Australia Post

It’s disappointing to find my newsagency competing with a government owned post office for traditional Mother’s day items such as cards, wrap, gift boxes, social stationery and desktop gifts.

This two page flyer hit my letterbox and I am sure millions of others. The government ownership of Australia Post and the respect for its national brand enables them to do these things more effectively than any small business channel.

That Australia Post continues to encroach on traditional newsagent categories extends the mockery of the Federal Government’s small business policy. The Government is happy to use its own protected brand to take business from newsagents – not only my newsagency but the 865 others who directly compete with a government owned Post Office.

Visit one of the Government owned Australia Post retail outlets and take a look at the Government’s small business policy in action.

The latest Australia Post brochure, Crowd Pleasing Prices is another example of Australia Post is encroaching further on territory which has been well served by independently owned small business. It does this with the benefit of a product and service monopoly and backed by national TV and radio advertising funded by the monopoly.

The Government is complicit in the actions of Australia Post. They know the harm being done to family businesses across the country yet they respond to complaints by writing irrelevant responses to questions which were not put in the first place.

The Australian Postal Corporation Act 1989 .defines what Australia Post’s permitted functions. Inaction by this government allows Australia Post to skirt around the Act. Here are the relevant clauses:

16 Functions—incidental businesses and activities
(1) The functions of Australia Post include the carrying on, within or outside Australia, of any business or activity that is incidental to:
(a) the supplying of postal services under section 14; or
(b) the carrying on of any business or activity under section 15.
(2) Without limiting subsection (1), the functions of Australia Post include the carrying on, within or outside Australia, of any business or activity that is capable of being conveniently carried
on:
(a) by the use of resources that are not immediately required in carrying out Australia Post’s principal or subsidiary function;
or
(b) in the course of:
(i) supplying postal services under section 14; or
(ii) carrying on any business or activity under section 15.

Government ownership, regulation and monopoly protection guarantees traffic to Australia Post stores for a fraction of what it costs newsagent. My newsagency does not have this monopoly advantage. Australia Post is abusing this advantage to encroach more and more into space previously the domain of newsagencies, some supermarkets and stationery stores.

I cannot land consumers to my store for the same low cost of Australia Post.

I cannot leverage a national brand like Australia Post to buy competitively.

I cannot control my opening and closing hours.

I cannot get the rent discount of an “essential service”.

I do not have a government protected postal service brand with which to leverage the sale of unrelated items.
Australia Post has, through its government owned stores, been targeting newsagencies. The government’s inaction on this is evidence of merely lip service being paid to small business.

Here is the response from Helen Coonan, the Minister responsible for Australia Post responding to my letter of November 16, 2006. This is the third crack at a response from the Minister’s office.

The letter does not respond to my queries and continues the Government’s hide and seek game with the Act under which Australia Post operates. See for yourself – below is, part of what I wrote to the Minister three months ago:

For decades, Australia Post stuck to post products and services. Now, with a considerably broader retail offering, the benefits of its exclusive brand and post products provide an unfair advantage.

Australia Post offers products which I consider are not permitted under the Australian Postal Corporation Act 1989. I urge you to look at the enclosed Christmas stars at Australia Post catalogue. Over the twelve pages, I counted one hundred and fourteen items which I consider to fall outside of what is permitted under the Act.

[Here I listed items such as specific books, stationery packs, and other traditional newsagency lines now sold by Australia Post.]

These products, and others in the catalogue, are not incidental to nor do they relate to the supply of postal services. They are products outside what the Act permits. Of course, this comes down to interpretation. But what do Cookbooks, Gardening Australia magazine books, Chess Sets and Binoculars have to do with what is permitted under the Act?

For decades Australia Post was profitable without selling calendars, greeting cards and the broad range of stationery it offers today yet now it seems that Australia Post and the Government consider such product categories essential to its commercial viability. I would have thought that the postal product offering ought to be viable as a stand alone business – it is a monopoly after all.

