t e d o b j e c t i v e s a n d o f p l a n s f o r a t t a i n i n g t h e m . T h e M a n a g e m e n t

I n f o r m a t i o n S e c t i o n i n a d d i t i o n l a c k s s u i t a b l y s k i l l e d a n d e x p e r i e n c e d s t a f f

f o r a c c o m p l i s h i n g i t s a d m i t t e d l y d i f f i c u l t r e s p o n s i b i l i t i e s .

S o m e C o n f u s i o n A n d I n e f f i c i e n c y R e s u l t F r o m O r g a n i s a t i o n a l M i n g l i n g

O f D i s p a r a t e B a s i c A c t i v i t i e s , P r i n c i p a l l y I n T h e B r a n c h e s R e p o r t i n g

D i r e c t l y T o T h e F A D G - P o s t a l S e r v i c e s

F u n d a m e n t a l l y , o p e r a t i o n o f t h e p o s t a l s y s t e m i n v o l v e s s i m u l t a n e o u s

m a n a g e m e n t o f t w o q u i t e d i f f e r e n t a l t h o u g h c l o s e l y r e l a t e d a c t i v i t i e s - p u b l i c

V - 3

c o n t a c t a n d t h e s e r v i c i n g o f c u s t o m e r s , a n d t h e a c t u a l p r o c e s s i n g o f t h e m a i l s .

T h e s e a c t i v i t i e s d i f f e r s i g n i f i c a n t l y i n t h e i r o p e r a t i o n s , o b j e c t i v e s a n d a d m i n ­

i s t r a t i o n . " C u s t o m e r s e r v i c e s , " w h i c h i n v o l v e i m m e d i a t e r e c e i p t , u l t i m a t e

d e l i v e r y a n d r e l a t e d s o r t i n g , c o u n t e r s e r v i c e s a n d s o f o r t h , a r e h i g h l y l a b o u r ­

i n t e n s i v e a n d o f f e r r e l a t i v e l y f e w o p p o r t u n i t i e s f o r s a v i n g s t h r o u g h m e c h a n i s a ­

t i o n . T h e e m p l o y e e s p e r f o r m i n g t h e s e s e r v i c e s h a v e f r e q u e n t c o n t a c t s w i t h

t h e p u b l i c a n d m u s t f u n c t i o n o n s c h e d u l e s w h i c h a l l o w c u s t o m e r a c c e s s t o t h e

s e r v i c e s a n d w h i c h f u l f i l l s e r v i c e s t a n d a r d s . T h e p o s t a l o f f i c e r s , p o s t a l

c l e r k s , p o s t m e n a n d o t h e r p o s t o f f i c e e m p l o y e e s i n c l u d e d i n t h e c u s t o m e r

s e r v i c e s f u n c t i o n n e e d n o t b e h i g h l y s k i l l e d t e c h n i c a l l y , b u t t h e y m u s t e x e r ­

c i s e s i g n i f i c a n t i n t e r - p e r s o n a l s k i l l s .

O n t h e o t h e r h a n d , " m a i l p r o c e s s i n g " e n c o m p a s s e s a n u m b e r o f f u n c t i o n s ,

i n c l u d i n g m a i l s o r t i n g a n d t r a n s p o r t , w h i c h o f f e r o p p o r t u n i t i e s f o r c o s t s a v ­

i n g s t h r o u g h m e c h a n i s a t i o n . M a i l p r o c e s s i n g f u n c t i o n s e n t a i l v e r y l i t t l e p u b l i c

c o n t a c t , a n d a r e h i g h l y s t r u c t u r e d a n d s c h e d u l e d i n a s y s t e m s s e n s e . E m p l o y ­

e e s i n t h e s e a c t i v i t i e s a r e g e n e r a l l y m o r e o r i e n t e d t o w a r d s t e c h n i c a l m a t t e r s

t h a n t o w a r d s p u b l i c c o n t a c t s a n d s e r v i c e . F i n a l l y , t h e i n d u s t r i a l i m p l i c a t i o n s

o f m a i l p r o c e s s i n g a c t i v i t i e s a r e c o n s i d e r a b l y m o r e d e m a n d i n g t h a n a r e t h o s e

o f c u s t o m e r s e r v i c e s .

T h e A P O h a s ' l o n g s i n c e r e c o g n i s e d t h e e x i s t e n c e o f t h e s e t w o t y p e s o f

a c t i v i t i e s i n o p e r a t i n g t h e p o s t a l s y s t e m a n d , t o a c o n s i d e r a b l e e x t e n t , i n

o r g a n i s i n g p o s t a l a c t i v i t i e s . T h e r e a r e , h o w e v e r , t w o C e n t r a l A d m i n i s t r a t i o n

b r a n c h e s i n w h i c h t h e t w o a c t i v i t y g r o u p s o v e r l a p , a n d t h i s s i t u a t i o n a p p e a r s

t o b e c a u s i n g s o m e d i f f i c u l t y .

A s n o t e d i n C h a p t e r I I I , t h r e e b r a n c h e s r e p o r t d i r e c t l y t o t h e F A D G -

P o s t a l S e r v i c e s :

- T h e M a i l s a n d T r a n s p o r t B r a n c h , w h i c h i s o r i e n t e d t o w a r d s m a i l ­

p r o c e s s i n g a c t i v i t i e s

- T h e P o s t O f f i c e s B r a n c h , w h i c h i s o r i e n t e d t o w a r d s f u n c t i o n s c o n ­

d u c t e d i n p o s t o f f i c e s a n d t h u s m a i n l y t o c u s t o m e r s e r v i c e s t y p e s

o f a c t i v i t i e s

- T h e C o m m e r c i a l B r a n c h , w h i c h i s m a i n l y o r i e n t e d t o w a r d s c u s t o m e r

s e r v i c e s a c t i v i t i e s .

T h e o v e r l a p i n v o l v e s t h e P o s t O f f i c e s a n d t h e C o m m e r c i a l B r a n c h e s ,

b o t h o f w h i c h a r e p r i n c i p a l l y f o c u s s e d o n a c t i v i t i e s i n , o r i n t i m a t e l y r e l a t e d t o ,

p o s t o f f i c e s . W i t h i n t h e C e n t r a l A d m i n i s t r a t i o n P o s t a l S e r v i c e s D i v i s i o n , a

l a c k o f s u f f i c i e n t c o - o r d i n a t e d p l a n n i n g b e t w e e n t h e s e B r a n c h e s a p p e a r s t o

h a v e c o n t r i b u t e d t o t h e d i f f i c u l t i e s e n c o u n t e r e d i n i n t r o d u c i n g t h e $ 2 0 p o s t a l

o r d e r .

V -4

F o r h i s t o r i c r e a s o n s , p o s t m a s t e r s g e n e r a l l y g i v e t h e i r a l l e g i a n c e t o t h e

P o s t O f f i c e s B r a n c h a n d d o n o t i d e n t i f y w i t h t h e c o n c e r n s o f t h e C o m m e r c i a l

B r a n c h . B e c a u s e o f t h i s a l l e g i a n c e , a n d a l s o b e c a u s e o f a n a p p a r e n t l a c k o f

c o - o r d i n a t e d p l a n n i n g , r e c e n t r e q u e s t s b y t h e C o m m e r c i a l B r a n c h f o r m a r k e t ­

i n g i n f o r m a t i o n f r o m p o s t m a s t e r s m e t w i t h c o n s i d e r a b l e r e s i s t a n c e i n t h e

f i e l d . T h e s u b m i s s i o n o f t h e P o s t m a s t e r s ' A s s o c i a t i o n t o t h e C o m m i s s i o n of

I n q u i r y h i g h l i g h t e d t h e p o s t m a s t e r s ' u n d e r l y i n g l a c k o f u n d e r s t a n d i n g of, a n d

e m p a t h y f o r , t h e a c t i v i t i e s o f t h e C o m m e r c i a l B r a n c h .

E x h i b i t V - l , f o l l o w i n g t h i s p a g e , i l l u s t r a t e s t h e c o m p l i c a t i o n a n d t h e

p o t e n t i a l f o r c o n f u s i o n , c o n t r a d i c t i o n o r g a p s i n C e n t r a l A d m i n i s t r a t i o n r e l a ­

t i o n s w i t h t h e s t a t e s c r e a t e d b y t h e C o m m e r c i a l B r a n c h - P o s t O f f i c e s B r a n c h

o v e r l a p . A s t h e e x h i b i t s h o w s , a s t a t e P o s t O f f i c e s B r a n c h m u s t h a v e p a r a l l e l

d e a l i n g s w i t h b o t h t h e P o s t O f f i c e s a n d C o m m e r c i a l B r a n c h e s o f t h e C e n t r a l

A d m i n i s t r a t i o n , a s w e l l a s t h e C e n t r a l A d m i n i s t r a t i o n M a i l s a n d T r a n s p o r t

B r a n c h .

T h e e x h i b i t a l s o i l l u s t r a t e s t h e c o m p l i c a t i o n o f r e l a t i o n s h i p s t h a t s t e m s

f r o m s t a t e - l e v e l r a t h e r t h a n C e n t r a l A d m i n i s t r a t i o n a r r a n g e m e n t s . B e c a u s e

c a p i t a l c i t y e x c h a n g e s a r e r e s p o n s i b l e f o r m a i l d e l i v e r y i n c e n t r e c i t y a r e a s ,

t h e s t a t e M a i l E x c h a n g e B r a n c h e s r e c e i v e d i r e c t i o n f r o m b o t h t h e P o s t O f f i c e s

a n d t h e M a i l s a n d T r a n s p o r t B r a n c h e s a t C e n t r a l A d m i n i s t r a t i o n . A s a r e s u l t ,

t h e s e m a i l e x c h a n g e s n o t o n l y a r e s u b j e c t t o f u n c t i o n a l g u i d a n c e f r o m t h e

M a i l s a n d T r a n s p o r t B r a n c h i n t h e a r e a s o f m a i l p r o c e s s i n g , p r o d u c t i o n

s t u d i e s , s t a f f i n g a n a l y s e s a n d i n d u s t r i a l r e l a t i o n s , b u t a l s o a r e g u i d e d b y t h e

C e n t r a l A d m i n i s t r a t i o n P o s t O f f i c e s B r a n c h o n t h e o p e r a t i o n s of, a n d r e l a t i o n s

w i t h , t h e m a i l e x c h a n g e p o s t a l d e l i v e r y s t a f f s .

R e s p o n s i b i l i t y A n d C o m m e n s u r a t e A u t h o r i t y A r e N o t S u f f i c i e n t l y D e l e g a t e d

F r o m T h e S t a t e L e v e l T o T h e F i e l d P o s t O f f i c e s M a n a g e m e n t O r g a n i s a t i o n

E x h i b i t V - 2 p o r t r a y s t h e c u r r e n t a r r a n g e m e n t o f t h e f i e l d m a n a g e m e n t

o r g a n i s a t i o n f o r p o s t o f f i c e s . A s s h o w n , t h e o r g a n i s a t i o n i s h e a d e d b y t h e

S u p e r i n t e n d e n t - P o s t O f f i c e s i n e a c h s t a t e ( e x c e p t i n T a s m a n i a ) . R e p o r t i n g

t o t h e S u p e r i n t e n d e n t a r e o n e o r m o r e A s s i s t a n t S u p e r i n t e n d e n t s , a n d r e p o r t ­

i n g t o t h e s e A s s i s t a n t S u p e r i n t e n d e n t s ( e x c e p t i n W e s t e r n A u s t r a l i a ) a r e a

n u m b e r o f D i s t r i c t P o s t a l M a n a g e r s - 72 a c r o s s t h e e n t i r e c o u n t r y . E a c h

D i s t r i c t P o s t a l M a n a g e r h a s a s m a l l i m m e d i a t e s t a f f of i n s p e c t o r s a n d i s t h e

o p e r a t i n g s u p e r i o r o f t h e p o s t m a s t e r s i n h i s d i s t r i c t (i n a c t u a l f a c t , m o s t

p o s t m a s t e r s o f n o n - o f f i c i a l p o s t o f f i c e s r e g a r d t h e m s e l v e s a s b e i n g u n d e r t h e

j u r i s d i c t i o n o f t h e p o s t m a s t e r o f a n e a r b y o f f i c i a l p o s t o f f i c e ) . D i s t r i c t

P o s t a l M a n a g e r s a r e a l s o c u r r e n t l y r e s p o n s i b l e f o r t h e f e w o u t l y i n g m a i l

p r o c e s s i n g f a c i l i t i e s . U n d e r t h e m a i l c e n t r e c o n c e p t , t h e n u m b e r a n d p a r t i c u ­

l a r l y t h e c a p a c i t y o f o u t l y i n g p r o c e s s i n g f a c i l i t i e s w i l l i n c r e a s e s i g n i f i c a n t l y o v e r

t h e n e x t o n e t o t w o d e c a d e s .

V - 5

POSTMASTER-GENERAL'S DEPARTMENT

SELECTED CENTRAL ADMINISTRATION - STATE POSTAL SERVICES RELATIONSHIPS

\

COMMERCIAL BRANCH

POST O FFIC ES BRANCH

M AILS AND TR A N SPO R T BRANCH

POST O FFIC ES BRANCH

MAIL EX CH AN G E ‘ BRANCH

T R A N SP O R T BRANCH

F IR ST ASSISTA NT D IR EC TO R -G EN ER A L

POSTAL SER V IC ES DIVISION

A SSISTA NT D IRECTO R

POSTAL SER V IC ES DIVISION

EXHIBIT V-2

POSTMASTER-GENERAL'S DEPARTMENT

PRESENT PLAN OF ORGANISATION POST OFFICES FIELD STRUCTURE NOVEMBER 1973

(a) E x c ep t in T a sm ania , w h ere th e d is tric t postal m anagers re p o rt d ire c tly to th e assista n t d ire cto r,

D IST R IC T PO ST A L M AN A GE R

PO ST M A ST E R S

BRANCH SE R V IC E S

IN SPEC T O R

PO ST M A ST E R S

D IST R IC T P O S T A L M AN A GER

A SSIST A N T S U P E R IN T E N D E N T (S )

POST O F F IC E S

S U P E R IN T E N D E N T

PO ST O F F IC E S

A SS IS T A N T D IR E C T O R

P O ST A L S E R V IC E S

postal services. (b) In N ew S o u th W ales and V ic to ria o n ly .

T h u s , o n p a p e r , a f i e l d m a n a g e m e n t o r g a n i s a t i o n s t r u c t u r e i s i n b e i n g .

A s t h e P o s t a l S e r v i c e s D i v i s i o n h a s r e c o g n i s e d , h o w e v e r , t h e r e a r e s e v e r a l

w e a k n e s s e s i n t h i s s t r u c t u r e . T h e f u n d a m e n t a l d e f i c i e n c y i s t h a t i t i s n o t a

d e c e n t r a l i s e d m a n a g e m e n t s t r u c t u r e a t a l l . I n s t e a d , i t i s e s s e n t i a l l y a

s u p e r v i s o r y e x t e n s i o n o f a u t h o r i t i e s e x e r c i s e d a t s t a t e o r h i g h e r l e v e l s .

D i s t r i c t P o s t a l M a n a g e r s , w h o r e p r e s e n t t h e b u l k o f t h e d e c e n t r a l i s e d i n t e r ­

m e d i a t e m a n a g e m e n t , r e a l l y h a v e l i t t l e i f a n y m a n a g e r i a l a u t h o r i t y o r r e s p o n ­

s i b i l i t y . T h e y d o n o t , f o r e x a m p l e , h a v e a f i n a n c i a l c o n t r i b u t i o n ( r e v e n u e

l e s s c o n t r o l l a b l e e x p e n s e s ) o b j e c t i v e o r r e s p o n s i b i l i t y , a n d t h e y h a v e n o s i g ­

n i f i c a n t a u t h o r i t y o v e r h i r i n g , p r o m o t i o n s , e s t a b l i s h m e n t s o r s t a f f t r a n s f e r s .

T h e c o n s u l t a n t s u n d e r s t a n d t h a t D i s t r i c t P o s t a l M a n a g e r s h a v e h i s t o r i c a l l y

f u n c t i o n e d m o r e o r l e s s a s " s u p e r " i n s p e c t o r s - t h e g e o g r a p h i c a l l y d i s p e r s e d

" e y e s a n d e a r s " o f a c e n t r a l a u t h o r i t y . T h i s i s n o l o n g e r a n a p p r o p r i a t e r o l e ,

s i m p l y b e c a u s e i t f a i l s t o t a p t h e p o t e n t i a l o f i n d i v i d u a l m o t i v a t i o n t o p e r f o r m

t h e " w h o l e j o b , " a n d i t r e j e c t s t h e A P O ' s o w n p h i l o s o p h y o f c a r r y i n g r e s p o n ­

s i b i l i t y a n d a u t h o r i t y a s c l o s e t o t h e w o r k l o c a t i o n a s p o s s i b l e . T h i s c u r r e n t

r o l e w i l l , o f c o u r s e , b e c o m e e v e n l e s s a p p r o p r i a t e a s t h e o p e r a t i o n s o f t h e

p o s t a l s y s t e m a r e i n c r e a s i n g l y d e c e n t r a l i s e d .

T h e r e a r e o t h e r p r o b l e m s w i t h t h e s t r u c t u r e . F o r e x a m p l e , i t d o e s n o t

p r o v i d e a r e a s o n a b l y u n i f o r m p y r a m i d o f r e s p o n s i b i l i t y . I n s t e a d , a l l p o s t ­

m a s t e r s r e p o r t t o D i s t r i c t P o s t a l M a n a g e r s (1, 4 3 5 o f f i c i a l p o s t o f f i c e s t o 72

d i s t r i c t s ) a n d t h e n a l l d i s t r i c t s r e p o r t t o t h e s t a t e l e v e l . T h e r e a r e n o t e n o u g h

i n t e r m e d i a t e l e v e l s , a n d t h e s c h e m e f a i l s t o t a p t h e p r e s u m a b l y s e n i o r s k i l l s

o f t h e p o s t m a s t e r s o f l a r g e r o f f i c i a l p o s t o f f i c e s f o r t h e b e n e f i t o f s m a l l e r

o f f i c i a l f a c i l i t i e s i n t h e v i c i n i t y . F i n a l l y , t h e s t r u c t u r e p r o v i d e s o n l y a

m o d e r a t e g r o w t h o p p o r t u n i t y i n t h e D i s t r i c t P o s t a l M a n a g e r p o s i t i o n , b e c a u s e

t h e d i s t r i c t s h a v e b e e n s i z e d t o y i e l d c o m p a r a b l e s c o p e s o f w o r k . A s i n g l e ,

t w o - s t e p s a l a r y r a n g e a p p l i e s t o a l l 7 2 p o s i t i o n s . T h u s , i t i s i m p o s s i b l e f o r

a D i s t r i c t P o s t a l M a n a g e r t o b e g i n i n a m o d e r a t e s i t u a t i o n a n d p r o g r e s s ,

m a n a g e r i a l l y a n d f i n a n c i a l l y , t o a l a r g e r a n d m o r e c o m p l e x d i s t r i c t a s h i s

c a p a b i l i t i e s e x p a n d .

O r g a n i s a t i o n S t r u c t u r e , R e l a t e d P a y L e v e l s A n d H i s t o r i c a l P r o m o t i o n

P r a c t i c e s C o m b i n e T o U n d e r u t i l i s e A n d T o o N a r r o w l y D e v e l o p R e s o u r c e s

I n P o s t a l S e r v i c e s

T h e p r e c e d i n g o b s e r v a t i o n d e s c r i b e d t h e c u r r e n t u n d e r u t i l i s a t i o n o f t h e

f i e l d m a n a g e m e n t s t r u c t u r e i n p o s t a l s e r v i c e s . T h i s c o n d i t i o n c o n t r i b u t e s to

p r a c t i c e s i n m a t t e r s o f p a y a n d p r o m o t i o n a l o p p o r t u n i t i e s t h a t a r e s t u l t i f y i n g

a n d u n d e s i r a b l e .

V- 6

E x h i b i t V - 3 i l l u s t r a t e s t h e p a y l e v e l s a n d t y p i c a l c a r e e r p a t h s o f p o s t

o f f i c e e m p l o y e e s i n t h e f i e l d u p t o t h e S u p e r i n t e n d e n t - P o s t O f f i c e s p o s i t i o n i n

a s t a t e a d m i n i s t r a t i o n ; t h e c u r r e n t e s t a b l i s h m e n t f o r e a c h t y p e o f p o s i t i o n i s

a l s o i n d i c a t e d . A s s h o w n , t h e r e a r e s e v e r a l k e y c a r e e r p r o g r e s s i o n p o i n t s

a t w h i c h t h e s a l a r y d i f f e r e n t i a l b e t w e e n s u b o r d i n a t e a n d s u p e r i o r p o s i t i o n s i s

i n s i g n i f i c a n t a t b e s t . F o r e x a m p l e , a P o s t m a s t e r o r S e n i o r P o s t a l C l e r k

a s p i r i n g t o p o s i t i o n s b e y o n d t h e s e o c c u p a t i o n a l c a t e g o r i e s w i l l n o r m a l l y l o o k

t o w a r d a n i n s p e c t i o n f u n c t i o n a s a n i m m e d i a t e o p p o r t u n i t y a n d , f o r t h e m o r e

a m b i t i o u s , a s a n e c e s s a r y s t e p p i n g s t o n e t o D i s t r i c t P o s t a l M a n a g e r a n d h i g h e r

l e v e l s . A s s h o w n , t h e c o m m o n p r o g r e s s i o n i s f r o m G r a d e 2 P o s t m a s t e r o r

S e n i o r P o s t a l C l e r k t o A s s i s t a n t I n s p e c t o r . F o r a n e x p e r i e n c e d G r a d e 2

P o s t m a s t e r a t $ 7 , 8 2 2 p e r a n n u m , t h e a n n u a l s a l a r y i n c r e a s e w o u l d b e o n l y

$77 ( o r u n d e r 1 p e r c e n t ) , w h i c h i s h a r d l y e n o u g h t o e n t i c e h i m t o a c c e p t

g r e a t e r r e s p o n s i b i l i t y a n d p o s s i b l e g e o g r a p h i c r e l o c a t i o n . T h e c o m p a r a b l e

s a l a r y d i f f e r e n c e f o r a G r a d e 2 S e n i o r P o s t a l C l e r k w o u l d b e $ 5 9 7 ( o v e r 8 p e r

c e n t ) , a c o n s i d e r a b l y m o r e a t t r a c t i v e f i g u r e .

