Four months ago I wrote to Senator Coonan, Minister for Communications (Minister responsible for Australia Post) presenting evidence which I claim shows Australia Post breaching the Act under which it operates. I’m still waiting for a reply. Well, I have received a reply but when you lay it next to my letter it does not address even remotely any of my concerns. It’s an off the shelf document right out of Yes Minister. The Minister’s office promised in a letter six weeks ago that I would receive a reply. So far, nothing. In the meantime Australia Post pursues newsagents and other small businesses relentlessly through its government owned stores.
Tired of waiting to hear from the Minister, I sent this letter yesterday. Here’s one paragraph from the letter which sums up my position:
In that past, correspondence from your office and others in the Federal Government shows you hiding behind the Act. If you are right and the Act permits Australia Post to sell non postal related items in greater numbers, the Act must be changed. A government established and owned enterprise with monopoly core products and services such as Australia Post ought not be permitted to use its monopoly supported brand to compete against small businesses, especially when the government has stripped those small businesses of any monopoly products and services they had.
The treatment of newsagents by the Howard Government is a scandal. That the government profits through its protected 863 retail stores competing with newsagents ought to shame it. Without media coverage, people won’t know the harm being done to small business.
I don’t disagree with your campaign against Australia Post. I just don’t understand what products newsagents previously had a monopoly on. If you are referring to magazines, I can recall always being able to buy my magazines at other outlets other than newsagents.
If Australia Post was not directly opposite your business, would you still fight so vigorously?
If Australia Post’s ability to drive sales wasn’t directly impacting yours, woudl you still be so venomous to their CEO?
If Australia Post was not out-flanking your business, would you even notice that they had diversified their product range?
I think not.
Truth be told, Australia Post Retail may well go broke if it were not for the diversification; it make commercial sense for Aus Post stores to have uniformity over the brand. If it were to go broke, you’d be bemoaning evidence of a government-misdirected of a business. Instead, you’re bemoaning evidence of a successful business that is benefiting independent franchisees. Don’t you think that the strong brand – with a strong marketing emphasis – helps far more independent franchisees than it does the government? Surely AusPost has an obligation to its franchisees…?
Mark – you need a new hobby horse. I worry for your health, the way you bang on about AP.
Philip.
Philip, I too am worried about Mark’s health with his relentless attack on AP and their Government owned retailed outlets, all 863 of them compared to the 4000 plus newsagents of which some are Licensed Post Offices as well.
Like it or not, they and the other 3500 plus Licenced Post offices, do feed off the brand. Yes, AP has an obligation to its LPO franchisees as the LPO’s have obligations to AP as well. We could be like Britian where they are looking down the barrell of Deutch Post completely moving in. Britian’s postal service is fragmenting all over the place, with many branches being shut down. New Zealand Post has not been a success story either.
Mark, your continued attack on AP does affect ALL the Post Offices, both Government owned and LPOs. You use the Government line as a smoke screen to attack us all on behalf of what you call Small Businesses. Although overall you are really downgrading the newsagent channel by saying the Post Offices are taking your business. Maybe some newsagents will consider buying an LPO instead? (better hours, less paperwork!)
I just can’t understand why you don’t attack supermarkets and petrol stations, as they have to really be the opposition that is taking most of your previously protected newspapers and magazines? The cream of your day to day business, and now looking to take some of your gambling income as well.
You have said Mark that you find the blogging makes you feel better, but I do worry that you get so worked up that it may be impacting on your focus on your own business. (You did miss your back to school order.)
Until 1999 newsagents had a monopoly on the distribution of newspapers and magazines. While other outlets sold these, newsagents managed the distribution. That monopoly came to an end and with justification. Unfortunately, the monopoly went without consideration of compensation as the government has paid in other areas.
Our government owned post offices have, since deregulation, moved more and more into the stationery, book, cards and other areas retailed by newsagents.
My business is okay because of what else we do. I worry for many of my colleagues who are in trouble as a result.
Ask yourselves how you would feel if your business were under attack by a government business every day. Would you be okay with that? How will you feel if you discover that a newsagency has closed because of this and that a family has lost their life savings?
