Wednesday, January 15, 2014

Australia Post. Why it no longer needs to deliver daily

When I was young the postman came twice a day. You could post a letter in the morning and if you were lucky have it delivered across town by the afternoon.

It was the only way to send messages (apart from telegrams, which were expensive).

Then came the phone (and the increasing usefulness of phones - they weren’t very useful at first when only a few houses were connected). Deliveries were cut back to once a day, and the Saturday service was axed.

The nature of the post changed. Short messages arranging meetings were no longer needed. Longer 'essays' were still the preserve of the post as was the delivery of documents, parcels and bills.

Then came mobile phones and text messages (and with them the gradual disappearance of Doctor Who style telephone boxes). You could send messages from almost anywhere. Even away from home there was no need to send a letter.

At first the arrival of email made little difference to the post. As with the phone it was of limited use when few of us had email addresses. And we couldn't send big documents.

Then email addresses became ubiquitous, as did social media. The much forecast 'digital divide' never happened. Every strata of Australia is now connected, from the elderly to farmers to school children. And the capacity of the system has grown. Almost all of us can send big documents and long letters with ease. We don't need to post them.

Australia Post says back in the 1980s almost all written communication was carried by the post. Today it’s less than 1 per cent...

And most of it is bills or notices from various levels of government.

Late to the party, businesses are abandoning the post big time. They are using email to send us bills and even ‘junk mail’. Links to websites mean they can get an instant response, or instant payment.

The Coalition has pledged to put virtually all government services and interactions online by 2017. By then there will be scarcely anything left to post.

Mail deliveries are plummeting at the rate of 4 to 5 per cent a year. Twelve years ago Australia Post delivered an average of 2.2 local letters or bills per day to each street address per day. It is now 1.7 and on track to fall to 1.3 by 2016, sliding further beyond that.

When the national broadband network is complete there will be no excuse whatsoever for daily mail deliveries. Australia's really remote locations are already limited to two deliveries per week. That should become the standard for the rest of us, as a precursor to eliminating local deliveries. If the spread of the telephone was responsible for halving the frequency of mail deliveries, the spread of the internet should be responsible for eliminating them.

It would be absurd to have spent $40 billion building a world-class system to instantly deliver messages while hanging on a system poorly replicating it that hardly anyone used.

Delivering mail used to make Australia Post money. It now costs it $150 million per year. The loss is on track to blow out to $1 billion, and then perhaps $2 billion, far exceeding the profits from delivering parcels and making the entire organisation an albatross around the taxpayers necks.

Delivery twice a week is more than adequate for most parcels. If someone wants one sooner, they can try a competitor to Australia Post or pay a premium.

Australia will soon stop paying Holden and Ford to make cars Australians aren't keen to buy.

If we are serious about getting value for our taxpayer dollars we will also stop paying postal workers to make deliveries Australians no longer need.

Australia Post employs 33,000 workers and provides work for another 10,000 contractors. Twice-weekly deliveries would slash the wage bill (and the rubber burnt and the petrol poured into tanks) and give us a chance of making good on our investment in the NBN.

It’s not only a question of money. Right now there are roughly 2 Australians of traditional working age for each Australian who is older or younger. The Intergenerational Report says by 2050 there will be just 1.5.

Australia will need to make good use of every worker it has. Employing someone to do something we no longer need merely because we always have will be a waste of a scarce resource. In most fields the market will handle the transition. Banks are moving us away from tellers, supermarkets invite us to check out our own groceries, and the baker and the milkman no longer call.

But Australia Post is stuck with a government-imposed requirement to deliver mail five days a week to 98 per cent of Australian addresses. Changing it will require a government decision. It’ll mean taking on unions and the National Party.

The Business Council tackles the question obliquely in its submission to the Commission of Audit by saying there’s a case for selling Australia Post. But that's beside the point. The point is that we are asking Australia Post to do things we no longer need. Passing the parcel to a private owner who can take on the unions and lobby for weaker service standards is passing the bucks.

In The Sydney Morning Herald and The Age

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