A n o t h e r a n d r a t h e r s t a r t l i n g e x a m p l e o c c u r s i n S o u t h A u s t r a l i a a n d

W e s t e r n A u s t r a l i a , w h e r e a p r o m o t i o n f r o m D i s t r i c t P o s t a l M a n a g e r t o

A s s i s t a n t S u p e r i n t e n d e n t m a y w e l l p r o d u c e n o s a l a r y i n c r e a s e a t a l l , s i n c e

b o t h p o s i t i o n s a r e C l a s s 8 o n t h e c l e r i c a l p a y s t r u c t u r e . I n t h e o t h e r s t a t e s ,

a s i m i l a r p r o m o t i o n w i l l p r o d u c e a n i n c r e a s e o f $ 4 9 4 p e r a n n u m ( o r m o d e r a t e l y

o v e r 4 p e r c e n t ) , a f a r b e t t e r a l t h o u g h n o t p a r t i c u l a r l y g e n e r o u s i n c e n t i v e .

S a l a r y l e v e l s a r c a l s o t r o u b l e s o m e i n a h i e r a r c h i c a l , a s d i s t i n g u i s h e d

f r o m c a r e e r p r o g r e s s i o n , s e n s e . A l l b u t 10 o f t h e 72 D i s t r i c t P o s t a l M a n a g e r s

( a t $1 1, 0 3 2 o r $ 1 1 , 5 2 5 p e r a n n u m ) h a v e G r a d e 5 P o s t m a s t e r s ( a t u p t o $ 1 1 , 0 7 2

p e r a n n u m ) r e p o r t i n g t o t h e m . S u c h a c l o s e , i f n o t o v e r l a p p i n g , r e l a t i o n s h i p

i s q u i t e i n a p p r o p r i a t e t o t h i s s u p e r v i s o r - s u b o r d i n a t e s i t u a t i o n . I n c o n t r a s t ,

t h e s a l a r y i n t e r v a l s b e t w e e n I n s p e c t o r a n d D i s t r i c t P o s t a l M a n a g e r , o r b e t w e e n

A s s i s t a n t S u p e r i n t e n d e n t a n d S u p e r i n t e n d e n t , a r e q u i t e s i g n i f i c a n t .

In s o m e c a t e g o r i e s , t h e r e a r e t o o f e w s t e p s w i t h i n c e r t a i n p a y l e v e l s .

F o r i n s t a n c e , G r a d e 4 a n d G r a d e 5 P o s t m a s t e r p o s i t i o n s t e n d t o b e o c c u p i e d

f o r m a n y y e a r s b y t h e s a m e i n c u m b e n t , s i n c e t h e r e a r e v e r y f e w p r o m o t i o n a l

o p p o r t u n i t i e s o u t o f t h e s e p o s i t i o n s . Y e t t h e r e a r e o n l y t h r e e s a l a r y r a t e s

f o r e a c h o f t h e s e p o s i t i o n s . T h u s , m a n y G r a d e 4 a n d G r a d e 5 P o s t m a s t e r s

c a n n o t p r o g r e s s , e x c e p t f o r g e n e r a l s a l a r y a d j u s t m e n t s , e v e n i f t h e i r p e r f o r m ­

a n c e i m p r o v e s . F i n a l l y , a s n o t e d a b o v e , t h e r e a r e o n l y t w o s a l a r y r a t e s f o r

D i s t r i c t P o s t a l M a n a g e r s , a s i m i l a r l y c o n s t r i c t i n g s i t u a t i o n .

V - 7

10.145/75— 2|

EXHIBIT V-3

P O S T M A S T E R G E N E R A L S D E P A R T M E N T

C A R E E R P A T H S , S A L A R Y L E V E L S ,

A N D C U R R E N T E S T A B L I S H M E N T S .

P O S T O F F I C E S F I E L D O R G A N I S A T I O N

A N N U A L

S A L A R Y

(S000)

S U P E R I N T E N D E N T S

(2)

P O S T O F F I C E S

N E W S O U T H W A L E S . V I C T O R I A

S O U T H A U S T R A L I A

V I C T O R I A , Q U E E N S L A N D

S O U T H A U S T R A L I A

D I S T R I C T P O S T A L M A N A G E R S

S E N I O R P O S T A L C L E R K S - G R A D E 1

S E N I O R P O S T A L C L E R K S G R A D E 2

S E N I O R P O S T A L C L E R K S G R A D E 3 P O S T M A S T E R S G R A D E 3

1 5

Note Numbers m parenineses represeni establishm ents for each position classification

Q u i t e a p a r t f r o m s a l a r y c o n s i d e r a t i o n s , p o s t o f f i c e s f i e l d c a r e e r p a t h s

a r e n a r r o w . A s E x h i b i t V - 3 s h o w s , t h e r e i s e s s e n t i a l l y j u s t o n e r o u t e -

G r a d e 2 P o s t m a s t e r o r S e n i o r P o s t a l C l e r k ( 9 43 e s t a b l i s h e d p o s i t i o n s ) -

A s s i s t a n t I n s p e c t o r ( 9 9 ) - I n s p e c t o r ( 1 2 7 ) - D i s t r i c t P o s t a l M a n a g e r ( 7 2 ) -

A s s i s t a n t S u p e r i n t e n d e n t (9) - S u p e r i n t e n d e n t (6 - i n c l u d i n g t h e A s s i s t a n t

D i r e c t o r - P o s t a l S e r v i c e s i n T a s m a n i a , s i n c e t h e r e i s n o S u p e r i n t e n d e n t ) .

C l e a r l y , c o n s t r i c t i o n s o c c u r b o t h a t t h e b o t t o m a n d t o w a r d t h e t o p o f t h i s

c h a i n . C o n s t r i c t i o n t o w a r d t h e t o p i s n o r m a l , a l t h o u g h i t s e e m s q u i t e s e v e r e

h e r e (72 d o w n t o 9); t h e c o n s t r i c t i o n a t t h e b o t t o m ( 9 4 3 t o 9 9 ) i s m o s t u n d e s i r ­

a b l e i f t h e r e i s b e n e f i t t o b e g a i n e d i n p r o v i d i n g m o t i v a t i o n t o a d v a n c e

F i n a l l y , d i f f e r e n c e s i n p o s i t i o n r e q u i r e m e n t s , r e l a t e d p a y l e v e l s a n d

h i s t o r i c a l p r a c t i c e s w o r k t o s e p a r a t e o p e r a t i n g a n d s t a f f e l e m e n t s o f p o s t a l

s e r v i c e s . T r a d i t i o n a l l y , o p e r a t i n g e x p e r i e n c e r a t h e r t h a n f o r m a l t r a i n i n g

h a s b e e n t h e p r e r e q u i s i t e t o a d v a n c e m e n t i n f i e l d o p e r a t i n g m a n a g e m e n t .

F o r e x a m p l e , t e r t i a r y d e g r e e s o r d i p l o m a s a r e h e l d b y o n l y t w o (of s i x )

A s s i s t a n t D i r e c t o r s - P o s t a l S e r v i c e s , b y o n e (of f i v e ) S u p e r i n t e n d e n t s -

T r a n s p o r t a t i o n , a n d b y n o n e (of f i v e ) o f t h e S u p e r i n t e n d e n t s - P o s t O f f i c e s .

I n c o n t r a s t , t h e i n c u m b e n t o f a C e n t r a l A d m i n i s t r a t i o n s t a f f p o s i t i o n o r

s e n i o r e x e c u t i v e p o s i t i o n c o m m o n l y h o l d s a t e r t i a r y d i p l o m a o r d e g r e e . T h e

i n c u m b e n t s o f t h e s e v e n m o s t s e n i o r C e n t r a l A d m i n i s t r a t i o n p o s i t i o n s a l l h a v e

s u c h q u a l i f i c a t i o n s .

T h e s e p a t t e r n s a n d t h e p a y l e v e l s w i t h i n p o s t a l s e r v i c e s w h i c h f o r m a l

t r a i n i n g c a n c o m m a n d s e v e r e l y l i m i t o p p o r t u n i t y f o r r o u n d i n g o u t t h e e x p e r i e n c e

o f b o t h o p e r a t i n g a n d s t a f f e m p l o y e e s . A n e m p l o y e e f i l l i n g a n A s s i s t a n t C o n ­

t r o l l e r p o s i t i o n i n t h e C e n t r a l A d m i n i s t r a t i o n P o s t a l P l a n n i n g B r a n c h , f o r

e x a m p l e , m a y w e l l h a v e a d i p l o m a o r a d e g r e e . H e h a s v e r y f e w l i n e m a n a g e ­

m e n t p r o m o t i o n o p t i o n s a v a i l a b l e t o h i m a t t h e s t a t e l e v e l , h o w e v e r , b o t h

b e c a u s e h i s p a y i s l i k e l y t o b e a s h i g h a s , o r h i g h e r t h a n , t h a t f o r m o s t s t a t e

p o s t a l s e r v i c e s p o s i t i o n s t o w h i c h h e m i g h t a s p i r e , a n d b e c a u s e c a n d i d a t e s f o r

s u c h s t a t e - l e v e l p o s i t i o n s t e n d t o b e c h o s e n o n t h e b a s i s o f e x p e r i e n c e r a t h e r

t h a n e d u c a t i o n . S i m i l a r l y , t h e o p t i o n s f o r s t a t e l i n e m a n a g e m e n t e m p l o y e e s

s e e k i n g p r o m o t i o n t o C e n t r a l A d m i n i s t r a t i o n a r e s i g n i f i c a n t l y l e s s e n e d b y t h e

t e n d e n c y a t C e n t r a l A d m i n i s t r a t i o n t o p r o m o t e t h e b e t t e r - e d u c a t e d e m p l o y e e .

T h u s , p r o p o r t i o n a t e l y , t h e m o r e e d u c a t e d e m p l o y e e s a r e f o u n d m o r e

c o m m o n l y i n C e n t r a l A d m i n i s t r a t i o n p o s t a l p l a n n i n g a n d p o s t a l e n g i n e e r i n g

p o s i t i o n s t h a n i n s t a t e l i n e m a n a g e m e n t o r s e n i o r a d m i n i s t r a t i v e p o s i t i o n s .

T h i s l a c k o f m o b i l i t y r e s u l t s i n a s e n i o r C e n t r a l A d m i n i s t r a t i o n s t a f f c o m p o s e d

o f i n c u m b e n t s w h o a r e g e n e r a l l y w i t h o u t r e c e n t o p e r a t i n g - l e v e l e x p e r i e n c e ,

a n d i n s t a t e s t a f f s l a c k i n g p e o p l e w i t h C e n t r a l A d m i n i s t r a t i o n e x p e r i e n c e . T h e

p o t e n t i a l v a l u e t o b e g a i n e d t h r o u g h c r o s s - f e r t i l i s a t i o n i s l o s t , a s i s t h e a b i l i t y

t o g i v e e a c h s i d e f i r s t - h a n d i n s i g h t i n t o t h e g o a l s , o p e r a t i o n s , a n d p r o b l e m s

o f t h e o t h e r .

V - 8

G e n e r a l l y , T h e P r e s e n t S t a t e O r i e n t a t i o n O f T h e F i r s t L e v e l O f T h e

F i e l d O r g a n i s a t i o n A p p e a r s Q u i t e W o r k a b l e

T h e c u r r e n t d i v i s i o n o f p o s t a l s e r v i c e s f i e l d o p e r a t i o n s i n t o s i x s t a t e

a d m i n i s t r a t i o n s a p p e a r s t o b e q u i t e l o g i c a l . I t i s n o t f e l t t h a t t h e t a s k o f

m a n a g i n g p o s t a l s e r v i c e s w i t h i n a n y o n e o f t h e s e g e o g r a p h i c e n t i t i e s w o u l d

o v e r t a x t h e t o p e x e c u t i v e , a l t h o u g h N e w S o u t h W a l e s r e p r e s e n t s a s u f f i c i e n t l y

l a r g e s i t u a t i o n t o w a r r a n t p e r i o d i c r e - a p p r a i s a l . T a s m a n i a , o n t h e o t h e r

h a n d , r e p r e s e n t s a r a t h e r m o d e r a t e m a n a g e m e n t s i t u a t i o n . A s n o t e d f o r

t e l e c o m m u n i c a t i o n s i n C h a p t e r I V , w e r e T a s m a n i a i n t e g r a l t o t h e c o n t i n e n t

and w i t h o u t a d i s t i n c t p o l i t i c a l t r a d i t i o n , t h i s m o r e m o d e r a t e o p e r a t i o n m i g h t

w e l l b e a b s o r b e d i n t o a l a r g e r g e o g r a p h i c e n t i t y . H o w e v e r , b o t h p h y s i c a l

s e p a r a t i o n a n d t r a d i t i o n s u g g e s t t h a t a d i s t i n c t p o s t a l s e r v i c e s s t r u c t u r e f o r

T a s m a n i a s h o u l d c o n t i n u e .

F r o m t h e s t a n d p o i n t o f m a n a g e m e n t b y a c e n t r a l a u t h o r i t y , t h e e x i s t e n c e

of s i x g e o g r a p h i c e n t i t i e s a p p e a r s t o r e p r e s e n t a n e n t i r e l y m a n a g e a b l e a r r a n g e ­

m e n t . F u r t h e r , t h e r e i s n o t h i n g u n t o w a r d i n h a v i n g o r g a n i s a t i o n s o f d i f f e r i n g

m a g n i t u d e s ( s t a t e s , d i s t r i c t s a n d s o f o r t h ) ; i n f a c t , a v a r i e t y o f s i z e s s h o u l d

f o s t e r a d e s i r a b l e m a n a g e m e n t p r o g r e s s i o n f r o m m o d e r a t e t o m a j o r r e s p o n ­

s i b i l i t i e s w i t h i n a g i v e n o r g a n i s a t i o n l e v e l - w i t h , o f c o u r s e , a p p r o p r i a t e d i f ­

f e r e n c e s i n c o m p e n s a t i o n .

U p t o t h e p r e s e n t , t h e w o r k a b i l i t y o f e m p l o y i n g s t a t e b o u n d a r i e s h a s b e e n

c l o s e l y r e l a t e d t o t h e h u b o f t h e s t a t e p o s t a l s y s t e m - t h e c a p i t a l c i t y m a i l

e x c h a n g e . T h i s c e n t r a l i t y w i l l d i m i n i s h a s o u t l y i n g m a i l c e n t r e s a r e d e v e l ­

o p e d a n d b e c o m e o p e r a t i o n a l . O n t h e o t h e r h a n d , a n e w c e n t r a l i t y m a y e m e r g e

i n t h e c a p i t a l c i t y a i r p o r t m a i l e x c h a n g e s n o w b e i n g p l a n n e d . A l t h o u g h t h e

s p e c i f i c o r g a n i s a t i o n a l i m p l i c a t i o n s o f t h e s e p r o s p e c t i v e s y s t e m m o d i f i c a t i o n s

c a n n o t b e a s s e s s e d a t t h i s t i m e , t h e y d o n o t s e e m t o c o n s t i t u t e a r e a s o n t o

s h i f t a w a y f r o m t h e s t a t e o r i e n t a t i o n .

V - 9

B - R E C O M M E N D A T I O N S

I n C h a p t e r III, a n u m b e r o f r e c o m m e n d a t i o n s f u n d a m e n t a l t o t h e f u t u r e

o f t h e p o s t a l s e r v i c e s w e r e p r e s e n t e d , i n c l u d i n g : t h e e s t a b l i s h m e n t o f p o s t a l

s e r v i c e s a s a s e p a r a t e e n t i t y , e i t h e r a s a s t a t u t o r y c o r p o r a t i o n o r a s a

D e p a r t m e n t o f S t a t e ; t h e p r o v i s i o n o f a p p r o p r i a t e t o p m a n a g e m e n t c a p a c i t y

t h r o u g h a c h i e f e x e c u t i v e o f f i c e r - c h i e f o p e r a t i n g o f f i c e r c o n c e p t ; a n d t h e d e l e ­

g a t i o n t o p o s t a l s e r v i c e s o f m o r e o f t h e m a n a g e m e n t a u t h o r i t y n o w e x e r c i s e d

b y o t h e r a g e n c i e s , p a r t i c u l a r l y t h e P u b l i c S e r v i c e B o a r d . T h e r e c o m m e n d e d

p o s t a l s e r v i c e s o r g a n i s a t i o n d e s c r i b e d h e r e i n t a k e s c o g n i s a n c e o f t h e s e e a r l i e r

r e c o m m e n d a t i o n s a n d b u i l d s u p o n t h e m .

T h e r e c o m m e n d e d o r g a n i s a t i o n a l s o r e s p o n d s t o t h e o b s e r v a t i o n s d e s c r i b e d

e a r l i e r i n t h i s c h a p t e r . It r e l i e v e s t h e e x c e s s i v e b u r d e n o n t h e F A D G - P o s t a l

S e r v i c e s , p r o v i d e s m o r e a p p r o p r i a t e a r r a n g e m e n t s f o r p o s t a l s e r v i c e s p l a n n i n g

s t r u c t u r e s h e a d q u a r t e r s a n d o p e r a t i n g o r g a n i s a t i o n s t o s e p a r a t e m o r e c l e a r l y

a n d t o b u l w a r k t h e c u s t o m e r s e r v i c e s a n d m a i l p r o c e s s i n g a c t i v i t i e s a n d ,

f i n a l l y , r e - a r r a n g e s a n d s t r e n g t h e n s t h e f i e l d m a n a g e m e n t s t r u c t u r e t o f a c i l i ­

t a t e d e l e g a t i o n of g r e a t e r m a n a g e m e n t a u t h o r i t y a n d r e s p o n s i b i l i t y , a l o n g w i t h

t h e c o l l a t e r a l b e n e f i t s o f i m p r o v e d e m p l o y e e d e v e l o p m e n t a n d c a r e e r p r o g r e s s i o

T h e s p e c i f i c r e c o m m e n d a t i o n s t o a c c o m p l i s h t h e s e e n d s a r e s e t f o r t h i n

t h e b a l a n c e of t h i s c h a p t e r .

E s t a b l i s h A C h i e f E x e c u t i v e O f f i c e r - C h i e f O p e r a t i n g O f f i c e r A r r a n g e m e n t

T o A c c o m m o d a t e T h e T o t a l T o p M a n a g e m e n t J o b

E x h i b i t V - 4 i l l u s t r a t e s t h e r e c o m m e n d e d b a s i c o r g a n i s a t i o n s t r u c t u r e f o r

p o s t a l s e r v i c e s . T h e h e a d q u a r t e r s s t r u c t u r e r e s t s u p o n t h e t w o k e y p o s i t i o n s

o f M a n a g i n g D i r e c t o r ( c h i e f e x e c u t i v e o f f i c e r ) a n d C h i e f G e n e r a l M a n a g e r

( c h i e f o p e r a t i n g o f f i c e r ) .

A s c h i e f e x e c u t i v e o f f i c e r , t h e M a n a g i n g D i r e c t o r ( M D ) w o u l d b e r e s p o n ­

s i b l e f o r a l l e l e m e n t s o f t h e p o s t a l s e r v i c e s . H e w o u l d o r i e n t h i s a c t i v i t i e s

c h i e f l y t o w a r d s m a t t e r s of s t r a t e g i c a n d l o n g e r - r a n g e i m p o r t , a n d w o u l d

c u l t i v a t e r e l a t i o n s h i p s w i t h h i g h e r a u t h o r i t i e s a n d w i t h o u t s i d e e n t i t i e s h a v i n g

e x e c u t i v e - l e v e l s i g n i f i c a n c e t o p o s t a l s e r v i c e s . I

I h e C h i e f G e n e r a l M a n a g e r ( C G M ) w o u l d r e p o r t t o t h e M D a n d w o u l d b e

r e s p o n s i b l e f o r t h e e n t i r e d a y - t o - d a y o p e r a t i n g a n d e x e c u t i v e c o - o r d i n a t i o n of

t h e p o s t a l s e r v i c e s , t o g e t h e r w i t h r e l a t e d s h o r t e r - r a n g e o p e r a t i o n a l p l a n n i n g

a n d t e c h n i c a l a n d c o m m e r c i a l s e r v i c e s d e v e l o p m e n t .

V - 10

RECOMMENDED PLAN OF ORGANISATION BASIC STRUCTURE

PO S T A L SE R V IC E S

D I R E C T O R

S T A T E D I R E C T O R S

C U S T O M E R S E R V I C E S

D I R E C T O R

S T R A T E G I C S E R V I C E S

I N T E R N A L A U D I T O R

M A I L P R O C E S S I N G

D I R E C T O R

P E R S O N N E L E M P L O Y E E A N D

D I R E C T O R

M A N A G E M E N T S E R V I C E S

D I R E C T O R

C H I E F

G E N E R A L M A N A G E R

trA 1I8IH

T h e n e e d f o r , a n d b e n e f i t s of, t h i s d u a l t o p m a n a g e m e n t c o n c e p t a r e

d e s c r i b e d i n C h a p t e r I I I ( b e g i n n i n g o n p a g e I I I - 3 2 ) , a n d f o r b r e v i t y a r e n o t

r e p e a t e d h e r e .

P r o v i d e T h e M a n a g i n g D i r e c t o r W i t h A n I m m e d i a t e S t a f f T a i l o r e d T o H i s

S t r a t e g i c A n d E x t e r n a l O r i e n t a t i o n

A s s h o w n i n E x h i b i t V - 5 , t h e i m m e d i a t e s t a f f t o t h e M D s h o u l d c o n s i s t o f

f i v e f u n c t i o n s :

- S e c r e t a r i a t

- E x t e r n a l R e l a t i o n s

- F i n a n c e

- S t r a t e g i c S e r v i c e s

- I n t e r n a l A u d i t .

P o s i t i o n t i t l e s h a v e b e e n s u g g e s t e d f o r t h e s e a n d o t h e r k e y s t a f f p o s i t i o n s

w h i c h s e e m a p p r o p r i a t e t o t h e i r r e s p e c t i v e l e v e l s o f r e s p o n s i b i l i t y . H o w e v e r ,

t h e s e a r e s u g g e s t e d t i t l e s o n l y , a n d s h o u l d b e c o n s i d e r e d i n t h e l i g h t o f t h e

s t a t u s o f o r g a n i s a t i o n ( t h a t i s , D e p a r t m e n t o f S t a t e v e r s u s s t a t u t o r y c o r p o r a t i o n )

a n d a n e v a l u a t i o n o f t h e r e l a t i v e i m p o r t a n c e o f a l l p o s i t i o n s .

