Corporate Governance Statement

Recommendation 1.1: Corporations should establish the functions reserved to the Board and those delegated to the Executive Team.

Role of the Australia Post Board

The Board is responsible for the governance of Australia Post. The role of the Board is to decide the objectives, strategies and policies to be followed by Australia Post and ensure that Australia Post performs its functions in a manner that is proper, efficient and, as far as practicable, consistent with sound commercial practice. The Board derives its authority from section 23 of the APC Act.

In discharging those broadly defined roles, the Board’s primary tasks include, amongst others:

• reviewing and approving Australia Post’s corporate plan;
• selecting, appointing and monitoring of the performance of the Group Chief Executive Officer and Managing Director and, if appropriate, terminating the appointment of the Group Chief Executive Officer and Managing Director;
• approving and monitoring key corporate policies, including policies in relation to financial matters and risk management;
• monitoring financial outcomes and the integrity of reporting and, in particular, approving annual budgets and longer-term strategic and business plans;
• approving decisions affecting Australia Post’s capital, including approval of major new business initiatives and declaring dividends; and
• meeting its accountability obligations to Government by: submitting corporate plans, evaluating and recommending dividend proposals, reporting on business and operational performance, preparing an annual report, notifying significant business proposals, ensuring compliance with applicable Government policies and ensuring proper accounting and risk management and oversight.

The Board has established three Committees:

• Nomination and Remuneration Committee (see Principle 2 and Principle 8);
• Audit and Risk Committee (see Principle 4); and
• People and Sustainability Committee (formerly the People, Safety and Culture Committee (see Principle 8).

Timetables for Board and Committee meetings are agreed annually in advance.

Delegation to the Group Chief Executive Officer and Managing Director and the Executive Team

Under Section 94 of the APC Act, the Board may delegate virtually all or any of its powers to a Director or employee of the corporation.

Sections 18 and 19 of the APC Act specify a wide number of postal, postal-related and other powers of Australia Post. These powers are exercisable by the Group Chief Executive Officer and Managing Director, and may be delegated by that person to other employees of Australia Post under section 93 of the APC Act.

The Board has delegated to the Group Chief Executive Officer and Managing Director responsibility for implementing Australia Post’s strategic priorities and for managing Australia Post’s day-to-day operations. Specific limits on the authority delegated to the Group Chief Executive Officer and Managing Director are set out in Delegated Authorities approved by the Board.

The Executive Team comprises the Group Chief Executive Officer and Managing Director and other senior managers (Executives) who are accountable to the Group Chief Executive Officer and Managing Director. Specific limits on the authority delegated to the Executive Team are set out in the Delegated Authorities approved by the Group Chief Executive Officer and Managing Director.

Recommendation 1.2: Corporations should carry out appropriate checks of board candidates and provide information to shareholders that is material to their candidacy.

The Group Chief Executive Officer and Managing Director is appointed by the Board subject to approval by the Shareholder in accordance with the Cabinet Handbook.

Non-Executive Directors are appointed by the Governor-General on the nomination of Shareholder Ministers for a period of up to five years. Reappointment is permissible. In practice, terms of appointment are generally three years.

To nominate a person for appointment as a Director, Shareholder Ministers must have regard to the need to ensure that the Directors collectively possess an appropriate balance of skills and experiences aligned to the Corporation’s strategic priorities.

Recommendation 1.3: Corporations should have a written agreement with each director and Executive setting out the terms of their appointment.

New Directors consent to act as a Director and receive a formal letter of appointment from Shareholder Ministers which sets out duties and responsibilities, rights and remuneration entitlements.

The Group Chief Executive Officer and Managing Director and each Executive are employed under individual contracts of employment which sets out the terms on which they are employed including details of their duties and responsibilities, rights and remuneration entitlements. Each contract of employment sets out the circumstances in which the contract may be terminated by either Australia Post or the Executive, including details of notice periods and amounts payable to the Executive as a consequence of termination by Australia Post.

Continuation of employment is subject to ongoing performance reviews by the Board and the Group Chief Executive Officer and Managing Director. Where the Board terminates the Group Chief Executive Officer and Managing Director, or endorses the termination of another Executives’ employment for reasons other than performance or misconduct, the individuals are entitled, in the case of the Group Chief Executive Officer and Managing Director, to:

• 12 months’ notice in writing or payment of up to 12 months fixed annual remuneration in lieu of notice or a combination of both notice in writing and payment in lieu of notice;

and, for other Executives, to:

• 90 days’ payment in lieu of notice and a termination payment calculated based on length of service and capped at 12 months fixed annual remuneration including the payment in lieu of notice.

