Communications Minister Malcolm Turnbull has thrown his weight behind a bid by Treasurer Joe Hockey to get Australia Post to perform many of the over the counter functions of Centrelink and Medicare, a move that would be likely to trigger big job cuts at both organisations and a major consolidation of Commonwealth’s retail property footprint.

Speaking at the Australian Information Industry Association’s Navigating Analytics Summit in Canberra on Thursday [20th March], Mr Turnbull said that “Australia post has very big existential challenges” and confirmed that the Abbott government is now actively scoping for efficiencies in shared functions between key social security agencies Centrelink and Australia Post.

“Obviously these are matters of policy that we are considering,” Mr Turnbull told public sector delegates to the forum.

The flagging of an expected extension of over-the-counter social security counter functions to Post pours cold water on a growing push within so-called ‘dry’ sections of the Coalition to either sell or float the mail monopoly off before it starts to heavily bleed cash because of the enormous cost of maintaining national letter delivery services in the face of dwindling volumes.

However it also opens the door to potentially large scale job-shedding across both of the organisations as delivery channels are rationalised and functions merged.

Australia Post employs 32,000 staff with another 10,000 franchisees, while the Department of Human Services last listed to employ around 33,000 staff.

The appeal of shrinking public sector costs by losing bodies is underscored that a one per cent headcount reduction across both organisations would remove 650 jobs from public payroll.

While Mr Turnbull studiously avoided any talk of headcount, or its reduction, the Communications Minister made pointed reference to the costs of maintaining profitless mail services.

“We all understand that Australia Post is a high fixed cost business,” Mr Turnbull said.

“Its letter volumes are declining year on year inexorably, as they are with every post office in the world.

“So you lose a dollar of letter revenue that is a very large percentage – I won’t say exactly how much, but it’s extremely high … straight off the bottom line [of Australia Post].”

Mr Turnbull said that Australia Post needed “about three and a half dollars of parcel revenue to make up for a dollar of lost letter revenue.”

“They are not seeing that,” the Communications Minister said, repeating that “Australia Post has very big existential challenges.”

Mr Turnbull noted that “one of the factors that feeds into is the viability” of both Post Offices and “licenced and Post Offices” (that are usually franchised) was the looking at what other services they could deliver.

“One way to address the viability of those Post Offices, or to support them and of course to deliver [better] government services, is to use them as locations for the delivery of Medicare Services, Centrelink Services – [but] recognising there are limitations in terms of expertise,” Mr Turnbull said.

“In other words to deliver more trusted government services through that Australia Post network,” he said.

The recognition of potential limitations is likely to interpreted as a strong signal that franchisees will not be forced to take on social security functions if they do not want to, a factor especially pertinent in areas of high welfare dependency where recipients need higher levels of specialised attention.

Many Australia Post franchisees are known to be less than keen to deal with some of Centrelink’s more challenging customers, especially those who have drug dependency or mental health conditions.

Human Services executives have previously highlighted that they now anticipated that over-the-counter interactions with customers will become necessarily more challenging for staff because the widespread rollout of online reporting functions meant that many people now did not need visit an office to discharge their obligations.

It is known that higher proportion of customers presenting to Centrelink offices that exhibit challenging behavioural issues, like verbally or physically abusing staff, has led to changes to security arrangements including the use of security guards in offices to deter some customers from escalating their levels of aggression towards staff.

It is understood that many Centrelink Offices contain a so-called “angry phone” where aggressive customers can dial into a call centre staffed by officers with specialist conflict resolution training to deal with aggressive or traumatised individuals.

It is understood that there is a push within Human Services for “higher intensity” customers to remain being be dealt by Centrelink, with the most probable functions to go to Post being forms lodgement for benefits like Medicare refunds.

Under the previous Howard Government, the cost of manually processing Mediace refunds had been calculated to be up to $10 per over the counter transaction – or as much as 20 per cent of a $50 refund for a doctor’s fee.

Those costs led to the introduction of the initially Eftpos-based Easyclaim electronic refund that could be processed at a surgery without the need to visit a Medicare office.

Mr Turnbull said he saw potential for technology innovations from the retail bank branches to be applied to Post and social security functions. He cited the introduction of video kiosks at St George Branches.

“There is obviously a lot that can be done with a video kiosk,” Mr Turnbull said.

“At many of those branches you can now go and sit in front of a video screen and talk to a domain expert at the St George head office.”

Julian Bajkowski attended the Navigating Analytics Summit as a guest of the Australian Information Industry Association.