Australia Post again delivered on its core obligations of providing reliable community service and sound commercial performance – while investing in new services that are vital to serving Australians in the digital world.
I am very pleased to report that we met all of our community service obligation (CSO) performance standards and managed to earn a modest profit in the 2013–14 financial year. That is a significant achievement, in itself, given the ongoing digital disruption to many of our core products and services.
Our strategy
We remain focused on running Australia Post efficiently and productively, while simultaneously working on a range of strategic initiatives that all relate to changing, growing and reforming the business – in the long-term interests of the Australian community.
Our primary strategic goal is to run the business in a way that captures our immediate growth opportunities. This year we made significant headway with the construction of our future parcels network; the integration of StarTrack; the expansion of our trusted services offering; and by building the functionality and scale of the MyPost Digital Mailbox.
Strategically, we also remain focused on growing in new areas that are aligned to both our customers' needs and our existing strengths across communications, ecommerce and trusted services.
Reforming our letters service
The Australian community's reducing reliance on our letters service remains a significant and ongoing challenge. In the six years since our mail peak, the volume of domestic addressed letters sent in Australia has fallen 25.3 per cent. So, this year, our posties delivered 1.2 billion fewer letters than they did in 2007–08.
We're also delivering this dwindling volume to an ever-expanding network. So, in real terms, letters delivered per letterbox has actually fallen 30.6 per cent over the past six years.
In this year alone, we incurred a loss of $328.4 million in our highly regulated mail services business (up from last year's loss of $285.1 million). Under the existing regulatory settings for the letters service (the CSO standards and price constraints), we know that these losses will inevitably grow in future years as volumes continue to decline. In fact, without regulatory reform, our losses in letters will soon overwhelm the profits that we earn from our parcels and retail businesses, combined.
Therefore, we have been actively engaging in the recent community discussion about the future of our letter services – pointing out that regulatory reform is fundamental to securing a viable, self-funding future for Australia Post. We will continue to work closely with our Shareholder and engage with the community as we develop a new model that ensures we maintain accessible, reliable and sustainable letter services for all Australians.
Looking ahead
Australia Post is a much-loved brand with unrivalled community-based post office and delivery networks that underpin connection and commerce, for all Australians. By managing the reform of our letters business now, I am confident that we will be in a strong position to maintain those networks – and invest in new services that will serve Australians well into the future.
I'd like to thank my fellow directors, the management team and our outstanding CEO, Ahmed Fahour – as well as the thousands of employees, licensees, agents and contractors who work so hard to deliver a tremendous community service across Australia.
John Stanhope
Chairman