Recommendation 1.4: The corporate secretary should be accountable directly to the Chair of the Board for matters relevant to the Board.

Australia Post’s Corporate Secretary fulfils other management responsibilities in addition to corporate secretarial duties. The formal reporting line of the Corporate Secretary is to the Executive General Manager, Corporate Services. For any matter relevant to the corporate secretarial duties or conduct of the Board, the Corporate Secretary has an indirect reporting line, and is accountable, to the Chairman of the Board.

Recommendation 1.5: Corporations should have a policy concerning diversity and disclose that policy, together with measurable objectives for achieving gender diversity and its progress towards achieving those objectives.

Australia Post is committed to achieving a respectful and inclusive workplace that values diversity. Our Diversity and Inclusion Strategy aims to promote improved diversity outcomes to foster a workplace culture that ensures equal employment opportunities for all. Managing diversity in Australia Post is a corporate objective and responsibility is vested in the Board, our Executive Team, managers and employees.

Diversity in the workplace encompasses understanding, acceptance and respect for individual difference including ethnicity, gender, sexual orientation, age, disability, family status, religious beliefs, perspective, experience or other ideologies.

We recognise that maximising our people’s skills and commitment better positions Australia Post to meet our business purpose and future challenges. Developing and managing an increasingly diverse workforce means recognising, respecting and leveraging individual differences and contributions in the workplace. It requires the implementation of practices that maximise respect for all individuals and which recognise the value that diversity brings to Australia Post.

While we define diversity in the broadest-possible sense, we formally measure and track our progress against five key areas: gender, Aboriginal and Torres Strait Islanders, people from culturally and linguistically diverse backgrounds, people with disability and Lesbian, Gay, Bisexual, Transgender, Queer or Questioning, and Intersex (LGBTI+).

Performance against each of our five focus areas is now disclosed in Australia Post’s Annual Report, which is prepared in compliance with the Equal Employment Opportunity (Commonwealth Authorities) Act 1987 and presented to the Minister for Communications. The report is published on our website at auspost.com.au. Performance for 2018-19 (also shown in comparison to the prior financial year) was:

Note: Some data in this table is based on self-declaration.

Recommendation 1.6: Corporations should disclose the process for evaluating the performance of the Board, its committees and individual Directors.

Evaluation of Board and Individual Directors

The Board annually reviews its own performance, including its performance against the requirements of its Charter, and the performance of individual Directors. An independent review of the performance of the Board is conducted every two years, while an internal review is conducted in the intervening years.

The most recent review, which was conducted during the year, was undertaken internally through a confidential survey. The results of the survey were discussed at a subsequent Nomination and Remuneration Committee meeting.

Evaluation of Board Committees

Audit and Risk Committee

The Committee regularly informs the Board about Committee activities and makes recommendations to the Board on matters relevant to the Committee’s purpose. The Committee undertakes an annual self-assessment of its performance against the requirements of its Charter. The Committee provides an annual report to the Board on the operation and performance of the Committee. The Committee was satisfied that it had been effective in performing its responsibilities under its Charter.

People and Sustainability Committee

The Committee regularly informs the Board about Committee activities and makes recommendations to the Board on matters relevant to the Committee’s purpose. The Committee undertakes an annual self-assessment of its performance against the requirements of its Charter. The Committee was satisfied that it had been effective in performing its responsibilities under its Charter.

Non-Committee members such as executives and/or external parties who the Chairman and members of the Committee think fit may be invited to attend all or part of a Committee meeting but should not participate if they have an interest in the matter under consideration.

Nomination and Remuneration Committee

The Committee regularly informs the Board about Committee activities and makes recommendations to the Board on matters relevant to the Committee’s purpose. The Committee undertakes an annual self-assessment of its performance against the requirements of its Charter. The Committee was satisfied that it had been effective in performing its responsibilities under its Charter.

Non-Committee members such as executives and/or external parties who the Chairman and members of the Committee think fit may be invited to attend all or part of a Committee meeting but should not participate if they have an interest in the matter under consideration.

Recommendation 1.7: Corporations should disclose the process for evaluating the performance of the Executive Team.

Executive Team performance evaluations have been conducted for the year ended 30 June 2019.