What Australia Post is doing is unique – even though the government would have us believe otherwise.
The claims that they must diversify to fund their retail postal service is nonsense.
Is that true Mark? Weren’t magazine publishers supplying supermarkets with their publications before 1999? Isn’t your claim about newsagents previously having a monopoly on these products misleading at best, untruthful at worst?
Personall, i have problem with LPOs or franchises. The problem is that the government is using their post office outlets to make money, but at the cost of small business. This isnt a situation like like where Telstra used to have a monoply, they were plaing at the big end of town and bodies like the ACCC took action where needed.
Whether it be a LPO, a franchise or a government owned post office, the fact remains the government still uses each to make money, and does so to the detriment of small business.
The government has privatised everything else, why not do so with their AP Retail arm. If not then derrgulate the monoply AP has on postal products.
A national postal service should be government owned, but other commercial arms of the business should not when they impact heavily on existing business. The government isnt there to compete in the marketplace.
Although i don’t agree with Mark that AP has breached the Act (yes i have read it), i do agree that it needs to be changed.
Ted you;re right re magazines. However, it was only major supermarkets. Deregulation opened petrol outlets, 7-elevens (and similar), 2nd and 3rd tier supermarkets and a range of other direct supply outlets. I don;t disagree with this. I do disagree that something one has paid goodwill for can be taken without compensation. I also disgaree that the government can push such deregulation without any structural assistance.
Thanks for the clarification Mark. Out of interest does the same explanation apply for newspapers or have they also supplied these outlets direct? What was the result of deregulation on newspapers?
No, Ted, newspapers were different. 100% exclusive to newsagents until 1999. I know of newsagencies where deregulation wiped more then $100,000 from their bottom line. They have survived only through their hard work. If newsagents were auto workers or farmers the government would have drowned them in cash.
Mark if you are as worried about small bussiness as you say.What would you think of a newsagent, going into a shopping center where there is already a newsagent.Would this not put pressure on the current agent?? Would some one that is so concerned about the channel do this to anothe agent???
I actually mean’t what has happened in regard to newspapers since deregulation? Have they bypassed the newsagent and gone direct to other outlets in any state?
Why should government owned post shops have a monopoly on stamps for example? The only place I can make a profit on stamps is buy them of ebay
There are a lot of whys however Mark from what I read has the foresight, the Newsagent of yesterday is gone and if we dont draw a line in the sand the Newsagent of tommorrow will be gone also.
There are already a number of newsagents in shopping centres, coles, woolies for example, get the picture?? I cannot believe some peoples comments or lack of foresight, its clear as but blind to some.
Mary, It all depends on the circumstances. Many centres are developed in such a way that two and even three newsagencies are necessary to service traffic grouping and flow. Also, tenants don’t decide if there is to be a second or third newsagency, this is the landlord’s prerogative. I am pro competition but anti unfair competition such as the government using its Australia Post monopoly to compete with newsagents. Mark
Ted, What has happened is that more newspaper accounts are now direct between publisher and consumer, reducing newsagent margin, some outlets are delivered direct and some publishers have taken back some delivery territories altogether. Publishers will say it’s business as usual and technically they would be right. The reality is that deregulation has allowed them to maintain or grow GP while newsagents have experienced a fall in the newspaper area. Mark
Mark said:
“If newsagents were auto workers or farmers the government would have drowned them in cash.”
The government shouldn’t throw money at these special interest groups either.
If someone buys a business and pays for an intangible like “goodwill” that is their problem. The value of “goodwill” can be destroyed for all sorts of reasons not the least is the political risk.
Most people I know who purchased a newsagency did so because they expected incorrectly that they would be a featherbedded monopoly forever and they could make substantial capital gains when they sold the business. The monopoly came to an end and some poeple lost out. That was the risk they ran – the government should not be responsible for making up their loss.
Good to see other people not just newsagents reading Marks blog, What are the opening hours for AP stores again, do you work public holidays xmas day, new years, newsagents do (I’m not talking employees here I’m talking newsagents the owners of the shops becaus ewe cant afford to pay $40 to $50 per hour because our prices are set by publishers). I only hope that the government continues to pour money towards AP stores and doesn’t just walk away like they did with newsagents in 99.
