The privatisation of the United Kingdom Royal Mail service should open a fresh debate over why Australia Post remains under government ownership.
Selling its majority stake in the 500‑year old mail service to institutional investors prior to an anticipated stock exchange float in mid‑October, the Cameron government happily discovered that the initial public share offering had been oversubscribed within hours.
In addition to ten per cent of shares already allocated to Royal Mail staff for free, the strong demand for shares could see the government lift the amount of shares it sells from 50 per cent to 70 per cent.
The impetus towards British mail privatisation has been informed by economic change and technological developments, which have had significant, yet cross‑cutting, effects upon many government‑owned postal carriers around the world.
The popularity of traditional, ʻsnail mailʼ letters have been dented by the advent of the internet and mobile phone technologies, causing ongoing financial losses within the letters segment of official carriers.
Save for any unforeseen developments, enhancing the popularity of letter‑writing and distribution, this trend is unlikely to change anytime soon.
On the other hand, the viability of public sector mail operators have been propped up by changing consumer tastes in favour of online shopping, contributing to an explosion of activity in the parcel segment of post offices.
This phenomenon has also led to the effectual breakdown of the parcel monopoly, as evidenced by the growth in private courier companies, raising questions about to why government still needs to be involved in the parcel market.
There are broader issues at play as well, including the need for indebted governments to reduce their asset ownership coverage, and to allow the private sector to inject capital and provide management expertise for sheltered government‑owned entities.
Governments have responded to these developments by proceeding down the path of postal services liberalisation, with the United Kingdom being the latest country to catch the deregulatory wave.
In countries such as Germany and the Netherlands, the government post offices have been either partially or completely privatised, mainly through public offerings of shares.
The monopolistic rights accorded to government operators to carry letters have either been abolished entirely, including Germany, New Zealand and Sweden, or watered down to accommodate greater private involvement in the mail business.
Australia has taken its own post toward liberalisation over recent decades, including the corporatisation of Australia Post in 1989 and measures to dilute its exclusive monopoly rights distributing heavy‑weight letters and parcels.
But with the privatisation of British Royal Mail proceeding, and the ending of postal monopolies among European Union countries, Australia increasingly becomes an odd man out with its government‑owned postal carrier.
With suggestions that Australia Post CEO Ahmed Fahour has orchestrated a structural split of the entity into ʻBlue Post,ʼ managing the parcel distribution business, and ʻRed Postʼ for traditional mail and retail functions, a reasonably logical path to privatisation presents itself.
The federal government could readily sell off Blue Post assets to the market, given the healthy levels of profitability attributed to Australia Postʼs parcel deliveries and the needlessness of a government operator competing against the likes of TNT, UPS, and Fedex.
The attractiveness of Red Post to prospective buyers may be less clear, given the decline in the prominence of letters in modern communications, but there is nonetheless the potential for reform to be undertaken in this area.
One option for reform could be for the government to relinquish monopoly rights of letter carriage, selling the rights to deliver the ʻcommunity service obligationʼ for mail deliveries every weekday at the same price.
The retail arm has largely morphed over the years into a physical bill‑paying service, which could be lucratively outsourced to supermarkets, petrol stations, and other private operators with similar capabilities.
It has been reported that Communications Minister Malcolm Turnbull expressed a few months ago that the Liberal‑National Coalition have no plans to privatise Australia Post, or to significant change its regulatory framework.
Retention of the status quo is unfortunate. International reforms will starkly remind us that only through the injection of market disciplines can new life can be breathed into a much‑recognised Australian brand.