Performance evaluations are based on an assessment of performance against key business objectives set annually. The measures include safety, financial, strategy, customer satisfaction, employee engagement and other individual metrics that support the key business objectives.  

The APC Act provides that the Board of Australia Post comprises up to nine Directors, including the Chairperson, the Deputy Chairperson, the Managing Director and not more than six other Directors.

The Directors of Australia Post at any time during the financial year are listed with a brief description of their qualifications, appointment date, experience on pages 58 and 59 of the Annual Report.

The Board met 9 times during the financial year. Director’s attendances are set out on page 60 of the Annual Report.

Recommendation 2.1: The Board should establish an appropriately structured nomination committee.

The Board has established a Nomination and Remuneration Committee. The Committee currently comprises all Non-Executive Directors.

The Committee has a formal Charter that is required to be reviewed at least annually. The Charter was most recently reviewed in December 2018. A copy of the Charter is available on Australia Post’s website.

The Committee is responsible for:

• providing Shareholder Ministers with a recommendation on Board composition and membership;
• undertaking a Board Performance Review annually which will feed into the Annual Board Plan;
• developing an Annual Board Plan for submission to Shareholder Ministers;
• informing Shareholder Ministers prior to a vacancy on the Board or in the role of the Group Chief Executive Officer and Managing Director;
• ensuring that Australia Post’s performance, remuneration, and succession practices for the Group Chief Executive Officer and Managing Director are consistent with applicable provisions regarding remuneration and disclosure;
• reviewing and making recommendations to the Board regarding remuneration levels for the Group Chief Executive Officer and Managing Director in accordance with the parameters set by the Remuneration Tribunal;
• seeking agreement of the proposed remuneration for the Group Chief Executive Officer and Managing Director from the Remuneration Tribunal where it falls outside of previously agreed parameters;
• reviewing and making recommendations to the Board regarding corporate goals, objectives and short-term incentive programs relevant for the Group Chief Executive Officer and Managing Director;
• assessing the performance of the Group Chief Executive Officer and Managing Director in light of objectives determined;
• ensuring that the recommendations in relation to the Group Chief Executive Officer and Managing Director’s Key Performance Indicators (KPIs) encourage behaviour consistent with the organisation’s code of conduct and support Australia Post’s long-term financial soundness, growth and success within an appropriate risk management framework;
• establishing and maintaining appropriate succession arrangements for the Group Chief Executive Officer and Managing Director;
• considering the Group Chief Executive Officer and Managing Director’s recommendations around recruitment, performance, remuneration and succession arrangements for Executive General Managers and the Management Committee; and
• providing guidance and counsel on the Corporation’s approach to the performance review of employees, including the outcomes of the annual Performance, Career and Development review process.

The Committee met 5 times during the year. Details of Directors’ attendances are set out on page 60 of the Annual Report.

Recommendation 2.2: The Board should establish and disclose a board skills matrix on the mix of skills and diversity for Board membership.

Non-Executive Directors are appointed by the Governor-General on the nomination of Shareholder Ministers. Australia Post seeks to maintain a Board of Directors with a broad range of skills, experience and knowledge relevant to overseeing the business of a global eCommerce organisation.

The Board evaluated its skills, experience and knowledge, noting the following key areas of expertise brought to the Board of Directors:

During the year, the Board Performance Review identified that, with regard to the capability of the Board, new appointees should have skills from the areas of large complex business experience, logistics, on-the-ground international experience, retail and operational experience.

Diversity of the board, including through gender, age, ethnicity and geography, is also a consideration for new appointees.

Recommendation 2.3: The Corporation should disclose whether its Directors are independent.

Australia Post considers a Director to be independent if the Director is free of any interest, position, association or relationship that might influence, or reasonably be perceived to influence, his or her capacity to bring an independent judgement to bear on issues before the Board and to act in the best interests of the entity and its Shareholder.

In determining whether a Director is independent, the Board considers whether the Director:

• is, or has been, employed in an Executive capacity by Australia Post or any of its subsidiaries and there has not been a period of at least three years between ceasing such employment and serving on the Board;
• is, or has within the last three years been, a partner, Director or senior employee of a provider of material professional services to the entity or any of its child entities;
• is, or has been within the last three years, in a material business relationship (for example, as a supplier or customer) with Australia Post or any of its subsidiaries, or an officer of, or otherwise associated with, someone with such a relationship;
• has a material contractual relationship with Australia Post or its subsidiaries other than as a Director;
• has close family ties with any person who falls within any of the categories described above; or
• has been a Director of Australia Post for such a period that his or her independence may have been compromised.