At present AP stores are getting the easy road, thats fine don’t get me wrong good luck to you. I’ve owned a newsagent for 18 years, we open 7 days a week 4am to 6pm and today I had to lay off 2 fulltime employees because we could no longer justify wages. Hopefully these people can get a job at coles, woolies or even AP where job security is protected and the Government will step in and help us out like the farmers, or auto workers. I work 7 days a week my freind so don’t say I’m sitting on a feather bed making millions.
At present the big monopolies can afford to wipe out small business because they are not owned by indivuals that work in their business, they are owned my superannuation funds and multinationals that when it suits them will leave us all to rot like what has happened in the US and UK re Walmart.
History has a habit of repeating itself lets hope Australia post isn’t sold off in the not to distant future and all postal employees and franchisees are not left holding an empty bag.
I am not sure that farmers are getting drowned in money. From what I understand in my area many farmers are getting about $13,000. If the wife has gone out and gotten a job, then zilch for many. I don’t think anyone would say that is a lot to feed the family on. They talk big figures in the media, but it never seems to actaully flow like that to the bottom. What about all the money for the tsunami? Same thing, big figures talked, the base doesn’t seem to receive it.
I do agree that if an industry’s rules are changed by the government then there should be some compensation. To say that is a risk they take is not true. There were rules in place and they were changed.
I just hope the chemists don’t get hammered as well shortly. Supermarkets are wielding so much political power it seems, and they want everything.
It is very hard to understand the goodwill part of the business; you of course buy the goodwill as part of the purchase of a business and hopefully goodwill would continue to grow especially if you have the right staff, I feel that is where the growth is in business today and it does not cost much, goodwill is created by staff, customers want to feel welcome, see a smiling face, see a well organised shop, see well groomed staff. Goodwill can offset some of the challenges being faced.
Does anybody else feel that around the corner there will be a change in the Government owned AP shop concerning ownership, Lukes comments were spot on, AP do not have the pressures that say a Newagency has yet, sure they have a budget however its more like a claytons one and a National advertsing arm also. Who knows whats around the corner, but I am sure the goodwill of your staff can add to your business finacially.
Something doesn’t make sense here. Mark says that the magazine companies were going direct to supermarkets before deregulation, but somehow deregulation allowed the publishers to expand into petrol outlets amongst others. If the publishers were able to go direct to supermarkets, then they were able to go direct to any outlets…they simply chose not to at the time.
It could therefore be argued that newsagents were fortunate that the publishers didn’t take such steps long ago. I’m not saying that this is necessarily fair but it sounds to me like “deregulation” is a bit of a furphy and simply suits your argument to demand compensation from the government.
Ted, No ‘furphy’. If they did have the arrangements you suggest then there was no need for the deregulation. The reality is that there was legal action, government involvement and ACCC involvement. That is sufficient evidence to support that something valuable to newsagents was taken away. Mark
If the previous (pre 1999) magazine arrangement was legal then there would be no need for any involvement from the ACCC, so then it must have been illegal?
The Trade Practices Act gained royal assent in 1974. Four of the major newspaper/magazine publishers/distributors applied for authorisation in February 1975 under the 1974 TPA to essentially engage in anti-competitive conduct. The Fraser government got the collective submission of the publishers/distributors over the line with an emotional dissertation in February 1980, five years after they made the application.
The effect of the authorisation was to grant all print media publishers/distributors immunity from prosecution under the 1974 TPA for cartel type conduct with regard to the distribution of print media.
Australia’s newsagents had, under this arrangement, the exclusive right to deliver all print media publications in a sales territory defined by the original applicant publishers/distributors. This arrangement continued until 2000 and was administered by newsagency councils set up in each of the mainland states.
The Howard government asked the ACCC to facilitate discussions between newsagents and publishers/distributors in 1999 in an effort to move to a free market arrangement for print media publications. The territorial arrangements for the distribution of print media publications had originated in NSW in 1939 and by the end of the 2nd world war had been implemented Australia wide.