T h e m a j o r f u n c t i o n s r e c o m m e n d e d f o r e a c h o f t h e s e s t a f f u n i t s a r e i d e n ­

t i f i e d i n E x h i b i t V - 5 . T h e s e f u n c t i o n s a r e s h o w n p u r e l y f o r d e s c r i p t i v e p u r ­

p o s e s , a n d n o i m p l i c a t i o n s r e g a r d i n g l o w e r - l e v e l o r g a n i s a t i o n s t r u c t u r e

s h o u l d b e a t t a c h e d t o t h e m . A n u m b e r o f t h e r e c o m m e n d e d f u n c t i o n s a r e

a l r e a d y p e r f o r m e d w i t h i n t h e A P O a n d a r e s i m p l y r e a r r a n g e d i n t h e r e c o m ­

m e n d a t i o n s t o s u p p o r t t h e s e p a r a t e m a n a g e m e n t o f t h e p o s t a l s e r v i c e s a n d t h e

a r r a n g e m e n t o f i t s s e n i o r e x e c u t i v e r e s p o n s i b i l i t i e s . A s i n C h a p t e r I V , t h e

f o l l o w i n g p a r a g r a p h s d i s c u s s o n l y t h o s e r e c o m m e n d e d f u n c t i o n s w h i c h a r e n e w

o r n o t a b l y m o d i f i e d .

T h e S e c r e t a r i a t w o u l d i n c l u d e a h i g h - l e v e l i n d u s t r i a l r e l a t i o n s a d v i s e r

a s i m m e d i a t e s u p p o r t f o r t h e i n f o r m a t i o n n e e d s o f t h e M a n a g i n g D i r e c t o r i n

t h i s c r i t i c a l a n d s e n s i t i v e a r e a . T h i s a d v i s e r w o u l d n o t b e r e s p o n s i b l e f o r

p l a n n i n g o r c o n d u c t i n g i n d u s t r i a l p r o g r a m m e s , n e g o t i a t i o n s , a n d s o f o r t h ;

s u c h m a t t e r s w o u l d a p p r o p r i a t e l y b e p e r f o r m e d u n d e r t h e C h i e f G e n e r a l

M a n a g e r , i n k e e p i n g w i t h h i s o p e r a t i n g r e s p o n s i b i l i t i e s . I n s t e a d , t h e a d v i s e r

w o u l d m a i n l y k e e p h i m s e l f i n f o r m e d o n i n d u s t r i a l m a t t e r s o f s i g n i f i c a n c e t o

t h e p o s t a l s e r v i c e s b u t e x t e r n a l t o i t ; a d v i s e t h e M a n a g i n g D i r e c t o r ( a n d h i s

s t a f f ) o n s u c h m a t t e r s a n d t h e i r i m p l i c a t i o n s ; m a i n t a i n l i a i s o n a n d r e l a t i o n s h i p s

V- ll

RECOMMENDED PLAN OF ORGANISATION MANAGING DIRECTOR'S IMMEDIATE STAFF

P O S T A L S E R V IC E S

• A d m in istra tiv e A ssista n t • In d u stria l R e la tio n s A dviser • In te rn a tio n a l R e la tio n s

• Legal L iaison W ith A tto rn e y -G e n e ra l's D e p a rtm e n t

E X T E R N A L R E L A T IO N S

D IR E C T O R D IR E C T O R

F IN A N C E

IN T E R N A L A U D IT O R S T R A T E G IC S E R V IC E S D IR E C T O R

S E C R E T A R IA T

M A N A G IN G D IR E C T O R

• P u b lic R e latio n s

• M iniste rial R e la tio n s • D o m estic G o v e rn m e n ta l R e la tio n s

• F in a n c ia l O b jec tiv e s A n d P olicies • B u d g et A n d T a riff S u b m issio n s • Cash B udgeting

• E c o n o m ic A n d F in a n c ia l A n aly sis

• L o ng-R a nge P lan n in g an d B usiness Plan e M a n a g e m e n t C o m m u n ic a tio n s S y ste m s D ev e lo p m e n t • A D P C o -o rd in a tio n

• F iscal A n d A c c o u n tin g A u d its

o n i n d u s t r i a l m a t t e r s w i t h o u t s i d e p a r t i e s o n b e h a l f o f t h e M a n a g i n g D i r e c t o r ;

a n d , f i n a l l y , c o n t r i b u t e a s r e q u e s t e d t o t h e f o r m u l a t i o n o f p o s t a l s e r v i c e s

i n d u s t r i a l p o l i c i e s a n d p r o g r a m m e s .

A s s h o w n i n t h e e x h i b i t , t h e S e c r e t a r i a t w o u l d a l s o i n c l u d e L e g al l i a i s o n

w i t h t h e A t t o r n e y - G e n e r a l ' s D e p a r t m e n t . If t h e A t t o r n e y - G e n e r a l ' s D e p a r t ­

m e n t w e r e n o t u s e d , t h e S e c r e t a r i a t w o u l d n o t i n c l u d e t h i s l i a i s o n f u n c t i o n ;

i n s t e a d , a L e g a l C o u n s e l f u n c t i o n w o u l d b e a d d e d t o t h e M a n a g i n g D i r e c t o r ' s

s t a f f . A p o s i t i o n o f S e c r e t a r y w o u l d a l s o b e r e q u i r e d i f a s t a t u t o r y c o r p o r a ­

t i o n f o r m o f o r g a n i s a t i o n w e r e a d o p t e d .

F i n a n c e w o u l d i n c l u d e t h e r e c o m m e n d a t i o n o f f i n a n c i a l o b j e c t i v e s , a n d

f i n a n c i a l m a n a g e m e n t a n d a n a l y s i s . T h e d e t e r m i n a t i o n o f o b j e c t i v e s i s c r i t i c ­

a l l y i m p o r t a n t t o e f f e c t i v e s t r a t e g i c a n d o p e r a t i n g m a n a g e m e n t , a n d s u c h

o b j e c t i v e s w o u l d f o r m t h e h e a r t o f a s e r i e s o f i n t e r - c o n n e c t e d o b j e c t i v e s a n d

g o a l s t o w h i c h e v e r y m a n a g e r w o u l d b e o r i e n t e d i n p l a n n i n g a n d c a r r y i n g o u t

h i s d u t i e s . F i n a n c i a l m a n a g e m e n t a n d a n a l y s i s w o u l d t a k e - o n i n c r e a s e d s i g ­

n i f i c a n c e i n s u p p o r t o f t h e f o r m u l a t i o n o f o b j e c t i v e s a n d , i f t h e r e c o m m e n d a ­

t i o n s o f t h e f i n a n c i a l c o n s u l t a n t s t o t h e C o m m i s s i o n o f I n q u i r y a r e i m p l e m e n t e d ,

i n t h e a c q u i s i t i o n a n d u s e o r t e m p o r a r y i n v e s t m e n t o f s h o r t - t e r m d e b t c a p i t a l .

S t r a t e g i c S e r v i c e s i s r e c o m m e n d e d a s a s m a l l , e l i t e g r o u p o f f u n c t i o n s

t h a t w o u l d p r i n c i p a l l y f a c i l i t a t e a n d c o - o r d i n a t e ( p r o s p e c t i v e l y a n d c u r r e n t l y )

t h e e f f o r t s of o t h e r o r g a n i s a t i o n a l u n i t s a n d p u r s u e s t r a t e g i c i s s u e s n o t r e a d i l y

i n t h e d o m a i n s o f o t h e r s . O n e f u n c t i o n a l a r e a s h o u l d i n c l u d e s t r a t e g i c s t u d i e s

a n d l o n g e r - r a n g e p l a n n i n g , i n c l u d i n g t h e F i v e - Y e a r B u s i n e s s P l a n . L o n g e r -

r a n g e p l a n n i n g a n d b u s i n e s s p l a n a c t i v i t i e s w o u l d c o n s i s t e s s e n t i a l l y o f s p e c i f y ­

i n g p l a n c o n t e n t s , c o m p i l i n g t h e c o n t e n t s o f p l a n s d e v e l o p e d b y o t h e r s , a d d i n g

t o t h e c o m p i l a t i o n t h e p e r t i n e n t i m p l i c a t i o n s o f s t r a t e g i c s t u d i e s , a n d c r i t i c a l l y

e x a m i n i n g t h e w h o l e a s a n i m m e d i a t e a d v i s e r t o t h e M a n a g e r D i r e c t o r . S t r a ­

t e g i c s t u d y a c t i v i t i e s c o u l d e n c o m p a s s v i r t u a l l y a n y t o p i c h a v i n g f u n d a m e n t a l

a n d l a s t i n g s i g n i f i c a n c e t o p o s t a l s e r v i c e s . B e c a u s e s e v e r a l o t h e r u n i t s ( d i s ­

c u s s e d s u b s e q u e n t l y ) w o u l d a l s o h a v e p l a n n i n g f u n c t i o n s , t h e s e s t r a t e g i c s t u d i e s

w o u l d l o g i c a l l y c o n c e r n t o p i c s : (1) o u t s i d e t h e e x p e r t i s e o f o t h e r g r o u p s ;

(2) w i t h i n t h e e x p e r t i s e o f o t h e r g r o u p s t e m p o r a r i l y o v e r l o a d e d b y o t h e r w o r k ;

o r (3) i n a r e a s i n w h i c h t h e M a n a g i n g D i r e c t o r d e s i r e d a f r e s h v i e w p o i n t . T o

p r e c l u d e d u p l i c a t i o n a n d t o c o n t r o l a n i n h e r e n t l y u n s t r u c t u r e d a c t i v i t y , s t r a ­

t e g i c s t u d i e s w o u l d b e u n d e r t a k e n o n l y w i t h t h e e x p r e s s a u t h o r i s a t i o n o f t h e

M a n a g i n g D i r e c t o r .

It i s r e c o m m e n d e d t h a t t w o o t h e r f u n c t i o n s b e p a r t o f S t r a t e g i c S e r v i c e s :

d e v e l o p m e n t o f a m a n a g e m e n t c o m m u n i c a t i o n s s y s t e m , a n d c o - o r d i n a t i o n

of a u t o m a t e d d a t a p r o c e s s i n g . T h e f i r s t f u n c t i o n i s i n d i r e c t r e s p o n s e t o t h e

V - 12

o b s e r v a t i o n m a d e i n C h a p t e r I I I c o n c e r n i n g m a n a g e m e n t c o m m u n i c a t i o n s . A s

t h e m e c h a n i c a l e l e m e n t s o f a n i m p r o v e d c o m m u n i c a t i o n s s y s t e m a r e d e s i g n e d ,

r e s p o n s i b i l i t y f o r s y s t e m o p e r a t i o n w o u l d b e t r a n s f e r r e d t o t h e C h i e f G e n e r a l

M a n a g e r ' s s t a f f . H o w e v e r , t h e o v e r v i e w o f t h e m a n a g e m e n t c o m m u n i c a t i o n s

s y s t e m ( i n i t s b r l l s e n s e ) w o u l d r e m a i n w i t h S t r a t e g i c S e r v i c e s .

R e g a r d i n g A D P c o - o r d i n a t i o n , f e w p o s t a l s e r v i c e s d a t a p r o c e s s i n g a p p l i ­

c a t i o n s a r e c u r r e n t l y i m p l e m e n t e d , a n d e a r l y a c q u i s i t i o n of s o p h i s t i c a t e d d a t a

p r o c e s s i n g e q u i p m e n t f o r u s e b y p o s t a l s e r v i c e s f o l l o w i n g i t s s e p a r a t i o n f r o m

t e l e c o m m u n i c a t i o n s w o u l d b e u n l i k e l y b e c a u s e o f t h e f e w a p p l i c a t i o n s i n v o l v e d .

A t t h e s a m e t i m e , h o w e v e r , a n i n i t i a l l y m o d e s ; b u t i n c r e a s i n g l y s o p h i s t i c a t e d

A D P s t a f f w o u l d b e n e e d e d t o c o - o r d i n a t e t i m e - s h a r i n g a n d c o n t r a c t u a l s e r v ­

i c e s , t o e v a l u a t e h a r d w a r e r e q u e s t s ( i n c l u d i n g a n a l y s i s n o w d o n e b y M a n a g e ­

m e n t A d v i s o r y S e r v i c e s ), a n d t o s e r v e A D P u s e r s a n d p o t e n t i a l u s e r s w i t h i n

p o s t a l s e r v i c e s a s a d v i s e r s , s y s t e m s a n a l y s t s , p r o g r a m m e r s , a n d p e r h a p s

e v e n a s d a t a t r a n s c r i b e r s a n d o p e r a t o r s .

S i n c e i t i s n o t b e l i e v e d t h a t p o s t a l s e r v i c e s w o u l d s o o n b e i n a p o s i t i o n t o

j u s t i f y t h e p r o c u r e m e n t o f e x t e n s i v e c o m p u t e r h a r d w a r e , t h e u s e o f t e l e c o m ­

m u n i c a t i o n s A D P s t a f f a n d f a c i l i t i e s o n a n a g e n c y b a s i s o r t h e h i r i n g o f c o n ­

t r a c t u a l p r o c e s s i n g i s r e c o m m e n d e d . If a n d w h e n t h e c o s t of a p o s t a l s e r v i c e s

i n s t a l l a t i o n a n d a s s o c i a t e d s t a f f c a n b e j u s t i f i e d , i t i s r e c o m m e n d e d t h a t t h e

A D P o r g a n i s a t i o n , t h e n b e i n g m o r e o p e r a t i o n a l a n d i n t e r n a l , a n d l e s s d e v e l ­

o p m e n t a l a n d c o n t r a c t u a l , b e r e a s s i g n e d t o t h e s t a f f o f t h e C h i e f G e n e r a l

M a n a g e r a s a d i s t i n c t s t a f f f u n c t i o n a l g r o u p .

P r o v i d e A n I m m e d i a t e S t a f f T o T h e C h i e f G e n e r a l M a n a g e r I n c o r p o r a t i n g

T h o s e F u n c t i o n s A p p r o p r i a t e T o H i s O p e r a t i n g R e s p o n s i b i l i t i e s

A s s h o w n i n E x h i b i t V - 6 , t h e f u n c t i o n s r e c o m m e n d e d f o r t h e s t a f f o f t h e

C h i e f G e n e r a l M a n a g e r a r e :

- O p e r a t i o n s O f f i c e

- C u s t o m e r S e r v i c e s

- M a i l P r o c e s s i n g

- P e r s o n n e l

- E m p l o y e e a n d I n d u s t r i a l R e l a t i o n s

- M a n a g e m e n t S e r v i c e s .

V -1 3

P O S T A L S E R V IC E S

RECOMMENDED PLAN OF ORGANISATION CHIEF GENERAL MANAGER'S IMMEDIATE STAFF

CH IEF

G E N E R A L M AN A GER

D IR EC TO R

CUSTOM ER S E R V IC E S

• C ustom e r Services O p e ra tio n s Review A nd P ro d u c tiv ity A nalysis • M arket R esearch • P ro d u c t Design A nd D evelopm ent • P ro d u c t M arketing A nd M anagem ent • Post O ffices P olicy A nd D o c u m e n ta tio n • Post O ffices F acility D esign A nd E ngineering • T ariff S ubm ission Proposals • A dvertising • Philatelic

O PE R A T IO N S O FFIC E

e N etw o rk P lanning

• M anagem ent A d visory Services • O p e ra tio n s In fo rm a tio n C o-ordina tion

D IR E C T O R

M AIL PR O C E SSIN G

D IR E C T O R

PE R SO N N E L

D IR E C T O R

EM PLO Y E E AND IN D U ST R IA L R E L A T IO N S

• Mail Processing O p eratio n s Review A n d P ro d u c tiv ity A nalysis • Mail Processing Policy A nd D o c u m e n ta tio n • Mail P rocessing D esign A nd Engineering

• S ta ff R e c ru itm e n t

® T raining A nd D ev elo p m en t • E sta b lish m e n ts

• P erso n n el R ecords • M anpow er Planning • G eneral Services

ST A T E D IR E C T O R S

PO ST A L SE R V IC E S

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• M an ag e m en t D evelopm ent (In d u stria l) • C o n d itio n s O f Service A nd A w ard I n te rp re ta tio n • U nion A nd T ra d e A ssociation

R elatio n s • N eg o tiatio n A n d A rb itra tio n • S ta ff R elatio n s

• S pecial S tu d ie s

• Mail P rocessing A nd C u sto m e r Services • In d u stria l R e la tio n s S pecialists

D IR E C T O R

M A N A G E M E N T S E R V IC E S

• A c c o u n tin g S y stem s D ev elo p m en t • A c c o u n tin g

• S ite s A n d Facilities

• P urchasing C o -o rd in a tio n A nd T e n d e r B oard S u p p o rt • O p e ra tio n s B udget P re p a ra tio n A nd A nalysis • O ffice Services

IT V-6

T h e f u n c t i o n s r e c o m m e n d e d f o r e a c h o f t h e s e u n i t s a r e l i s t e d o n t h e

e x h i b i t , b u t s h o u l d n o t b e c o n s t r u e d a s s u g g e s t i n g l o w e r - l e v e l o r g a n i s a t i o n

s t r u c t u r e - T h e f o l l o w i n g p a r a g r a p h s e x p l o r e t h o s e f u n c t i o n s t h a t a r e n e w o r :

m o d i f i e d , b u t n o t t h e f u n c t i o n s a l r e a d y p e r f o r m e d a n d s i m p l y r e - a r r a n g e d r.i

t h e r e c o m m e n d e d s t r u c t u r e .

T h e O p e r a t i o n s O f f i c e w o u l d s e r v e a s a n i m m e d i a t e " n e r v e c e n t r e " s o u r c e

o f s t a f f s u p p o r t t o t h e C O M a n d t o t h e o r g a n i s a t i o n w h i c h h e d i r e c t s . T h e

O p e r a t i o n s O f f i c e w o u l d b e r e s p o n s i b l e f o r m a i n t a i n i n g c o n s o l i d a t e d n e t w o r k

p i - n s a n d a n a l y s e s ( b u i l d i n g o n i n p u t s f r o m o t h e r s t a f f g r o u p s a n d o p e r a t i n g

o r g a n i s a t i o n s ), a n d f o r c o - o r d i n a t i n g o p e r a t i n g i n f o r m a t i o n a n d p r o v i d i n g

m a n a g e m e n t a d v i s o r y s e r v i c e s .

T h e i n f o r m a t i o n c o - o r d i n a t i o n f u n c t i o n w o u l d p r o b a b l y e v o l v e o v e r t i m e .

U n t i l t h e d e s i g n o f a m a n a g e m e n t c o m m u n i c a t i o n s s y s t e m ( d i s c u s s e d p r e v i o u s l y ) I

y i e l d e d m e a n i n g f u l s p e c i f i c a t i o n s , t h i s f u n c t i o n w o u l d i n v o l v e d i s t i l l i n g f r o m

e x i s t i n g d a t a s o u r c e s t h e m o s t u s e f u l m u l t i - f u n c t i o n a l i n f o r m a t i o n a n d s u b s e ­

q u e n t l y a n a l y s i n g i t t o s u p p o r t t h e C G M i n f u l f i l l i n g h i s o p e r a t i n g r e s p o n s i b i l i ­

t i e s . A s t h e c o m m u n i c a t i o n s s y s t e m d e s i g n u n f o l d s , t h i s f u n c t i o n w o u l d g r a d u a l l y

c e a s e t o r e l y o n p r e s e n t s o u r c e s a n d w o u l d s e r v e r a t h e r t o e n s u r e c o n t i n u e d

f u l f i l l m e n t o f t h e s y s t e m d e s i g n , d i r e c t l y o r t h r o u g h c o - o r d i n a t i o n w i t h o t h e r s .

R e g a r d l e s s o f d e s i g n s t a t u s , t h i s f u n c t i o n w o u l d r e c e i v e , a n a l y s e a n d b a l a n c e

r e p o r t s a n d s t a t i s t i c s e m a n a t i n g f r o m l i n e a n d o t h e r s t a f f g r o u p s , a n d w o u l d

f u r n i s h t h e r e s u l t s t o t h e C G M a n d o t h e r o p e r a t i n g m a n a g e r s .

T h e m a n a g e m e n t a d v i s o r y s e r v i c e s f u n c t i o n w o u l d c o n s i s t o f t h e a c t i v i t i e s

( o t h e r t h a n o f f i c e e q u i p m e n t h a r d w a r e a n a l y s i s ) n o w p e r f o r m e d b y t h e M a n a g e ­

m e n t A d v i s o r y S e r v i c e s S e c t i o n o f t h e C e n t r a l A d m i n i s t r a t i o n P e r s o n n e l B r a n c h ,

a u g m e n t e d a s n e c e s s a r y t o p e r m i t t h e o f f e r i n g o f c o n s u l t i n g a s s i s t a n c e i n

i n t e r n a l o r g a n i s a t i o n a n d a d m i n i s t r a t i v e p r a c t i c e s . T h i s f u n c t i o n w o u l d c o n ­

c e r n i t s e l f m a i n l y w i t h m a n a g e m e n t o r g a n i s a t i o n a n d m u l t i - f u n c t i o n a l a d m i n ­

i s t r a t i o n m a t t e r s , b e c a u s e t h e r e c o m m e n d e d c u s t o m e r s e r v i c e s a n d m a i l

p r o c e s s i n g g r o u p s w o u l d b e c o n t i n u o u s l y m o n i t o r i n g , c e n t r a l l y a n d i n t h e

f i e l d , s u c h o t h e r m a t t e r s a s t h e e f f i c i e n c y o f w o r k ! - - l e v e l s y s t e m s , p r o ­

c e d u r e s , o r g a n i s a t i o n s , a n d s o f o r t h .

T h e C u s t o m e r S e r v i c e s a n d M a i l P r o c e s s i n g u n i t s w o u l d e a c h c o n t a i n t h e

f u l l r a n g e o f a n a l y t i c a l e x p e r t i s e a n d f u n c t i o n s n e c e s s a r y t o p l a n a n d s u p p o r t

o p e r a t i o n s i n t h e s e t w o b a s i c a c t i v i t i e s w h i c h c o n s t i t u t e t h e p o s t a l s y s t e m .

E a c h u n i t w o u l d b e r e s p o n s i b l e f o r p r o v i d i n g o p e r a t i o n a l g u i d a n c e t o t h e c u s ­

t o m e r s e r v i c e s a n d m a i l p r o c e s s i n g a c t i v i t i e s i n t h e s t a t e a n d f i e l d o p e r a t i n g

o r g a n i s a t i o n s , a n d a l s o f o r p r o v i d i n g t o t h e C h i e f G e n e r a l M a n a g e r , b o t h

d i r e c t l y a n d t h r o u g h t h e O p e r a t i o n s O f f i c e , t h e s p e c i a l i s e d p l a n s a n d a n a l y s e s

n e e d e d f o r t o p o p e r a t i o n a l d e c i s i o n s .

