Senate Environment and Communications Legislation Committee [Part 2], , 3:06:08 to 3:20:56
Australia Post CEO Paul Graham addresses his upcoming retirement and defends executive bonus structures. The committee examines the inclusion of property sales in performance metrics and the overall financial health of the corporation.
Topics: Workplace culture, Government spending
Speakers: Mr. Paul Graham, Senator Sarah Henderson, Speaker 1, Unknown Speaker
>> Thank you. Broadcasting. I now welcome officers from Australia Post, Australian Postal Corporation. Uh, welcome Mr. Paul Graham, uh, who's the group chief executive and managing director. And I welcome your team and I'm sure others assisting either from the back of the room or offsite. Uh, do you wish to make an opening statement, Mr. Graham? I I do
chair. Thank you. Before I begin, I'd just like to acknowledge Dr. Helen Haines and the horrific horrific attack she suffered last week. I've dealt with Dr. Haines in this house and she's always been a great supporter of Australia Post. Our thoughts are obviously with her, her family, her team and the local indie community and we wish her strength and courage in her recovery. Thank you chair and Sanders. Uh said my name is Paul Graham, the group chief executive officer managing director of Australia Post. Today I'm joined by Mr. Josh Bannister, our executive general manager, retail, brand, and marketing, along with Miss Jane Anderson, our executive general manager, community sustainability, and stakeholder engagement, and Mr. Nick McDonald, our group corporate secretary. I'd like to start by acknowledging the traditional custodians and on the wall and Nambry peoples and pay my respects to their elders. There has been increasing amount of press and parliamentary coverage in relation to our post office network in recent months. want to take this opportunity and place in the public record our absolute commitment to maintaining 4,000 postal atlets across Australia with two and a half thousand of those in regional, rural and remote Australia. This is not only enshrined in our regulatory framework but forms a core part of overall strategy at Australia Post. Regional Australia remains at the center of our investment for a stronger Australia Post. We're now supporting communities where traditional post office has never been practical. In partnership with Outback Stores, we've opened 16 new community postal agencies in remote communities, many of them in indigenous owned stores. 11 in the Northern Territory with others in Western Australia and Queensland. These communities can now send and receive mail and parcels close to home without long journeys. Our focus in regional Australia is not only maintain our post office footprint, but also on ensuring that reliable and cost-effective pass delivery can be maintained. That is why we continue to invest in new parts facilities in places like Morwell, building on the 10 new facilities we announced this past year, all in regional towns, all to help grow local businesses. E-commerce growth in the regions is outstripping the growth of Metro, demonstrating that our investments are making it easier and more convenient for people to access products in these regional, rural, and remote areas. Our commitment to communities goes beyond our network. During mental health month, we announced more than 700,000 in community grants for 81 community-ledd projects that build connection and support mental health and well-being. More than half of these grants are going to rural and remote areas. At the same time, the way Australians live, work, and shop is rapidly changing, and customers are looking for longer hours of access and more convenience. We've responded by broading how and where people can use our services, including through parcel lockers and other self-service options. Importantly, these are in addition to our reported retail outlets. They're designed to complement our post offices, not replace them. A licensed post offices remains vital to their communities. And as more Australians shop online, P parcels now make up the majority of their transactions. Commissions to lences have increased every year for the past 17 years and reached a record $635 million last financial year. Additionally, our renegotiated bank of post agreements, which now include A&Z, have lifted those commissions by 30%. Let me be clear. We are not seeking to reduce LPO services with third parties and government agents have moved online and ended arrangements with Australia Post. We are seeking new ones with an expression of interest process underway for additional over-the-counter services. Where licences choose to retire, leave the network. Our priority is continuity of service for those communities. For two years, we've been working with licences and their associations to modernize an LPO model that is more than 30 years old. And that work continues. However, the challenges for LPOS in metropolitan non metropolitan areas are not like for like. For LPOS's in regional and rural and remote Australia, we propose to provide an additional $30 million in commissions each year with targeted support for those outlets that need it most. The challenges in metropolitan areas are largely due to significant geographical overlap. We remain committed to exploring opportunities to strengthen and improve their financial sustainability. Importantly, Australia