Australia Post paid millions in bonuses to senior staff after board deemed them ‘appropriate’

Australia Post considered scrapping controversial bonus payments to its executives last year, internal documents reveal, but the organisation's board eventually decided they were needed to "incentivise" senior staff.

The discussion came after long-running criticism of the multimillion dollar scheme by senior government ministers, who wrote to the board raising concerns the incentives were out-of-step with community expectations.

Eight senior executives were collectively paid $4.45m in bonuses last financial year - more than $500,000 each - with another $24m in incentives paid to 362 non-executive staff, who already earned more than $235,000.

The federal finance and communications ministers wrote to the Australia Post chairman, Lucio Di Bartolomeo, demanding he justify $28m in bonuses, outline the payment structures in detail, and explain how they represented value for money. The 27 October letter was sent amid growing public concern over low wage growth and climbing inflation.

Australia Post's reply, obtained under freedom of information laws, reveals the board justified the payments as "the most appropriate use of public resources" given increasing competition against "the largest and most innovative companies in the world" and "accelerated letter decline".

Earlier this week, a government discussion paper raised questions about whether Australia Post would continue to deliver letters on a daily basis. The postal service reported a $255m decline in its letters business in 2021-22, with 80% of its revenue now coming from e-commerce

Australia Post's acting chairwoman, Andrea Staines, told ministers Katy Gallagher and Michelle Rowland the board considered removing bonuses for some staff and returning to fixed remuneration, but decided against doing so because of "an obligation to deliver public outcomes".

"This approach was discounted as it would limit the enterprise's ability to drive performance through at-risk performance-based remuneration and create a significant fixed remuneration cost increase in ongoing enterprise costs," Staines wrote, on behalf of the board.

Staines outlined the challenge of declining letters revenue and tough competition from parcel delivery companies like Amazon and DHL. There were 66% fewer letters sent in the past financial year than in 2007-08, when 4.6bn were sent.

"To ensure Australia Post continues to meet its strategic objectives, it must hire the most experienced and capable employees from competitive and constrained talent pools and incentivise them to successfully compete in these markets," Staines said.

Staines said there was already "a high level of transparency" on bonus payments but outlined possible improvements, including periodic updates on incentives rather than annual disclosures.

The federal government has also raised concerns about bonuses paid to senior executives at NBN Co. Chief executive Stephen Rue was paid a $697,808 bonus last financial year, more than the prime minister's annual salary.

The Greens senator Sarah Hanson-Young said she was "shocked by the exorbitant amount". Three NBN executives collectively received more than $1m in bonuses.

"If you're asking me whether the community would expect better - yes," said Labor senator Carol Brown at a Senate estimates hearing last month. "We expect boards and executives shouldn't be indifferent to community expectations."

A senior public servant told the committee that Gallagher and Rowland had written to NBN Co last year urging it to "put in place a remuneration structure that is transparent and ensures executive remuneration is aligned to key performance indicators".