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Thursday, 26 September 1974
Page: 1465

Senator JESSOP (South Australia) -I would like to support what Senator Durack, Senator Lawrie and Senator Townley have said about the outrageous increase in charges that this Government intends to inflict upon the people of Australia. At the outset I reject totally the suggestion that has been put forward and promoted by the Postmaster-General (Senator Bishop) that the Senate is to blame for these increases in charges. He continued his attack on the Opposition, trying to show that it is frustrating the Government. I have become tired of that phrase, particularly as out of a total of 343 Bills that have been introduced by this Government the Opposition has rejected only thirty-four. To accuse the Opposition of increasing these charges is quite irresponsible and unacceptable. On the one hand the Postmaster-General blames the Opposition for forcing the Government to increase the cost of a postage stamp to 10c and on the other hand he flamboyantly abolishes broadcasting and television licences, thereby reducing the revenue of the Department by about $7 1 m in a full year.

Senator Townley - Is Caucus not considering wiping out the tax on unearned income?

Senator JESSOP - I would not be surprised by what Caucus would be considering. I am quite certain that the Treasurer (Mr Crean) and the Prime Minister (Mr Whitlam) would be bound to take notice of whatever it suggests. I cannot understand the rationale of this incredible charge against my Party. Certainly the PostmasterGeneral's Department requires additional finance to keep up with wage pressures and the running costs caused by the inflation that is rife under this Government. However, the Opposition believes that there are areas of inefficiency within the Postal Department where economies ought to be effected. It is to that area that we, as a government, would be looking to avoid the necessity of excessively high increases in postal charges.

The Postal Department is the largest department in the Commonwealth, employing about 35 per cent to 40 per cent of the Commonwealth's civilian public servants or over 1 14,000 people. Recognising the need for a restructuring of the Postmaster-General's Department, the Liberal-Country Party Government in 1971 streamlined its administration with the object of establishing 32 fully equipped business management headquarters throughout Australia under the control of area managers. This involved the amalgamation of the lesser administrative units into larger area offices. The organisational reforms effected under the Liberal-Country Party Government provided an appropriate balance between centralisation and decentralisation, and between forward planning and shortterm achievements. These sentiments were expressed at that time by the Director-General of the Postal Department, Sir John Knott.

The results of this initiative taken by the Liberal Party Government were revealed over the ensuing 2 years because the combined earnings of the postal and telecommunications sections improved from a $2m deficit in 1970-71 to a profit of $36m in 1971-72. Because the postal section of the Post Office is labour intensive it suffers much more than the telecommunications area, which is highly capital intensive, as a result of wage increases. I believe also, because there is a fairly large number of females employed within the Department, it would have suffered substantially as a result of the added costs of the maternity leave that was provided by the Government early in its administration.

Senator Mulvihill - Do you oppose that reform, Senator?

Senator JESSOP - I do not oppose that at all if taken at a sensible time, but taken at a time when the economy is in a sick state and when inflation is increasing I believe that that sort of activity was irresponsible. My Party would recognise that need and would act upon it when the economic circumstances permitted. I heard the other day that in one union's log of claims there is a claim that maternity leave ought to be increased to 52 weeks and that paternity leave ought to be increased to 12 weeks. As Senator Sims asks, what is going to happen in the Postal Department if that sort of irresponsibility is allowed to persist.

We have heard a lot about the Vernon report. It has been subjected to a great deal of criticism by many writers in Australia. I noted earlier today an article by Mr McGuinness of the 'Australian Financial Review'. In July he said:

The report of the Commission of Inquiry into the Australian Post Office is a disappointing document.

It contains few of the basic issues which any proper examination of the postal and telecommunications services should consider, in particular the basis for pricing capital investment, procurement and subsidy policies.

There is little in it- except historical and public relations material, and accountants' reports- which was not covered in principle by the Coombs task force report.

And the Coombs report had the benefit of much less time and input than the Post Office inquiry.

He went on to say:

The increase in charges foreshadowed by the Government is not much of an anti-inflationary measure, but it is essential if any kind of brake is to be put on a form of social investment which is heavily capital-consuming and, henceforth, in a capital-scarce environment like ours, inflationary.