Post maintains its nationwide network without the support of taxpayer funding. We remain one of the only major postal operators in the world that delivers on our governmentmandated service obligations on a fully self-funded basis. Australia Post is about to enter the busiest time of the year. Australians are increasingly rely on e-commerce to find the lowest possible price to help in the current cost of living crisis. At the end of next month, Black Friday will mark the start of what we expect to be our biggest peak delivery period on record. Last year, we delivered almost 111 million parcels across November and December, including more than 3 million on a single day for the first time. This year, we are preparing to deliver more than 120 million parcels. To meet this anticipated demand, we've recruited 3,900 casualty members and expanded our air network. Last month, together with Quonus, we welcomed the first of three additional Airbus A321 freighters based at the new 24-hour freight terminal at Western Sydney International Airport. None of this work and the service we provide are possible without our people. Our team members, licenses, and delivery partners will once again work long hours over the coming weeks so that Australians can receive the gifts, medicines, and essentials they rely on. I want to sincerely thank them for their continued dedication. They are the beating heart of the communities that we serve. Finally, last week, I announced my intention to retire in June next year. I remain fully committed to supporting customers and our team members right up until the last minute of my last day. Working hard to keep our people safe, delight our customers and communities, and ensure our long-term sustainability. Uh, thank you, Chair. I'm happy to take questions.
>> Thank you very much. Uh, Senator Henson.
>> Uh, thank you very much, uh, Chair, Mr. Graeme, to you and your team. Thank you for your attendance this evening. Uh firstly to your resignation uh was this a decision you made of your own valition or were you encouraged to resign?
>> Uh thank you for the question Senator. It was a decision purely made of my own valition in consultation with my family.
>> And why then have you decided to resign? uh and did there's been a fair bit of recent controversy in the last few months uh concerning what I would say is your misleading evidence to this committee the failure to be transparent in relation to your program buyback program and your program more broadly both to consolidate and reduce post offices in metro regions as well as in the regions. I understand some of that is still under consideration. The the stark contrast in the evidence that you gave saying that no trial was approved by the board in May. Mr. McDonald said yes, a trial was approved and we initiated the inquiry into Australia Post's retail network off the back of your evidence uh at the last estimates. So, uh, did did any of that play a role in your decision to resign?
>> Uh, Senator, I decided to retire, uh, not resign. Uh, and every day and post, there are many, many topics that one could consider and contribute to such a decision. Again, I categorically deny uh the uh assertions that you've made in relation to me misleading uh the committee uh and will continue uh to deny them. I've always been uh very transparent, open and honest uh in my evidence. Uh the decision was purely a personal one. Uh I am 65 next month. Uh I know I don't look it. Uh and uh it's been a decision that has been coming for
>> Well, I I do note and this has already been provided to the committee and as public the your letter of the 24th of September where you accepted uh that you could have done a better job and been clearer with the committee in your evidence. Now I would say mislead you have characterized this differently but but putting the different ways in which um you have characterized the evidence you gave uh you have made a number of concessions in this letter that you should have done a better job to be clearer about your program uh your support for LPOS's across the country and about the decisions that were made in May by the forward.
>> Uh, thank you, Senator. And again, I don't agree with your interpretation of my clarification letter. I think we both could have done a better job, frankly, in uh being clear on what questions we were asking and what answers we were giving. Uh, but at all times, I have provided clear, honest uh uh answers to the committee uh and will continue to do so.
>> Well, we had a very long debate last time, Mr. Graham and and uh you've said I acknowledge that my answers during the hearing in relation to the 9th September evidence did not sufficiently distinguished between the board's May 26 endorsement key design elements. It went on and on and on. Uh you went to great lengths to explain yourself without explaining clearly and coherently why at the last hearing you told our committee the board made no decision in relation to that trial and Mr. McDonald 30 or seconds prior to your evidence said the board made a decision to go ahead with that trial. starkly contradictory evidence. Your evidence was incorrect. Mr. McDonald's evidence was correct. We had the document to prove it. And I'm that's why I'm saying that I believe that you misled our committee because of the fact that you gave evidence which clearly wasn't accurate.
