Post office owners reveal AusPost’s secret plan to run its own stores into the ground: Legal threats, disappearing services and fears family businesses will be unsellable

Australia Post executives have been accused of deliberately sabotaging post offices and making businesses unviable as part of a broader scheme to shrink its retail network and transform into the next FedEx.

A Senate inquiry has heard claims that post offices are being ‘run into the ground’ by corporate policies deliberately designed to slash foot traffic, cannibalise profit and devalue small businesses.

The investigation, led by Senator Sarah Henderson, has accused Australia Post of using ‘unethical’ and ‘improper tactics’ in its ‘insidious’ mission to shut down stores.

Chief Executive Paul Graham was called before the inquiry earlier this month after being accused of misleading a budget estimates hearing in May.

Mr Graham, whose $3.3million salary package makes him the Commonwealth’s highest-paid CEO or government official, told budget estimates there were no active closure programs – only for a leaked, board-approved business case to surface two weeks later, revealing plans to buy back 36 stores.

The confidential document outlined a program called ‘Licensed Post Office Reimagined’, which proposed turning post offices into parcel lockers and shifting key services to ‘host businesses’ such as pharmacies or newsagents.

Mr Graham defended the plan as ’embryonic’ and ‘strongly rejected’ claims that he had misled the budget estimates hearing.

Senator Henderson further alleged that Mr Graham ’embarked on a shocking spate of threats’ against various post office owners following the leak, actions she said put him ‘perilously close’ to being in contempt of parliament, the inquiry heard.

Mr Graham denied that anyone had received legal threats, stating instead that Australia Post was carrying out due diligence by investigating the misappropriation of sensitive information.

Licensees speaking anonymously told the Daily Mail that within 48 hours of the leak, Australia Post engaged legal firm Mallesons in an effort to uncover the whistleblower.

A source said multiple employees received legal letters because, although the document was confidential, it was accessible to anyone with internal systems access.

Senator Henderson also accused Australia Post of using ‘a classic bait and switch’ strategy to move LPO owners off their perpetual agreements and onto fixed-term contracts.

Unlike traditional franchise models, which typically have fixed terms requiring renewal after five or ten years, LPOs operate on perpetual agreements with no set expiry date, making them a valuable and ongoing business asset.

In June, licensees in rural and regional areas were told they would have to sign a fixed-term agreement and forfeit the certainty that underpins most of their businesses’ value in order to receive higher short-term commissions and better pay.

This change would significantly shift the balance of power by substantially devaluing individual businesses, leaving licensees with assets they can’t sell and exposing them to negative equity.

For the two-thirds of licensees who Australia Post says hope to sell up and retire in the next five years, the change could be devastating.

One licensee said she would be put in ‘an extremely vulnerable position’, with the stability and confidence of a perpetual licence being taken away.

‘It is difficult to plan for the future when the foundation of our business can be altered or taken away at the end of a term,’ her submission said.

However, an Australia Post spokesperson said its current modelling suggested that 70 per cent of eligible licensees would be financially better off under the arrangement, which was ‘entirely voluntary’.

Sources told the Mail that all signs point to Australia Post’s ‘widely known vision’ to become a parcel-focused carrier rather than a community-facing hub.

In doing so, post offices are no longer being seen as critical pieces of community infrastructure, but as a network of corporate franchises.

This theory is strengthened by the professional backgrounds of many current executives, including Executive General Manager Josh Bannister, who has previously worked at McDonald’s and Domino’s.

Mr Bannister, who also appeared before the Senate, helped author the leaked business case and was ‘intimately involved’ in the LPO Reimagined proposal.

Another strategy raised at the inquiry was that Australia Post was intentionally causing services to withdraw from its stores to decrease foot traffic and make them less profitable.

In the past 12 months, more than 60 services have disappeared from post offices, the Senate heard, the latest being Western Union, which will withdraw its wire transfers from October.

A licensee told the Mail that the withdrawn services were ’60 less reasons for somebody to walk into my post office, 60 less things that bring my business value’.

‘Their [Australia Post’s] view is anything that doesn’t help us become a parcel carrier is unnecessary.

‘If they want to turn us into a logistics company they can at least be honest about it and make us a fair offer instead of driving us into the ground.’

An Australia Post spokesperson said the ‘vast majority’ of services withdrawn reflected decisions made by ‘third parties and government services moving to digital channels or choosing not to renew their contracts’.

They also said they were investigating additional over-the-counter services, and had expanded the available banking services with licensees receiving a 30 per cent commission increase. 

Aggressive management, compliance demands and disciplinary action have also reportedly intensified in recent years.

A source said leadership was ‘handing out breaches left, right and centre’.

‘They are very aggressive and they are in control of all the livelihoods of their franchisees,’ the source said.

The peak body for licensees, the Licensed Post Office Group, argued the rules are so broad that licensees ‘cannot reasonably understand their own obligations’.

LPOG also said there was a double standard in how licensees and management received consequences.

Meanwhile, the Ombudsman for Small Business wrote that Australia Post’s dispute-handling processes should ‘afford natural justice’ and ‘proportionate outcomes’.

Parcel lockers placed outside LPOs – without consultation or warning – are also cited as eating away at commissions earned over the counter from handling and processing packages.

LPOG chair Scott Etherington told the inquiry that loading and unloading the parcel lockers involved double the work of processing parcels over the counter, yet paid only half the commission.

However, Australia Post insists the parcel lockers are ‘designed to complement not replace’ post offices, with parcels accounting for the majority of post office transactions.

In a statement, the spokesperson said Australia Post was committed to its extensive post office network: ‘We reject any suggestion Australia Post is seeking to run down or close its retail network.

‘Australia Post has strict regulations to maintain a minimum of 4,000 retail outlets nationally, with 2,500 in non-metro areas and LPOs remain central to how we serve customers and communities.’

‘Consultation on the proposed Licensed Post Office Reimagined (LPOR) model remains ongoing and no final decisions have been made.

‘The proposal is entirely voluntary, and licensees who choose not to participate will remain on their existing agreements.’

The Senate inquiry will reconvene for a third hearing on September 30.