Australia Post floats new plan: slower, less frequent and more expensive

Hiking the costs of postage stamps, slashing letter delivery frequency and slowing the delivery speed of the priority letter service are all on the table as the federal government looks to save Australia Post.

The postal service’s flailing letter division has prompted the government-owned business to report a full-year loss for the first time since 2015, after letters losses ballooned to $189.7 million in December.

The Albanese government is seeking feedback on potential changes to Australia Post’s services – including stamp price hikes and slashing letter delivery frequency – as it looks to make the company more sustainable. Credit:Jason South

Finance Minister Katy Gallagher and Communications Minister Michelle Rowland will on Thursday canvass an overhaul of postage pricing and delivery frequency as options in a discussion paper aimed at modernising the company and arresting the tide of red ink. With letter volumes expected to continue a steep decline, the discussion paper notes letter delivery has proved “particularly cost burdensome”.

Any further stamp price hikes will come on top of the increase in January from $1.10 to $1.20, which the discussion paper said remained “relatively low” compared with the postage rate in other countries.

“The new rate remains below many other countries, and is 86 per cent below the average for OECD countries with two-speed letter delivery services,” the paper states.

The paper makes clear the government’s intention to keep Australia Post in full public ownership as it appeals for public feedback on “relaxing letter delivery frequency requirements, which are particularly cost burdensome in the face of declining volumes” and flags the option of “deregulating the priority letter service” to allow slower delivery speeds.

Credit:Matt Golding

Not to be confused with express post, which guarantees delivery on the next business day, the priority letter service currently requires customers to pay an extra 55 cents for faster delivery in line with times set in regulations – for example, two business days for letters posted between capital cities compared with four days for regular post.

Announcing the consultation process, Gallagher said the government was “committed to ensuring that Australia Post continues to modernise to ensure that it is financially sustainable and continues to provide employment opportunities and deliver essential services to all Australians, particularly in regional, rural and remote Australia”.

The discussion paper lays bare the parlous state of Australia Post’s letter business, with postal officers now delivering 3 billion fewer letters than at its peak in 2007-08 – a decline of 66 per cent – while the average household is expected to receive less than one letter per week by 2032.

Credit:Matt Golding

“This would lead to addressed letters per postal delivery officer round per day declining from 640 to around 150. The key to ensuring sustainable, secure employment will therefore be to ensure postal delivery officers support viable, revenue-generating services,” the paper says.

It follows comments by Australia Post chief executive Paul Graham who said last month “all options are on the table” while being optimistic about growth in the company’s parcels business, noting volumes were well above pre-COVID levels.

In a bid to capitalise on this growth and remain competitive with other large parcel delivery companies and courier businesses, the paper calls for feedback on proposals to improve delivery frequency to include weekends and same-day service, investing in apps to buy and track deliveries, and to makes it easier and cheaper for small businesses to send their products to customers.

Rowland urged Australians, especially small businesses, to have their say.

“The consultation announced today will ensure Australia Post maintains the long-term financial stability it needs to continue supporting small businesses and providing essential community services – particularly in our rural, regional and remote communities,” she said.

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