V - 14

F u n c t i o n s c o n s t i t u t i n g t h e C u s t o m e r S e r v i c e s u n i t w o u l d b e d r a w n f r o m

t h e c u r r e n t P o s t O f f i c e s a n d C o m m e r c i a l B r a n c h e s . T h e M a i l P r o c e s s i n g

u n i t w o u l d , i n t u r n , i n c l u d e t h e a c t i v i t i e s o f t h e p r e s e n t M a i l s a n d T r a n s p o r t

B r a n c h . F u n c t i o n s o f t h e P o s t a l E n g i n e e r i n g a n d P o s t a l P l a n n i n g B r a n c h e s

w o u l d f a l l i n t o o n e o r t h e o t h e r u n i t , a s a p p r o p r i a t e .

C o m b i n i n g e x i s t i n g f u n c t i o n s i n t o t w o u n i t s i n t h i s m a n n e r w o u l d g i v e t h e

o p e r a t i n g l e v e l a c l e a r s o u r c e o f g u i d a n c e f o r e i t h e r b a s i c a c t i v i t y . T h i s m e a n s ,

f o r e x a m p l e , t h a t t h e m a i l p r o c e s s i n g o p e r a t i n g o r g a n i s a t i o n w o u l d a s k f o r

d i r e c t i o n c o n c e r n i n g a m a i l p r o c e s s i n g o p e r a t i o n a l p r o b l e m f r o m i t s c o u n t e r ­

p a r t o r g a n i s a t i o n a t h e a d q u a r t e r s . It a l s o m e a n s t h a t a p o s t m a s t e r w i t h a

m a i l s o r t i n g a n d r o u t i n g p r o b l e m w o u l d g o , v i a c h a n n e l s , t o t h e h e a d q u a r t e r s

M a i l P r o c e s s i n g u n i t f o r a s o l u t i o n . B e c a u s e t h i s u n i t w o u l d i n c o r p o r a t e t h e

f u l l r a n g e o f e x p e r t i s e r e g a r d i n g a l l a s p e c t s o f m a i l p r o c e s s i n g , i t w o u l d be

t h e s o l e p o i n t o f f o c u s f o r s t a f f s u p p o r t a n d f u n c t i o n a l g u i d a n c e f o r m a i l

p r o c e s s i n g a c t i v i t i e s . T h e s e p o i n t s s i m i l a r l y a p p l y c o n c e r n i n g t h e C u s t o m e r

S e r v i c e s u n i t .

A n o t h e r a d v a n t a g e of t h i s o r g a n i s a t i o n a l a r r a n g e m e n t w o u l d b e t h e c o - o r ­

d i n a t e d f o c u s p r o v i d e d by t h e s i n g l e , c o m p r e h e n s i v e c e n t r a l f u n c t i o n a l s t a f f

g r o u p . T h e r e w o u l d n o l o n g e r b e a n o p p o r t u n i t y f o r g a p o r o v e r l a p i n t h e

f u n c t i o n a l d i r e c t i o n g i v e n by h e a d q u a r t e r s o r g a n i s a t i o n s . F u r t h e r , o t h e r

h e a d q u a r t e r s o r g a n i s a t i o n a l u n i t s w o u l d h a v e a s i n g l e g r o u p t o w h i c h t h e y

c o u l d d i r e c t t h e i r q u e s t i o n s , s u g g e s t i o n s a n d r e q u e s t s r e g a r d i n g o n e o r t h e

o t h e r o f t h e b a s i c a c t i v i t i e s .

T h e P e r s o n n e l a n d t h e E m p l o y e e a n d I n d u s t r i a l R e l a t i o n s u n i t s s h o u l d b e

e s t a b l i s h e d s e p a r a t e l y , a s s h o w n . T h i s s e p a r a t i o n w o u l d n o t b e a m o d i f i c a t i o n

o i c u r r e n t a r r a n g e m e n t s , a l t h o u g h t h e i n c l u s i o n o f t w o o p e r a t i o n s s p e c i a l i s t

f u n c t i o n s i n t h e E m p l o y e e a n d I n d u s t r i a l R e l a t i o n s u n i t w o u l d r e q u i r e t h a t

f u n c t i o n s n o w p e r f o r m e d i n t h e P o s t O f f i c e s a n d i n t h e M a i l s a n d T r a n s p o r t

B r a n c h e s b e t r a n s f e r r e d t o t h i s u n i t .

It i s r e c o m m e n d e d t h a t s e p a r a t e u n i t s b e m a i n t a i n e d f o r p e r s o n n e l a n d

f o r e m p l o y e e a n d i n d u s t r i a l r e l a t i o n s , p r i n c i p a l l y b e c a u s e o f t h e p r e s e n t

h e c t i c s t a t e o f i n d u s t r i a l r e l a t i o n s i n t h e p o s t a l s e r v i c e s . P r e s e n t c o n d i t i o n s

u n f o r t u n a t e l y w o r k t o c r e a t e a n u n s e t t l e d a n d r a p i d l y c h a n g i n g e n v i r o n m e n t

f o r i n d u s t r i a l r e l a t i o n s , a n e n v i r o n m e n t f r o m w h i c h it w o u l d s e e m w i s e t o

s e p a r a t e p e r s o n n e l a c t i v i t i e s . I f a n d w h e n t h e i n d u s t r i a l s i t u a t i o n p e r m i t s

a m o r e p r o g r a m m e d a n d s t a b l e p e r f o r m a n c e o f t h e i n d u s t r i a l r e l a t i o n s f u n c ­

t i o n , i t i s r e c o m m e n d e d t h a t t h e t w o g r o u p s o f f u n c t i o n s b e c o m b i n e d t o g a i n

f o r p o s t a l s e r v i c e s t h e b e n e f i t s a n t i c i p a t e d f o r t e l e c o m m u n i c a t i o n s ( d e s c r i b e d

on p a g e I V - 1 8).

V -1 5

R e s t r u c t u r e T h e S t a t e - L e v e l P o s t a l S e r v i c e s O r g a n i s a t i o n

A n u m b e r o f m o d i f i c a t i o n s t o t h e s t a t e - l e v e l p o s t a l s e r v i c e s o r g a n i s a t i o n

s t r u c t u r e a r e r e c o m m e n d e d , a n d a r e i l l u s t r a t e d i n E x h i b i t V - 7 . N a t u r a l l y ,

t h e s e p a r a t i o n o f p o s t a l s e r v i c e s f r o m t e l e c o m m u n i c a t i o n s w o u l d n e c e s s i t a t e

t h e a s s i g n m e n t o f a n u m b e r o f s t a f f a c t i v i t i e s , n o w p e r f o r m e d i n c o m m o n , t o

t h e S t a t e D i r e c t o r s - P o s t a l S e r v i c e s . T h e s e s t a f f a c t i v i t i e s w o u l d i n c l u d e

m a n a g e m e n t s e r v i c e s , a u d i t , a n d p e r s o n n e l a n d i n d u s t r i a l r e l a t i o n s . T h e

M a n a g e m e n t S e r v i c e s u n i t w o u l d e n c o m p a s s a c c o u n t i n g , b u d g e t a n d r e l a t e d

s t a f f s e r v i c e a n d a d m i n i s t r a t i o n a c t i v i t i e s . T h e A u d i t u n i t w o u l d i n c l u d e

i n v e s t i g a t i o n s a n d t h e p e r f o r m a n c e o f a c c o u n t i n g a n d a d m i n i s t r a t i v e a u d i t s

a s m a y b e o r d e r e d b y t h e S t a t e D i r e c t o r o r b y t h e h e a d q u a r t e r s I n t e r n a l A u d i t

u n i t . P e r s o n n e l a n d I n d u s t r i a l R e l a t i o n s w o u l d f u n c t i o n e s s e n t i a l l y a s i t d o e s

n o w , b u t w o u l j l i n c l u d e r e l a t e d f u n c t i o n s d r a w n i n f r o m t h e p r e s e n t s t a t e - l e v e l

P o s t O f f i c e s B r a n c h ( o r S e c t i o n ) . N o s e p a r a t i o n o f I n d u s t r i a l R e l a t i o n s f r o m

P e r s o n n e l i s c o n s i d e r e d n e c e s s a r y a t t h i s l e v e l b e c a u s e I n d u s t r i a l R e l a t i o n s ,

b e i n g a h i g h l y c e n t r a l i s e d f u n c t i o n n o w a n d i n t h e f u t u r e , w o u l d t e n d t o p a s s

t h e m o r e s e r i o u s a n d i n v o l v e d p r o b l e m s t o t h e h e a d q u a r t e r s l e v e l f o r r e m e d y

a n d s o l u t i o n .

A p h a s e d a p p r o a c h t o o r g a n i s i n g s t a t e - l e v e l d i r e c t i o n o f p o s t a l s e r v i c e s

o p e r a t i o n s i s r e c o m m e n d e d . I n t h e f i r s t p h a s e , w h i c h i s i l l u s t r a t e d i n

E x h i b i t V - 7 , a C u s t o m e r S e r v i c e s u n i t w o u l d b e e s t a b l i s h e d r e p o r t i n g t o t h e

S t a t e D i r e c t o r . T h i s u n i t w o u l d d i r e c t , t h r o u g h a n u m b e r o f R e g i o n P o s t a l

M a n a g e r s (a n e w p o s i t i o n d e f i n e d i n t h e n e x t r e c o m m e n d a t i o n ) , t h e a c t i v i t i e s

i n a n d r e l a t e d t o p o s t o f f i c e s , a n d a l s o t h e a c t i v i t i e s o f a n y m a i l h a n d l i n g

o f f i c e s , m a i l s o r t i n g o f f i c e s a n d a r e a m a i l c e n t r e s t h a t c u r r e n t l y r e p o r t t o

D i s t r i c t P o s t a l M a n a g e r s . T h e C u s t o m e r S e r v i c e s u n i t w o u l d a l s o i n c l u d e

t h e a c t i v i t i e s n o w p e r f o r m e d b y s t a t e - l e v e l P o s t O f f i c e s B r a n c h e s ( o r S e c t i o n s )

a n d t h e p o s t o f f i c e s - r e l a t e d a c t i v i t i e s n o w p e r f o r m e d i n s t a t e p o s t a l p l a n n i n g

a n d e n g i n e e r i n g o r g a n i s a t i o n s . T h u s , t h e C u s t o m e r S e r v i c e s u n i t w o u l d p r o ­

v i d e s t a f f s u p p o r t f o r a n a l y s i n g , p l a n n i n g a n d d e s i g n i n g p o s t o f f i c e s t h r o u g h o u t

t h e s t a t e , a s w e l l a s l i m i t e d s u p p o r t f o r m a r k e t i n g a n d p r o m o t i o n a c t i v i t i e s .

A l s o i n t h e f i r s t p h a s e , a M a i l P r o c e s s i n g u n i t w o u l d b e e s t a b l i s h e d ,

r e p o r t i n g t o t h e S t a t e D i r e c t o r . T h i s u n i t w o u l d d i r e c t m a i l e x c h a n g e s a n d ,

d u r i n g c o n s t r u c t i o n a n d p i l o t o p e r a t i o n p e r i o d s , m a i l a n d p a r c e l c e n t r e s . It

w o u l d a l s o a b s o r b t h e s t a t e - l e v e l T r a n s p o r t B r a n c h f u n c t i o n s , a n d w o u l d

i n c l u d e t h e n o n - p o s t o f f i c e s a c t i v i t i e s n o w p e r f o r m e d b y p o s t a l p l a n n i n g a n d

b y e n g i n e e r i n g a t t h e s t a t e l e v e l . I n t h i s f a s h i o n , t h e M a i l P r o c e s s i n g u n i t

w o u l d c e n t r a l i s e d i r e c t i o n o f , a n d s t a f f s u p p o r t f o r , t h e s e m a i l p r o c e s s i n g

o p e r a t i o n s w i t h i n t h e s t a t e , e x c e p t f o r t h e p r o c e s s i n g f a c i l i t i e s a s s i g n e d t o

R e g i o n P o s t a l M a n a g e r s a s m e n t i o n e d p r e v i o u s l y . T o t h e s e f a c i l i t i e s , t h e

M a i l P r o c e s s i n g u n i t w o u l d p r o v i d e f u n c t i o n a l c o u n s e l a n d s u p p o r t t h r o u g h

C u s t o m e r S e r v i c e s .

V - 16

POSTAL SERVICES

R E C O M M E N D E D P L A N O F O R G A N I S A T I O N

I N I T I A L P H A S E , S T A T E S T R U C T U R E

• A c c o u n t i n g

• B u d g e t

• A d m i n i s t r a t i o n A n d S e c u r i t y

• P u r c h a s i n g C o - o r d i n a t i o n

• A c c o u n t i n g A u d i t

• A d m i n i s t r a t i v e A u d i t

• i n v e s t i g a t i o n s

e T r a i n i n g

• P r o c e s s i n g

• A w a r d s I n t e r p r e t a t i o n a n d

P o s t O f f i c e s P r o d u c t i v i t y

A n a l y s i s

P o s t O f f i c e P l a n n i n g

P o s t O f f i c e D e s i g n

F l e e t M a n a g e m e n t

T r a n s p o r t C o n t r a c t s

S c h e d u l i n g

® N e t w o r k A n a l y s i s a n d P l a n n i n g

• M a i l P r o c e s s i n g P r o d u c t i v i t y

A n a l y s i s

R e c r u i t i n g a n d T e s t i n g

T r a i n i n g

O p e r a t i o n s

( S e e E x h i b i t V - 8 )

M A N A G E R

P O S T A L S E R V I C E S

• O p e r a t i o n s

• T r a i n i n g , R e c e i v i n g a n d

T e s t i n g A s R e q u i r e d

T h e s e c o n d p h a s e w o u l d o c c u r a t t h e c o m p l e t i o n o f a n i n i t i a l s h a k e d o w n

p e r i o d f o r a m a i l o r p a r c e l c e n t r e . A t t h a t t i m e , t h e c e n t r e a n d r e l a t e d t r a n s ­

p o r t ( g e n e r a l l y i n t r a - r e g i o n a l ) w o u l d b e t r a n s f e r r e d f r o m M a i l P r o c e s s i n g t o

the a u t h o r i t y o f t h e p e r t i n e n t R e g i o n P o s t a l M a n a g e r . H e w o u l d t h e n b e c o m e

f u l ly r e s p o n s i b l e f o r t h e e n t i r e s c o p e o f t h e p o s t a l s y s t e m i n h i s r e g i o n . A s

he a s s u m e d s u c h r e s p o n s i b i l i t y , t h e R e g i o n P o s t a l M a n a g e r w o u l d c e a s e t o

r e p o r t t o C u s t o m e r S e r v i c e s a n d w o u l d r e p o r t i n s t e a d t o t h e S t a t e D i r e c t o r .

In t h i s f a s h i o n , t h e o r g a n i s a t i o n s t r u c t u r e w o u l d g r a d u a l l y e v o l v e t o w a r d s

a p a t t e r n i n w h i c h t h o s e R e g i o n P o s t a l M a n a g e r s h a v i n g r e s p o n s i b i l i t i e s f o r

m o r e t h a n p o s t o f f i c e s r e p o r t e d t o t h e S t a t e D i r e c t o r - d i r e c t l y , o r t h r o u g h

a D e p u t y S t a t e D i r e c t o r i f t h e n u m b e r o f t h e s e b r o a d e r - s c o p e d R e g i o n P o s t a l

M a n a g e r s w a r r a n t e d . T h e C u s t o m e r S e r v i c e s a n d M a i l P r o c e s s i n g u n i t s w o u l d

g r a d u a l l y r e l i n q u i s h o p e r a t i n g r e s p o n s i b i l i t i e s a n d b e c o m e r e l a t i v e l y m o r e

o r i e n t e d t o w a r d s p r o v i d i n g s t a f f s u p p o r t i n t h e i r r e s p e c t i v e a r e a s . T h e M a i l

P r o c e s s i n g u n i t w o u l d c o n t i n u e t o e x e r c i s e o p e r a t i n g a u t h o r i t y o v e r c a p i t a l

cit y a n d a n y a i r p o r t m a i l e x c h a n g e s a n d t h e t r a n s p o r t a t i o n a r r a n g e m e n t s k e y e d

to s u c h f a c i l i t i e s , a s w e l l a s o v e r t h e v a r i o u s s t a t e - w i d e t r a n s p o r t a t i o n c o n ­

t r a c t s a n d a n y i n t e r - s t a t e t r a n s p o r t a t i o n c o n t r a c t s u n d e r s t a t e c o n t r o l .

It i s b e l i e v e d t h a t t h e i n i t i a l r e s t r u c t u r i n g o f t h e s t a t e l e v e l , a n d t h e p h a s e d

e v o l u t i o n o f a m o d i f i e d s t r u c t u r e , w o u l d n o t a b l y e n h a n c e e f f e c t i v e n e s s b y :

- S t r o n g l y r e c o g n i s i n g a n d o r g a n i s i n g a r o u n d t h e d i s t i n c t i o n b e t w e e n

c u s t o m e r s e r v i c e s a n d m a i l p r o c e s s i n g w h i c h i s b a s i c i n t h e p o s t a l

. s y s t e m

- P r o v i d i n g f o r l e s s c o m p l i c a t e d f u n c t i o n a l r e l a t i o n s h i p s b e t w e e n t h e

s t a t e l e v e l a n d h e a d q u a r t e r s

- I n i t i a l l y p r o v i d i n g a s t r o n g c u s t o m e r s e r v i c e s o r i e n t a t i o n t o a l l

p o s t o f f i c e f i e l d m a n a g e r s , i n c l u d i n g t h o s e w h o s e r e s p o n s i b i l i t i e s

a l r e a d y i n c l u d e m a i l p r o c e s s i n g f a c i l i t i e s , i n o r d e r t o c a r r y t h i s

o r i e n t a t i o n d o w n t h r o u g h t h e p o s t o f f i c e s o r g a n i s a t i o n

- A f t e r s h a k e d o w n u n d e r s p e c i a l i s e d m a n a g e m e n t , u s i n g t h e o p p o r ­

t u n i t y a f f o r d e d b y m a i l c e n t r e s t o d e c e n t r a l i s e a v i t a l t o t a l - s y s t e m

r e s p o n s i b i l i t y t o t h e f i e l d a n d s i m p l i f y s t a t e f i e l d r e l a t i o n s i n t h e

p r o c e s s .

V - 17

R e o r g a n i s e T h e F i e l d M a n a g e m e n t S t r u c t u r e A n d G i v e F i e l d M a n a g e r s

S u f f i c i e n t A u t h o r i t y A n d S t a f f S u p p o r t T o A c c o m p l i s h T h e i r E x p a n d e d

T a s k s

T o o v e r c o m e t h e d i s a d v a n t a g e s o f t h e e x i s t i n g f i e l d p o s t o f f i c e s t r u c t u r e ,

a n d g r a d u a l l y b u i l d m o r e c o m p l e t e f i e l d m a n a g e m e n t r e s p o n s i b i l i t i e s a n d

t h e r e b y g a i n m o r e e f f e c t i v e m a n a g e m e n t p e r f o r m a n c e a n d u s e o f h u m a n c a p a ­

b i l i t i e s , a w h o l e s a l e r e s t r u c t u r i n g o f t h e f i e l d o r g a n i s a t i o n i s r e c o m m e n d e d -

f i r s t i n t o a n i n i t i a l p h a s e a n d t h e n g r a d u a l l y i n t o a f i n a l p h a s e t o f i t t h e s y s t e m

e v o l u t i o n d e s c r i b e d u n d e r t h e p r e c e d i n g r e c o m m e n d a t i o n . I n s u m m a r y , t w o

n e w m a n a g e m e n t p o s i t i o n s w o u l d b e e s t a b l i s h e d - R e g i o n P o s t a l M a n a g e r , a n d

. S u p e r v i s i n g P o s t m a s t e r ; r e l a t e d s u p p o r t s t a f f s w o u l d b e c r e a t e d ; a n d t h e p o s i ­

t i o n s o f S u p e r i n t e n d e n t - P o s t O f f i c e s , A s s i s t a n t S u p e r i n t e n d e n t - P o s t O f f i c e s

a n d D i s t r i c t P o s t a l M a n a g e r w o u l d b e d i s c o n t i n u e d .

U n d e r t h e i n i t i a l p h a s e o f t h e r e c o m m e n d e d s t r u c t u r e , w h i c h i s s h o w n i n

E x h i b i t V - 8, a R e g i o n P o s t a l M a n a g e r w o u l d r e p o r t t o t h e s t a t e - l e v e l C u s t o m e r

S e r v i c e s u n i t . H e w o u l d b e f u l l y r e s p o n s i b l e f o r t h e e f f e c t i v e m a n a g e m e n t o f

a l l p o s t o f f i c e s w i t h i n h i s r e g i o n , a n d a l s o f o r a n y p r o c e s s i n g f a c i l i t i e s a l r e a d y

i n f u l l a n d s m o o t h o p e r a t i o n a n d f o r r e l a t e d i n t r a - r e g i o n t r a n s p o r t a t i o n . It i s

i n t e n d e d t h a t t h e R e g i o n P o s t a l M a n a g e r w o u l d h a v e a n d e x e r c i s e s u c h b a s i c

a u t h o r i t i e s a s :

- F u l l f i s c a l a u t h o r i t y f o r o p e r a t i n g e x p e n d i t u r e s a n d r e s p o n s i b i l i t y

f o r o p e r a t i n g r e s u l t s a g a i n s t a n a p p r o v e d b u d g e t , w i t h t h e b u d g e t

n e t t i n g d o w n t o a n a p p r o v e d f i s c a l c o n t r i b u t i o n a s h i s o b j e c t i v e

- A u t h o r i t y w i t h i n d e l e g a t e d l i m i t s t o m a k e b u d g e t e d c a p i t a l e x p e n d i ­

t u r e s , a n d w i t h i n f a r m o r e r e s t r i c t e d l i m i t s t o m a k e u n b u d g e t e d

e x p e n d i t u r e s

- A u t h o r i t y t o a p p o i n t : o f f i c e r s t o p o s i t i o n s t w o o r m o r e e c h e l o n s

b e l o w h i s o w n p o s i t i o n , a n d t o r e c o m m e n d a p p o i n t m e n t s o f i m m e d i ­

a t e s u b o r d i n a t e s t o h i s s u p e r i o r , a s l o n g a s t h e s e a n d o t h e r p e r s o n ­

n e l m a t t e r s w e r e p r o c e s s e d i n a c c o r d a n c e w i t h e s t a b l i s h e d p o l i c y

a n d p r o c e d u r e .

