No more rock star CEOs for Australia Post

Former high-profile Australia Post CEOs Ahmed Fahour and Christine Holgate.

Liberal and Labor governments have both wanted the same thing from Australia Post: an uncontroversial organisation that gets on with the job of what it’s tasked to do, delivering letters and parcels on time with minimal fuss.

This allows the government of the day to focus more on dealing with other state-owned enterprises: the ABC and NBN, which have both long been considered greater priorities in the Communications Minister’s portfolio.

With the appointment of Paul Graham – Woolworths supply chain boss – the government hopes it will steer Australia Post back to its more traditional course, ending the era of not one, but two rock star chief executives.

For the past five years Mr Graham has ensured daily essentials like milk, bread, fresh meat and toilet paper were delivered across the supermarket network, and he has received high praise from Woolworths chief executive Brad Banducci for getting on with that job.

Unlike Ahmed Fahour and Christine Holgate, Mr Graham is not a “rock star” chief executive who finds himself getting photographed by the media getting his shoes shined outside the Myer marquee at the Melbourne Cup, or on the front page of CEO magazine.

To date he has maintained a relatively low profile despite having strong experience, having also served as DHL’s global chief operating officer and Europe CEO, overseeing 170,000 people in 65 countries and $32bn in revenue.

The idea of an uncontroversial CEO sounds simple and appealing but needs to be treated with caution.

Then Australia Post CEO Ahmed Fahour having his shoes shined in the birdcage at the 2015 Melbourne Cup.

It was four years ago that Mr Fahour resigned from the organisation after his $5.6m pay packet was revealed — a salary then prime minister Malcolm Turnbull said was too much and was fuelling “a cult of excessive executive, CEO remuneration”.

Then last October Scott Morrison weighed in with his own criticism of Ms Holgate, demanding she stand aside or “go” after it was revealed — under questioning from Labor — that she rewarded four senior executives Cartier watches worth about $20,000 for striking a banking deal worth $66m a year.

Both Ms Holgate and Mr Fahour were highly successful chief executives. Mr Fahour was fabulously paid but that was because he delivered the targets agreed to with the government. It is thanks to his $2.5bn investment in building Australia Post’s e-commerce network a decade ago that Australia Post still controls the domestic parcel delivery market, with more than 80 per cent market share.

Ms Holgate strengthened this legacy, overseeing record $7.5bn revenue in her final year overseeing Australia Post, and added $66m a year to turnover after securing a landmark deal with three of the four big banks to allow post offices to continue to do banking services on their behalf.

There wasn’t anything particularly new in this deal for the banks, which is part of the reason why ANZ baulked at the cost of stumping up $22m a year for post offices to continue what they have done for decades for the big banks. But for licensed post offices, which are similar to franchisees, it was a lifeline, raising their minimum payments from Australia Post by 25 per cent to $40,000 a year.

For the government, Australia Post’s record revenue and $53.6m before-tax profit last year meant it could pay the government a $21m dividend, and not put its hand out for taxpayer cash.

This is unlike the US Postal Service, which is run as an independent government agency, with its chief executive earning a modest $US303,460 ($400,000) a year. Last August American taxpayers forked out $US25bn in “emergency” funding to the USPS after it lost $US9.2bn in fiscal 2020.

Success comes at a price and the Morrison government needs to decide if it will be “penny wise, pound foolish” in its attempt to keep Australia Post out of the headlines. Here’s hoping Mr Graham can get on with the job.