Australia Post is using its powerful brand and exclusive postal products to draw traffic into Government owned stores and away from independent small businesses like mine. Is this an outcome that the Government wants? Is the Government happy to ignore the pleas of small business so that its own national retail network profits?

For decades, newsagents were profitable while they had a monopoly on the distribution of newspapers and magazines. In 1999 the Government facilitated the deregulation of the distribution of newspapers and magazines. As we have lost the benefits of exclusive traffic as a result of this deregulation, Australia Post has increased its range of newsagent type lines and thereby very successfully leveraged its continued exclusivity to more effectively compete with us.

The Government is profiting at the expense of my newsagency and other businesses like mine which compete directly with a Government owned Australia Post outlet, yet the Government refuses to even acknowledge that I may possibly be right. In response to my letters documenting breaches of the Act all I receive is vague government-speak.

In my September letter I said that “Australia Post is our drought”. A review of their Christmas catalogue illustrates how much this is the case. For many years now it has been draining newsagencies of revenue. Many are close to death as a result.

This is a very serious problem, causing families much heartache. Please take notice. Please understand that Australia Post is stealing our customers by straying from what is permitted under the Act and that its behavior, under your watch, makes a mockery of your claimed support for small business.

I urge the Government to amend the Australian Postal Corporation Act 1989 to limit what Australia Post can sell through its own retail outlets and to names postal items such as envelopes and Post branded packaging materials. Such would be the action of a Government committed to small business.

For the record I did not write from newsXpress. I wrote from Springfield Consulting, the company I own which trades as newsXpress Forest Hill.

Four months ago I wrote to Senator Coonan, Minister for Communications (Minister responsible for Australia Post) presenting evidence which I claim shows Australia Post breaching the Act under which it operates. I’m still waiting for a reply. Well, I have received a reply but when you lay it next to my letter it does not address even remotely any of my concerns. It’s an off the shelf document right out of Yes Minister. The Minister’s office promised in a letter six weeks ago that I would receive a reply. So far, nothing. In the meantime Australia Post pursues newsagents and other small businesses relentlessly through its government owned stores.

Tired of waiting to hear from the Minister, I sent this letter yesterday. Here’s one paragraph from the letter which sums up my position:

In that past, correspondence from your office and others in the Federal Government shows you hiding behind the Act. If you are right and the Act permits Australia Post to sell non postal related items in greater numbers, the Act must be changed. A government established and owned enterprise with monopoly core products and services such as Australia Post ought not be permitted to use its monopoly supported brand to compete against small businesses, especially when the government has stripped those small businesses of any monopoly products and services they had.

The treatment of newsagents by the Howard Government is a scandal. That the government profits through its protected 863 retail stores competing with newsagents ought to shame it. Without media coverage, people won’t know the harm being done to small business.

The latest stationery catalogue released by Australia Post as part of their push deeper into newsagent territory is working. As posted here before, my question for Senator Coonan, the Minister responsible for the Government owned Australia Post, is what part of the Australian Postal Corporation Act 1989 permits Australia Post to sell shredders, dictionaries, maths and other software packs, calculators, USB sticks, safes, office labelers and the many other office products in the catalogue?

I wrote to Senator Coonan on September 26 and am yet to receive a credible response. This lack of accountability shames the Federal Government. That it allows and even encourages its own retail network of 863 100% Government owned stores aggressively pursue products well covered by small business newsagents makes a mockery of its small business credentials.

I should note that one of Senator Coonan’s assistants did respond but the letter did not address any of my letter. I wrote again on December 5 and have only received a brief letter indicating that the Minister will respond. One day maybe. In the meantime, the Government profits from sales taken from my newsagency.

A big disappointment in this catalogue is the introduction by Australia Post of the Smiggle stationery range. While they have every right to place their product wherever they can, I would have been happier seeing them support a small business network established in their space rather than supporting a government business trying to chase the small business network out of town.

As I have said in recent posts on this topic:

Government ownership and regulation makes Australia Post stores destination stores. My newsagency does not have this monopoly advantage. Australia Post is abusing this advantage to encroach more and more into space previously the domain of newsagencies, some supermarkets and stationery stores. 

