The report investigates a complaint from Conference of Asia Pacific Express Carriers (Australia) Limited (CAPEC) alleging Australia Post is not complying with its obligations under competitive neutrality policy and is benefiting from competitive advantages simply as a result of its government ownership.

Key points

• Australia Post experiences competitive advantages and disadvantages as a result of its government ownership.
• Australia Post is meeting the requirements of competitive neutrality (CN) policy regarding tax neutrality, earning a commercial rate of return and including CN commentary in its annual report.
• Australia Post is not meeting the requirements of CN policy regarding debt neutrality. 
• Whether Australia Post is meeting the regulatory neutrality requirements of CN policy could not be determined. 
• Australia Post incurs a major disadvantage of government ownership because it has a legislated requirement to deliver community service obligations (CSOs) and to fully fund the cost of doing so.

 Recommendations

• Australia Post should make annual debt neutrality adjustment payments. An independent entity with requisite financial expertise should verify the accuracy of those payments.
• The Treasurer should initiate a public inquiry to consider the regulatory asymmetries between Australia Post and CAPEC members regarding border regulation of parcel traffic, their relative costs and possible reforms to address disparities in those costs. (This approach, though, will need to be judged against the alternative of Customs addressing these issues through an internal examination.)
• Australia Post’s CSOs should be funded directly from the Budget.