Australia Post's AUD 155m tax grab

Australia Post will pay a “special dividend” of AUD 150 million to the Government in the 2008-09 financial year. The amount is on top of the AUD 300million Australia Post provides to the commonwealth annually.

Liberal senator Simon Birmingham asked Australia Post executives how they justified slugging consumers with increased postal charges when that money would simply be transferred to the Government’s coffers.

The committee heard that about AUD 90 million would be raised from increased postal charges applied to ordinary small and large letters, which were mostly sent by private individuals and some small businesses.

About AUD 55 million would be raised from pre-sorted letters, which are mostly sent by businesses, while the remaining money will come from other types of letters.

Australia Post group financial controller Michael Tenace said the amount to be raised from increased postal charges had nothing to do with the special dividend to be paid to the Government, which would come out of profits generated over two financial years.

He said the proposed price hikes were to cover the increased costs of delivering letters.

The Australian Competition and Consumer Commission is reviewing Australia Post’s proposal to raise the basic postage rate from 50c to 55c and increase the price of other mail services.

The ACCC will release its preliminary views on the matter next month.

The Senate committee was told that if “all goes according to plan” with the ACCC review, the price increase would be imposed on consumers in early October.

Australia Post corporate secretary Michael McCloskey said the average extra cost for households would be AUD 2.70 a year.

The Senate committee heard that Australia Post usually provided the commonwealth Government, its shareholder, with 75per cent of its after-tax profits. This amounted to AUD 300 million in revenue a year.

Usually, the remaining 25 per cent of the organisation’s profits is invested on building upgrades, IT projects and other areas.

However, in the coming financial year, Australia Post would provide the Government with close to 100 per cent of its profits, the committee was told.

Australia Post has AUD 500 million in its reserves, the committee heard. About AUD 280 million of that would be spent on capital works this year.