XN000022-1995-07-19 — Page 77

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Notwithstanding these impressive productivity gains, the Post Office has found it increasingly difficult to cope with rapid increases in demand while, at the same time, maintaining service standards. Although total revenues from the Post Office's various businesses have been more than adequate to cover operating costs and even provide a modest surplus, under normal departmental funding arrangements the Post Office does not have the flexibility to direct the surplus to meet operating expenses and improve services. As a result, standards of service have had to be reduced in some areas.

In the light of this problem we have carried out a detailed review of postal policy and operation. This review has concluded, amongst other things, that the best way to improve the performance of the Post Office is to convert it to a trading fund operation, so that it can have the ability to optimise its revenues and direct those revenues to providing better services to the public.

A trading fund operation also accords with one of the objectives adopted by the Universal Postal Union which is that all postal administrations should seek to secure the administrative and financial management flexibility to support a commercial style of management responsive to customer demands.

The trading fund will bring a number of important benefits to the Post Office.

First, the Post Office will be able to enjoy greater flexibility of operation and deploy more commercially-orientated approaches to the conduct and development of the business. As a result, it will be able to respond more effectively to changes in technology, customer demands and market conditions.

Secondly, it will be able to expand its more profitable services to the benefit of customers while, at the same time, using the surpluses to improve productivity, enhance efficiency and customer services and, where necessary, support and improve those loss-making but essential services.

Thirdly and most importantly, the trading fund operation will increase the transparency and public accountability of the Post Office. Each year, the Postmaster General will be required to publish an up-to-date Business Plan for the coming financial year, together with a Corporate Plan setting out his service targets and expenditure proposals for the next five years. In addition the accounts of the trading fund will be subject to annual inspection by the Director of Audit.

To ensure that the trading fund will exercise its increased flexibility responsibly, a regulatory framework will be established under which the Secretary for Economic Services will become the regulator of postal services. The Secretary will be responsible for formulating postal policy objectives, approving the Corporate and Business Plans of the Post Office, setting performance targets, vetting proposals for postage rate increases, and tabling in the Legislative Council an annual report on the operation and performance of the trading fund.