I cannot land consumers to my store for the same low cost of Australia Post.

I cannot leverage a national brand like Australia Post to buy competitively.

I cannot control my opening and closing hours.

I cannot get the rent discount of an “essential service”.

I do not have a government protected postal service brand with which to leverage the sale of unrelated items.

When farmers talk of the impact of droughts the government steps in with assistance. When auto makers talk of the impact of cheap imports the government steps in and helps. When newsagents talk of the impact of Australia Post the government ignores us.

Australia Post is our drought. For many years now it has been draining newsagencies of revenue. Many are close to death.

How many newsagencies need to close as a result of Australia Post competition before we see action?

This is the Government owned Post Office opposite my newsagency as of yesterday. Looking more like a newsagency every day. See the Valentines card display in the entrance?

I wasn’t going to post the photo here, fearing some would think I am obsessed about Australia Post. Maybe I am. Maybe you would be too if a 100% government owned business was taking sales from your shop. I don’t have an exclusive product like stamps to guarantee traffic.

The Government owned 863 Post Offices have launched a stationery sale using this flyer. Nowhere is it promoting postal products. This flyer directly targets small business newsagents who rely on back to school / back to work promotions to kick start stationery sales for the year.

It is offensive that this Government owned business so aggressively and relentlessly targets small businesses in this way. It is even more offensive that the Minister responsible, Senator Helen Coonan, refuses to even talk about the millions of dollars in sales Australia Post is ripping out of the newsagency channel. Instead, she responds to queries with letters way off topic. My last letter still awaits a response.

My newsagency is directly opposite a Government owned Australia Post shop. They are taking stationery sales from us. They do this by abusing their monopoly privilege around postal products and promoting traditional newsagent stationery lines. I do not have exclusive traffic to leverage off. I do not have their marketing budget. I do not have a government protecting me.

For all its bluster about deregulation and competition, when it comes to Australia Post the Government is looking after its mates.

Newsagents, their families and their employees are the losers as a result of Government failure on small business policy.

The European Union has called for postal monopolies in member countries to end by 2009. Some countries like France are resisting the move. Others like the Netherlands are happy. The Consumer Postal Council offers a good overview.

Since the Australian Federal Government relentlessly pursues best practice in terms of deregulation, what are their plans for Australia Post? Will the Government go the way of Europe and completely deregulate all postal services?

Currently, Australia Post is protected by its mail service exclusivity. While, through its Government owned outlets, it is busily taking retail sales from small businesses like newsagents it refuses to make postage stamps and other products and services available to those same newsagents on an equitable basis.

Complete deregulation along the lines of the European model would address the current unfair arrangements.

Government owned Post Offices are closed today. Customers at Forest Hill this morning were angry and came into our newsagency venting. The closure is odd given Australia Post’s community service obligation; requirement to operate on a commercial basis and that it justifies the sale of stuffed bears, calendars, greeting cards and the like on the need to subsidise its mail service. Maybe if it opened on usual commercial days it could better cover its costs.

The closure today is proof of benefits Australia Post it receives through Government ownership. They access trading and lease terms unavailable to small business. They abuse their customers by closing on a regular trading day. They hurt small businesses around them by turning off traffic.

If other businesses had full access to the Australia Post exclusive range, Australia Post would not close today.

I have sent this letter to the Federal Minister for Small Business today in response to her inadequate response on Australia Post – see my earlier post today. I’m not confident of a considered original response. Here are what I consider to be the key points in this letter:

In 1999, your Government facilitated the deregulation of newsagencies. You took away our exclusivity and allowed others to cherry pick our top selling magazines and newspapers. As a result, newsagencies like mine have been left with a supply model which is fundamentally flawed and a significantly higher customer acquisition cost. Your deregulation has left newsagents severely disadvantaged.

I agree that deregulation of the supply of newspapers and magazines was appropriate. However, since you did not put in place any review process, you do not have data to show what a mistake you made and how much you have hurt this small business channel. Good governance requires you review the impact of such significant deregulation on the 4,600 family businesses affected.

