Australia Post accused of ‘insidious’ plan to shut its own stores

Australia Post executives have been accused of deliberately undermining post offices and making them financially unviable as part of a wider plan to reduce the retail network and move the organisation towards a FedEx-style model.

A Senate inquiry heard allegations that corporate policies were effectively “running post offices into the ground” by reducing customer traffic, eroding profits and diminishing the value of small businesses.

The investigation, led by Senator Sarah Henderson, accused Australia Post of using “unethical” and “improper tactics” as part of what she described as an “insidious” push to close stores.

Chief Executive Paul Graham appeared before the inquiry earlier this month after being accused of misleading a budget estimates hearing in May.

Mr Graham, whose $3.3 million salary package makes him the Commonwealth’s highest-paid chief executive or government official, told budget estimates that no active closure program was under way. However, a leaked, board-approved business case emerged two weeks later outlining plans to buy back 36 stores.

The confidential document detailed a proposal known as “Licensed Post Office Reimagined”, which would convert post offices into parcel lockers and shift key services to “host businesses”, including pharmacies and newsagents.

Mr Graham described the proposal as “embryonic” and strongly rejected claims that he had misled the budget estimates hearing.

Senator Henderson also alleged that Mr Graham launched a “shocking spate of threats” against post office owners after the leak. The inquiry heard she believed those actions brought him “perilously close” to being held in contempt of parliament.

Mr Graham denied that anyone had received legal threats, saying Australia Post was instead conducting due diligence into the alleged misuse of sensitive information.

Licensees who spoke anonymously told the Daily Mail that Australia Post engaged law firm Mallesons within 48 hours of the leak to identify the whistleblower.

One source said several employees received legal letters because, despite the document being confidential, it could be accessed by anyone with entry to Australia Post’s internal systems.

Senator Henderson also accused Australia Post of using a “classic bait and switch” to persuade Licensed Post Office owners to move from perpetual agreements to fixed-term contracts.

Unlike conventional franchise arrangements, which generally run for fixed periods and must be renewed every five or 10 years, LPOs operate under perpetual agreements with no specified end date. That arrangement makes them valuable, continuing business assets.

In June, licensees in rural and regional areas were told they would need to sign fixed-term agreements and surrender the certainty supporting much of their businesses’ value in exchange for higher short-term commissions and improved pay.

The proposed change would substantially alter the balance of power, potentially reducing the value of individual businesses, leaving licensees with assets they could not sell and exposing them to negative equity.

The consequences could be particularly severe for the two-thirds of licensees who, according to Australia Post, hope to sell their businesses and retire within the next five years.

One licensee said she would be put in ‘an extremely vulnerable position’, with the stability and confidence of a perpetual licence being taken away.

‘It is difficult to plan for the future when the foundation of our business can be altered or taken away at the end of a term,’ her submission said.

However, an Australia Post spokesperson said its current modelling suggested that 70 per cent of eligible licensees would be financially better off under the arrangement, which was ‘entirely voluntary’.

Sources told the Mail that all signs point to Australia Post’s ‘widely known vision’ to become a parcel-focused carrier rather than a community-facing hub.

In doing so, post offices are no longer being seen as critical pieces of community infrastructure, but as a network of corporate franchises.

This theory is strengthened by the professional backgrounds of many current executives, including Executive General Manager Josh Bannister, who has previously worked at McDonald’s and Domino’s.

Mr Bannister, who also appeared before the Senate, helped author the leaked business case and was ‘intimately involved’ in the LPO Reimagined proposal.

Another strategy raised at the inquiry was that Australia Post was intentionally causing services to withdraw from its stores to decrease foot traffic and make them less profitable.

In the past 12 months, more than 60 services have disappeared from post offices, the Senate heard, the latest being Western Union, which will withdraw its wire transfers from October.

A licensee told the Mail that the withdrawn services were ’60 less reasons for somebody to walk into my post office, 60 less things that bring my business value’.

‘Their [Australia Post’s] view is anything that doesn’t help us become a parcel carrier is unnecessary.

‘If they want to turn us into a logistics company they can at least be honest about it and make us a fair offer instead of driving us into the ground.’

An Australia Post spokesperson said the ‘vast majority’ of services withdrawn reflected decisions made by ‘third parties and government services moving to digital channels or choosing not to renew their contracts’.

They also said they were investigating additional over-the-counter services, and had expanded the available banking services with licensees receiving a 30 per cent commission increase. 

Aggressive management, compliance demands and disciplinary action have also reportedly intensified in recent years.

A source said leadership was ‘handing out breaches left, right and centre’.

‘They are very aggressive and they are in control of all the livelihoods of their franchisees,’ the source said.

The peak body for licensees, the Licensed Post Office Group, argued the rules are so broad that licensees ‘cannot reasonably understand their own obligations’.

LPOG also said there was a double standard in how licensees and management received consequences.

Meanwhile, the Ombudsman for Small Business wrote that Australia Post’s dispute-handling processes should ‘afford natural justice’ and ‘proportionate outcomes’.

Parcel lockers placed outside LPOs – without consultation or warning – are also cited as eating away at commissions earned over the counter from handling and processing packages.

LPOG chair Scott Etherington told the inquiry that loading and unloading the parcel lockers involved double the work of processing parcels over the counter, yet paid only half the commission.

However, Australia Post insists the parcel lockers are ‘designed to complement not replace’ post offices, with parcels accounting for the majority of post office transactions.

In a statement, the spokesperson said Australia Post was committed to its extensive post office network: ‘We reject any suggestion Australia Post is seeking to run down or close its retail network.

‘Australia Post has strict regulations to maintain a minimum of 4,000 retail outlets nationally, with 2,500 in non-metro areas and LPOs remain central to how we serve customers and communities.’

‘Consultation on the proposed Licensed Post Office Reimagined (LPOR) model remains ongoing and no final decisions have been made.

‘The proposal is entirely voluntary, and licensees who choose not to participate will remain on their existing agreements.’

The Senate inquiry will reconvene for a third hearing on September 30.