T o h e l p h i m c a r r y o u t h i s r e s p o n s i b i l i t i e s , t h e R e g i o n P o s t a l M a n a g e r

w o u l d h a v e a n i m m e d i a t e s t a f f c o n s i s t i n g of i n s p e c t i o n , m a n a g e m e n t s e r v i c e s ,

a n d p e r s o n n e l a n d i n d u s t r i a l r e l a t i o n s f u n c t i o n s . T h e i n s p e c t i o n f u n c t i o n ,

p o r t i o n s o f w h i c h m i g h t b e p e r f o r m e d o n a n o u t p o s t e d b a s i s , w o u l d b e f o r m e d

b y r e g i o n a l r e g r o u p i n g s o f t h e d i s t r i c t i n s p e c t i o n a c t i v i t i e s n o w p e r f o r m e d .

M a n a g e m e n t s e r v i c e s w o u l d b e a s m a l l , o p e r a t i o n s - o r i e n t e d g r o u p i n c l u d i n g

a c c o u n t i n g , p o s t o f f i c e s a u d i t , b u d g e t p r e p a r a t i o n a n d a n a l y s i s , a n d g e n e r a l

a d m i n i s t r a t i o n ( s e c u r i t y , s t a f f s e r v i c e s a n d s o f o r t h ) a c t i v i t i e s . T h i s g r o u p

V - 1 8

R E C O M M E N D E D P L A N O F O R G A N I S A T I O N C U S T O M E R SERVICES FIELD S T R U C T U R E

PO S T A L S E R V IC E S

E X H I B I T V - 8

(a) 01 w hich the supervising postm aster is the direct head.

w o u l d b e f u n c t i o n a l l y s u p e r v i s e d b y t h e s t a t e - l e v e l M a n a g e m e n t S e r v i c e s u n i t ,

a s r e q u i r e d t o e n s u r e c o n f o r m i t y w i t h p o l i c y .

T h e R e g i o n P o s t a l M a n a g e r w o u l d a l s o h a v e a p e r s o n n e l a n d i n d u s t r i a l

r e l a t i o n s g r o u p i n v o l v e d i n t h e n o r m a l r e c r u i t i n g a n d t e s t i n g f u n c t i o n a n d i n

t h e m a i n t e n a n c e o f p e r s o n n e l r e c o r d s . F u r t h e r , t h i s g r o u p w o u l d d o s t a f f

a n a l y s e s a n d m a k e r e c o m m e n d a t i o n s o n o p t i m u m a s s i g n m e n t s o f p o s t o f f i c e s

s t a f f w i t h i n t h e r e g i o n . F i n a l l y , a m i n o r i n d u s t r i a l r e l a t i o n s a d v i s o r y f u n c ­

t i o n w o u l d b e i n c l u d e d t o s u p p o r t t h e R e g i o n P o s t a l M a n a g e r a n d h i s l i n e s u b ­

o r d i n a t e s a s r e q u i r e d , b u t t h e m a j o r i n d u s t r i a l r e l a t i o n s f u n c t i o n w o u l d b e

p e r f o r m e d a n d c o n t r o l l e d b y t h e s t a t e - l e v e l P e r s o n n e l a n d I n d u s t r i a l R e l a t i o n s

uni t .

T h e l i n e m a n a g e m e n t s u b o r d i n a t e s o f a R e g i o n P o s t a l M a n a g e r w o u l d

o c c u p y S u p e r v i s i n g P o s t m a s t e r o r P o s t m a s t e r p o s i t i o n s , o r w o u l d b e h e a d s

of t h o s e f e w m a i l p r o c e s s i n g f a c i l i t i e s n o w o p e r a t i n g i n t h e f i e l d .

T h e n e w p o s i t i o n o f S u p e r v i s i n g P o s t m a s t e r i s r e c o m m e n d e d t o s e r v e a s

a n i n t e r m e d i a t e p o i n t o f m a n a g e m e n t a n d c o m m u n i c a t i o n s . A S u p e r v i s i n g

P o s t m a s t e r w o u l d b e r e s p o n s i b l e f o r t h e o p e r a t i o n s o f h i s o w n ( g e n e r a l l y a

h i g h e r - g r a d e d ) p o s t o f f i c e , a n d w o u l d p r o v i d e s u p p o r t a n d c o u n s e l t o , a n d h a v e

l i n e m a n a g e m e n t a u t h o r i t y o v e r , a n u m b e r of s u b o r d i n a t e P o s t m a s t e r s . It

i s a n t i c i p a t e d t h a t a S u p e r v i s i n g P o s t m a s t e r w o u l d r e q u i r e o n e o r p e r h a p s

t w o s t a f f a s s i s t a n t s t o s u p p o r t h i m i n t h i s e f f o r t . T h e i n t e n t i s t o f u r t h e r

s u b - d i v i d e t h e f i e l d m a n a g e m e n t j o b b y p r o v i d i n g m a n a g e m e n t r e s p o n s i b i l i t y

t o z o n e ( m o d e r a t e - s i z e d c i t y a n d s u b u r b s , f o r e x a m p l e ) o r m e t r o p o l i t a n a r e a s .

It i s a n t i c i p a t e d t h a t m o s t P o s t m a s t e r s o f o f f i c i a l p o s t o f f i c e s e i t h e r w o u l d

b e S u p e r v i s i n g P o s t m a s t e r s o r w o u l d r e p o r t t h r o u g h a g e o g r a p h i c a l l y a n d

o r g a n i s a t i o n a l l y c o n v e n i e n t S u p e r v i s i n g P o s t m a s t e r . P o s t m a s t e r s o f n o n ­

o f f i c i a l p o s t o f f i c e s w o u l d r e p o r t t h r o u g h e i t h e r a S u p e r v i s i n g P o s t m a s t e r o r

a P o s t m a s t e r , a c c o r d i n g t o g e o g r a p h i c l o c a t i o n . T h e r e w o u l d a l s o b e a f e w

o f f i c i a l p o s t o f f i c e s w h i c h , e i t h e r b e c a u s e o f p e c u l i a r g e o g r a p h i c c i r c u m s t a n c e s

o r s p e c i a l f u n c t i o n s (a m a j o r G P O , f o r i n s t a n c e ) w o u l d r e p o r t d i r e c t l y t o a

R e g i o n P o s t a l M a n a g e r .

A s d e s c r i b e d u n d e r t h e p r e c e d i n g r e c o m m e n d a t i o n , t h e a d v e n t o f a f u l l y

o p e r a t i o n a l a n d s t a b l e m a i l o r p a r c e l c e n t r e i n h i s r e g i o n w o u l d t r a n s f o r m

t h e r e s p o n s i b i l i t i e s o f t h e R e g i o n P o s t a l M a n a g e r i n t o t h e i r u l t i m a t e f o r m .

H e w o u l d a s s u m e l i n e m a n a g e m e n t r e s p o n s i b i l i t y f o r s u c h a c e n t r e a n d r e l a t e d

t r a n s p o r t a t i o n ( p r e s u m a b l y m o s t l y i n t r a - r e g i o n t r a n s p o r t a t i o n ) , a n d w o u ' d

r e p o r t t o t h e S t a t e D i r e c t o r i n s t e a d o f t o C u s t o m e r S e r v i c e s . H i s i m m e d i a t e

s t a f f m i g h t r e q u i r e a m p l i f i c a t i o n d u r i n g t h e t r a n s f o r m a t i o n . In t h e e n d , h e

w o u l d b e r e s p o n s i b l e a n d a c c o u n t a b l e f o r t h e p o s t a l s y s t e m i n h i s r e g i o n .

V- 19

R e g i o n s a r e c o n c e i v e d a s b e i n g s i g n i f i c a n t l y l a r g e r ( i n g e o g r a p h y a s w e l l

a s i n n u m b e r o f p o s t o f f i c e s i n c l u d e d ) t h a n t h e 7 2 e x i s t i n g p o s t a l d i s t r i c t s .

W h i l e t h e m a t t e r h a s n o t b e e n a n a l y s e d i n d e t a i l , i t i s f e l t t h a t , i n v i e w o f t h e

s u p p o r t s t a f f p r o v i d e d a n d t h e i n c r e a s e d e x p e r t i s e a n d r e s p o n s i b i l i t y o f s u b ­

o r d i n a t e s i n v o l v e d , p e r h a p s r o u g h l y h a l f a s m a n y r e g i o n s w o u l d b e r e q u i r e d

a s t h e r e a r e n o w d i s t r i c t s . I f r e a s o n a b l y a c c u r a t e , t h i s a p p r o x i m a t i o n w o u l d

p r o d u c e m a n a g e a b l e e n t i t i e s a t a c o s t t h a t w o u l d n o t o u t w e i g h t h e l o n g e r - t e r m

a d v a n t a g e s i n o p e r a t i n g e f f e c t i v e n e s s w h i c h s h o u l d r e s u l t . T h e c o n s u l t a n t s '

c o n c l u s i o n s r e g a r d i n g t h e s i z e a n d s c o p e o f a r e g i o n a r e r o u g h l y e q u i v a l e n t t o

t h e r e s u l t s o f a s e p a r a t e s t u d y r e c e n t l y d o n e b y t h e P o s t a l S e r v i c e s D i v i s i o n i n

C e n t r a l A d m i n i s t r a t i o n .

I t i s i n t e n d e d t h a t r e g i o n s s h o u l d d i f f e r c o n s i d e r a b l y i n s c o p e i n a g e o ­

g r a p h i c s e n s e a n d , m u c h m o r e i m p o r t a n t , i n t e r m s o f f i s c a l v o l u m e , v a r i e t y

o f f a c i l i t i e s , n u m b e r o f i m m e d i a t e l i n e s u b o r d i n a t e s a n d s o o n . T h e r e f o r e ,

r e g i o n s t a f f s s h o u l d d i f f e r n o t a b l y i n s i z e a n d l e v e l o f s k i l l s a s w e l l . S i m i l a r l y ,

t h e c l a s s i f i c a t i o n s a n d s a l a r y l e v e l s o f R e g i o n P o s t a l M a n a g e r s s h o u l d d i f f e r ,

a n d i t w o u l d b e a p p r o p r i a t e t o u s e m o r e t h a n o n e p o s i t i o n t i t l e i f m a j o r d i f ­

f e r e n c e s i n m a g n i t u d e e x i s t b e t w e e n r e g i o n s .

T o a l e s s e r e x t e n t , t h e r e i s n o r e a s o n t o o r g a n i s e u n i f o r m l y f o r m a n a g e r i a l

s c o p e a t t h e S u p e r v i s i n g P o s t m a s t e r l e v e l . D i f f e r e n c e s s h o u l d e x i s t a t b o t h t h e

R e g i o n P o s t a l M a n a g e r l e v e l a n d t h e S u p e r v i s i n g P o s t m a s t e r l e v e l , s o t h a t e a c h

w o u l d p r o v i d e - t h r o u g h p r o m o t i o n a l t r a n s f e r - o p p o r t u n i t y f o r g r o w t h a n d

i n c r e a s i n g s k i l l .

R e v i s e T h e P o s t a l S e r v i c e s C l a s s i f i c a t i o n P l a n A n d P a y S c a l e s T o R e f l e c t

O r g a n i s a t i o n a l R e s t r u c t u r i n g

T o i m p r o v e t h e e f f e c t i v e n e s s o f p o s t a l s e r v i c e s , a n u m b e r o f o r g a n i s a ­

t i o n a l c h a n g e s h a v e b e e n r e c o m m e n d e d i n t h i s c h a p t e r . T h e s e c h a n g e s w o u l d

s u b s t a n t i a l l y a l t e r t h e r e s p o n s i b i l i t i e s a n d s p a n s o f c o n t r o l o f a n u m b e r o f

p o s t a l s e r v i c e s e m p l o y m e n t c a t e g o r i e s , a s w e l l a s t h o s e o f i n d i v i d u a l p o s i t i o n s .

T o e n s u r e r e a l i s t i c a n d e q u i t a b l e c o m p e n s a t i o n , a n d t o f a c i l i t a t e p r o m o t i o n a l

t r a n s f e r s , a c o m p l e t e c l a s s i f i c a t i o n s t u d y w o u l d b e r e q u i r e d , i n c l u d i n g a l l

a n a l y t i c a l , s u p e r v i s o r y a n d m a n a g e m e n t p o s i t i o n s , w h e t h e r n e w l y c r e a t e d o r

c o n t i n u e d f r o m t h e p r e s e n t s c h e m e .

T h e p r i n c i p a l a r e a o f c h a n g e i n s c o p e a n d a u t h o r i t y a t t h e o p e r a t i n g l e v e l

i n v o l v e s t h e f i e l d p o s t a l o r g a n i s a t i o n , r e p o r t i n g i n i t i a l l y t o t h e s t a t e - l e v e l

C u s t o m e r S e r v i c e s u n i t . T h e p o s i t i o n s o f S u p e r i n t e n d e n t a n d A s s i s t a n t

S u p e r i n t e n d e n t - P o s t O f f i c e s , a n d t h a t o f D i s t r i c t P o s t a l M a n a g e r , w o u l d n o

l o n g e r e x i s t . I n s t e a d , t h e r e c o m m e n d e d o r g a n i s a t i o n c r e a t e s t h e p o s i t i o n s

V - 2 0

of R e g i o n P o s t a l M a n a g e r a n d S u p e r v i s i n g P o s t m a s t e r , b o t h o f w h i c h b e a r no

r e s e m b l a n c e t o e x i s t i n g p o s i t i o n s . T h e s e n e w p o s i t i o n s w o u l d h a v e c o n s i d e r ­

a b l e a u t h o r i t y , w h i c h t h e i r c o m p e n s a t i o n l e v e l s m u s t r e f l e c t . F u r t h e r , t h e

c o m p e n s a t i o n l e v e l s o f t h e s e p o s i t i o n s s h o u l d b e s u f f i c i e n t l y a b o v e t h o s e o f

s u b o r d i n a t e p o s i t i o n s t o g i v e t h e s u p e r i o r p o s i t i o n t h e w e i g h t i t w a r r a n t s , a n d t o

p r o v i d e s u f f i c i e n t d i f f e r e n t i a t i o n t o a t t r a c t a c a n d i d a t e f r o m l o w e r f i e l d l e v e l s

o r f r o m e l s e w h e r e i n p o s t a l s e r v i c e s .

T h e p r e r e q u i s i t e q u a l i f i c a t i o n s a n d p a y l e v e l s o f p o s i t i o n s i n t h e f i e l d a n d

a t s t a t e a n d h e a d q u a i t e r s l e v e l s s h o u l d b e a r r a n g e d , i n s o f a r a s p o s s i b l e , t o

p r o v i d e o p p o r t u n i t y f o r a d v a n c e m e n t i n t o a n d t h r o u g h m a n y f a c e t s o f p o s t a l

s e r v i c e s . T h e r e i s s i g n i f i c a n t b e n e f i t t o b e g a i n e d f r o m r o t a t i n g s e n i o r a n a l y s t s ,

s u p e r v i s o r s a n d l o w e r - l e v e l m a n a g e r s t h r o u g h a v a r i e t y o f f u n c t i o n s i n o r d e r

t o d e v e l o p w e l l - r o u n d e d , e x p e r i e n c e d c a n d i d a t e s f o r t h e s e n i o r l i n e m a n a g e m e n t

p o s i t i o n s i n t h e s t a t e s a n d a t h e a d q u a r t e r s . C l e a r l y , n e c e s s a r y e n t r y q u a l i f i c a ­

t i o n s a n d p a y l e v e l s m u s t p e r m i t , a n d e v e n e n c o u r a g e , s u c h r o t a t i o n .

V - 2 1

REPORT to AUSTRALIAN POST OFFICE

COMMISSION OF INQUIRY

Private contract work performed for

the Australian Post Office

Construction of Conduits.

Installation of Switching Equipment.

Purchase of Switching Equipment.

Purchase of Cables.

Utilisation of Workshops.

G. Paterson B.C.E F.I.E. Aust 16.11.1973

ί ■ -

-

■ - . · ϊ · . ·. ·â– .-

142, Bambra Road, Caulfield, VIC. 5162

16.11.75·

The Secretary, Australian Post Office Commission of Inquiry, Box 4564, G.P.O. SYDNEY, N.S.W. 2001.

Dear Mr. Payne,

Private Contract Work performed for the Australian Post Office - Consultant1s Report.

In accordance with your letter of 12th September, 1975

authorising me to act as Consultant to the Commission of Inquiry

within the terms of reference specified therein, I have pleasure

in forwarding herewith my report.

Yours sincerely,

G. PATERSON, B.C.E., P.l.E CONSULTANT.

Enel.

.Aust.

PRIVATE CONTRACT WORK PERFORMED FOR

THE AUSTRALIAN POST OFFICE

Contents of Report Section

Introduction 1

Terms of Reference 2

Reasons for the introduction of contract construction of conduits and installation of telephone switching equipment 3

Conduit construction 3.1

Inspection of conduit construction by contract and departmental labour 3.2

Allowance for ineffective time in departmental conduit work 3.3

General comments on conduit work contract versus departmental labour 3.4

Inspection of contract installations of telephone switching equipment 3.5

Reasons for not using supply and install contracts for cross-bar equipment 3.6

Installation of telephone switching equipment - general considerations 3.7

Comparison of contract and departmental costs for conduit work and exchange equipment installations 3.8

Omission of engineering administration charges in comparative estimates 3.9

Examination of items included in comparative estimates 3.10

Conclusions - contract work for construction of conduits and installation of standard telephone switching equipment Items 1 and 2 of Terms of Reference 3.11

Sources of supply for cross-bar type switching equipment 4.0

Allocation of orders for cross-bar equipment 4.1

Trends in prices of cross-bar equipment 4.2

Future competition in the switching equipment industry 4.3

4.4 Conclusions

C o n t e n t s o f R e p o r t ( c o n t ' d . ) S e c t i o n

Sources of supply for telephone cables 4.5

Tenders for telephone cables 4.6

Prices of telephone cables 4.7

Competition in the telephone cable industry 4.8

Future of the telephone cable industry 4.9

Conclusions 4.10

Data and information on which to determine reasonableness of tenders for switching equipment and telephone cables 5.0

Conclusions 5.1

A.P.O. Workshops - general 6.0

Manufacture of relays 6.1

Telephone manufacture 6.2

Printed Circuit Boards 6.3

Workshop costing practice 6.4

Conclusions 6.5

Summary 7.0

APPENDICES

APPENDIX 1

APPENDIX 2

APPENDIX 3

APPENDIX 4

- Comparison of estimated and actual man-hours on A.P.O. conduit works carried out with departmental labour.

- Contract Capital Works -cost comparisons overhead man-hour rates - engineering manipulative staff.

- Engineering Contract Installation Work cost comparison schedule.

Comments by Price Waterhouse and Co. on the basis of calculations used by the A.P.O. to compare the costs of contract work and estimated departmental costs - letter dated

30.10.73.

REPORT BY CONSULTANT ON I ’RIVATE CONTRACT WORK

PERFORMED FOR THE AUSTRALIAN POST OFFICE

1. INTRODUCTION:

The purpose of this report is to assist the Australian Post Office (A.P.O.) Commission of Inquiry in its investigation into possible changes in relation to the performance of work by contract for the A.P.O.

The report has been prepared from information obtained from the following sources:-

(a) Printed submissions to the Commission of Inquiry and transcript of evidence.

(b) Study of contract documents and field inspection of conduit works being done by A.P.O. labour and by contract in Sydney, and of telephone exchange installations in both Sydney and Melbourne.

(c) Visits to typical cable making and switching equipment factories, namely, Austral Standard Cables at Clayton, Vic., and L.M. Ericsson at Broadmeadows and Coburg, Victoria.

(d) Visits to Melbourne and Sydney workshops of the A.P.O. and discussions with the responsible officers involved.

(e) Study of contract documents, specifications and schedules for bulk supply orders for cables and switching equipment.

(f) Discussions with senior management of Austral Standard Cables, Plessey, S.T.C. and L.M. Ericsson.

(g) Various discussions with officers of the A.P.O. of both Commercial and Engineering disciplines, mainly in the Melbourne Central office, but also with officers in Sydney (who are responsible for the major part of

the construction work by contract), and in Victoria (Lonsdale exchange and Melbourne Workshops).

(h) Study of numerous schedules and reports made available by the A.P.O.

(i) Contact was made with senior officials of both the A.P.W.U. and the P.T.T.A. and resulting from this officers of these unions were present at the inspections made in Sydney.

- 1 -

10345/ 75—23

An offer was made to meet with union officials and discuss any matters which they considered relevant in addition to their written submissions. A discussion was held with Mr. Turbet of the P.T.T.A. on 31.10.73, but apart from two

telephone discussions with Mr. Blunden, no meeting was held with the A.P.W.U.

The assistance and willing co-operation of all officers of the A.P.O. in making information available is most gratefully acknowledged. In particular special thanks are accorded to Mr. L. Smith, A.D.G. (Support Services) who acting in a liaison capacity for this exercise, made all the necessary arrangements for interviews and visits both within and outside the A.P.O. He was also a most competent adviser on sources of information

and was responsible for obtaining much useful documentary data.

TERMS OF REFERENCE: * 1

The terms of reference specified for this report are as follows:-

Within the following broad categories of contract work:-

(A) Contract work for the laying of conduits and the installation of standard telephone switching equipment for the national telecommunications network;

(B) Contract work which requires the manufacture and supply of telephone switching equipment and cables for the national telecommunications network;

The Commission requires that the consultant report on the use by the A.P.O. of contractors having particular regard to:

(1) Statements by the A.P.O. that the use of private contractors for work within Category "A" has been in general the "least cost" way of performing this work, especially for conduits;

(2) The methods used by the A.P.O. to determine relative costs of performing work within Category "A" by contract as opposed to employment of departmental resources;

(3) The effectiveness of the "open tender system" in ensuring competitiveness in pricing for work within Category "B";

(4) The data and information available to the A.P.O. to determine the reasonableness of tenders within Category "B";

(5) The scope for the department to manufacture an increasing amount of technical equipment required for the telecommunications network through a greater utilisation of existing resources in postal workshops.

3. REASONS FOR THE INTRODUCTION OF CONTRACT CONSTRUCTION OF CONDUITS AND INSTALLATION OF TELEPHONE SWITCHING EQUIPMENT:

The use of contractors for construction of conduits and installation of the standard type of telephone switching equipment in exchanges became necessary when the works programme of the A.P.O. exceeded the capacity of departmental labour

resources.

The help of contractors was sought as a means of quickly increasing the available work force. Generally the cost of contract work was found to be very favourable particularly in the case of conduits, and the trend in N.S.W. has been for an

increasing use to be made of contractors, with less emphasis in consequence on the rapid build up of the A.P.O. labour force which would otherwise have been necessary to meet the works programme. While contract work has been used also in Victoria

and Queensland to a limited extent by far the greatest use of contract labour has been in N.S.W.