Australia Post has seized on the deregulation you brought about and now your Government is profiting from these regulatory changes.

While Ministers in the Government say it’s an Australia Post issue and that they will not meddle, I say it’s a policy problem which they created:

Australia Post is selling products which fall way outside what is permitted under the Act. Their Last minute gifts catalogue, which was released December 4, provides proof. I have enclosed a copy for your information.

Australia Post is looking more like a newsagency every day. Newsagents cannot compete because we do not have the exclusive postal product which drives people to Post Offices. Australia Post is abusing its exclusive postal products and government ownership to the detriment of small business newsagents.

These are policy matters and go to heart of the Government’s small business credentials. I urge you to act for your small business constituents and not just an enterprise the Government wholly owns.

I know I go on about Australia Post a lot in this place. These are not the ranting of a lunatic. Rather, they are valid complaints by someone who feels the impact of a flawed Government policy and can see that it will cost jobs in small businesses.

Is anyone listening?

Tasmanian Liberal Senator Guy Barnett (finally) takes aim at Australia Post closing their corporate offices for several days over the holidays in a story by Angus Hohenboken in The Australian and The Murcury. These extended holidays are further proof of benefits of government ownership. Australia Post retail is a mess, it’s delivering profit to the Government at the expense of small businesses.

I took this photo last Friday at the Government owned Australia Post shop opposite my newsagency. The line snaked from the counter right back to the door. Two thirds of the people in line were buying non postal service items – picnic sets, calendars, Christmas cards and books. Many of the folks are in line because they need stamps and along the way buy these other items. Thanks to its postal monopoly, Australia Post is landing these people in its stores for far less than its competitors. No one cares – no one in the Government at least. They crave the Post profits more than a strong small business sector.

I arrived in Paris this afternoon and the first business I happened to see was La Poste, the French Post Office. This one I visited sold stamps and postal products. No books, calendars, cards, soft toys, wine coolers, picnic sets – none of the items which Australia Post and the Government seem to think are essential to Australia Post’s operation.

There was an Australia Post representative, a Government employee I am guessing, out the front of this government owned post office handing out flyers to people walking between the Post Office and my newsagency. The postal related items he was spruiking: Binoculars, Deluxe Wine Set, Family Picnic Pack, Stadium Seat Gift Set and a Thermo Pack. These are items the Federal Government would have us believe are incidental to Australia Post carrying out our postal service. They are items the Government would have us believe help Australia Post fund a better mail service. I am not as gullible as the Government.

The photo shows their commitment to postal services. You need to navigate shelves packed with cards, calendars, soft toys and plenty of Christmas gifts before you find a small counter for postal forms. To actually conduct any postal business you need to wait behind the truckloads of people buying cards, calendars and all these other items.

When is the Government going to wake up to the fact that on its watch this Corporation which it wholly owns is ripping millions of dollars out of private enterprise – especially small business? When will the ACCC realise that Australia Post is abusing its advantage? When with the AGCNCO realise that Australia Post is abusing its Government ownership?

This use of a spruiker is a new tactic in what has become a bitter battle in my centre for newsagency type sales. They price compete on basic newsagency lines. Now they are luring customers away from us and to their store.

Further to my earlier comments about Australia Post, I received this letter yesterday from an Assistant Advisor to Senator Coonan, the Minister responsible for Australia Post. The adviser has not read my letter and considered my concerns. This letter is similar to others I have seen out of the Minister’s office on the same topic. For example, I have a letter sent by Senator Coonan to a colleague in Parliament with almost identical wording. Again, no attempt to consider the problem as something which Government policy has created and fostered.

Australia Post is creeping closer to being a newsagency in its Government owned stores. It is abusing the Act, with permission from the Government, and taking revenue from newsagencies like mine which directly compete with a Government owned and operated shop. Right now we are going head to head on calendars, cards, printer ink, gifts, stationery and a range of other smaller items. Every day this continues is another day the Government demonstrates disinterest in small business.

