$12,000 Cartier watches: How is Australia Post funded?

Anastasia Santoreneos
·3-min read
How is Australia Post funded? Source: Getty
How is Australia Post funded? Source: Getty

Australia Post chief Christine Holgate has been ordered to stand aside after it was revealed she spent $12,000 on Cartier watches for senior staff.

It was also revealed the company spent nearly $800,000 on plants and greenery across the last two financial years, spent $300,000 on corporate credit cards and chauffeur-driven cars, and hired a $3,000-a-day “reputation management” firm.

It comes as the postal service dropped letter delivery frequencies to every second day in metropolitan areas, and sent a memo to staff asking them to volunteer their time and vehicles to deliver parcels amid Victoria’s lockdown.

“We are the shareholders of Australia Post on behalf of the Australian people,” Scott Morrison said in Thursday’s Question Time. “She [Holgate] has been instructed to stand aside. If she doesn’t wish to do that, she can go.”

Holgate told a Senate estimates committee that the company did not use taxpayer money to fund the purchases, but could not specify which corporate card the watches were purchased with.

Home Affairs Minister Peter Dutton said on Friday that while Holgate came from the private sector where rewarding staff with watches was considered “acceptable”, Australia Post was a different ball game.

“In Australia Post where you're talking essentially about taxpayer dollars, the Australian government, the Australian people are the shareholders in Australia Post, then it's unacceptable,” Dutton said.

The company has since said it would fully cooperate with an investigation into the gifting of the watches to senior staff.

Is Australia Post funded by taxpayer dollars?

The Home Affairs Minister’s assertion that Australia Post was funded by “essentially taxpayer dollars” is not actually correct.

According to Australia Post’s website, the company is a Federal Government-owned business enterprise, but is actually self-funded.

The Australian Government owns the postal service, and is the only shareholder via the Minister for Communications and the Minister for Finance.

“Australia Post receives no funding from the government,” the Government communications website states.

It’s governed by the Australian Postal Corporation Act 1989, and according to Part 5 of the legislation, Australia Post was given an “initial investment” by the Government. Any profits produced thereafter can be reinvested into the business or returned to the Government as dividends.

You could think of it as being a quasi-private business. These are businesses which operate in the private sector, but are linked to the Federal Government in some way - usually because they are mandated to provide a service to the public.

The executives and managers in these companies do not work for the Government, however.

How does it fund itself?

Like any other business, Australia Post uses its assets and resources to turn a profit.

In 2020, Australia Post turned over a record full-year revenue of $7.5 billion, up 7 per cent on the previous year. It also recorded a record profit before tax of $53.6 million, up 30 per cent on last year.

Holgate attributed Aus Post’s success to the boom in eCommerce as Australians adapted to Covid-19 restrictions.

The company also struck a funding deal with Commonwealth Bank, Westpac and NAB back in 2018 to improve services at Australia Post outlets. The Cartier watches were actually purchased for staff behind this deal.

Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, news and tech news.

Follow Yahoo Finance Australia on Facebook, Twitter, Instagram and LinkedIn.