The Board has determined that each Non-Executive Director is, and was throughout the entirety of the financial year, independent.

During the financial year there were two instances where an individual Director declared a potential conflict of interest and was, accordingly, neither provided with a copy of relevant materials, nor present for relevant discussions where the potential conflict was deemed to be a conflict. One Director declared a temporary external engagement, which was not deemed to be a conflict.

No Director has received or become entitled to receive a benefit because of a contract between any entity in the Australia Post Group and the Director, or a firm which the Director is a substantial member of, or an entity in which the Director has a substantial financial interest.

Directors have unfettered access to Australia Post records and information reasonably necessary to fulfil their responsibilities. Directors also have access to the Corporate Secretary on any matter relevant to their role as Director. In addition, the Board has access through the Corporate Secretary to other relevant senior managers to seek additional information concerning Australia Post’s business.

Provided they have prior agreement from the Chairman, Directors have the right to seek independent professional advice at Australia Post’s expense to help them carry out their responsibilities.

It is usual for the Non-Executive Directors to confer, without management being present, at the start of each scheduled Board meeting.

Recommendation 2.4: The majority of the Board should be comprised of independent Directors.

As at 30 June 2019, the Board comprised eight Non-Executive Directors and one Executive Director. The Executive Director was Australia Post’s Group Chief Executive Officer and Managing Director, Christine Holgate. The Board has determined that each Non-Executive Director is, and was throughout the entirety of the financial year, independent.

Recommendation 2.5: The Chair should be an independent Director

The Chairman is appointed by the Governor-General on the nomination of Shareholder Ministers.

The Board is satisfied that Australia Post’s Chairman, John Stanhope is, and was throughout the entirety of the financial year, independent.

The Chairman presides over Australia Post’s Board meetings. The Chairman is responsible for:

• leading the Board in reviewing and discussing Board matters;
• managing the efficient organisation and conduct of the Board’s function;
• briefing all Directors in relation to issues arising at Board meetings;
• facilitating effective contribution by all Directors and monitoring Board performance;
• overseeing the membership of the Board is skilled and appropriate for Australia Post’s needs and reporting this to Shareholder Ministers;
• promoting constructive relations between Board members and between the Board and management;
• reviewing corporate governance matters with the Corporate Secretary and reporting on those matters to the Board; and
• Overseeing the implementation of policies and systems for Board performance review and renewal.

Recommendation 2.6: Establish a program for inducting new directors and provide appropriate professional development opportunities for directors.

The Chairman is appointed by the Governor-General on the nomination of Shareholder Ministers.

Directors receive a formal letter of appointment from Shareholder Ministers. An induction pack is provided to Directors by Australia Post and contains sufficient information to allow the new Director to gain an understanding of:

• the powers granted to Shareholder Ministers;
• the rights, duties and responsibilities of Directors;
• the role of Board Committees;
• the roles and responsibilities of the Executive Team; and
• Australia Post’s financial, strategic, and operational risk management position.

New Directors undertake an induction program which includes:

• access to information about Australia Post’s Governance Frameworks; GBE Guidelines; APC Act; PGPA Act; the most recent Corporate Plan; the most recent Annual Report; our organisational chart; insurance and indemnity details pertaining to Australia Post’s Directors and Officers Insurance policy and Tier 1 policies;
• a program of meetings with Australia Post’s Chairman, Group Chief Executive Officer and Managing Director, members of the Executive Team, and the Corporate Secretary; and
• visits to Australia Post’s main operational sites.

Recommendation 3.1: Corporations should establish a Code of Conduct

Australia Post has a Code of Conduct, referred to as ‘Our Ethics’, that applies to Australia Post and its Directors, employees, licensees, contractors and other third parties performing services for or on behalf of the Australia Post Group (all of which are referred to as ‘our workforce participants’ in Our Ethics).

Our Ethics sets out a number of overarching principles of ethical standards which are set out under the following headings:

• Health, safety and the work environment;
• Compliance with laws and regulations;
• Work practices and performance;
• Conflicts of interest;
• Corporate Responsibility;
• Using corporate property;
• Corporate records; and
• Privacy, confidentiality and public comment.