The result of the Howard government’s request to facilitate new distribution arrangements was the transitory contracts of ACP, Fairfax and News, three of the original 1975 applicants. These contracts were similarly structured and presented to individual newsagents on a non-negotiable, take-it-or-leave-it basis. They heavily favored the publishers/distributors and severely disadvantaged Australia’s newsagents who were offered no compensation. Newsagents at this time depended on print media for over 50% of their net profit. Over the sixty year period between 1939 and 1999 newsagents had invested heavily in what was essentially a newspaper distribution system.
To be arbitrarily forced into ‘gifting’ this goodwill investment to the publishers/distributors at the whim of the Howard government and overseen by the ACCC reeks of unconscionable conduct as defined in the 1974 TPA, the very Act the ACCC ‘watchdogs’.
The Trade Practices Act gained royal assent in 1974. Four of the major newspaper/magazine publishers/distributors applied for authorisation in
February 1975 under the 1974 TPA to essentially engage in anti-competitive conduct.
The Fraser government got the collective submission of the publishers/distributors over the line with an emotional dissertation in February 1980, five years after they made the
application. The effect of the authorisation was to grant all print media publishers/distributors immunity from prosecution under the 1974 TPA for cartel type conduct with regard to the distribution of print media.
Australia’s newsagents had, under this arrangement, the exclusive right to deliver all print media publications in a sales territory defined by the original applicant publishers/distributors.
This arrangement continued until 2000 and was administered by newsagency councils set up in each of the mainland states. The Howard government asked the ACCC to facilitate discussions between newsagents and publishers/distributors in 1999 in an effort to move to a free market arrangement for print media publications.
The territorial arrangements for the distribution of print media publications had originated in NSW in 1939 and by the end of the 2nd world war had been implemented Australia wide. The result of the Howard government’s request to facilitate new distribution arrangements was the transitory contracts of ACP, Fairfax and News, three of the original 1975 applicants.
These contracts were similarly structured and presented to individual newsagents on a non-negotiable, take-it-or-leave-it basis. They heavily favoured the publishers/distributors and severely disadvantaged Australia’s newsagents who were offered no compensation.
Newsagents at this time depended on print media for over 50% of their net profit. Over the sixty year period between 1939 and 1999 newsagents had invested heavily in what was essentially a newspaper distribution system. To be arbitrarily forced into ‘gifting’ this goodwill investment to the publishers/distributors at the whim of the Howard government and overseen by the ACCC reeks of unconscionable conduct as defined in the 1974 TPA, the very Act the ACCC ‘watchdogs’.
I’m not against competition, far from it. What stinks is that it comes from a government department that has a primary function i.e. not retail.
I don’t think any government department competes with private enterprise as directly as AP does with the exception of perhaps Telstra? I am in Italy at the moment and like just about all of Europe the Post Office in this country is just that, the Post Office. There are absolutely no other products in the office and I have to say that the lack of retail merchandise only serves to allow focus on what they are set up to provide the public i.e. a postal service! Can someone fill me in on what other countries have the same problem we have with Australia Post?
Someone put forward the point that without retail merchandise they would probably not survive. So what? If there is a problem with AP that is being helped by having retail products in order to survive it is just plain wrong. And just because jobs have been created because of it and the withdrawal may cause the loss of those jobs is no reason to allow it to continue either. How many jobs are being lost by newsagent employees because of it? Why should private enterprise in this case Newsagents be the ones to be faced with direct competition on unfair terms?
You can’t tell me that the range and level of products available in AP offices just happen to be most if not all of what Newsagents would consider to be their core merchandise? Am I the only one to suspect that it is not by accident but more by design?
The fact that Mark may have an AP office directly opposite him probably serves to remind him daily that they face competition from a government department. I have one just around the corner from me and for some it may be out of sight and therefore out of mind but the effects on my business and subsequently my beef is exactly the same as Mark’s.
For what it’s worth I’m writing to Coonan to voice my opinion as well and I sure as hell wish that other Newsagents would wake up and do the same.