Australia Post shake-up coming in the mail
The cost of stamps and other services by Australia Post could go up as the government-owned corporation undergoes its biggest overhaul in 214 years.
The cost of stamps and other services by Australia Post could go up as the government-owned corporation undergoes its biggest overhaul in 214 years to secure its long-term future and stem financial losses.
A review launched on Thursday will focus on boosting technological investment, enhancing customer experience and reducing letter service operations to ensure the carrier remains viable in a highly competitive market.
Finance Minister Katy Gallagher and Communications Minister Michelle Rowland have set an eight-week deadline for post office licensees and agents, Australia Post workers, small businesses and charities to lodge submissions to help guide the government’s modernisation push.
The future-proofing strategy for Australia Post, which has an extended workforce of more than 60,000 people, comes after the national institution last month reported a “significant deterioration in its financial position” and projected growing losses over the next decade fuelled by a plunge in letter services and costly community service obligations.
On the back of a record first-half letters loss before tax of $189.7m, Australia Post will report a full financial year loss in 2022-23 for the first time since 2015.
Technological disruption, which accelerated during the Covid-19 pandemic, has resulted in letter volumes declining by 66 per cent since their peak in 2007-08.
Australia Post projects that the use of letter services by households will halve from its current average of 2.4 letters each week by 2028. In contrast, Australia Post’s domestic parcel volumes, benefiting from the nation’s $67bn online retail sector, have soared with more than 500 million parcels delivered in 2021-22.
The government’s five modernisation principles include keeping Australia Post in full public ownership and proposes “reducing operating cost in delivering regulated letter services, freeing up delivery and processing resources to support parcels delivery”.
With more than 4300 post offices across the country, including 3500 operated by individuals and small businesses acting as licensees and agents, the modernisation strategy will seek to enhance customer experience.
Since 2013-14, retail transaction volumes have plunged by 39 per cent, despite growth in financial, identity and government services. The government’s discussion paper says modernising retail operations will focus on “tailored formats, expanded services, self-service and mobile options”.
Over the past three years, Australia Post has invested “more than $1bn to help better deliver by opening new facilities, adding electric vehicles, and upgrading technology to improve the customer experience”.
The discussion paper, which informs the consultation process with business, unions and licensees, says that while Australia Post does not receive financial support from taxpayers, it is “required to meet a range of community service obligations”.
“The estimated cost of these community service obligations was $348.5m in 2021-22,” it says.
“The existing community service obligations are no longer financially sustainable and are not well targeted at the needs of Australians due to changes brought about by the digitisation of the economy. The community service obligations do not apply to Australia Post’s parcel business, but Australia Post provides a parcel service that delivers to all parts of Australia.”
The government said “amending letter delivery performance standards to reflect current and future usage, and changing letter pricing to reflect the actual cost to Australia Post of providing letter services, can support Australia Post’s financial sustainability”.
Senator Gallagher said Australia Post had been a “constant driver of economic activity for businesses and consumers” and the government wanted to ensure it remained a “cherished national publicly owned institution that provides invaluable services”.
Ms Rowland said helping Australia Post “adapt to changes in technology and commerce, and consumer expectations” was critical to secure its future in a competitive market. “The consultation … will ensure Australia Post maintains the long-term financial stability it needs to continue supporting small businesses and providing essential community services,” she said.
She said all Australians should engage with the government to address how to sustain Australia Post over the long-term.
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