Australia Post to raise post office payments – if postal reforms go ahead

Hundreds of post offices across rural Australia could receive an increase in their minimum annual payments from this July, under plans unveiled today by Australia Post. The state-owned postal service said it is allocating A$51.4m to raise the minimum annual payment for 478 Licensed Post Offices and 495 Community Postal Agencies, which are respectively post offices run by licensees and small postal outlets providing a limited range of postal services.

The Post also wants to increase payments it provides more than 1,800 Licensed Post Office operators for holding undelivered parcels, from 60c to $1.60.

Payments should come into effect from 1 July, 2015. However, the changes will only happen if Australia Post has its proposals approved regarding reforms to its letters business.

In a bid to cope with declining mail volumes and mounting losses in its letters business, Australia Post wants to launch a new two-tier letter delivery service that includes a premium service and a slower regular service.

Australia Post also wants to raise its stamp prices, with the basic postage rate set to increase from 70c to $1. The moves respond to an 8.2% year-on-year decline in letter volumes, which brought in a A$151m loss for Australia Post in the first half of this year.

Today Australia Post said its planned payment increases also came in response to the recent Senate Inquiry into the company’s relationship with Licensed Post Offices. It also follows an independent review, commissioned by Australia Post, regarding the LPO payment structure.

Ahmed Fahour, the Australia Post managing director and CEO, said LPOs played a “vital role” and his company had been looking into how to best support them in the face of digitisation and the “significant challenge facing our traditional letters business”.

“The new small Post Office support plan will immediately strengthen the future sustainability of 478 LPOs and 495 CPAs across rural and remote Australia,” he said.

“We have also more than doubled parcel handling payments – with the street carded parcel rate increasing from 60 cents to $1.60 (including GST).”

Support

Fahour said the review of LPO payments had suggested that licensees are being “remunerated appropriately”, but he conceded that there were some areas where Australia Post could provide better support for operators.

“This includes increased payments for street carded parcels, where the work required to administer this service exceeds current payments,” he said.

“The findings of the PiP study show the complex nature of the challenges facing our LPOs. The study also showed the need for LPOs to have diverse revenue streams in light of declining mail volumes.”

Australia Post said it is planning on introducing a new payment for LPO operators where users of the web-based MyPost service — which allows customers to receive their parcels at a post office or parcel locker instead of their home address — designate an LPO as their “home” post office through the online service.

Fahour said if Australia Post’s proposals to reform the letters business failed, the company would not have the ability to provide the payment increases to LPOs as announced.

“Unless the planned changes to reform our letters service proceed, Australia Post will have no capacity to provide this form of sustainability payments to our important partners into the future,” he said.

“We’ve been clear that we will be seeking an increase to the current Basic Postage Rate of 70c to $1, to better recover the costs of delivery. This increase would flow directly to the LPO network contributing $75 million of the $125 million in annualised payments.”

Security

The Post Office Agents Association Ltd (POAAL), which represents LPO operators in Australia, said it was pleased with the plans to increase basic payments for small, rural post offices.

POAAL said the proposals would translate into an increase from A$20,000 to $30,000 in the guaranteed annual income from Australia Post services for LPOs from the start of July, with a minimum $7,500 annual payment introduced for Community Postal Agencies.

POAAL director Bob Chizzoniti said the minimum payments provided security for operators, particularly those in areas subject to drought and fluctuating population.

However, Chizzoniti said the payment increase for undelivered parcels was not the “ideal long-term solution” his organisation was pushing for.

“Australia Post still needs to find more new business to support the post office network. The parcels delivery business is growing but highly competitive, so we can’t pin our future on that alone,” he said.

POAAL said Australia Post has not explained its long-term strategy for the future delivery of postal services in rural areas.

Chizzoniti said: “We still don’t know what Australia Post’s plans are for provision of postal services in rural Australia. What will a post office look like in years to come? How will people in rural and remote Australia access mail, parcels, banking and other Australia Post services? What role will technology and automation play in all this? There are structural issues that must be addressed.”