Read the letter and see Sir Humphrey at work.

This is the entrance to the Government owned Post Shop opposite my newsagency. To get to the line to buy stamps or post a parcel you first need to navigate the soft toy speed hump. It’s there right in the entrance. I have been thinking about these soft toys and how the executives at Australia Post con the government that they are somehow connected with providing postal services then it dawned on me – they are the their lucky charms. They bring luck to the house in which they live. By luck, I mean on time mail. Buy one of these Australia Post soft toys and your mail will be on time. This means Express Post will arrive the next day!

On September 26 I wrote to, among others, Federal Minister for Small Business, Fran Bailey about Australia Post and the unfair advantage their Government-owned Australia Post stores had and how they were specifically targeting small businesses, specifically newsagencies. In my letter I said, in part:

When farmers talk of the impact of droughts the government steps in with assistance. When auto makers talk of the impact of cheap imports the government steps in and helps. When newsagents talk of the impact of Australia Post the government ignores us.

Australia Post is our drought. For many years now it has been draining newsagencies of revenue.

Yesterday, I received this reply from the Minister. While I appreciate the response, it is meaningless. The letter says, in part:

The Australian Government recognises the importance of newsagencies in our communities and is committed to creating a fair trading environment for all small businesses.

It also makes the claim that Australia Post is permitted to:

…carry on any business or activity that is incidental or relates to the supply of postal services.

This morning I have responded with this letter to the Minister. How can the Government consider Music CDs, Chess sets, Radios, Puzzles and Cookbooks to meet the criteria under the Act? Why will the Government not take steps to have the Australia Post breach of its obligations under the Act investigated?

The Government is conflicted beyond its ownership and regulation of Australia Post. As my letter to the Minister today says:

For decades, newsagents were profitable while they had a monopoly on the distribution of newspapers and magazines. In 1999 the Government facilitated the deregulation of the distribution of newspapers and magazines. As we have lost the benefits of exclusive traffic as a result of this deregulation, Australia Post has increased its range of newsagent type lines and thereby very successfully leveraged its continued exclusivity to more effectively compete with us.

I am not calling for a wind-back of newspaper and magazine deregulation. Rather, I am calling for the Government to get out of the business of competing with independent small business.

I was in a Government owned Post Office yesterday and was confronted with a big display of plush product – soft toys. Where in the Act are provisions permitting Australia Post to enter the soft toy space? Their entry into this category this Christmas season will affect sales in my newsagency.

I am disappointed that the Government will not even for a moment contemplate that they are wrong on this and that the actions of their Corporation are harming a small business channel which is vital to the community.

Yes, Sir Humphrey Appleby is alive and well and writing letters for the Government.

I’ve been into a five post offices today in Vienna and found businesses focused on postal and related products and services. More than 50% of available floor space relates directly to postal products and services. Even their retail products relate – packaging, a small range of cards, envelopes, pens and some writing pads. They look nothing like Post Shops we have in Australia. Queues were not long – the most was four during the lunch rush – and service seemed fast. In two outlets they had some CDs and DVDs but even then the range was very limited – nothing like the 90% floor space for non postal items I see in some Australian Post Shops.

One argument used by Australia Post and its apologists in the Government is that Australia Post needs to sell the non post related items to make ends meet. If that’s the case how is it that Austrian Post is doing very well, according to their Annual Report, without taking business away from independent retailers in the stationery, greeting card and magazine space?

Before a Public Offering in May of this year, Austrian Post was wholly owned by the Austrian privatisation agency ÖIAG. Now, OIAG owns 51%. A full breakdown of the ownership structure is at their website. They have with 1,338 “company owned” branches and 612 “third-party outlets”.

The government has the power to rein in Australia Post but does not. They could provide clarity in defining what Australia Post can do but they do not. They could prove their small business credentials and stop Australia Post turning its stores into newsagencies (with poor service) but they do not. There is a lot the government could learn from a visit to Austrian Post.