John Carmody returns to the Mule in his promised second guest post and takes a close look at Australia Post’s profitability with some (ahem) back-of-the-envelope calculations.

There are many forms of communication which underpin the function and productivity of a modern society like Australia. Despite the Cassandra-commentary from Mr Ahmed Fahour (the well-paid CEO of Australia Post), regular mail delivery certainly remains one of them.

In making his tendentious, but opaque, points, he has not been entirely frank with the community. He has, for instance, claimed that 99% of our mail is electronic. That assertion is meaningless because so much e-mail is advertising, brief inter- or intra-office memos and notices, or quick substitutes for telephone calls. When these are removed from the calculation, the importance of “hard mail” becomes more obvious

The data which the Herald has published (for instance, “Please Mr Postman: snail mail doomed to disappear“, 14 June) also show how shallow or formulaic Mr Fahour’s thinking seems to be. In 2012-13 Australia Post made an after-tax profit of $312 million and if there had been no losses on the handling of letters, that would have been $530 million. Do Australians really want a profit of that magnitude from such a vital national service?

But when one looks at that “letter-loss” a little more closely and at the figure of 3.6 billion letters delivered that year, it is clear that the loss per letter was 6.5 cents. In other words, if instead of recently increasing the cost of a standard letter to 70 cents, this had been to 75 cents, the losses would have been comprehensively dealt with.

Some comparisons might be informative. The British Royal Mail currently charges about $A1.10 for delivery of a standard (20g) letter for next-day delivery within the UK (its “aim”) and $A0.95 if you’re happy for delivery within 3 days. The Deutsche Post charges the equivalent of 86 Australian cents for delivery within Germany but about $A1.08 cents to adjacent France. Given that we currently pay only 70 cents for delivery across a far larger area, my suggested price of 75 cents seems reasonable and justified.

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For the first time in a while, John Carmody returns to the Stubborn Mule with the first of two guest posts. He argues that the government’s proposed medical “co-payments” do not add up.

The government continues to flounder about many details of its budget and part of the reason is a lack of stated clarity about its intentions (although the electors are drawing their own conclusions about those intentions and whether they are fair and honest). The proposed $7 “co-payment” for GP visits is an example of this lack of frankness.

On the one hand, the Government – purporting to be concerned about an excessive patronage of GPs – seems to want us to visit our doctors less frequently than the 6 visits which every man, woman and child currently makes each year (i.e. about once in two months for all of us, an internationally comparable figure, incidentally) . On the other hand, it has, so to speak, attempted to sugar-coat this unpleasant pill by promising that, while a little of that fee will go to the practitioners, most of it will go into a special fund (to be built up to $20 billion over the next 6 years) to boost medical research (and thereby do us all a great deal of good). Neither claim survives scrutiny.

The $2 proposed share to GPs will not compensate them for the extra administrative costs which they will have to carry on behalf of the Government; nor will that nugatory sum compensate for the progressive tightening of the reimbursement of doctors from “Medicare”; so the Government’s share will, to be realistic, need to be significantly less than $5. After dealing with its own extra administrative costs, therefore, the Government will probably only be able to put $3-4 per GP consultation into the proposed research fund. To build that fund up to the $20 billion proposed will require every Australian to visit the GP about 50 times each year – once each week. How this is going to reduce our alleged “overuse” of medical services has not been explained. Nor has how, in practice, it can be achieved. The Government is living in Fairyland.



Government spending

20 May 2014

Before, during and after this month’s budget, Treasurer Joe Hockey sounded dire warnings about Australia’s “budget emergency”. Amidst this fear-mongering, it was a pleasant relief to come across a dissenting view. In a recent interview on 2SER Dr Stephanie Kelton (Department of Economics at the University of Missouri in Kansas City) argued that the government budget is very […]

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Randomness revisited (mathsy)

21 April 2014

My recent randomness post hinged on people’s expectations of how long a run of heads or tails you can expect to see in a series of coin tosses. In the post, I suggested that people tend to underestimate the length of runs, but what does the fox maths say? The exploration of the numbers in this post draws on […]

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Do Daleks use toilet paper?

18 April 2014

I have been watching some (very) old Doctor Who episodes, including the first ever serial featuring the archetypal villains, the Daleks. In this story, the Daleks share a planet with their long-time enemies, the Thal. After a war culminating in the denotation of a neutron bomb, both races experience very different mutations. The Daleks have […]

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6 April 2014

With three children, I have my own laboratory at home for performing psychological experiments. Before anyone calls social services, there is an ethical committee standing by (their mother). This evening, I tried out one of my favourites: testing the perception of randomness. Here is the setup: I gave the boys two pieces of paper and […]

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Chinese non-residents…in China

31 March 2014

Recently I travelled to China for the first time. My first glimpse of Beijing took in the Escher-like headquarters of Chinese TV station CCTV. It is an extraordinary building and to get a proper sense of it, you have to see it from a number of different angles. Driving across the city, impressed by the […]

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Bringing Harmony to the Global Warming Debate

25 February 2014

For some time now, our regular contributor James Glover been promising me a post with some statistical analysis of historical global temperatures. To many the science of climate change seems inaccessible and the “debate” about climate change can appear to come down to whether you believe a very large group of scientists or a much […]

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I’m with Felix

16 February 2014

FT blogger Felix Salmon and venture capitalist Ben Horowitz have very different views of the future of Bitcoin. Salmon is a skeptic, while Horowitz is a believer. A couple of weeks ago on Planet Money they agreed to test their differences with a wager. Rather than a simple bet on the value of Bitcoin, the bet centres […]

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Where Have All The Genres Gone?

1 February 2014

The Mule has returned safely from the beaches of the South coast of New South Wales. Neither sharks nor vending machines were to be seen down there. We did, however, have a guest drop in. none other than regular blog contributor, James Glover. The seaside conversation turned to music and James has distilled his thoughts […]

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