The unions within the Post Office see the use of contractors as a threat to the growth of their membership, and to the increasing influence they hope to exercise over post office affairs. They are therefore antagonistic to contract work generally, although they readily concede its necessity for

"first off" installations of a new technology in telephone switching equipment, such as the stored programme controlled electronic system now being installed in the Pitt, Lonsdale and Weymouth trunk exchanges. Training of A.P.O. engineers and

technicians in the new technology is carried out as part of the contract.

It should be quite clear that there is always more than sufficient work to keep the available departmental work force fully employed, and a decision to use contractors to do a certain job is of no disadvantage to existing A.P.O. personnel who might have done the work. Such personnel would merely be

transferred to other work which might otherwise have had to be deferred.

3.1. CONDUIT CONSTRUCTION:

Conduit construction involves relatively simple civil engineering work consisting of digging a trench averaging about three feet in depth by two feet in width usually within the footpath or nature strip, laying a number of P.V.C. or fibrolite

pipes properly spaced in the bottom of the trench, placing a special fluid concrete mix around the pipes, and backfilling the trench over the concrete after it is set. In some cases the pipes may be placed in a bed of sand without concrete. Excavated material unsuitable for backfilling is removed from the site and

replaced with sand. Where the trench goes through grassed nature strips, care is taken to restore the grass over the trench as far as Is possible. The work also involves the construction of concrete pits and manholes.

i

It was noted that the A.P.W.U. in their submission to the Commission of Inquiry had been critical of standards of construction, safety provision and amenities on contract works. Accordingly a study of the A.P.O. specifications for

conduit works was made. The specifications cover all technical requirements adequately, and also provide the A.P.O. supervisory staff with the authority necessary to ensure that the contractor observes requirements for safety barriers, covers, warning lights, etc. The specification requires that the contractor shall "erect shelters wherein his workmen may change their clothes, have meals, wash and boil water". It also makes the contractor responsible for providing "efficient sanitary appliances for the use of his employees and the supervising officer".

3.2. INSPECTION OF CONDUIT CONSTRUCTION BY CONTRACT AND DEPARTMENTAL LABOUR:

Conduit construction works in suburban areas of Sydney were inspected on 11.10.73 in company with Messrs. Smith (A.D.G. Support Services - Central office) and Harvey (Supervising Engineer - Primary Works - N.S.W.). An official of the A.P.W.U.

(J. Ronan) was also present during the inspection of jobs designated No. 2 and No. 3 described hereunder

JOB No. 1 - DEPARTMENTAL - ARTARMON DISTRICT:

A brief inspection was made of a departmental job in the Artarmon district; a party of nine including the leading hand (who was in charge in the absence of the party leader) were backfilling a short length of open trench in the footpath. The open trench was covered where work was not in progress, and there appeared to be adequate barricades. Equipment at the site consisted of a trenching machine, front end loader, tip truck and tool trailer. Amenities caravans were apparently located in a side street. It was noted that while the plant operators were relatively young men, the rest of the work force would be within

the 40 - 50 age group or older.

JOB No. 2 - CONTRACT - NORTH RYDE DISTRICT:

The work force consisted of eleven men divided into two gangs working at different locations. One gang was about half a mile from the main site modifying existing concrete pits to take the new conduits. The other gang was making temporary repairs to a roadway with bituminous pre-mix, and clearing part of open trenching where it had fallen in following heavy overnight rain. A front end loader and a small tractor together with a single caravan were the major items of equipment on the site. The caravan was used as a store for tools and other supplies, and with some tidying up could also have been used by the men as a

shelter in which to eat lunch. The men normally eat their lunch outdoors by the roadside. There was no sanitary convenience provided, and the A.P.O. supervisor stated that use was made of nearby garages and hotels as necessary.

4

Completed work appeared to be entireLy satisfactory. Filling of the trench in nature strips and restoration of the grass was effective. A large concrete pit about four feet square by four feet deep was inspected, and the concrete work was of good quality and finish. A.P.O. engineers confirm that

in no case has any difficulty been experienced in pulling cables through conduits constructed by contract.

It is apparently contractor's practice to open up where possible relatively long lengths of trench, thereby enabling greater lengths of pipe to be laid and concreted in single operations with resultant economy. In some cases bad weather may cause the sides of the trench to collapse, but

generally the gamble pays off. Contract work may therefore tend to be more untidy and cause more inconvenience during the construction period, which will however be shorter than if the work is completed in short sections as appears customary with departmental construction.

It is unfortunate that none of the major items of work on the contract was being done at the time of the inspection. It was noted that all five of the men at the main site were actively working - even the foreman had a shovel and was helping to spread the bituminous pre-mix.

JOB No. 3 - DEPARTMENTAL - LINDFIELD:

The departmental gang with a working strength of eight, plus the leader, were backfilling a short length of deep open trench with sand over concrete encased pipes. The trench had been dug through the nature strip in a residential area, and had reached a junction pit. The completed work in

the nature strip was very neat and tidy and the turf had been carefully replaced and all surplus soil removed.

A front end loader with a trenching attachment and a tool trailer were at the working site. As at Job No. 1 it was noted that with two exceptions, the gang would be in the 40 - 50 age group or older.

The "site headquarters" for the gang was set up by the roadside about half a mile from the work location, and provided amenities of an extremely high standard. These consisted of

(a) A caravan fitted up as a change room.

(b) A combined kitchen - mess room caravan complete with bottled gas heating and a refrigerator. Seating is provided for the whole gang to sit at a table for meals and tea breaks.

(c) A portable W.C. (chemical type)

(d) A small bus to provide transport to and from the site, and between the working locatioh and the mess caravan.

5

In addition to the above items of equipment there was a third caravan for stores and two tool trailers.

One lines assistant acts as "billy boy" and is located for the major part of his time at the caravan site. He looks after the kitchen-mess caravan, provides hot water and soap in separate wash basins for the men when they return from the job, makes tea, cleans up after lunch, tea breaks, etc.

An A.P.O. gang for conduit construction in N.S.W. nominally consists of twelve men, but is virtually never at full strength, since with four weeks recreation leave per annum, together with sick leave, one or two men are usually absent. The leader and the "billy boy" do not contribute any manual work

to the job, so that the effective working strength of the gang is reduced to eight or nine. Two men were absent on the Lindfield job and the number doing effective work was therefore eight.

Under the Award applicable to conduit construction by A.P.O. labour, a concession of half an hour per day in working time may be granted for men working in wet trenches or in cramped conditions. It is understood that advantage is frequently

takerf of this concession so that the 40 hour week becomes one of 37^ hours.

There is also a considerable amount of ineffective time due to tea breaks, smokos, personal hygiene, travelling time, establishing camp, moving caravans etc. This gives rise to an 87% increase in the job man-hours as discussed in the next section.

3.3. ALLOWANCE FOR INEFFECTIVE TIME IN DEPARTMENTAL CONDUIT WORK:

As by far the greatest amount of competition between contract and departmental construction has occurred in N.S.W., the following information is based on data supplied from the N.S.W. State office.

An addition of 87% to the calculated man-hours of work in conduit installations has been accepted practice in N.S.W. for many years. Actual records of completed works verify that the 87% allowance for ineffective time is valid. Experience over 26 projects completed between 1966 and 1972 showed that over a total of nearly 376,000 man-hours the variation from the estimated total was only 1%. Refer to appendix 1. for details.

It was suggested to the A.P.O. that the percentage to be applied for ineffective time could be expected to differ with the size of the job. However it is based on the operation of a typical twelve men gang, and as a number of such gangs are employed on the longer conduit works, these can merely be regarded as the summation of a number of smaller jobs.

6

The factors contributing to the 87% ineffective time are as under

(a) Establishing camp - moving caravans and equipment etc.

(b) Protection of work - covering excavations, barrier rails, setting up and removing.

(c) Supervision - giving and receiving instructions (party leader - non working unit).

(d) Travelling time, or waiting for transport.

(e) Tea breaks, smokos, personal hygiene.

(f) Flag man (where required).

(g) Records - pegging out routes, sketches, etc.

(h) Cleaning and tidying up.

(i) Clerical work - covers line inspector's clerk.

(j) Material handling - stores staff.

(k) Laying out materials, receiving and stacking pipes, frames and covers.

(l) Driving departmental vehicles (other than trucks) e.g. buses.

The time of the lines assistant who acts as "billy boy" is assumed to be covered in items (a) (b) (e) (h) and (k). He also can act as flagman for part of his time when the caravans are close to the working site.

3.4. GENERAL COMMENTS ON CONDUIT WORK -DEPARTMENTAL VERSUS CONTRACT LABOUR:

As conduit construction can be done by any reasonably competent civil engineering contractor familiar with water supply, gas, sewerage or drainage jobs it could be expected that contract work would involve the least cost, particularly as tendering for

such work is usually very competitive. The marked economy of contract work is seen from the comparisons of cost discussed in Section 3.8.

7

On the other hand the A.P.O. has traditionally been obliged to provide extraordinarily high standards of amenities and be party to an award which provides very generous working conditions. A.P.O. engineers in N.S.W. contend that departmental conduit parties usually contain an above average number of older and slower men, and this was confirmed by observation of the two parties visited.

Departmental work could be expected to be more tidy during construction and involve less mess and inconvenience than the average contract job, but would be slower. When completed, and finally tidied up there would be nothing to distinguish between the two methods of construction.

The contract job seen was the only one in progress at the time in the Sydney suburban area, and the very minimal amenities provided were not consistent with the stated requirements of the A.P.O. specification.

In order to avoid criticism by the A.P.W.U. on the matter of contractor's amenities, the A.P.O. should insist that specification requirements are met, on at least a minimum acceptable standards basis. Although this may increase contract costs a little, it is considered that there would still be a handsome margin over departmental costs.

INSPECTION OF CONTRACT INSTALLATIONS OF TELEPHONE SWITCHING EQUIPMENT:

Inspections were made at the Lonsdale and Pitt trunk exchanges where the latest stored programme controlled type electronic switching equipment was being supplied and installed by S.T.C. As this is a completely new technology, the contract embraces the manufacture, supply, installation, testing and putting into service of the equipment. A.P.O. engineers and

technicians are undergoing training to become familiar with the installation. An official of the P.T.T.A., (K. Walton), present at the Pitt inspection expressed satisfaction with the training which members of his association were receiving in the new technology.

Contract installation of the standard cross-bar type of equipment was being carried out by Plessey at Pitt exchange, and by S.T.C. at Lonsdale. At both locations semi-skilled female labour was being used to carry out routine installation tasks.

At Lonsdale A.P.O. engineers and supervisors were satisfied with the contract installation work and stated that the finished job would be no different to one installed by A.P.O. staff. Occasional delays occurred by late delivery of certain items of equipment from the A.P.O. stores, necessitating extensions of time to the contract, but such difficulties were common to both A.P.O. and contract work.

At Pitt the A.P.O. supervisory staff were critical of the cross-bar installation by Plessey, and stated that the time schedule for the job would necessitate A.P.O. staff doing testing work which was the contractor's responsibility. However it appeared that the time schedule had been affected

by the late delivery of some equipment which was not the fault of the contractor. The supervisory staff also claimed that installation standards had declined over past years although the equipment still did the job.

The A.P.O. specification for installation work seems to be quite adequate with regard to workmanship requirements, and any decline in standards must be due to leniency on the part of supervision. A.P.O. engineers associated with the contract work at Pitt exchange appeared

to be satisfied with the standard of the contract installation.

3.6. REASONS FOR NOT USING SUPPLY AND INSTALL CONTRACTS FOR CROSS-BAR TYPE EQUIPMENT: ......

Inquiry was made as to why the A.P.O. had not placed installation contracts for cross-bar type equipment on a complete supply, deliver and install basis where the contractor would be entirely responsible for all phases of the operations necessary to achieve a specific installation programme, in the

same way as now applies to "first off" new technology installations.

It was stated that the existing procedure of placing contracts with all material supplied from the A.P.O. stores gives much more flexibility in determining up to date requirements at the time of the installation, which under the present system can be commenced within a few weeks of placing the contract. Lead times would be too long if "turn key"

type contracts were used, in which case the A.P.O. would have to commit itself to specifying exact requirements too far in advance, with the result that by the time installation was ready to begin, significant changes to the project may have become necessary.

A five man team from the British Post Office which visited Australia at the end of 1970 reported that the system adopted by the A.P.O. of supplying switching equipment from its own stores, had many advantages over the British system of

supply and install contracts.

The following extract from the report of the B.P.O. team is relevant - - - - - - - "the provisioning and

installation cycle in the A.P.O. is normally some two years shorter than in the B.P.O. - i.e. traffic specifications start some two years later than is needed in the B.P.O. to achieve a given installation date. This applies whether the exchange is installed by the A.P.O. or by a contractor, and is very largely due to the greater flexibility which comes from the

item by item purchasing of equipment as stores, instead of as individual supply and install contracts".

9

3.7. INSTALLATION OF TELEPHONE SWITCHING EQUIPMENT - GENERAL CONSIDERATIONS:

Unlike conduit work, the installation of telephone switching equipment requires special skills possessed only by the A.P.O. and by the suppliers of the equipment.

As shown in Section 3.8., apart from the Pitt exchange projects, the cost savings by contract installation of switching equipment spread over 66 jobs are not as clear cut as in the case of conduits. In a number of cases, a reduction of incidental charges by A.P.O. employment of local labour in country centres would cancel out differences in comparative costs.

It would therefore seem logical and desirable for the A.P.O. to carry out the greater part of its normal installation work with its own forces, who in addition to installation capability must possess the expertise needed to operate and maintain all the types of equipment in the telecommunications network.

The most satisfactory overall arrangement in the interests of both the A.P.O. and the switching equipment industry would be to have a base load of installation work always . available to fully occupy the A.P.O. staff while leaving a

limited proportion of the work including the peak loads to be done by contract.

The advantages of such an arrangement are as under

1. Avoidance of extreme A.P.O. staffing levels, as would be needed to cover peak load works programmes.

2. Cost advantages to the A.P.O. (Refer Section 3.8) .

3. A yardstick by which to measure the efficiency of departmental installations.

4. Possible improvements in equipment design and efficiency of manufacturing processes arising from participation of the supplier in installation work.

5. Maintenance of installation capability by the manufacturers which is essential for export supply and install contracts.

The manufacturers in their submissions to the Commission of Inquiry have gone into considerable detail with regard to Items 4 and 5 above. The case they present in relation to Item 4 has some weaknesses in so far as

10

(a) Most design improvements occur as the result of experience in operation and maintenance rather than in the installation and testing process.

(b) Only L.M. Ericsson (L.M.E.) can make design changes to cross-bar equipment as Plessey and S.T.C. manufacture under licence.

(c) Equipment is installed in complete units supplied from the A.P.O. stores.

However there is some merit in the argument that installation experience leads to improvements through feed-back from installers to factory.

Opportunity was taken to have separate discussions on contract installation with senior management officers of S.T.C., Plessey and L.M.E., and all were consistent in their contention that the factors covered by Items 4 and 5 were of particular

importance to their operations. L.M.E. stated that installation work was not very profitable, and they would not continue with it if profit were the sole consideration.

It is clear that contractor installation cannot exist only on peak loads, but must be given a measure of base load also in order to maintain a permanent number of trained installation staff.

It is however easier for the contractors than for the A.P.O. to cope with a fluctuating work load, because some of their installation staff can be absorbed into the factory or into P.A.B.X. installation work. The common practice of

employing temporary staff for the duration of a project is also an advantage.

The P.T.T.A. claim that all installation work with the exception of that involving new technology should be done by A.P.O. staff. They feel that increasing contract installation will have a detrimental effect on promotional opportunities for

their members.

While the proportion of contract work desirable to provide the advantages listed under Items 1 - 5 is a matter to be determined by the A.P.O. management, it is suggested that the existing overall proportion of about 15% could well be retained. This would be sufficient to give scope for competition between

the three firms able to tender, provide them with a sufficient base load, take the peaks off the A.P.O. staff and make it possible to reject unsatisfactory tenders without too much effect

on the total programme.

11

The number of trained technicians employed by the contractors under the foregoing conditions would amount to less than 2% of the total A.P.O. staff in the same category (many of whom would be engaged on operation and maintenance). It is thus difficult to see how such a small intrusion of contractor's technicians into the installation field would have any significant effect on the future prospects of P.T.T.A. members.

A.P.O. technicians doing installation work are involved in much less ineffective time than the line gangs on conduit work. In N.S.W. a standard system of estimating allows a certain number of man-hours for each rack of equipment plus an ineffective time loading of 22%. This loading makes allowance for:-

(a) Time spent in giving and receiving instructions.

(b) Inspection and supervision.

(c) Clerical recording.

(d) Cleaning.

(e) Stopping and starting work and personal habits.

(f) Inspection of locations prior to starting work and/or in providing special amenities.

There is no obvious reason why departmental installation work should be more expensive than contract work. In a number of the jobs for which cost comparisons are made (refer Section 3.8) the departmental costs are less, and in some other cases the contract advantage is marginal. One factor which reduces contract costs is the flexibility enjoyed by the contractors in engagement of temporary labour for the duration of a project. Heavy departmental costs for incidental expenses arising from travelling and living allowances on jobs out of the metropolitan area would be greatly reduced if local temporary staff were employed.

It is understood that an agreement between the A.P.O. and the P.T.T.A. is being negotiated, which will result in the A.P.O. being able to recruit temporary staff locally at Telecommunications Assistant level for the duration of a specific project and to give on the job training for particular manipulative tasks.

Such an arrangement should reduce the margin of cost difference between departmental and contract installation.

12

3.8. COMPARISON OF DEPARTMENTAL AND CONTRACT COSTS FOR CONDUIT WORK AND EXCHANGE EQUIPMENT INSTALLATIONS:

The method used by the A.P.O. for comparing the costs of departmental and contract work is set out in a letter dated 20.12.1972 issued for the Director General to all State Directors. This letter forms Appendix 1 of a statement made by the A.P.O. to the Commission of Inquiry entitled "Comparison

of costs of contractor work on conduit and exchange equipment installation projects as against departmental costs". Appendices 2, 3 and 4 of the same letter give details in itemised form of comparative estimates of departmental and contract costs

of various projects carried out in N.S.W. and Victoria in 1972 - 73.

A summary of these comparative estimates is set out hereunder. It will be noted that a number of the exchange installation projects are estimated to be cheaper by A.P.O. labour, and that over 50% of the saving by contractor installation

in N.S.W. is in two large projects at the Pitt Street exchange.

COMPARATIVE COSTS OF DEPARTMENTAL AND CONTRACT WORK:

ITEM PROJECTS

Comparative Cost $ Difference Contract A.P.O. $

WORKS IN N.S.W. - 1972 - 73

1 17 conduit projects (all cheaper by contract)

1,458,120 3,318,463 1,860,343

2 66 exchange equipment installations (44 cheaper by contract) 4,043,505 5,202,763 1,159,258

SUBDIVISION OF ITEM 2 ABOVE:

2a 2 Pitt St. installation projects 904,221 1,573,850 669,629

2b 42 installation projects (all cheaper by contract) 2,200,473 2,769,868 569,395 2c 22 installation projects

(all cheaper by A.P.O. labour) 938,811 859,045 - 79,766

WORKS IN VICTORIA 1972 - 73

3 8 exchange equipment installations 507,788 549,062 41,274

SUBDIVISION OF ITEM 3 ABOVE:

3a 4 installation projects (all cheaper by contract)

275,622 352,627 77,005

3b 4 installation projects (all cheaper by A.P.O. labour) 232,166 196,435 - 35,731

NOTE: In two of the projects under 3(a) departmental costs were substantially increased by the heavy incidental costs involved in travelling and living allowances.

13

The costs shown in the foregoing summary are comparative only and exclude items of material which are supplied by the A.P.O. irrespective of how the work is carried out. Engineering administration overheads are excluded, it being assumed that they apply equally to either method of construction. (Refer Section 3.9).

The contract prices for conduit works are estimates based on calculated quantities and the unit rates quoted by the contractor for each item of the schedule. The same estimated quantities would be used in preparing the departmental estimate of man-hours and materials required.

For switching equipment projects the contract price used is the actual quoted price for the work.

Additions are made to the contract prices in the comparative estimates to cover supervision, and associated overheads due to the involvement of the department in the contract project. (Refer to Section 3.10). "

3.9. OMISSION OF ENGINEERING ADMINISTRATION CHARGES IN COMPARATIVE ESTIMATES:

The method used as a basis for comparing costs of departmental and contract work was evolved after A.P.W.U. complaints that departmental estimates were too heavily loaded with overhead charges. Accordingly the normal departmental engineering administration charges are omitted from the cost comparison, it being considered that the use of contractors on the present scale would have negligible effect on the costs of engineering

administration in the department.

As we are dealing with comparative costs rather than real costs in this exercise, the omission of engineering administration charges is considered to be justified with the present levels of contract work. However should the scale of contract work be significantly increased, omission of these charges would tend to weight the comparison in favour of departmental work.

The reason for this conclusion can be seen by considering the following extreme cases

(a) Where the whole of the work is done by the department.

(b) Where the whole of the work is done by contract.

In case (a) the real cost of the work must obviously include the engineering administration required to organise and control the manipulative staff doing the work, together with their plant and equipment.

14

In case (b) the real cost of the contract work must also include the costs of the A.I’.O. engineer i tig administration staff required to control and administer Lite contract works. In this case however, the engineering force required should be considerably smaller than that necessary when the department does all the work, since it would not need to be concerned with construction plant or with the management of manipulative labour.

Departmental engineering administration charges should thus be less for an "all contract" situation. However for the present scale of contract work it is probable that the engineering establishment has undergone no appreciable adjustment so that

the omission of the consequent overhead charges from both departmental and contract estimates is justified for the comparative figures.

3.10 EXAMINATION OF ITEMS INCLUDED IN COMPARATIVE ESTIMATES:

Appendix 3 to this report shows the format used for making comparative estimates and the items which are involved. These items are discussed hereunder.

ESTIMATED COST BY DEPARTMENTAL LABOUR

(a) Labour Costs:

The man-hour content of the actual work in the job is estimated, and the appropriate loading for ineffective time is added. This loading is 87% for conduit work and 22% for installation work. (Refer to Sections 3.3 and 3.7 and Appendix I of this report).

Labour rates per man-hour are established by the State costing officers on a weighted average basis for the classifications involved, and include some loading for overtime.

(b) Materials:

Material costs include all stores overhead and handling charges. Only those materials which are supplied by the contractor and included in his price are allowed for in the departmental estimates.

These are items such as concrete, sand, bituminous pre-mix, etc. Costs of pipes or switching equipment supplied by the A.P.O. to the contractor are excluded from the comparative estimates.

(c) Incidentals:

These include all expenditure relating to fares, freight, cartage, final reinstatement of roadways and footpaths, hire of vehicles, use of departmental vehicles and mechanical aids, minor services, travelling and

subsistence allowances. Incidental charges can be suite high where A.P.O. personnel have to be transferred av:av from their home base for the duration of a project.

