In an effort to offset the costs Australia Post faces for delivering letters and parcels to virtually every house around Australia, the company has applied to the Australian Competition and Consumer Commission (ACCC) to raise stamp prices by around 40% to $1.00 from its current price of 70 cents.
Not only that but Australia Post also wants two classes of letter deliveries – Priority and Normal – or less regular. There will be a new timetable for delivery of those normal letters – adding up to two business days. That could mean a letter sent from Sydney to Melbourne might take three, four or five business days at the basic postage rate.
The cost of larger letters could rise from $2.10 to $3.00. Concession stamps will be frozen at 60 cents while the seasonal greeting card rate is frozen at 65 cents.
Australia Post recently received permission from the Australian government to introduce a two-speed letter service.
The regular service will be up to two days slower than the current timetable from January 2016 while a new priority service will be operated on commercial terms. In other words, consumers could pay much more than $1.00 per stamp for the priority service – which will deliver to the existing timetable.
Australia Post is not the only government-owned postal service facing the problem of slumping letter volumes and sliding revenues. Since 2008, the volume of addressed letters has fallen by 25%, while Australia Post's delivery network has expanded by around 50% since 1993/1994.
A slower (normal) service will allow Australia Post to cut costs while the priority service should increase revenues. That should see the letters business become self-sufficient.
Without reform, Australia Post estimates the letters business will lose $12.1 billion over the ten years from 2013/14 to 2022/23.
The ACCC is expected to release its final decision in December this year.
