Small businesses are at risk as Australia Post expands

- November 24, 2020 3 MIN READ
australia post

Australia Post, a fully owned government entity, is using its market power to damage small businesses. After a year filled with strife and struggle for businesses around the country, things must change, proclaims Peter Strong CEO of the Council of Small Business of Australia (COSBOA).

Once upon a time, Australia Post was simply a post office and postal delivery service that kept neatly to its own lane. In recent years, however, the company has added partnerships with overseas competitors of Australian small businesses and Australian communities, such as Amazon, to its business model.

Personal finance products, currency conversion, and the sale of books, gadgets, souvenirs, technology, drones and gift cards have turned Australia Post into far more than its name suggests. The company even provides digital services including employment screening, online payment services, and a digital identity platform.

In adding so many strings to its bow, Australia Post has become removed from its core purpose as a postal service and continues to expand into new markets. In short, the Australia Post of today is a Government Business Enterprise (GBE) using its special and protected status to take business from Australian SMEs.

As Australia Post continues to expand far beyond its remit, I’m left asking a question that must surely resonate with small businesses up and down the country: shouldn’t Australia Post focus on post, and leave well alone from the products and services of small businesses?

A bad year for businesses

 While postal agents – small businesses in their own right – do provide the private sector with an opportunity to add value to their own private businesses, the major post offices continue to compete unfairly with self-employed businesses. In 2020, things have only gotten worse.

This year has seen Australian small businesses battle what can undeniably be labelled the biggest economic shock in over a century. Amongst this backdrop, StarTrack, a delivery service wholly owned by Australia Post, has decided to further punish small businesses by increasing its business prices by 4.9%. With the consumer price index sitting at less than one per cent, Australia Post had no logical reason to increase its prices.

A partnership with Are Media, formerly Bauer Media, means even more business is being taken away from over 3000 Australian newsagents who rely in part on magazine sales for survival. Magazines are a core identifying product category for newsagents, and taking their business in the middle of a pandemic is both unprincipled and personally distressing.

Australia Post seems comfortable to make collateral damage of the small businesses that hold the country’s economy together and appears unconcerned that they are doing so at a time when these businesses are at their most vulnerable.

A monopolising force

Australia Post’s obligations go beyond mere morality or a sense of ‘doing the right thing’. There’s a chance it could be breaking Section 16 (2) of the Australian Postal Corporation Act in relation to selling magazines and other products. Australia Post might play the free market card when it wants to take from small business, but not when it comes to putting up its prices thanks to enjoying essentially zero competition.

Australia Post receives all kinds of benefits, such as retail price maintenance on stamps and limited liability on damaged parcels. Its unique competitive advantage means that other small business cannot hope to compete.

What’s next? Flowers to compete with florists? Coffee and snacks? Clothing? Hardware? Airline tickets? Will Australia eventually consist of one physical shop: the Government-owned Post Office? Community, choice, and jobs would be destroyed.

Instead, Australia Post should stick to post and leave the rest to the private sector. This is a massive and growing issue and one that needs to be addressed as soon as possible. As we continue onwards towards the new era of COVID-adjacent business, small businesses must be allowed to recover. While innovation is necessary, big business needs to show leadership: starting with Australia Post.

Australia Post’s behaviour is utterly inconsistent with our country’s belief in a fair go. By using its competitive advantage as a protected Government Business Enterprise, with a model that lacks competitive neutrality, Australia post is severely damaging vulnerable small businesses. As the owner and sole shareholder, it’s the government’s job to step in and do the right thing – before it’s too late.

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