1 5

(d) S u p e r a n n u a t i o n a n d F u r l o u g h :

A charge to cover liability for superannuation and furlough is made as a percentage of direct labour costs. This varies with the type of labour employed and is 3% in the case of external (conduit construction) staff, where there is a high labour turnover, and most of the staff are exempt. The rate is 11% for the more highly skilled installation staff.

(e) Manipulative Overhead:

This covers all costs which arise as a direct consequence of the activities of the engineering manipulative staff (that is the labour force exclusive of engineering administration staff).

The rate of manipulative overhead is determined by each State from the annual statistics of man-hours expended on Capital Works, operation and maintenance for both internal and external plant. Recorded actual costs are distributed to internal and external plant in proportion to the man-hours worked, ■ ' and the appropriate rate of overhead per man-hour determined.

The items involved in deriving manipulative overhead are as under:-

1. Protective clothing.

2. Leave costs.

3. Training of technicians, line men, technical assistants, motor drivers, telecommunications trainees and other miscellaneous classifications.

4. Movable plant maintenance.

5. Trailer maintenance.

6. Undistributed costs - motor vehicles and mechanical aids.

7. Superannuation and furlough.

Appendix 2 to this report provides a detailed example of the derivation of the manipulative overhead rates for the year 1970-71 in N.S.W.

It should be noted that the rates have now increased to $0.87 per man hour for internal and $0.71 per man-hour for external plant works.

16

A rate of $0.13 per man-hour is used to cover depreciation and interest charges on plant and tools. Although the tools and plant used for conduit construction and switching equipment installations are quite different, the same rate is applied to both types of work. The installation work requires a considerable variety of testing equipment.

Estimated Costs of Contract Work:

Additions are made to the contractor's price to cover the costs associated with supervision. Man-hours of supervision are estimated, and in respect of these the same procedure is followed as for a departmental job estimate. Incidentals, superannuation and furlough, manipulative overhead and depreciation charges are

applied based on the departmental man-hour content of the job. In addition a surcharge of 1% is applied to the contract price to cover administrative costs incurred by the A.P.O. Stores in supplying the contractor with materials and the associated documentation.

(f ) D e p r e c i a t i o n o n P l a n t a n d T o o l s :

General Comment:

It is considered that all relevant factors have been taken into account in the make-up of the comparative estimates. The overhead charges applied are reasonable and generally soundly based, and this opinion is confirmed by Price Waterhouse and Co., whose comments on this

subject are contained in their letter of 30th October, 1973, which forms Appendix 4 of this report.

The criticism by Price Waterhouse concerning the use of identical labour rates for the departmental job, and for the supervision on the contract work is valid, as it would be expected that a contract supervisor should be more highly paid than the manipulative work force. However, if it is assumed that the supervising rate is

increased by 25% the effect on the comparative costs of contract work is very small - less than 2% in almost all cases.

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1 0 3 4 5 / 7 5 — 2 4

3.11 CONCLUSIONS - CONTRACT WORK FOR CONSTRUCTION OF CONDUITS AND INSTALLATION OF STANDARD TELEPHONE SWITCHING EQUIPMENT. ITEMS 1 & 2 OF TERMS OF REFERENCE:

From the information presented in Section 3 - 3.10 of this report covering Items 1 and 2 of the Terms of Reference the following conclusions are reached

1. The use of contractors to perform conduit laying works is definitely the "least cost" way of doing this work in N.S.W. and there is no reason why it should be different in other States. Conduit construction can be done by any competent civil engineering contractor and does not call for any special expertise possessed only by the A.P.O.

On economic grounds it would be desirable for the A.P.O. to carry out an increasing proportion of its conduit works by contract, while retaining a departmental labour force of sufficient size to perform works associated with operating areas where contract work would be difficult to specify and

supervise, and at the same time to do sufficient straight forward new work to maintain a constant check on contract prices and departmental efficiency. Refer to Sections 3.1., 3.2., 3.3., 3.4. and 3.8.

2. The use of contractors to install standard type switching equipment has in a majority of cases proved to be more economical than departmental installation. The economic advantage of contract installation is in a number of cases marginal and could be further reduced by a relatively small

improvement in departmental efficiency.

Installation work requires special skills which are not readily available outside the Post Office or the three equipment manufacturers. The Australian Post Office staff must possess the expertise necessary to install, operate and maintain all the equipment in the telecommunications network. It is therefore considered that the major part of the installation work should continue to be done by the Australian Post Office with its own resources.

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Contract installation work should be retained at about its existing level (approx. 15% of the total) which would be adequate to provide healthy competition between the three contractors, satisfy their stated needs to maintain installation capability, and have negligible effect on promotion prospects of P.T.T.A. members, while at the same time providing a constant check on departmental efficiency. Refer Sections 3.5., 3.6.,

3.7., 3.8.

3. The estimating methods used by the A.P.O. to determine relative costs of conduit laying and equipment installation projects by contract as opposed to employment of departmental resources, provide a satisfactory basis for comparison.

Omission of engineering administration overheads from the comparative estimates is justified for the present levels of contract work.

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4 . 0 S O U R C E S O F S U P P L Y F O R C R O S S - B A R T Y P E S W I T C H I N G E Q U I P M E N T :

Virtually the whole of the Λ.Ρ.Ο. requirements of cross-bar type switching equipment are purchased in Australia from three firms whose viability depends on A.P.O. orders. A small annual order for relays and relay sets only, covering about 2.5% of requirements, is placed with Centre Industries, a sheltered workshop in N.S.W.

Of the three major firms, S.T.C. and Plessey owe their position in the Australian telecommunications industry to the A.P.O. who assisted them to begin manufacture in Australia in 1948 of the then used step-by-step switching equipment, under a 10 year agreement incorporating an arrangement which provided for the sharing of any profits in excess of 12.5% on the funds employed.

With the decision to introduce L.M.E. cross-bar equipment as the new standard for the system, S.T.C. and Plessey continued the manufacture of the superseded equipment on a diminishing scale under the terms of the original agreement, and at the same time modified their plants to produce cross-bar equipment under licence from L.M.E. as a result of an agreement between the A.P.O. and L.M.E.

L.M.E. were initially discouraged by the A.P.O. in their desire to set up a manufacturing plant on the grounds that requirements did not warrant three manufacturers. However L.M.E. became established in 1963 and with the other two firms

initially supplied cross-bar equipment at a negotiated price related to the Swedish price.

Since 1965 orders have been placed on the basis of competitive tenders without any agreement on profits. Demand for the equipment has grown steadily since the advent of three suppliers, but nevertheless there is a collective over-capacity of about 40% at the present time.

No two companies are capable of meeting the whole of the A.P.O. requirements, and even if they were, failure to receive an order by the third company would be disastrous to its operations. For practical reasons it is therefore necessary that the A.P.O. place orders with all three firms, and that the amount allotted to the firm quoting the highest prices is still sufficient to ensure its continued viability.

The extent of dependence of the firms on the A.P.O. is seen from figures extracted from their own submissions to the Commission of Inquiry, namely:-

50 - 60% of S.T.C. output is for the A.P.O. 92% of Plessey " " " " "

65% of L.M.E. ............. . "

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The steady growth in annual requirements has enabled the low tenderer to be rewarded by substantial increases in order value, while at the same time avoiding any drastic cut­ back in order value for the firms quoting the higher prices.

The table hereunder sets out the bulk order values allocated over the past seven years, and indicates how deductions and increases in annual order value have been used as penalties for higher prices and rewards for lower offers.

BULK CROSS-BAR EXCHANGE EQUIPMENT ORDERS 1967-68 to 1973-74:

Year Total Plessey

$ m.

S.T.C. $ m.

L.M.E. $ m .

Centre Ind. $ m .

1967-68 22.31 7.92 7.01 7.38

1968-69 26.68

r-1 Γ- 8.38 10.59 -

1969-70 30.49 9.47 10.58 10.44 -

1970-71 34.90 9.49 12.11 12.40 0.90

1971-72 36.62 10.55 12.87 12.24 0.96

1972-73 39.19 14.50 12.18 11.45 1.06

1973-74 44.80 15.50 11.40 16.90 1.00

TOTAL 234.99 75.14 74.53 81.4 3.92

Competition for the 'largest share of the cake" appears to be very real, because with mass production techniques profitability increases with volume of output.

The matter of equipment procurement by the A.P.O. under the open tender system was discussed with representatives of all three firms. All were very definite as to the serious effect on their operations of any reduction in their share of

the A.P.O. business, and of the constant need for improvements in their manufacturing processes to maintain competitiveness.

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4.1. A L L O C A T I O N 0 " O R D E R S F O R C R O S S - B A R E Q U I P M E N T :

A study has been made of the Purchasing documents relating to the 1973-74 Bulk Cross-bar exchange equipment contracts (Schedule C 7109) by the Central Office of the Australian Post Office.

The tender schedule lists the estimated quantities required of approximately 450 separate items of equipment. Prices are to be submitted for each single unit of equipment.

The Special Conditions of Contract include provisions as under:-

1. Tenderers are to base prices quoted for each item on an assumed total cross-bar production level of $9 million, made up of a wide range, but not necessarily all of the items listed.

2. Discounts to be quoted for each increment of $400,000 over $9 millions up to the total order value for which the tenderer can guarantee delivery in the 1973/74 financial year.

3. Tenderers to be advised of their anticipated ■ order value without commitment by 31.10.72, and of the items and quantities by 30.11.72.

4. Λ firm order to be placed by 30.12.72 of which 80% of the value will be a firm financial commitment.

5. Advice as to whether delivery of all or any proportion of the unconfirmed 20% is to be carried over into 1974-75 to be given not later than 30.12.73.

The analysis of tenders is a complex process. It is not practicable merely to allocate to each of the three tenderers all of those items for which their price is lowest. Orders given to any firm must include a sufficient variety of items to provide a practical balance for factory production.

Many factors are involved in the order allocation process. Those of major importance are:-

1. Total order values must fit into the budget allocation expected to be available.

2. The minimum value of the order which can be given to the highest tenderer while still maintaining viability.

3 . T i n 1 m a x i m u m o n l i ' r w l l i c i t c a n h v g i v e n L o t h e

l o w e s t t e n d e r e r w i t h o u t o v e r t a x i n g c a p a c i t y

L o d e l i v e r w i t h i n t h e s p e c i f i e d p e r i o d .

4. Discount rates depend on order volume and are a major factor in the fixing of allocations.

5. With some 450 items to be considered, use is made in comparing tenders of relative costs of a cross-bar material unit designed to be representative of a large range of all items

purchased. This unit is termed a Switch Equivalent (S.E.). The volume of S.E.s which can be produced by each tenderer at various alternative order value levels is one of the

factors involved in the overall process.

6. Having determined Item (2) above, and decided upon order values to be given to the two lower tenderers to derive the maximum discounts, a computer programme is then used to optimise within the constraints applied, the allocation of items and quantities to make up the total

order value for each firm.

In the case of the 1973-74 tenders approval was obtained from the Director-General for the highest tenderer to be approached with a view to reduction in prices. This resulted in improved discount rates being offered, and Item

(2) above to be resolved.

The Australian Post Office staff concerned in dealing W-ith these tenders are to be commended for the expertise and competence with which they carry out this task and within the constraints imposed by the obligation to place orders with all three major companies, no effort is spared to ensure

that the A.P.O. receives the best possible deal.

4.2 TRENDS IN PRICES OF CROSS-BAR EQUIPMENT:

Australian Post Office records show that the cost of a Switch equivalent (Refer (5) Section 4.1) of cross-bar equipment is less now than in 1964-65 when competitive tendering between the three major suppliers commenced.

The comparative figures are:-

Average cost of S.E. in. 1964-65 - 5221

Average cost of S.E. in 1973-74 - 5211

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Taking into account the considerable depreciation in money values over the above period, there has in real terms been a cost reduction of about 45% in the nine years considered.

Factors causing this very favourable trend would be:-

1. The incentive to improve manufacturing processes, and a drive towards greater all round efficiency arising from competitive tendering.

2. The steadily increasing volume of equipment ordered, thereby lowering costs in factories designed for mass production.

Attempts have been made to estimate the financial advantage which may have accrued to the A.P.O. if all three firms had been subject to an agreement limiting profits before tax to an agreed percentage on funds employedwith sharing of any excess. While theoretically some benefit may appear to have been gained by the A.P.O. it is doubtful under these conditions if the firms would have sustained the motivation necessary to achieve the objectives of (1) above.

The A.P.O. has benefited by the maintenance of prices at a steady level over a period of steep general price increases.

In discussion with representatives of the firms concerned, all were critical of using return on Shareholders' funds as a measure of profitability. All consider return on total assets,is the proper basis as the ratio of shareholders' funds to total assets varies widely. On this basis their profitability is comparable with that of other successful firms.

4.3 FUTURE COMPETITION IN THE SWITCHING EQUIPMENT INDUSTRY:

With the introduction of the Stored Programme Controlled electronic system (designated IOC) into main city trunk exchanges as an alternative to the cross-bar system, a new element of competition has been introduced into the switching equipment industry.

IOC type equipment is expected to have lower installation and maintenance costs than cross-barand may prove suitable for some of the smaller exchanges where the cross-bar system is now exclusively used.

The IOC type equipment already ordered from S.T.C. was obtained after world-wide competitive tenders had been called in 1968. The A.P.O. has negotiated a very favourable agreement with S.T.C. whereby prices to be paid for any future orders of IOC equipment will be jointly determined by the A.P.O. and S.T.C. and related to the original prices quoted in world­ wide competition. Provisions are also made for the licensing of the other two firms to manufacture IOC equipment locally should the demand be sufficient.

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In the meantime S.T.C. opened a new factory in Sydney in June 1973, and has commenced local manufacture of IOC equipment for Lonsdale and Waymouth trunk exchanges. S.T.C. obviously believe that the use of IOC will not be restricted to trunk exchanges.

L.tt.E. and Plessey are fully aware of the possible gradual intrusion of IOC type equipment into the cross-bar area. L.M.E. have already developed an Electronic Register Processor System whereby some of the advantages of IOC can be applied to

cross-bar installations in local exchanges.

It is therefore considered that in future keenly competitive prices should be received for cross-bar type equipment particularly from L.M.E. and Plessey. S.T.C. will need to match this competition if they wish to retain a reasonable

share of the considerable cross-bar business which will extend well into the 1980s.

4.4 CONCLUSIONS:

It is concluded that no change is warranted in the present system of competitive tendering for switching equipment.

4.5 SOURCES OF SUPPLY FOR TELEPHONE CABLES:

Telephone cables fall into two main categories:-

1. Paper insulated lead covered (P.I.L.C.) underground cables.

2. Plastic insulated and sheathed cables - polythene and P.V.C.

(a) Polythene for underground usage. (b) P.V.C. for indoor use.

Currently there are two suppliers for P.I.L.C. cable, Austral Standard Cables Pty. Ltd. and Olympic Cables Pty. Ltd. There is considerable overcapacity available for P.I.L.C. cable manufacture as A.S.C. are capable of supplying the whole of the

A.P.O. needs, while Olympic can supply about 50%.

To date there are three main suppliers of plastic cables, namely, A.S.C., Conqueror Cables Pty. Ltd. and Olympic. A fourth small Australian manufacturer, Beacon Cables Pty. Ltd. has tendered unsuccessfully for A.P.O. contracts.

There is adequate production capacity available in the plastic cable industry at present, but the demand for this type of cable has increased considerably over the past seven years.

25

A.S.C. was incorporated in 1948 under a ten year agreement with the A.P.O. including guarantee of minimum annual orders at prices based on a profit of 12.5% (before tax) on funds employed, with excess profits over the 12.5% being shared equally between the company and the A.P.O.

Olympic cables developed as P.I.L.C. manufacturers between 1962 and 1967, with guarantees from the A.P.O. as to minimum annual orders and ultimate plant amortisation.

There has been continuous technical co-operation between the established cable makers and the A.P.O. in development of quality standards and in constant design improvements.

A.S.C. are dependent on the A.P.O. for about 83% of their total business. While the Olympic parent company is not substantially dependent on the A.P.O. and has diversified interests, including the manufacture of cables for the electrical industry, the Olympic telephone cable factory would close down without A.P.O. orders.

Conqueror Cables are developing as the main competitor to A.S.C. in the plastic cable field.

By contrast with the switching equipment industry where manufacture is effectively limited by licensing agreements to three main firms, no such limitation exists in the cable industry. The possible intrusion of additional suppliers into

the P.I.L.C. cable field with its existing overcapacity could be a serious disadvantage. Benefits from a wider field of competition in open tenders might well disappear due to the resulting higher capital and fixed costs which the industry would have to bear.

In discussion with representatives of A.S.C. during the inspection of their Clayton factory, they expressed concern at the overcapacity situation, and quoted as an example co-axial cable plants installed by themselves and by Olympic, which had on a number of occasions been idle for a year.

The economics of P.I.L.C. cable manufacture are more dependent on large scale operations than is the case with plastic cable.

In the plastic cable field, the major part of A.P.O. requirements is supplied by A.S.C. in face of growing competition from Conqueror and Olympic. To date Olympic have only supplied about 8% of the total and Conqueror up to about 35%. Conqueror as a company is not substantially dependent on the A.P.O. as like Olympic they also manufacture cables for the electrical industry. Development of their plastic telephone cable capacity is considered necessary to ensure adequate competition for A.S.C. in the growing plastic cable industry.

2 6

With the open tender system offers for both plastic insulated and P.I.L.C. cables are received from Japanese firms but apart from some small orders, no significant amount of cable has been imported. With duty added the Japanese

tenders are usually not competitive.

Locally made cable has another advantage over imported cable, in so far as the A.P.O. is able to obtain at short notice deliveries of local cable cut to length. This benefit would outweigh any small price advantage which might

occasionally arise with imported cables.

4.6 TENDERS FOR TELEPHONE CABLES:

The tender papers for the two year period contract (schedule 6593) for supply of P.I.L.C. cable over 1972 and 1973 issued by the Central Office of the A.P.O. have been examined.

The schedule calls prices per 1,000 yards for 261 items, including and excluding drum prices.

Provision is made for orders to be placed by six letters of acceptance over the two years covering requirements for a six monthly and two three monthly periods in each year.

Discounts are assessed at six monthly intervals depending on the amount of cable ordered in the preceding six months.

In addition to tenders from A.S.C. and Olympic, offers were also received from four Japanese firms. The Japanese offers including duty (32.5%) were dearer and were eliminated from further consideration.

The allocation of cable quantities between the two local firms was a complex study involving many factors such as:-

(a) Relative prices with and without drums

(b) Drum return prices

(c) Discount scales

(d) Freight charges

(e) Escalation provisions

Analysis by computer determines the least cost practical allocation of quantities and items given the number of manufacturers. Olympic offer for part and A.S.C. for the whole of the requirements; allocations of the total order to one

supplier is not desirable in the preservation of competition.

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Tender papers for the two year contracts (Schedule 7119) for supply of External Plastic Insulated telephone cables (small size) for 1973 and 1974 were also examined.

The Schedule calls for prices per 1,000 yards for 68 items of cables.

General conditions of contract are similar to those applying to the P.I.L.C. cable contracts.

Four Australian and one Japanese offer were received, the Japanese offer being rejected on price after duty was applied. A.S.C., Olympic and Conqueror tendered for all items and Beacon Cables for five items only.

While the least cost would have resulted from allocation of the whole order to the lowest tenderer (A.S.C.) sufficient quantities were placed with Conqueror and Olympic to maintain viability of their operations and provide competition in this growing industry.

As in the case of switching equipment tenders, the Australian Post Office staff involved with cable contracts perform the analysis of the offers with commendable competence to obtain a least cost allocation of orders within the restraints imposed by the need to maintain viable competition.

4.7 PRICES OF TELEPHONE CABLES:

Price trends in telephone cables are influenced by many factors which make price comparisons difficult. Major factors are:-

1. Price of copper which has a very marked influence on cable costs.

2. Technological developments which have reduced copper content and introduced new and better insulation materials and techniques.

Taking all factors into account makes it virtually impossible to provide a common base for cable statistics over the years.

The Australian Post Office have data on average cable purchase costs in $ per pair - Kilometre for a range of serials in P.I.L.C. cable, and some relevant figures are shown in the table below.

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AVERAGE COSTS - LOCAL EXTERNAL TYPE CABLE - SERIALS 460-471 and 491: ~

Year

Cost - $

Per Pair Kilometre

Basic Copper Price Cents/Kilogram

1956-57 14.54 -

1960-61 12.55 61.5

1963-64 9.57 60.0

1969-70 14.00 127.9

1972-73 14.28 99.2

These figures must be accepted in the knowledge that the 1972-73 cables are much improved in design to those of 1956-57.

It can however be generally stated that as a result of improved technology and manufacturing processes cables are costing about the same now as 16 years ago and in terms of real money are costing less.

Information available for some types of plastic insulated cables (which have not changed in design over the period being considered) indicates that prices tendered in 1973 are very comparable with those quoted in 1967, after adjustment to common labour and material prices.

On a duty free basis the prices quoted by Japanese firms for plastic insulated and P.I.L.C. cables would be lower than Australian prices. These low prices may however only be quoted in the face of strong local industry.

4.8 COMPETITION IN THE TELEPHONE CABLE INDUSTRY:

The position of A.S.C. differs from that of all other manufacturers in the cable business in so far as they have the capacity to provide all the P.I.L.C. requirements of the Australian Post Office and the major part of the

plastic insulated cables also.

29 -

The following table shows how Australian Post Office payments for P.I.L.C. cables have been shared between the two suppliers of this type of cable over the past seven years.

P.I.L.C. GABLES - DIVISION OF PAYMENTS TO SUPPLIERS 1967/68 - 1973/74

Firm

% of Total A.P..0. Payments - P.I,.L.C. Cables

1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 1973/74

A.S.C. 62.7 67.3 73.6 71.2 69.3 64.0 57.5

Olympic 37.3 32.7 26.4 28.8 30.7 36.0 42.5

A.S.C. knows that however competitive their own prices are Olympic share will probably not be allowed by the Australian Post Office to fall much lower than about 30% and on the other hand however competitive Olympic prices are they are unlikely

to receive more than about 45% of the total. Thus A.S.C. are assured of 55-70% of the business anyway, and their pricing policy could be directed towards securing the more profitable lines of cable, while maintaining higher than necessary prices for the remainder.

It will be noted from the A.P.O. Submission to the Commission of Inquiry, Vol. 5, Chapter 15, Appendix 1, shows A.S.C. as having a higher average of return on total assets than any of the other major suppliers, namely, 13.2%.

