Proposed increase to basic postage rate but with new concession rate stamp

30 January 2014
  • Australia Post to notify the ACCC of proposed increase in the basic postage rate from 60 to 70 cents.
  • Australia Post proposes the introduction of a concession rate stamp to maintain 60 cent postage for 5.7 million eligible Australians until 2017.
  • Price increase is set to flow through as additional payments to Licensed Post Office operators, which will help maintain the viability of nationwide Post Office network.

Australia Post will tomorrow lodge a notification with the Australian Competition and Consumer Commission (ACCC) proposing to increase the basic postage rate (BPR) from 60 cents to 70 cents.

Included in the notification is a proposal to introduce a concession rate stamp for eligible Australians to continue to have access to 60 cent postage for standard letters until 2017.

Australia Post has only increased the BPR three times over the past 22 years, with the last in 2010. During this period, the price of a basic stamp in Australia has increased by 33 per cent (from 45 cents to 60 cents), whereas CPI has increased in the same period by more than 70 per cent, and most operating costs by over 100 per cent.

"The current stamp price no longer reflects the true cost of delivering each letter and stamp price increases have not kept up with inflation," said Ahmed Fahour, Managing Director & CEO of Australia Post.

"This 10 cent increase will allow us to partially offset the growing losses that we are seeing in our letters business. At 70 cents the Australian domestic stamp will remain among one of the lowest prices in the OECD."

In the face of falling letter volumes, Australia Post made a loss of $218 million in its regulated mail business in the 2012/13 financial year, the domestic mail business losing $147 million. This followed a loss of $114 million in the previous year.

In FY2012/13, letter volumes were down 231 million - or 6.4 per cent - on the previous year. Over the past five years, the volume of domestic letters posted in Australia has declined by around 1 billion items - from 4.6 billion in FY 2007/08 to 3.6 billion in FY12/13. Meanwhile, the size of Australia Post's domestic delivery network has continued to expand in line with the growth of Australia's population - from 10.5 million addresses in June 2008 to 11.2 million addresses in June 2013.

"As more and more Australians communicate and transact online, letter volumes continue to decline at a rapid rate. Today, the average number of letters delivered per letterbox each day is 1.5, down from 2.0 in 2008 and a decrease of 25 per cent. This is a consistent trend all around the world," said Mr Fahour.

"We are always reluctant to increase the price of postage but we know that it's absolutely necessary to maintain essential services and support our critical retail network of more than 4,400 outlets.

"Importantly, this price increase will flow through to all Licensed Post Office operators in the form of increased payments, which will help maintain their viability.

"We are very mindful of the potential cost-of-living impact this increase might have on Australians - particularly pensioners, job-seekers and low-income earners and that's why we're proposing the introduction of the Concession Stamp Rate. The 60 cent rate would be held until 2017, in effect maintaining the stamp price at the same cost for seven years for those 5.7 million eligible Australian customers," added Mr Fahour.

Concession rate stamps will be available to any individual who has a Commonwealth Government concession card. Eligible customers will be required to register for an Australia Post concession card - details on the registration process will follow completion of the ACCC notification process. It's estimated that approximately 5.7 million Australians will be able to access concession rate stamps.

Australia Post is proposing the introduction of the new stamp price from 31 March 2014. Any increase to the BPR will have a flow on effect to the prices of business mail and business customers will be contacted over the coming days with full details of any potential changes.

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