Finance

War of words erupts between licensed post office advocacy groups following Senate inquiry

Andrew Sadauskas /

A war of words has erupted between two groups representing franchised and licensed post offices (LPOs), following a key Senate inquiry into Australia Post that concluded in November 2014.

The inquiry recommended “where a payment is found to be not fair or reasonable, that a study should be conducted to determine what an appropriate payment rate should be”, in a clause known as “recommendation 17”. This was alongside recommendations to revise the amount of money franchisees will receive when the Australia Post franchise network begins to be wound up in 2016.

One of the two representative groups, the Post Office Agents Association Limited (POAAL), had been the only recognised body able to negotiate on behalf of LPOs since it first launched as the Non-Official Postmasters Association in 1939.

However, many LPOs became increasingly disillusioned as the emergence of email and the internet came to put pressure on the mail delivery business.

Australia Post initially rejected criticism that it had underpaid and undercut its licensed stores, leading to a breakaway group of LPOs, known as the Licensed Post Office Group (LPO Group), threatening to sue Australia Post. The LPO Group’s claims eventually led to the Senate inquiry, which began in November 2013.

A key recommendation of the inquiry was that “at the request of any recognised association, Australia Post be required to renegotiate the terms and conditions of an LPO Agreement”.

Another key recommendation of the inquiry was “the definition of ‘association’ in the LPO Agreement be amended to include, in addition to POAAL, other licensee representative groups including but not limited to the LPO Group”.

In recent weeks, the dispute between POAAL and LPO Group has reached a new level, with LPO Group stating on its website that it had heard “unsettling amount of talk doing the rounds at present, that the LPOG’s call for fair and reasonable payments for licensees will see the rapid decline of Australia Post within the next 12-18 months. This opinion has been linked to POAAL by POAAL members”.

LPO Group chair Angela Cramp told SmartCompany POAAL does not support the Senate inquiry and “will not support any investigation into our payments, apparently”.

“As working licensees, with skin in the game, we were facing very bleak business outcomes, and ROI, as a direct result of the lack of effective representation by POAAL. POAAL is effectively a family-run business, and only one of the board of POAAL actually owns an LPO,” Cramp says.

“Their current position is that if licensees want to survive then they need to find other revenues to prop up the LPO. If we want fair pay, then Australia Post will be broke in a year. If we keep providing underfunded service for the government, then AP might last another five years. POAAL’s position is that we should be happy we can limp on for another five years, if we shut up.

“As licensees all over the country with upwards of $2 billion invested in our LPOs, we can confirm, working for, or paying staff to work for four to six minutes for 29c (payment pre Senate inquiry for delivering a parcel) was, and never would be, commercially viable. And almost every one of our payments is just as poor.

“POAAL was/is in charge of negotiating the rates licensees receive for our work for AP and POAAL feels our pay is fair. They do not deliver parcels and they don’t operate a diverse range of LPOs. LPOG has hundreds of working licensees that know we will not last much longer without radical changes. The Senate agreed.”

But in a statement to SmartCompany, POAAL director Bob Chizzoniti said new income streams are needed to secure the future of the Australian postal network.

POAAL warns that if Australia Post consistently returns a loss, then pressure will grow for Australia Post to be privatised in line with the recommendation from the National Committee of Audit’s report.

“Australia Post can sometimes be difficult to deal with, however we have shown that POAAL has the experience and persistence to continue to represent licensees in the long term,” Chizzoniti says.

“The Minister’s current e-government plan will not benefit the postal network. The Government can help the postal network by making selected government services available through post offices. Australia Post can help by making all services available at all post offices – not just its corporate network – to benefit customers and licensees in metro, regional, rural and remote areas.”

POAAL also says while the post office network may have been founded on letter delivery, its future lies in having diversified income sources with potential for growth.

In a statement issued in December, Australia Post managing director and group chief executive officer Ahmed Fahour said with its overall customer numbers and letter volumes declining, the business environment for both licensees and Australia Post has become more challenging.

“We are currently establishing an agreed terms of reference for a formal independent study into our licensed post office network, to be conducted by a third-party. The findings of this study will form part of a broader review into the structure and value of payments to licensees,” Fahour says.

“I’m confident that by also extending our consultative arrangements to include formal meetings with licensed post office representative bodies, such as LPO Group, APLAC and POAAL, we are well placed to help address the strategic challenges facing the traditional mail business.”

Meanwhile, Cramp says the LPO Group is now waiting for the federal cabinet to act on the Senate recommendations, which it hopes will happen on February 6.

“Recommendation 17, the review of the work performed by LPOs, and the remuneration for that is underway. The results are expected to be tabled mid-March. That will be LPOG’s line in the sand. No more talking,” Cramp says.

*This article was updated at 1.50pm on Wednesday, January 28 2015 to include comments from Australia Post.

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Andrew Sadauskas

Andrew Sadauskas is a former journalist at SmartCompany and a former editor of TechCompany.

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