Our Ethics provides a mechanism to enable Australia Post’s workforce participants to report actual or suspected breaches, including an independently operated Whistleblower Hotline service to allow for anonymous reporting. The Whisteblower Hotline also services the requirements of the Public Interest Disclosure Act 2013.

Our Ethics is available on Australia Post’s website.

Recommendation 4.1: The Board should establish an appropriately structured audit committee

The Board has established an Audit and Risk Committee. Its primary function is to assist the Board through its oversight and review of financial reporting, performance reporting, system of risk oversight and management, system of internal control and auditor independence and performance.

Structure of the Audit and Risk Committee

Under its Charter, the Audit and Risk Committee must have a minimum of three members, all of whom must be Non-Executive Directors. In accordance with the PGPA Act, the Chair of the Board, the Chief Executive Officer and the Chief Financial Officer are not to be members of the Committee. The Charter also requires all members to be financially literate, with at least one possessing accounting or related financial qualifications and experience.

As at 30 June 2019, the Committee comprised four members.

Non-Committee members such as executives and/or external parties who the Chairman and members of the Committee think fit may be invited to attend all or part of a Committee meeting but should not participate if they have an interest in the matter under consideration.

The Committee meets privately with the external auditor on general matters concerning external audit and other related matters, including the half-year and full-year financial reports. The Committee also meets privately with the Group Chief Financial Officer, Chief Risk Officer and General Manager Internal Audit.

The Corporate Secretary is the secretary to the Committee. Copies of the minutes of a meeting of the Committee are distributed for approval at the next Committee meeting. The Chairman of the Committee reports to the Board on the Committee’s conclusions and recommendations.

The Committee met 4 times during the year. Details of Directors’ attendances are set out on page 60 of the Annual Report.

Charter of the Audit and Risk Committee

The Committee operates under a formal Charter published on Australia Post’s website. The Charter is required to be reviewed by the Committee annually. The Charter was most recently reviewed in December 2018 and is available on Australia Post’s website.

The Charter sets out the roles and responsibilities, composition, structure and membership requirements of the Committee.

The Committee’s primary responsibilities include oversight and review of:

• financial reporting;
• performance reporting;
• system of risk oversight and management;
• system of internal control; and
• auditor independence and performance.

Monitoring performance of the external auditor

Under section 43 of the PGPA Act, the Auditor-General is responsible for auditing the financial reports of Australia Post and its subsidiaries. The Auditor-General is also responsible for auditing compliance with the performance standards prescribed for Australia Post under section 28C of the APC Act. Ernst and Young (EY) has been retained by the Australian National Audit Office to assist in both of these assignments.

The Board has in place a comprehensive set of audit independence principles in relation to the external auditors. Among other things, these principles exclude the engagement of the external auditors for the provision of certain non-statutory audit-related services, such as internal auditing, taxation planning, treasury policy and operations, and business and strategic planning. In addition, the senior audit partner on Australia Post’s account must be rotated at least every five years. However, under circumstances where the involvement of key personnel in the audit of Australia Post does not constitute a familiarity risk, the ANAO may extend the rotation of the senior audit partner to a maximum of seven years.

The Audit and Risk Committee, together with ANAO, monitor the ongoing non-statutory audit related services provided by EY.

Recommendation 4.2: CEO and CFO certification of financial statements

Prior to the adoption of the financial reports, the Board receives and considers a written statement from the Group Chief Executive Officer and Managing Director and Group Chief Financial Officer to the effect that:

• the financial records of the Corporation and the consolidated group have been properly maintained;
• the statements comply with accounting standards and any other requirements prescribed by the PGPA Act and the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015, and present fairly the entity’s financial position, financial performance and cash flows; and
• integrity to the financial statements is founded on a sound system of risk management and internal control which is operating effectively.

Recommendation 4.3: External auditor availability at AGM

There is no requirement for Australia Post to hold an AGM.

Under section 43 of the PGPA Act, the Auditor-General is responsible for auditing the financial reports of Australia Post and its subsidiaries. The Auditor-General makes itself available at the request of the Shareholder.

Recommendation 5.1: Corporations should establish disclosure policies and ensure compliance with those policies

Australia Post’s disclosure obligations are prescribed from the provisions of the APC Act, the PGPA Act, and the GBE Guidelines.

