The Australian Government has granted Australia Post its desired radical service delivery reforms, most importantly a two-speed letter delivery service and possible price increases.
Australia Post is facing significant structural decline as people choose to communicate over the internet. Australians are now sending one billion fewer letters a year than they were in 2008, with letters losses rising to more than $300 million a year.
Whilst Australia Post has been able to offset these losses by growing its parcels business, losses in letters are now so large that they are said to be overwhelming all profitable areas of the business. Without reform, total projected company losses could reach $6.6 billion over the next 10 years, with letters losses of $12.1 billion.
Australia Post does not receive funding from the government and the government believes that Australians should not be forced to subsidise business and government mail, which accounts for 95 per cent of total letters volume.
The government (Communications Minister Malcolm Turnbull) has approved Australia Post’s request to introduce a two-speed letters service – a Priority and a Regular service that will be introduced for consumers no earlier than September 2015. The Regular service will be delivered two days slower than the current timetable.
The price of Regular letters will be overseen by the Australian Competition and Consumer Commission (ACCC), consistent with current practice. Australia Post has advised the Government it will apply to the ACCC to raise the regular stamp price from $0.70 to $1.00. This it says is necessary to support a more sustainable letters service with an aim of breaking even over time. The Priority service will be a commercial product.
Australia Post will continue to deliver mail five days a week to 98 per cent of addresses, and the delivery speed will vary depending on the service. The Priority service will be delivered to a faster timetable than the Regular service.
Concession card holders will continue to be offered a concession rate stamp, which will be frozen at $0.60, and all Australians will continue to have access to a $0.65 Christmas rate stamp.
Australia Post says these measures will also help it maintain its extensive post office network, particularly Licensed Post Offices (LPO) in regional and remote communities.
