Former Australia Post CEO Christine Holgate used the Senate inquiry looking into her departure to release parts of a secret review that advocates for the further privatisation of the postal service.
The report, from management consultancy BCG, has been a highly sought review as both Labor and the Greens believed it formed the basis of the government’s regulation changes to Australia Post last year, which included fewer letter deliveries, the scrapping of priority mail and extended intrastate delivery times.
The measures were put in place as a temporary way to help the service cope with the Covid-19 pandemic, in which planes that usually help deliver letters were grounded. They are due to expire in June.
But opponents believed the government could attempt to extend the regulation changes. Holgate’s submission shows many of the regulation changes have similarities to ”reforms” proposed within the confidential BCG report, which estimated a $140m saving from just those three changes. Cutting letter deliveries to three times a week was predicted to save $78m on its own.
A spokesperson for the communications minister, Paul Fletcher, said the regulatory relief put in place was at the request of Australia Post and would expire on 30 June.
Holgate said she did not wish for the measures to become permanent. She said she was also pushing against recommendations the Australia Post parcel delivery service be privatised, with the BCG finding the service had “potential for targeted divestures”.
The report says:
BCG notes that divesture of the parcels business would remove approximately $150m-$250m in annual net profit after tax from AusPost’s bottom line, leaving an operating loss from the residual business without meaningful reforms to the letters business, but could yield a large upfront cash release with potential to fund the ongoing delivery of the community service obligations if appropriately sequestered.
Holgate claimed her opposition to “disturbing” recommendations within the BCG review, which was commissioned by the government in July 2019 to coincide with a new chair of the board being appointed, as one of the reasons the board – heavy with Liberal-linked members – and the government had become set against her.
Holgate said she had wanted to expand Australia Post’s services, and “BCG essentially argued it was too optimistic and risky, even though the business was ahead of its targets for the year when the review commenced and the organisation had only lost money once in its history”.
On Tuesday, Holgate told the inquiry she had been against any attempt to privatise the parcel business and further service cuts.
“I think we can just look to the UK model, who split out parcels and privatised it and left the post offices behind – the post services went bankrupt and I’m sure you’re very aware of the multiple legal cases that had to take against the government. That’s number one,” she said.
“But number two, most importantly, this is a national asset that is critical to the infrastructure of our country, particularly for rural and regional Australia.
“We are one of the largest employers – almost 100,000 families are employed at Australia Post, 80,000 including our direct contractors, about another 20,000 through people who primarily work for us. We know that for every person we employ, there are two more jobs in the economy. So when you take down one Australia Post person you’re taking three jobs away. That is a massive negative impact.”
The BCG review suggested cuts to the workforce – of both posties and those working in retail – which, if carried out, could see thousands lose their jobs.
The government has denied it plans to cut jobs, or the number of licensed postal offices in rural and regional areas. It is yet to announce whether it plans on extending the regulation changes put in place in response to the pandemic.
The Guardian contacted Fletcher about questions raised by the BCG review and whether the government would now release it in full. A spokesman for the minister would say only that Australia Post “is a government business enterprise and it will remain a government business enterprise”.
The BCG report does not suggest selling Australia Post as a whole but privatising parts of its services.
Holgate said she was gagged from talking about the review in Senate estimates and that any line of questioning on it was shut down by government MPs. Former finance minister Mathias Cormann, then one of the shareholder ministers for Australia Post, had declared it was cabinet-in-confidence and therefore could not be released.
In additional tabled documents to the Senate inquiry, Holgate tabled part of the draft BCG review, which offered four options to the government to save Australia Post money. Holgate said it was one of four reviews into Australia Post that had been commissioned during her three years at the organisation.
She had instigated just one of those reviews, and said the three government-ordered reviews all found “our plans were too ambitious and there should be more focus on cutting costs”.
Labor’s communications spokesperson, Michelle Rowland, said Holgate’s submission “affirms what Labor has long maintained: the Morrison Government has an agenda to hack away at Australia Post”.
“The BCG report is a sinister blueprint to cut postie jobs, slash services and privatise key parts of Australia Post.”
The Greens senator and chair of the Australia Post Senate inquiry, Sarah Hanson-Young, said Holgate had been “bullied” out of her job for “protecting Australia Post from further privatisation and service cuts”.
“The Morrison government has kept this report secret for months – refusing to table it in the Senate under the guise that it was before cabinet,” she said.
“Now we know why they were hiding it. They should now release the full BCG report and respond immediately by rejecting its main recommendations. Taxpayers deserve to know what the government is planing for this essential service.”
Hanson-Young said the government needed to rule out any future privatisation of the service, including parcel delivery and job cuts.