Australia Post is accountable to its Shareholder Ministers for its performance. Disclosure of performance, expenditure and any significant issues is made to our Shareholder Ministers in a timely and balanced manner. This is executed through the provisions of a corporate plan, quarterly progress reports, the annual report and regular updates. This is in addition to responding to requests from Shareholder Departments on a regular basis.

Australia Post has established a formal Shareholder Communication Program that records the arrangements in place that facilitate effective communication between Australia Post and its Shareholder Ministers and Shareholder Departments. The program is published on Australia Post’s website.

Recommendation 6.1: The Corporation should provide information about itself and its governance to its shareholder on its website

Australia Post’s website (auspost.com.au) provides detailed information about its business and operations. Details of Australia Post’s Board members and Executive Team are included on the website.

Australia Post’s website makes helpful information available to the Shareholder and the public. It allows the Shareholder to view Australia Post publications, media releases, a copy of the most recent Annual Report and Annual Reports for previous financial years, and Australia Post’s Statement of Corporate Intent and Statements of Corporate Intent for prior years.

Australia Post also now publishes, in its Annual Report, the details of its achievements against a range of diversity programs focused on building our female talent pipeline, improving employment opportunities for Aboriginal and Torres Strait Islander Australians, celebrating our cultural diversity, and building awareness about people with disability.

The Shareholder can find information about Australia Post’ on its Our company web page. This includes Australia Post’s Board and Board Committee Charters and Corporate Governance Statement.

Recommendation 6.2: The Corporation should design and implement a shareholder relations program to facilitate two-way communication with its shareholder

Australia Post has established a formal Shareholder Communication Program that records the arrangements in place that facilitate effective communication between Australia Post and its Shareholder Ministers and Shareholder Departments. The program is published on Australia Post’s website.

Recommendation 6.3: The Corporation should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of shareholders

Australia Post has established a formal Shareholder Communication Program that records the arrangements in place that facilitate meetings with the Shareholder, including via annual strategic meetings, quarterly meetings with Shareholder Departments, and meetings upon request. The program is published on Australia Post’s website.

Recommendation 6.4: The Corporation should provide the option to send and receive communications from the Corporation in electronic form

Australia Post communicates with its Shareholder via a number of different communications channels, which include digital and physical methods.

Recommendation 7.1: Corporations should establish an appropriately structured risk management committee for the oversight of material business risks

The Board has established an Audit and Risk Committee. Its responsibilities include oversight of the effectiveness of Australia Post’s system of risk management and internal control.

The Committee receives regular presentations on Australia Post’s material business risks and the controls in place to mitigate the consequences of those risks. Australia Post’s main risks are reviewed at each meeting of the Committee, and periodically by the Board. The Committee also receives regular presentations from management throughout the year on specific risk topics. The Committee has responsibility for approving the internal audit plan.

Details of the structure and Charter of the Audit and Risk Committee are set out in relation to Recommendation 4.1, above.

Recommendation 7.2: The Board or a Committee of the Board should review the company’s risk framework at least annually to satisfy itself that it continues to be sound.

Group Risk Management Framework

Australia Post has Group Risk Management Framework (RMF) in place that describes the core strategies and processes that support our business in effectively managing risks, along with also providing clarity on the roles and responsibilities for those managing risk. The RMF supports application of the Group Risk Management Policy and has been developed utilising the principles as detailed in the International Standards for Risk Management (ISO 31000) and Compliance Management Systems (ISO 19600).

Functional responsibility for the RMF and Group Risk Management Policy resides with the Chief Risk Officer (CRO) and, on a regular basis, the CRO formally reports to the Audit and Risk Committee on all matters affecting Australia Post’s main risk exposures and application of the Group’s Risk Appetite Statement. On an annual basis, the CRO also provides an attestation to the Audit and Risk Committee regarding the adequacy of, and compliance with, the Group Risk Management Policy requirements and effective application of the RMF’s core components. This annual CRO attestation was provided to the Audit and Risk Committee in August 2018.

An external review of the Group Risk Management Policy is required to be performed every four years. The last external review was conducted in December 2017.

Recommendation 7.3: Corporations should disclose the structure and role of its internal audit function.

Australia Post’s internal audit function provides assurance to the Audit and Risk Committee on the effectiveness of Australia Post’s risk management framework and on the adequacy and effectiveness of key internal controls.

