License article

Government warned not to undervalue Australia Post in potential sale

Australia Post could be undervalued if the government rushed through a sale, experts warn, adding that its community service obligations would be harder to enforce as a monopoly business.

It follows comments by Australian Competition and Consumer Commission chairman Rod Sims that the Abbott government should move to sell off key national assets to boost productivity.

The comments by Mr Sims follow the recent sale of the UK's mail service, the Royal Mail, in October, which netted the British government $3.3 billion.

Since the sale, the shares have jumped 75 per cent, leading to claims that the asset was grossly undervalued.

Nicholas Reece, a former adviser to Julia Gillard and current public policy fellow at the University of Melbourne, said selling Australia Post could benefit the organisation and the broader Australian economy but needed to be approached with caution.

''The first thing the government will need to get right is Australia Post's service obligations and what a sale would mean for the organisation's 32,000 employees,'' he said. ''There is enough international evidence to suggest that an examination of a sale is warranted. But the government needs to do it methodically.''


Australia Post is obliged to provide a letter service to all Australians at a uniform rate under the Australia Post Corporation Act. It also needs to be accessible to all Australians regardless of where they live.

Ian McAuley, a public sector finance lecturer at the University of Canberra, said privatising Australia Post would make these obligations less attainable.

''When you privatise a monopoly, you get massive regulatory issues. Does the government have the capacity to apply that regulation?'' he asked.

''Of course a sale would bring in a lot of cash for the government, but you would be losing one asset to gain another.''

Mr Sims said the government's review of competition laws should recommend selling long-held assets to maximise productivity and benefit consumers. The ACCC says it was not referring to any specific entity.

Communications minister Malcolm Turnbull said on Monday he stood by earlier comments to the Communications Workers' Union that he had no plans to privatise Australia Post.

Mr Reece said the government should also consider whether a public float or private sale would best serve the public good.

''If the plan is to position Australia Post as a premier mail and parcel business in Asia, then a private sale to another global player might open up greater necessary capital investment,'' he said.

The acting shadow communications minister Michelle Rowland said the role of Australia Post would be compromised if it was privatised.

''Australia Post provides vital services to communities around Australia and should remain in public hands,'' she said.