The Vernon report indicated to the Government that postal service expenses would increase by 10 per cent this year based on last year's figures, but now the Government is asking us to accept an 18 per cent increase, and this is in spite of restrictions that have been applied to staff escalation. The Committee recommended that the postal charges should be increased at a rate of 15 per cent per annum. That seems to me to be quite incredible because under this Government I doubt very much that that figure could be adhered to. It seems to me that within a very short number of years we will see a greater escalation in charges.

Senator Drake-Brockman - A policy of despair, I think, don 't you?

Senator JESSOP - That would be an appropriate expression to describe it. The Post Office has estimated that without increasing charges the loss this financial year would be 5 times that of only 2 years ago- being approximately $100m. We know that the Austraiian Post Office finances its operations from 2 sources. Firstly, the Post Office is financed from the cash flowing from its trading activities, including net profit, if there is any, and depreciation; and secondly, it is financed by borrowing from the Treasury at a rate of interest equivalent to the interest rate on longterm Government bonds. The additional revenue that will accrue from the Government's proposals, amounting to about $146m, provides what would appear to be a profit of $60m. However, the Minister conveniently has not mentioned that this revenue is required to supplement capital expenditure because Treasury advances to the Department for capital are pegged at 1973-74 levels. This ignores the eroding effect of inflation which is currently running at about 14.6 per cent and, as anticipated in the Budget, will probably exceed 20 per cent.

In 1973-74 the estimated expenditure of the Post Office was $385m. This is the same amount of expenditure that is being allowed for this year. If honourable senators do a little simple arithmetic I suggest they will find that the Government ought to be allowing, if it takes inflation into account, for an expenditure of approximately $442. 5m. In other words, the additional revenue that will be attracted from the people of Australia by way of these additional charges merely offsets inflation. I think that in another 12 months we can look forward to another massive deficit in the Post Office.

My colleagues have already detailed many of the deficiencies and penalties of the measures that are being proposed in these Bills. I have received many complaints from people about the proposed increases in Post Office charges. I would like to read a typical example to honourable senators. It is from the Australian Postal Users Council. The letter was written on 20 September 1974 and states:

The new postal rates must greatly increase unemployment and inflation and will seriously assist in undermining the confidence of the public, industry and business.

The suggested increases are vastly in excess of those proposed in the Mini-Budget which you helped to reject in July this year. We ask your support in the rejection of this Bill. In April this year the Vernon Report compiled by the Commission set by the Government was tabled and obviously was to be used as a guide for the reconstruction of the Australian Post Office. This report was completely ignored when the new postal rates were compiled.

The Vernon Report recommended that there would of necessity be an annual increase of 1 S per cent per annum and that in three years time the basic standard letter rate would be 10c.

The present proposal to increase the basic standard letter rate from 7c to 10c is disastrous showing as it does an increase of 42.9 per cent. This great increase is suggested not in three years but in five months.

If we take the basic non-standard letter the increase is even greater from 7c to 1 lc, an increase of 63 per cent. As the rate progresses into the heavier letters and articles of nonstandard size the increase does not follow any regular percentage and would appear to have little logic. An article is an article and the processing of such an article basically requires the same amount of handling. Therefore the charge of 33c for a non-standard article between 100g and 250g is out of all proportion to the basic rate. It is obvious that some increases in postal rates are justified. No person could argue against that and certainly not members of this Council. But to increase the basic letter rate by 42.9 per cent is to inflict a cost increase on the community which we suggest is far in excess of what is necessary and desirable in today's circumstances.

The Council supports the idea put forward by Senator Durack which seems to me to be a logical and sensible suggestion. I will read the paragraph of the letter in which this matter is mentioned:

Once again publishers and the printing industry will surfer an unbearable load. During the past few years many magazines have been suspended or have placed their printing overseas. The phasing out of Categories 'A' and 'B' and the forcing into Category 'C or 'Other Articles' of many publications and all new publications again means that publishers of necessity must increase both their cover price and also advertising rates. By Government decree all such increases must be presented to the Prices Justification Tribunal.

I believe that Senator Durack 's suggestion that it would not be unreasonable to expect the Postal Department to do the same is a valid and sensible suggestion. I have stated already that the Opposition gave the Government an opportunity to revise its thinking on these charges realising that the Government is reaping an astronomical sum in increased personal income tax. We hoped that the Government would recognise the wisdom of providing some relief to the people of Australia by reducing some of these charges. Obviously, the Government has ignored and passed up the opportunity we gave to it. Therefore, it deserves the condemnation of the people of Australia.

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