Internal Audit is an independent, objective assurance and consulting function designed to add value and improve the organisation’s operations including the internal control environment. It assists the organisation to accomplish its objectives by bringing a systematic, disciplined, third line of defence to the evaluation of internal processes and controls, and improve the effectiveness and efficiency of the risk, control and governance processes.

The Audit and Risk Committee participates in the appointment, dismissal or replacement of the General Manager Internal Audit. Selection, promotion, performance assessment and professional development of Internal Audit staff are the responsibilities of the General Manager Internal Audit. The internal audit function is a co-sourced operating model comprising both trained audit employees and external consultants for specialist technical and operational areas. The Audit and Risk Committee oversees governance and processes to assure the on-going independence and objectivity of the internal audit function.

Recommendation 7.4: Corporations should disclose their economic, environmental and social sustainability risks and how those risks are managed.

Corporate Responsibility

This year, we simultaneously strengthened our to Corporate Responsibility (CR) commitments as we continued to deliver on our 2016-2019 CR Plan, Everyone, Everywhere, Everyday. Our 2020-2022 Group CR Plan, Everyone Matters, was endorsed by the Board in June and outlines 19 commitments to address our economic, social and environmental risks. Everyone Matters will come into effect from July 2019. Our approach to Corporate Responsibility aligns with the principles of the United Nations (UN) Global Compact and recognise our role as a leading Australian business in advancing the UN Sustainable Development Goals.

We are committed to contributing to Australia’s sustainable development while improving the quality of life of our workforce as well as of the Australian community. We have been transforming our business for the digital world and connecting Australians physically and digitally, while minimising our environmental impact throughout our value chain. We actively manage the economic, social and environmental impacts of our business operations, and work alongside our stakeholders to create greater, and new forms of, business, social and environmental value.

Over the past three years, we have been advancing this agenda through a broad range of programs related to four key areas: our people, customers, the community and the environment. This involves continually identifying, actively addressing, and monitoring and reporting any sustainability risks and opportunities that may relate to these areas. We continue to maintain a conservative posture for any Governance, Safety and Corporate Responsibility risks. Simultaneously, work has been undertaken to align our Corporate Responsibility agenda with the new Group Risk Appetite Statement. Refer to the Risk section of the Annual Report for more details.

Our Corporate Responsibility policy is considered a Level 1 policy, our highest classification of Group policies. This means it is approved by the Australia Post Board, applies to all employees and is assigned to an Accountable Executive – in this case, our Executive General Manager, Community and Consumer.

Our Corporate Responsibility performance is reported periodically to management as well as the Board, including via its new People and Sustainability Committee, and the Australia Post Stakeholder Council. Reporting on sustainability/non-financial data occurs annually through the Annual Report, which reflects the two leading sustainability frameworks: the Global Reporting Initiative and Integrated Reporting, as outlined by the International Integrated Reporting Council.

Responsible and Sustainable Sourcing

Australia Post actively manages the risk and compliance of its value chain, striving for transparency and measurable performance. A continual focus is to increase supply chain transparency and traceability, reduce social and/or environmental risks throughout our value chain, innovate to create new value and strengthen relationships with our suppliers.

Australia Post conducts its business with integrity and ensures compliance with all relevant laws, regulations, policies and procedures. Our Ethics clearly defines the standards of behaviour expected from our employees and business partners to operate ethically and with integrity when purchasing goods and services, and working with suppliers.

In addition, to deliver on these outcomes we have a dedicated program that is integrating these elements into our systems and processes while enhancing our people’s capabilities. Our expectations have been formalised through our Group Procurement Policy that outlines our Sustainable Procurement Principles. These are:

1. Workplace health, safety and wellbeing is never compromised.
2. Zero tolerance for harassment, abuse and discrimination.
3. Value social enterprises, Indigenous and ethically certified goods and services.
4. No exploitative or forced labour; wage practises must be fair.
5. Freedom of association and collective bargaining are respected.
6. Environmental impacts and hazards are minimised.

These expectations are reinforced with our suppliers through Australia Post’s Supplier Code of Conduct. Under the code, suppliers are expected to demonstrate a commitment and compliance to human rights, fair employment practices and environmental responsibility in accordance with existing international standards, such as the United Nations Universal Declaration of Human Rights, the International Labour Organisation Declaration on Fundamental Rights at Work, and the United Nations Convention on the Rights of the Child and Industry norms.

Our commitment to environmental sustainability, requires all suppliers to comply with all applicable environmental laws and regulations, conduct their business in a manner that protects the environment and have an environmental management program that takes responsibility for goods and services throughout their lifecycle to minimise the impact of activities on the environment.

