Australia Post says urgent funding needed to shore up Bank@Post to combat banks branch closures

Australia Post says its banking service is now handling close to $10bn in cash causing headaches it wasn’t designed for due to thousands of branches being closed by big banks.

Australia Post CEO Paul Graham wants banks to step up and provide more funding to future proof Bank@Post. Picture: Supplied

Australia Post has accused the major banks of growing profits off the back of the country’s struggling postal network, saying it has been forced to step up to fill the void left by thousands of branch closures.

Speaking at a senate inquiry on Tuesday, Australia Post chief executive Paul Graham said the government entity’s Bank@Post service was never designed to handle close to $10bn in cash annually and needed urgent funding from major banks to shore up its long-term future.

It is estimated that more than 2100 bank branches have closed across the country between 2017 and 2023, marking a 39 per cent reduction in active branches, according to a Senate report published last month.

“As banks accelerate closures, they are saving billions of dollars and as this inquiry pointed out they have shifted costs onto Australia Post, which is effectively subsidising bank profits,” Mr Graham told the Environment and Communications Senate committee.

Commonwealth Bank in February reported a near record $5bn cash profit for the half, while the National Australia Bank and Westpac both had cash profits around $3.5bn cash profit in their first half.

Mr Graham said Australia Post has also faced increased compliance costs and customer demand for banking services as a result of the bank closures, which the organisation estimated it was now handling over a million business transactions a year.

“This was never the intent of Bank@Post when it first commenced. In some cases, we are unable to meet customer demands. Currently, Bank@Post is heading for significant losses in the midterm, unless our bank partners provide additional funding,” he said.

Australia Post was looking to reduce its network to 4000 stores in the coming years. Picture: Christian Gilles/NCA NewsWire

Australia Post was having discussions with Commonwealth Bank, National Australia Bank and Westpac to shore up its future. Mr Graham said it was meeting with ANZ, which is not part of Bank@Post, to try and entice it to join.

“We are committed to continue to provide these services provided the banks step up as they’ve closed many branches over the years and transferred the cost of that to Australia Post its licensees,” he said.

“We want to ensure we have got a framework that is sustainable for the long term.”

Australia Post said it required improved funding as it needed to change the physical layout of many outlets to be able to handle extra customers and increased safety and security measures for customers and team members.

Australia Post reported a half-year profit of $33.6m as continued losses in the service’s letter division weighed in the final six months of 2023. After the price of an ordinary small letter stamp was lifted in April by 30c to $1.50, Mr Graham said the increase had not stemmed losses as he defended the decision to reduce the delivery of letters to two days a week as necessary.

“With households now receiving less than two letters per week and individuals sending around three letters per year, it was simply not viable to continue with the status quo. Even with the recently introduced 30c increase in stand prices, Australia Post will still lose money on every letter centre,” he said.

Australia Post would continue to review its network each quarter by closing underperforming outlets and also identify opportunities for new outlets in growth corridors such as Western Sydney. While targeting organic growth, Mr Graham said it had a goal of reducing its current network from over 4200 outlets to 4000 in the coming years.

“We don’t have any specific plans to get to the 4000 number. We will continue to ebb and flow based on a whole range of circumstances, from lease expiry to people handing back the licence, and also where we’ve decided that there is a significant overlap,” he said.

Mr Graham said the organisation found it difficult to attract new licensees because of the reduction in foot traffic and a shift to digital services, which has prompted it to work with outlets such as an IGA or a pharmacy to ensure it could continue to serve communities.

Originally published as Australia Post says urgent funding needed to shore up Bank@Post to combat banks branch closures