Olympic would be expected to submit keen prices in a bid to utilise as much as possible of their capacity for P.I.L.C. cable production, and this appears to have been the case in the 1972-73 contracts.

In the plastic cable area, where the rate of expenditure has doubled over the past seven years, competition is strong, with the largest supplier (A.S.C.) offering keen prices to offset the growth rate of competitors.

4.9 FUTURE OF THE TELEPHONE CABLE INDUSTRY:

The following table indicates the Australian Post Office annual expenditure on major supply contracts for P.I.L.C. and plastic insulated cables over seven years.

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A.P.O. EXPENDITURE ON TELEPHONE CABLES - 1967-68 to 1973-74 MAJOR SUPPLY CONTRACTS:

Type of

Tctr.l Annual Expenditure - $ Millions

Cable

1967-68 1968-69 1969-70 1970-71 1971-72 1972-73 1973-74

P.I.L.C. 17.82 20.36 19.42 16.15 17.98 17.90 19.72

Plastic 6.42 8.53 10.58 9.96 11.64 13.22 12.81

The indications are for a relatively static level of demand for P.I.L.C. cables and growth in the plastic insulated field at a reducing rate.

4.10 CONCLUSIONS:

From the foregoing review the following conclusions are submitted:-

1. The open tender system is satisfactory for the purchase of plastic insulated cables and no change in existing practices appear necessary.

2. In the case of P.I.L.C. cables, the Australian Post Office is obliged to share its business with two firms, both having received initial assistance from the Australian Post Office to become established. There is considerable over-capacity in the industry, and the entry of another manufacturer into the P.I.L.C. field (which cannot be prevented under the open tender system) would aggravate the over-capacity problem. Likewise an increase in the capacity of the

smaller firm (Olympic) is not warranted in the present circumstances.

The existing position where the larger firm must always secure about 60% of the business is not conducive to fully competitive tendering.

In the circumstances there is a case for the Australian Post Office to negotiate agreements with the two suppliers similar to that originally existing with A.S.C. prior to 1958, incorporating guaranteed minimum order levels, agreed percentage of profit on funds employed, and sharing of profits over the

specified percentage.

The New Zealand Post Office obtains all its cable supplies from A.S.C. through their factory at Hornby in New Zealand, and has a negotiated agreement covering prices which is apparently satisfactory to both parties.

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5. DATA AND INFORMATION ON WHICH TO DETERMINE REASONABLENESS OF TENDERS FOR SWITCHING EQUIPMENT AND TELEPHONE CABLES:

The various methods by which the Australian Post Office can check on the reasonableness of tenders for switching equipment and cables, are as under:-

1. By comparisons with the prices authorities in other countries are paying for similar equipment.

2. By comparing the prices quoted by local and overseas firms, with due regard to tariff levels.

3. By continually checking price trends. (Refer Sections 4.2 : 4.7)

4. By cost investigation of manufacturing processes as a condition of contract.

5. By advice from other Government Departments familiar with the operation of Government-owned factories. (Department of Supply in particular).

6. By making use of the knowledge of manufacturing processes and costs which the staff of the Australian Post Office workshops already possess.

Comment on each of these methods follows in the sequence listed

(1) Differences both in technical requirements and in the economic circumstances of other countries make it difficult to reduce comparisons to a common base. Much of the overseas switching equipment is purchased on a supply and install basis, and there is difficulty in separating material and installation costs. The same applies to cables which are often quite different in design and insulation details.

In New Zealand, Austral Standard Cables supply all the New Zealand Post Office cable requirements, under a pricing agreement, and it would seem that some useful comparison could be made as to comparative prices paid to A.S.C. for cables in Australia and New Zealand. However, again a difficulty arises

in that the N.Z.P.O. buys its cables to British Post Office specifications in order to retain similarity with cables previously imported.

The use of comparisons with other countries can therefore be taken as a rough guide only.

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(2) Due to the licensing arrangements for cross-bar switching equipment, overseas prices for cross-bar equipment can only be obtained from the L.M. Ericsson parent company in Sweden.

In 1970 an offer was obtained from L.M.E. (Sweden) for a quantity of additional cross-bar equipment which it was considered might be required to augment local supplies. However, the local prices with the discounts offered were less

than the Swedish price.

Japanese tenders for cable on a duty free basis have been assessed as being about 15% lower in price than locally made cables. This could lead to the belief that Australian made cables are a little higher in price than they need to be. However, the evidence is inconclusive, since the basis of

Japanese pricing is unknown.

(3) Records of price trends in both switching equipment and cables (Refer Sections 4.2 : 4.7) offer the most satisfactory evidence that prices paid by the Australian Post Office are reasonable, since in both cases the real costs are much lower now than they were when profit limitation agreements were in operation between the manufacturers and the Australian Post Office.

With competition generally satisfactory it can be concluded that the benefits of improved technology and manufacturing processes have been equitably shared between the Australian Post Office and the manufacturers.

(4) The Australian Post Office can as a Condition of Contract reserve the right to undertake a cost investigation of any firm's manufacturing processes. Cost audits have been carried out in some cases, the firms concerned agreeing reluctantly after insistence by the Australian Post Office. To obtain maximum benefit from such an investigation it should be conducted as a joint accounting and technical exercise. The reasonableness of manufacturing costs determined by the

cost investigation should be verified by technical staff with expert knowledge of the type of manufacturing processes involved.

(5) The Department of Supply, responsible for the operation of government owned factories manufacturing defence requirements has been a source from which the Australian Post Office can obtain information as to the probable order of costs in various manufacturing processes involving production line techniques.

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10.145/75—25

(6) The Australian Post Office workshops carry out some manufacturing work, (Refer Section 6.0) and the controlling staff possess considerable knowledge on costs of various manufacturing processes. Maximum use should be made of the

talent already available in the departmental workshops to assist in exercises undertaken to check the reasonableness of prices quoted by suppliers of mass produced equipment.

5.1 CONCLUSION:

It is concluded that the Australian Post Office has available sufficient safeguards to ensure that tenders submitted for supply of switching equipment and cables are reasonably priced.

34

6 . 0 A.P.O. WORKSHOPS GENERAL:

The Australian Post Office submission to the Commission of Inquiry Vol.5 p.640 summarises the present activities of the Departmental Workshops.

Terms of Reference Item 5 requires a report on the scope for the workshops to manufacture an increasing amount of technical equipment required for the telecommunications network through a greater utilisation of existing resources.

The Melbourne workshops were inspected on 25.9.73 and the Sydney workshops on 12.10.73, and useful discussions were had with the Supervising Engineers and senior members of their staff in both cases.

Major activities in both workshops of the production line type were reconditioning of telephones, the manufacture of relay parts, and the assembly and testing of relays and relay sets. The workshops are equipped to carry out a great range of diverse activities, and to manufacture parts required

for maintenance of obsolete equipment still in service. It is the policy of the Workshops to purchase the tooling for such equipment from the suppliers at the time they cease production.

The variety and quality of the machine tools and general equipment was impressive, particularly in the Sydney workshop. It was stated that some of this plant only worked at about 30% capacity, and it was noted that a significant

proportion of the machines were idle.

Engineering management at both workshops was of a high standard. In addition to possessing technical expertise, management were giving attention to improvements in productivity and industrial engineering techniques. An increased use of unskilled labour (largely female) was being made and Sydney workshops claimed an annual increase in productivity in terms

of value of production per man-hour of 4.5% per annum over the past six years.

Following investigation into what extra work could be undertaken "by greater utilisation of existing resources", it became apparent that capacity exists for manufacture of limited quantities of telecommunications equipment with no

increase in fixed capital investment, and a relatively small increase in manipulative staff, mostly unskilled.

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L.M.E. type relays, telephones, and printed circuit boards are the items best suited for such limited manufacture.

The advantage arising from Australian Post Office manufacture of these items are discussed in Sections 6.1 : 6.2 and 6.3.

6.1 MANUFACTURE OF RELAYS:

Relay manufacture by the workshops began in the post war years when supply problems were acute. Manufacturing processes were developed without outside assistance and Sydney workshops in particular possess considerable expertise in relay

production.

Large scale production by all States began in 1958 and with the introduction of the cross-bar system soon afterwards, working in conjunction with existing step-by-step switching equipment, many special relay sets were required. With the

phasing out of the step-by-step equipment the workshops have made all the 3,000 type relays needed for its maintenance. Up to 180,000 of these relays per annum have been manufactured and the demand is still about 100,000 per annum.

While the annual bulk purchases of cross-bar equipment by Central Office provide for specific State projects, there is still a demand by the States for relay parts from which special relay requirements can be made up, both for capital works and maintenance. A large number of different relays can be built up from a common set of parts.

The demand for relay parts is covered by orders initiated by the N.S.W. Supply Branch who control a Central Relay parts store from which all States draw their supplies of parts for assembly of relays in their own workshops.

It appears that the State orders for relay parts from the established suppliers do not receive a very high priority, as production programs are designed around the large bulk order involving completely made up relay sets. Delays of six to nine months in delivery of L.M.E. relay parts are common.

Unforeseen relay requirements not covered by the bulk orders occur frequently, with the workshops being called upon to assemble and supply special relays at short notice.

36

The advantages of workshop production of L.M.E. relays are as under

1. Security of supply and elimination of delay in providing for unforeseen relay requirements.

2. Reduction in stock holdings of relay parts.

3. Better utilisation of expensive workshop plant.

4. Maintenance of expertise in manufacturing processes by Australian Post Office workshop staff.

5. A practical means of checking on reasonableness of prices for cross-bar equipment quoted by suppliers.

Item 1 : 2 and 3 require no comment.

Items 4 and 5 are of particular importance in so far as the Australian Post Office should maintain and develop technical staff who are competent to advise on the production methods, efficiency and costs of suppliers. (Refer Section 5.0

(4) and (6) ). This kind of expertise can only be developed by experience in actual manufacturing processes such as those involved in relay parts production.

An ultimate target for the annual manufacture of 350 - 400,000 L.M.E. type relays could be accommodated within the existing plant resources of the workshops and would require the employment of about 250 extra personnel, engaged over a period of two years in the unskilled category.

With the steady growth in demand for cross-bar type equipment the suggested level of manufacture would have little impact on the business of the established suppliers.

The Sydney workshops have been manufacturing the 3,000 type relays required for maintenance of step-by-step equipment still in service, at costs well below those quoted by outside suppliers.

A cost analysis would have to be carried out for L.M.E. type relay manufacture, but on a "cash flow" basis it should be possible for the workshops to match or better the prices of established suppliers.

It would be necessary for the Australian Post Office to make licensing arrangements with L.M. Ericsson for manufacture of the L.M.E. relays and to pay the necessary royalties.

37

6 . 2 TELEPHONE MANUFACTURE:

Complete reconditioning and testing of the currently used 800 type telephones and of the older types still in use, is a major activity of the workshops. Some 250,000 telephones are restored to "as new" condition annually at a cost of less than half that of new telephones. Replacement parts are obtained for the 800 type phones from the suppliers and sometimes delays occur due to late delivery of sundry parts.

Parts for the now obsolete 400 type (black) telephones are manufactured entirely by the workshops who possess all the necessary tooling.

Some additional tooling would be needed to manufacture 800 type phones, otherwise all the required equipment is available in the Sydney workshops. Up to 50,000 phones per annum could be produced with the addition of 30 personnel, mainly in the unskilled class. .

Advantages to the Australian Post Office from the limited manufacture of 800 type telephones would be:-

1. Ample and always available supply of spare parts for reconditioning operations. .

2. Provision against the time when 800 type phones become obsolete and their maintenance depends on the Australian Post Office being able to manufacture all parts.

3. Maintenance of expertise within the workshops in manufacturing processes.

4. A yardstick whereby to measure the reasonableness of contract prices for telephones.

5. More efficient utilisation of existing workshop equipment.

With the small addition of staff required and the availability of equipment, the actual costs to the Australian Post Office on a "cash flow" basis should be low.

In the past, Sydney workshops have submitted tenders for the supply of telephones, at workshop prices lower than outside suppliers, but with the cost loadings added to make the tender completely comparable with those of outside industry the workshop offer could not be accepted, although only marginally higher.

38

6.3 PRINTED CIRCUIT BOARDS:

Printed circuit boards are incorporated in various types of modern electronic equipment including the new IOC technology, and also in cross-bar switching equipment.

It is necessary that the workshops keep abreast of developments in this field and acquire expertise in printed circuit board manufacture.

Limited manufacture could be undertaken within the existing resources of the workshops with considerable benefit to workshop staff participation in new technology developments.

6.4 WORKSHOP COSTING PRACTICE:

The costing system used for the workshops does not include any overhead charges arising from the following items:-

1. Interest on fixed assets and working capital

2. Depreciation

3. Superannuation and furlough liability

4. Engineering administration

5. General administration

Items 4 and 5 are for administration external to the actual operation of the workshops.

Workshop costs are determined on the following basis:-

1. Direct costs - Labour

Materials Incidentals

2. Overheads, covering the items below:-

(a) Establishment charges

(b) Plant maintenance

(c) Indirect production costs

(d) Experimental and developmental work

(e) Training of apprentices and technicians in training

(f) Non-accountable material

(g) Stores stock adjustment

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(h) Cost variances

(i) Compensation and medical expenses

(j) Paid leave

(k) Administration - covers all engineers, technical and commercial staff in the workshops

(l) Costing expenses.

The percentage of overhead costs to Direct Labour costs varies from State to State, the overall average for 1971-72 being 128.3%.

6.5 CONCLUSIONS:

By greater utilisation of existing resources, but subject to a small increase in staff, mostly unskilled, the workshops could with advantage undertake the manufacture of a limited amount of technical equipment required for the

telecommunications network. The items best suited for such manufacture are L.M.E. type relays, telephones and printed circuit boards.

7.0 SUMMARY:

The conclusions reached in this report relevant to the specified terms of reference are summarised below:-

1. Construction of conduits by contract is the "least cost" method of performing this work, and there would be economic advantage to the Australian Post Office in extending the use of contract work for conduit construction.

(Refer Section 3.1 : 3.2 : 3.3 : 3.4 : 3.8 : 3.11)

2. Installation of telephone switching equipment by contract is frequently less costly than doing the work with departmental resources, but the margin is not so clear cut as for conduits.

It is considered that the proportion of contract installation work should remain at about the present level. (Refer Sections 3.5 : 3.6 : 3.7 : 3.8 : 3.11)

3. The methods used by the Australian Post Office to determine relative costs of performing conduit construction and switching equipment installation by contract as opposed to employment of departmental resources are satisfactory for the present levels of contract work.

(Refer Sections 3.8 : 3.9 : 3.10 : 3.11)

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4. The "open tender system" is satisfactory in ensuring competition in pricing for switching equipment and plastic cables.

For P.I.L.C. cables there i- some doubt as to th” effectiveness of "the ο en tender" system, and it could be to the advantage of the Australian

Post Office and the industry to negotiate an ordering and price agreement arrangement with the two suppliers. (Refer Sections 4.0 - 4.10 inclusive).

5. There are sufficient channels open to the Australian Post Office to determine the reasonableness of tenders for switching equipment and cables. (Refer Sections 5.0 : 5.1)

6. Existing workshop resources could be utilised to a greater extent to manufacture a limited quantity of telecommunications equipment, the items best suited for production being L.M.E. relays, telephones, and printed circuit boards. Such utilisation of existing plant resources would require an addition of about 280 personnel, mostly unskilled, to the workshops staff.

(Refer Sections 6.0 - 6.5 inclusive)

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APPENDIX i

COMPARISON OF ESTIMATED AND ACTUAL MAN-HOURS

A.P.O. CONDUIT WORKS BY DEPARTMENTAL LABOUR

Project Completion

date

Man-!

Estimated

lours

Actual

Mosman West relief 23- 2-66 4,680 4,693

Burwood relief 25- 8-66 3,531 3,755

Harbord North West 4-10-66 2,071 4,308

Mosman exchange entry 29-11-66 4,490 4,502

Lane Cove relief 8-12-66 15,900 15,992

Castle Hill 26- 1-67 2,278 2,482

Drummoyne new entry 7- 6-67 3,531 4,209

Carramar relief 7- 8-67 3,374 4,075

East Haymarket - 4 way ducts 31- 7-68 3,949 4,048

York - Kent St. relief 20- 8-68 25,669 25,435

Blacktown relief 30-10-68 19,547 17,378

Wahroonga Fox Valley road 28- 7-69 24,178 25,264

Lakemba relief 14- 8-69 13,616 12,405

Double Bay relief 29- 8-69 6,523 5,770

Killara exchange entry 10-11-69 9,840 9,904

Chatswood C.H. 10 coaxial 26-11-69 6,454 6,969

Willoughby - 12 way 12- 2-70 11,955 11,260

Berowa - 4 way 12- 2-70 44,442 43,815

Mascot airport 3- 4-70 22,114 19,610

Revesby - Panania North 27- 4-70 9,565 8,842

Chatswood West area 25- 5-70 3,856 3,860

Mosman - North Sydney relief 22- 2-71 50,362 52,935

Cronulla relief 23- 3-71 23,411 19,889

Northbridge - Willoughby 15-10-71 37,223 36,432

Frenchs Forest 10- 3-72 9,615 10,345

Mona Vale - 8 way 20- 3-72 17,462 17,602

Total for 26 projects 379,636 375,779

Note - Estimated man-hours are calculated job man-hours plus an

87% loading for ineffective time.

APPENDIX 2

APPENDIX 3

A P P E N D I X 4

C O P Y

PRICE WATERHOUSE & CO.

Chartered Accountants

NATIONAL MUTUAL CENTRE

447 COLLINS STREET

MELBOURNE, 3000

Telephone: 61 3511 Cables and Telegrams: PRICEWATER

30 October 1973

Mr G Paterson 142 Bambra Road CAULFIELD VIC 3162

Dear Sir,

AUSTRALIAN POST OFFICE

In accordance with your instructions we have examined the bases of calculations used in New South Wales and in Victoria to compare costs of contractor work on conduit and exchange installation projects with estimated departmental costs.

Current costing procedures for comparing tenders from private contractors with departmental estimates to complete capital projects are laid down in the Director General's letter to all States dated 20 December 1972. This letter is included as Appendix 1 of the Statement by the Postmaster-General's Department, submitted to the Australian Post Office Commission of Inquiry entitled "Comparison of Costs of Contractor Work on Conduit and Exchange Equipment Installation Projects as against Estimated Departmental Costs".

We examined the principles and methods used in the preparation of Appendices 2 - 4 which form part of the Statement submitted to the Australian Post Office Commission of Inquiry, and visited the administration offices in New South Wales and Victoria for purposes of:

(a) Reviewing the costing principles of the contractor work on conduit and exchange equipment installation projects; and

(b) Carrying out a brief examination of the records of costings on contract items selected from those shown in Appendices 2 - 4 .

Contracts for excavation and conduit laying work are mainly carried out in New South Wales, and very little of this work is done by outside contractors in Victoria.

Contractors for the installation of exchange equipment in both New South Wales and Victoria are used in order to maintain the works

. . ./2

programmes to timetable rather than a means of achieving cost benefits. For this reason comparison of contractor costs with departmental estimates tends to serve as one means whereby tender

prices are checked rather than an important step in deciding whether the work should be done by contractors or departmental staff.

In the preparation of Appendices 2 - 4 , cost comparisons for all contracts, including contracts commenced prior to 20 December 1972, have been calculated or recalculated in accordance with the revised costing procedures laid down in the Director General's letter of

that date.

It has not been practicable for us to check the detailed revised cost estimates for New South Wales contracts which we recalculated, and our conclusions are based on our review of the application of the costing principles laid down.

As a result of our review, we reached the following conclusions:

(a) The calculations of comparative departmental cost estimates with alternative contractor costs, in respect of the individual contracts listed on the attachments (Appendices 2 - 4) to the Statement submitted to the Commission of

Inquiry, have been made in accordance with the procedures laid down in the letter from the Director General to all States dated 20 December 1972.

(b) The application of the principles and methods laid down by these procedures has resulted in the comparative cost . estimates being prepared on a reasonable basis.

(c) Certain aspects of the procedures could be improved so as to minimise the extent to which some calculations involve the use of arbitrary methods.

In principle, we consider that a reasonable approach has been taken, and a fair comparison has resulted, but we suggest that similar comparisons in future could be made on less arbitrary bases if the following aspects were

subject to more detailed study:

i) Adequacy of the method used to determine indirect charge of 87% loading included within excavation and conduit departmental labour;

ii) The need for a distinction to be made between the average labour rates used to cost labour for the whole job being done by departmental resources and the labour rate used to cost departmental labour

cost for supervision and inspection of contract jobs;

. . . / 3

2

i i i ) The m a t t e r o f n o t c h a r g i n g e n g i n e e r i n g a d m i n i s t r a t i o n

c o s t s c o u l d a l s o b e s u b j e c t e d t o f u r t h e r s t u d y .

T h i s c h a r g e i s n o t made a t p r e s e n t b e c a u s e i t i s

c o n s i d e r e d t o b e common t o b o t h d e p a r t m e n t a l w ork and

c o n t r a c t w o rk . H o w e v e r , i t c o u l d b e c l a i m e d t h a t a

l a r g e r p r o p o r t i o n o f a d m i n i s t r a t i o n o v e r h e a d w o u ld be

g e n e r a t e d i n t h e c a s e o f d e p a r t m e n t a l w o r k , b e c a u s e

o f t h e much l a r g e r l a b o u r f o r c e w h ic h w o u ld b e

n e c e s s a r y i f t h e d e p a r t m e n t d i d a l l w o r k , c o m p ared

w i t h t h e s i t u a t i o n , s a y , i f c o n t r a c t o r s d i d a l l w o rk .

I t i s c l a i m e d a t p r e s e n t t h a t o n l y m a r g i n a l

a d d i t i o n a l e n g i n e e r i n g a d m i n i s t r a t i o n w o u ld i n f a c t

b e i n c u r r e d f o r d e p a r t m e n t a l w o r k , a s t h e j o b

s u p e r v i s i o n i s i n c l u d e d i n t h e d i r e c t l a b o u r

e s t i m a t e . An e v a l u a t i o n o f t h i s w o u ld p r o b a b l y

t a k e some c o n s i d e r a b l e t i m e , and w o u ld r e q u i r e t h e

s t u d y o f e n g i n e e r i n g a d m i n i s t r a t i o n a c t i v i t i e s .

We w i l l b e p l e a s e d t o p r o v i d e y o u w i t h an y f u r t h e r i n f o r m a t i o n you

may r e q u i r e .

Y o u rs f a i t h f u l l y ,

( s i g n e d ) P r i c e W a t e r h o u s e & Co.

10345/75—L(R73/283l(a & b) Printed by Authority by the Government Printer o f Australia