We are collaborating with Supplier Ethical Data Exchange (SEDEX) and our suppliers to increase the transparency of our supply chain as well as recognise our suppliers’ performance in these areas. Over the past 18 months, we have also been reviewing the risks and operations of our extended value chain to ensure our supply chains are free of labour exploitation and in preparation for the new Commonwealth Modern Slavery Act. A cross-functional Modern Slavery working group has been established to ensure that our operations and supply chain are slavery free and that we have a leading-practice approach to managing and reporting on Modern Slavery. Our first public Modern Slavery Statement will be submitted to government at end 2020, in line with legislative requirements.

Details of Australia Post’s Corporate Responsibility strategy can be found online at our Corporate Responsibility web page.

Recommendation 8.1: The Board should establish an appropriately structured remuneration committee

The Board has established a Nomination and Remuneration Committee. Its responsibilities include reviewing and making recommendations to the Board regarding remuneration levels for the Group Chief Executive Officer and Managing Director in accordance with the parameters set by the Remuneration Tribunal and considering the Group Chief Executive Officer and Managing Director’s recommendations around recruitment, performance, remuneration and succession arrangements for Executive General Managers and the Management Committee.

Details of the structure and Charter of the Nomination and Remuneration Committee are set out above in relation to Recommendation 2.1.

In addition, the Board has also established a People and Sustainability Committee. The Committee has adopted a formal Charter that is required to be reviewed annually. The most recent review was in February 2019. A copy of the Charter is available on Australia Post’s website.

The Committee considers and makes recommendations to the Board, as appropriate, about:

• culture and engagement;
• diversity;
• workplace and industrial relations;
• learning and development;
• corporate responsibility;
• community;
• environment; and
• stakeholder management and reputation.

The Committee met 5 times during the year. Details of Directors’ attendances are set out on page 60 of the Annual Report.

Recommendation 8.2: The Corporation should distinguish between non-executive Directors’ remuneration and that of executive Directors and Executives

Remuneration for Australia Post’s Non-Executive Directors is determined by the Remuneration Tribunal. As at 30 June 2019 this was:

The Board is responsible for setting the remuneration arrangements for the Group Chief Executive Officer and Managing Director in accordance with the parameters set by the Remuneration Tribunal.

Remuneration arrangements for other Executives are reviewed and determined by the Nomination and Remuneration Committee based on recommendations by the Group Chief Executive Officer and Managing Director.

Advice is sought annually from independent specialised remuneration consultants on the:

• structure of remuneration packages applying in the external market; and
• quantum of increases that have occurred in comparable Australian corporations over the previous 12 months.

On the basis of this advice, the Group Chief Executive Officer and Managing Director ensures that payments to Executives are in-line with market practice, and that they are competitively placed to attract and retain the necessary talent for the work required by these roles.

Incentive rewards payable to the Group Chief Executive Officer and Managing Director and other Executives for meeting or exceeding specific key annual business objectives are linked to the annual business planning process at a corporate and individual level. Measures and targeted achievement levels are monitored and reviewed annually to reflect changes in the business priorities for the forthcoming year. The measures include safety, financial, strategy and execution, customer satisfaction, employee engagement and other individual metrics that support the key business objectives.

Before a reward is payable, a threshold must be reached, according to predefined measures. In the case of the Group Chief Executive Officer and Managing Director and some Executives, part of their incentive payment is deferred and expensed over the deferral period.

Remuneration details for the Group Chief Executive Officer and Managing Director and other Executives are set out in the Remuneration Report, which appears in page 64 of the Annual Report.

Recommendation 8.3: The Corporation should establish a policy on whether participants in equity based remuneration schemes are able to enter into transactions which limit the economic risk of participating in those schemes.

There are no employees in equity based remuneration schemes.

Directors’ attendance at meetings – 2018-19

Australia Post Board

Audit & Risk Committee

People and Sustainability Committee

(formerly People, Safety and Culture Committee)

Nomination & Remuneration Committee

Notes:

1. Christine Holgate attends all Board & Committee meetings. Those detailed are where she is a formal member.
2. Mario D’Orazio was appointed to the Australia Post Board on 21 March 2019, however only received confirmation of his appointment after the 25 March 2019 Board meeting.
3. Two Board meetings were held at Australia Post operating sites.