Charging $1 for a stamp could help arrest falling mail volumes if it meant Australia Post would stop raising business mail prices so much, PIAA chief executive Bill Healey says.

Healey says there is a view in the industry that increasing general mail prices to that level could bring in enough money to allow the mail carrier to better maintain and promote business mail.

“Business mail is not causing the same financial issues as general mail, so it could encourage Australia Post to get behind business mail and help the industry increase volume, which also brings in more revenue for them,” he says.

Printers and mailhouses have long insisted increasing stamp costs to $1 would create a big enough discount for direct mail to be an attractive option to advertisers who know it works but are scared off by the cost.

[Related: More Australia Post news]

However, Healey says there is no guarantee Post would keep bulk mail prices at reasonable levels unless ACCC oversight of price increases was reinstated, as recommended by the Senate committee.

“It only works if they don’t use it as an excuse to raise business mail prices. Any increase in stamp costs must be used to reinvigorate business mail,” he says.

Healey says Post has instead released its poor half-year results a day before today’s senate estimates committee hearing in cynical attempt to build support for major cuts to Australia’s postal services.

The monopoly mail carrier wants to increase regular delivery times by two days and have customers pay a premium to keep the current delivery time – a two speed service similar to what it charges business.

It says the current 70c stamp prices is less than the cost of providing the service, which is closer to $1, but would not necessarily seek to raise it by that much.

Post also wants “the ability to adjust prices that better reflect the real cost of running the letter service”, which Healey says is the removal of ACCC oversight for all stamp increases.

Post chief executive Ahmed Fahour says the company will lose $6.6bn in the next 10 years unless it is given a bailout or is allowed to change it services.

The half year results revealed a $151m loss on its letters business for the past six months – 57 per cent worse than the same period last year. Australia Post lost $328m on letters last year and that is expected to blow out to $350m for FY15.

It made only a $98m profit for the whole business, down 56 per cent on last year, and is expected to make the first loss in the 30 years since it was corporatised for the full year.

However, Healey says as recently as last September, Fahour claimed a loss in the second half of last year, and yet now the half yearly after tax profit this year is almost $100m.

“This indicates that the large savings in fixed networks costs flowing from the introduction of new technology is starting to pay off,” he says.

“We hope tomorrow’s Senate hearing will demand Australia Post provide a much greater level of detail on the half year results that were issued today.”

[Related: More direct mail news]

Healey says Fahour is part of the problem and has failed to run the company properly, and consistently not consulted with the public or industry on how to improve it.

“Australia Post was doing well before he came in during the global financial crisis and it has been nothing but crisis mode since then,” he says.

“The best thing about having a monopoly is a quiet life, you don’t have to make real change you can just raise prices.”

Healey says the Coalition of Mail Service Stakeholders, which brings together industry groups, licensed post offices and unions, wants real consultation with Australia Post.

“Our members recognise the challenges facing the postal industry and are calling on the government to immediately implement the recommendation of last year’s Senate inquiry to establish an Industry round table involving all stakeholders before any changes to our postal service are considered,” he says.

“It is time Australia Post worked with industry stakeholders and the community to develop a clear strategic direction for the future of mail services rather than misleading the Australian public on the continuing effectiveness and demand for traditional mail.”

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