ACCC green lights Australia Post’s $1 stamp price proposal

ACCC green lights Australia Post’s $1 stamp price proposal

The Australian Competition and Consumer Commission (ACCC) has announced that it does not to object to a draft proposal from Australia Post to introduce a basic postage rate (BPR) of $1. As previously reported, Australia Post is proposing to introduce a $1 BPR for letters delivered on a new timetable, which allows an extra two business days for delivery to occur. Australia Post plans to introduce the new BPR in January 2016.

The price for concession stamps or stamps for seasonal greeting cards will, however, remain unchanged.

In an official statement issued on Friday (27 November), the ACCC noted: “The proposed rise in the BPR is aimed at increasing Australia Post’s revenue from its reserved letter services so as to offset continuing losses as delivery volumes of these letters decline. Australia Post considers that its reserved letter business is not recovering its costs and, in the absence of price increases and efficiency reforms to its business practices, will experience further losses given that the volume of letters is expected to continue to fall.

“The ACCC has considered Australia Post’s forecasts for volumes and costs of its reserved letter services, and its proposed business reform program. It has come to the view that Australia Post will not likely recover revenue in excess of its costs for its monopoly letter services including its stamped letters over the period to 2017-18 with an increase in the basic postage rate to $1. This is due primarily to a forecast sustained decline in letter volumes.

“The ACCC notes that Australia Post’s new delivery timetable and business reform program is intended to allow it to change its cost structure to become more flexible and more responsive to volume declines in the future.”

ACCC Commissioner Cristina Cifuentes added: “It’s important that Australia Post continues its focus on achieving cost reductions and operational efficiencies. We will look closely at Australia Post’s progress in this area in considering any future proposal for price increases.”

In September, Australia Post announced a full-year loss after tax of $222m, compared to a $116.2m profit in 2014.

 

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