Australia Post has announced it may increase letter stamp cost from 70c to $1 and increase delivery time after getting the green light from Federal Communications Minister Malcolm Turnbull. The minister says the national mail carrier can introduce a two-speed mail service, which already exists for business, with a regular service operating two days slower than the current delivery speed. Printers and mailing houses have questioned Australia Post’s price hike plans, saying will bulk mail be next? Speaking with Australia Printer, Rodney Frost, general manager at Lamson Paragon, says it will hurt printers if AusPost decides to increase bulk mail delivery prices as well.
Rodney Frost
Frost says, “If the bulk mail stays the same for the next two to three years than that would be fantastic but I do not see that happening, which means costs will increase. This would lead to less mail, less print, less work.” He says organisations start the year with a sum allocated for their mailing and if Australia Post decides to increase the prices then that means that volumes from that organisation will decline. “I’m sure that the industry would love to sit with them to discuss this but Australia Post is a complicated beast,” he adds. Australia Post says addressed letter volumes have fallen to 8.2 per cent in the past six months, costing the company a loss of $151m, which it says was the worst decline since letter volumes peaked in 2008. The national carrier’s net profit slumped 57 per cent in the six months to December compared to last year, to $98m, and it says the downward trend will continue to ‘terminally decline’ if allowed to continue. Ahmad Fahour CEO of Australia Post argues the business has a competitive parcel arm but the losses in its letters division is making the company’s sustainability difficult. Australia Post is set to lodge an application with the Australian Competition and Consumer Commission (ACCC) to increase the price of a stamp from 70c to $1. The mail carrier has been lobbying the government to allow it to increase its prices after it predicted a first full year loss, last seen in 1982. Turnbull says, “Australia Post is facing significant structural decline as people choose to communicate over the internet. “While Australia Post has been able to offset these losses by growing its parcels business, losses in letters are now so large that they are overwhelming all profitable areas of the business.
Malcolm Turnbull, Communications minister
“Without reform total projected company losses could reach $6.6 billion over the next 10 years, with letters losses of $12.1 billion.” Printers and mailing houses have also questioned Post’s resuscitation strategy, many arguing the company is massively overstaffed, and are against the rising of prices, which they say will drive marketeers to competing channels. However it seems Post’s push for the government to relax its regulations to allow further price increase to its mail delivery services has been successful. Australia Post has already increased its bulk mail prices by 7.3 per cent, which was to offset its $328.4m loss last financial year in its letters division. Last week, Fahour warned this may become a burden on the federal budget unless the regulatory environment was changed. “If we do not change, the Government put in a report that forecast what would be the losses over the next ten years, and we are looking at a total letters business loss of $12bn,” he told ABC. “The whole corporation will lose $6bn, which somebody’s got to pay for.”
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