Australia Post seeks 17% basic postage rate increase

Australia Post is seeking a 17% increase in the basic postage rate, with extra income intended to help licensed post office operators maintain the retail network. The state-owned postal operator submitted a request with regulators on Friday to raise the 60c price of a basic stamp to 70c from the end of March.

But as it did so, Australia Post proposed introducing a new concession rate stamp to counter affordability concerns for those such as senior citizens who rely more heavily on the traditional mail. About 5.7m Australians would be eligible to use the stamps that would continue to be sold at the 60c rate.

Australia Post made a $312m profit last year thanks to its parcels business, but its regulated mail business lost $218.4m last year as volumes continued to decline, with domestic mail accounting for $147m of those losses.

The company said last week that the rate increase will allow it to partially offset these growing losses in the letters business.

But chief executive Ahmed Fahour said that stamp prices also need to rise because the basic postage rate has risen only 33% in the past 22 years, from 45c to 60c. Most operating costs have risen in that time by more than 100% thanks to inflation and the needs of Australia’s growing population.

“The current stamp price no longer reflects the true cost of delivering each letter and stamp price increases have not kept up with inflation,” Fahour said.

“At 70 cents the Australian domestic stamp will remain among one of the lowest prices in the OECD.”

Australia Post’s last basic postage rate increase was back in June 2010, when the 55c price was increased to 60c. Since then, while letter volumes have declined, the delivery network has grown so that the number of letters per delivery point per day has dropped from 1.8 to 1.5.

Post office operators

Australia Post said that funding from the postage rate increase will go to Licensed Post Office operators in the form of increased payments to help maintain the viability of the network.

Fahour said: “We are always reluctant to increase the price of postage but we know that it’s absolutely necessary to maintain essential services and support our critical retail network of more than 4,400 outlets.”

Australia’s Licensed Post Office operators backed the price increase, stating that some Licensees have not seen their payments rise since the last postage rate increase in 2010.

The Post Office Agents Association Ltd, which represents the operators of Australia’s 2,900 privately-owned Licensed Post Offices, said the price rise would result in a welcome increase to payments for post office operators.

POAAL will lodge a submission to the regulators supporting Australia Post’s pricing proposal.

However, Ian Kerr, the POAAL chief executive, said his organisation has asked for more details of the proposed new concession rate stamp.

“POAAL is keen to ensure that any concession rate stamp would not be open to abuse, and that there would be minimal impact on sales of full-rate postage stamps,” he explained.

Australia Post’s proposed concession rate stamps would be available to any individual who has a Commonwealth Government concession card. Those who are eligible will be required to register for an Australia Post concession card, the company said.

The regulator is expected to take less than 21 days to consider the price proposals, while the government has the right to veto the price proposal within 30 days. Australia Post said it was expecting to confirm the price increase in early March.