Budget papers suggest taxpayer could bail out Australia Post

As the national postal service prepares for its first financial loss in a decade, a small section in the budget reveals what could happen next.

Hiding within the budget papers is a concession the federal government might need to prop up Australia Post should its financial position continue to disintegrate.

The national postal service – a government business enterprise wholly owned by the Commonwealth – is set for its first full-year financial loss in a decade.

The budget papers reveal that “given Australia Post’s deteriorating financial position, there is a risk that the Australian government will need to consider providing financial assistance to Australia Post in the future”.

The government is undertaking public consultation to shape the future of the postal service.

Just last month, chief executive Paul Graham warned in a speech to the American Chamber of Commerce in Australia that the organisation was not only hurtling towards a significant loss this financial year, but more broadly its “long-term viability is at risk”.

The budget has warned the government could be needed to save Australia Post. Picture: NCA NewsWire / Christian Gilles

“We will post a financial loss this financial year with our letters business after posting a $189 million loss for the first six months of this financial year alone,” Mr Graham said last month.

“Our extensive research shows that just one in 10 Australians are aware that we are no longer profitable.

“It’s a stark message but the Australian community must understand that without change to their national postal service, its long-term viability is at risk.”

He warned that without major reforms, Australia Post could head in the same direction as mail organisations in places like Canada, where the postal service is bracing for losses in excess of $1bn.

He said if Australia Post continued to operate under a model created in the 1980s, the taxpayer could be forced to bail out the organisation.

A small section on the strained service, contained on page 314 of the main budget paper, details how the digitisation of the global and national economy has significantly changed how people and businesses use postal services.

“Australia Post does not receive financial support from the Australian government but is required to meet a range of community service obligations,” the papers state.

The average household now receives approximately one third of the number of letters each week than in 2007-08 – down from 8.5 letters per week to 2.4.

Communications Minister Michele Rowland said if the issue was not addressed, the financial position would continue to deteriorate.

She said public consultation would help inform the next steps to modernise postal services.

“More than 1,000 Australians responded and made it clear that Australia Post’s letter and parcel delivery services – and the more than 4,300 post offices nation-wide – play an important role in the lives of many Australians,” she said.