Australia Post’s major changes: Have your say as mail delivery impact revealed

The nation’s postal service is calling for huge changes after recording a massive financial loss. Have your say on the switch up.

Australia Post will press the federal government for regulatory changes after revealing its first full-year loss since 2015 due to a decline in letter usage.

In the year to June 30, Australia Post recorded an overall before-tax loss of $200 million, but its letter delivery business alone lost $384 million.

In a submission to a government consultation on modernising the postal service, Australia Post described the letter delivery service as “no longer sustainable”.

Australia Post is calling for “incremental increases” in stamp prices, a reduction in letter frequency and closure of some full-service post offices in metro areas, while allowing more self-service options such as parcel lockers.

Here’s how mail delivery could change.

WHY IS AUSTRALIA POST CALLING FOR REGULATORY CHANGES?

Australia Post has recorded a $200 million pre-tax loss this financial year, its second loss since it became a self-funded Government Business Enterprise (GBE) more than 30 years ago.

In a submission to the Government, the national postal service said further losses were expected unless Australia Post was able to modernise its business.

Australia Post is calling for change in the way mail is delivered in Australia. Picture: NCA

Group Chief Executive Officer and Managing Director Paul Graham said despite all efforts, it was simply not possible to stop the structural shift in the way Australians are using postal services.

“The headwinds Australia Post is facing into aren’t new and it’s my job along with the leadership team to transform and modernise Australia Post, so it can once again be a financially sustainable business.”

HOW WILL IT AFFECT MAIL DELIVERY?

Australia Post said letters volumes were down 7.8 per cent from last year, despite an increase in business-related letters, including consecutive interest rate rises and data breach notifications.

These days, the average Australian home receives just 2.2 addressed letters every week, down from 8.5 in 2008.

“This is expected to almost half in the next five years,” the submission said, further explaining that this expected decline would drive up the estimated cost to deliver in line with its current Community Service Obligations.

The submission said the delivery frequency of letters remained one of the most significant costs to Australia Post.

“Working in conjunction with the Communications Workers Union, this year Australia Post trialled a new delivery model in Hornsby NSW, which will be expanded to other locations in FY24,” the submission said.

During Covid, when letter delivery frequency in metropolitan areas was reduced to every second business day, research showed customers valued delivery speed over frequency, with many believing the change to alternate day delivery was permanent.

“While we are not advocating for a return to temporary regulatory relief, it is an important example of Australia Post’s ability to adapt and continue to deliver to the community,” the submission said.

Australia Post says the number of letters being delivered to households is on the decline. Picture: NCA

WILL STAMP PRICES GO UP?

Australia Post is calling for incremental increases in stamp prices beyond inflation.

“We support providing reasonable access to the letter services to all Australians on an equitable basis and ensuring a financially sustainable letters business,” the submission said.

The submission said changes in January 2023 included a 10-cents increase to the Basic Postage Rate (BPR), from $1.10 to $1.20. There was no increase to the price of a concession stamp or seasonal greeting cards.

“Even with this recent increase, Australia’s stamp price is the second lowest against global peers on a purchasing power parity basis,” the submission said.

Currently, Australia Post is prevented from charging more for corporate letter delivery, despite 97 per cent of letters coming from government and business.

“Pricing is an important part of our ongoing effort to ensure our letters business is sustainable.”

WHAT DOES IT MEAN FOR POST OFFICES AND CLOSURES?

Thanks to the rise of online shopping, in-store financial transactions conducted in post offices are declining – with 39 per cent fewer transactions recorded since 2014.

Australia Post is seeking to both remove the minimum requirement of retail outlets – currently 4000 post officers, and to adjust proximity requirements.

“In some metropolitan areas for example, post offices are overservicing local areas impacting the financial sustainability of nearby post offices,” the submission said.

Australia Post says post offices are currently overservicing local areas. Picture: Supplied.

A reduction in the number of post offices in high density areas is not expected to adversely impact customers, given the availability and access to numerous post offices within close proximity.

“Instead, we expect to see the remaining post offices in these high-density areas become more financially viable due to increased demand.”

WHAT IS HAPPENING OVERSEAS?

International postal services serve as warnings of what could come for Australia Post without regulatory changes.

Canada Post recorded a loss before tax of $AU624,007,600 in 2022, amid parcel delivery competition, economic uncertainty and reduced consumer spending. In 2021, the company recorded a loss before tax of $490 million. The Royal Mail in the UK reported a loss of $AU1.9 billion.

Originally published as Australia Post’s major changes: Have your say as mail delivery impact revealed