Australia Post’s chief executive told the Federal Parliament that changes needed to be made to the company’s business model as losses at its letter delivery service continued to mount.
- Australia Post is required to deliver letters to every Australian household five days a week
- The average household receives just over one letter per week
- Australia Post wants to invest and focus on its parcel business
The letters branch of its business has lost nearly $200 million in six months, according to half-year results released last week.
Australia Post is required by law to deliver letters to every Australian household five days a week, but these rules have been suspended in some areas during the pandemic.
Chief executive Paul Graham told a Senate Estimates hearing that there was a case to review the rules under which Australia Post was to operate.
“Our mail business is in unstoppable decline as volumes continue to decline and costs rise,” he said.
“We have strategies in place and the determination to ensure that Australia Post is financially, socially and environmentally sustainable so that we can continue to make a positive contribution to the nation.
“But we will have to explore other changes in the way we operate to put the company back on a stable financial footing.”
According to Australia Post, the average household now receives just over one letter a week, and this is expected to continue to decline.
‘Business mail’, such as invoices and bank statements, accounts for 98% of letters, with the remainder being personal letters and cards and unaddressed marketing letters.
Australia Post benefits from regular events such as elections and requiring banks to notify customers of rising interest rates.
And stamp costs have risen recently from $1.10 to $1.20, but that’s not expected to significantly offset lower letterhead revenue.
The burden of daily household delivery also increases as the number of households grows, increasing by around 200,000 each year.
Mr Graham said the company was doing what it could to increase the efficiency of its operations, but it may need the government to intervene.
“There are things that govern us that may need to be revisited in light of the changing customer habits that we’re seeing – the drop in mail and the further shift to digital services, as opposed to going into a Australia Post outlet.”
Booming parcel business
Australia Post wants to invest and focus on its parcels business, which boomed during the pandemic and has largely seen revenue hold up since then.
But he says the letters sector is causing a “continuous and significant decline” in its financial performance as it runs a “two-speed business”.
The federal government has opened the door to change.
In a statement released after the half-year results, Communications Minister Michelle Rowland said the challenges within the “cherished institution” needed to be carefully considered.
“The Albanian government is committed to working with Australia Post to enable it to continue to provide the postal services the Australian community needs now and in the future,” she said.
“With regard to letter delivery, the Government will work with Australia Post to examine options to improve productivity, while ensuring that Australia Post can meet the needs of the community in relation to the growing demand for package delivery.”
The government indicated in the Senate Estimates that any future changes would be made after public consultation.