>> Sorry, Sandra. Again, I strongly deny those accusations. The evidence I gave was true and honest. You asked multiple questions. those questions were not clear in relation to what question you're actually asking. I responded to the best of my ability and again there were two different decisions made. One was a trial that the board uh had signed off on in terms of relation to the concept uh for us to go away and do further work. So nothing had actually been uh executed in relation to that trial. The second one in relation to the paper that you produced was a business case uh that was an internal business case for management had not gone to the board. We can continue going around this circle. I didn't all night, Senator. The very fact is I have given true and accurate evidence to this committee and will always do so.
>> Well, Mr. Graham, you're you're conflating issues here. I didn't say that that secret document that we uncovered was a board document and but what I'm but it referred to the May decision. You gave evidence that there was no decision in relation to the phase one trial by the board and Mr. McDonald gave evidence that the board did agree to that phase one trial. And so what I'm saying to you is that your evidence was wrong. Mr. McDonald's evidence was correct. You've corrected this in your letter in a very convoluted way. Uh I appreciate the fact that you have written to us about these matters, but going forward uh we do expect that you'll be clear, wholesome, accurate in your answers. so we don't have to go through what we've had to endure the last few months.
>> Uh I fully uh endorse that uh view Senator and again if I'm unsure about the question that is being asked I will seek clarification of that question.
>> Uh can I just go to your um your financial results? um there was a $139.4 million property gain. Uh now without that gain, Australia Post would have recorded a loss of 107.6 million in financial year 206. Is that correct?
>> That's correct, Sam.
>> And I just want to ask about your executive bonus because the executive profit measured excluded property gains but the measure making up half your scorecard from what I understand included them. So I guess what I'm trying to say is without the property gain uh would your hurdle have been met in relation to your discretionary bonus?
>> Uh thank you Senator. As you say correctly my bonus or at risk renumeration is set by the board uh in relation to the guidelines that are issued by the REM tribunal and APSC. Uh my at risk renumeration was split last year into two components. one in relation to five KPIs that were also shared with the uh executive team uh and one that was specific to me in relation to the property strategy that we had to execute. Uh that strategy uh is critical to uh our transformation uh because every dollar uh that we gain from those property sales is plowed back into investing in the business. Uh we did not have a cohesive property strategy at Australia Post. uh we do have the great fortune of sitting on property uh that has been in the network for some time and it was important for us to get an articulated clear strategy so we could maximize the return uh to Australia Post and the taxpayer in relation to releasing those non-core properties from our portfolio and ensuring that they provided the cash flow that not only got us back into a profit position but enabled us to make the substantial investments we're making as part of our
transformation. And what what did you receive by way of discretionary bonus?
>> I believe the numbers in report. 1.2 million off the top of my head, but I've got it here in front of me.
>> So 1.2 million on top of what's your base salary and
>> 1.6 million, Senator? 1.64.
that's a very substantial amount of money, Mr. Graeme. Uh and that was obviously contingent on those property
sales. half of it was contingent on on the property strategy being executed. Senator, that's correct.
>> That's a mind-blowing amount of money um when if you had not sold that property, Australia Post had not sold that property, there would have been a loss and I imagine that would have se you know seriously affected your at risk portion of your salary.
>> Well, Senator, the facts are uh stated in your report. uh the board understood the critical importance of producing uh uh the cash flow that we need to invest in our transformation. Uh as you know our financial position uh is somewhat tenuous. Uh we developed a very clear articulated strategy in relation to our property portfolio. A key part of uh executing that uh is part of our post 26 and post30 platform and the board saw fit uh to provide that as a key measurement in relation to my at risk renumeration.