Monday, 07 September 2015 14:12

Postage increases would help arrest Australia Post losses

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The competition watchdog, the ACCC, says Australia Post’s proposed change to increase basic postage rates to $1would significantly reduce the losses on the postal service’s stamped letters by 2016-17.

The ACCC today released an issues paper to identify issues arising from Australia Post’s draft proposal to the commission last month seeking to increase the prices of its ordinary letter service.

“Based on Australia Post’s proposal a $1 basic postage rate will significantly reduce the losses on Australia Post’s stamped letters by 2016-17.

“Further, Australia Post’s monopoly letter services (stamped and bulk business mail) are forecast to reverse their previous loss making state by 2016-17,” ACCC Chairman Rod Sims said.

"This would be a turnaround in a short period with the price increase. However, stamped letters would continue to face losses and there is uncertainty around the longer-term rate of decline in letter volumes and a risk Australia Post’s overall monopoly letter services could return to net losses.”

As iTWire reported last month, Australia Post’s proposal to increase prices comes in the face of a continuing rapid decline in ordinary mail volumes, losses in its mail delivery business and planned voluntary staff redundancies.

If given the green light by the ACCC, the proposed increases to the cost of sending ordinary letters, excluding priority paid, would see prices rise by 30 cents from to $1.

The ACCC said today it’s assessment of Australia Post’s pricing proposal will focus on:

•    The method by which Australia Post allocates costs between its services

•    Australia Post’s forecasts of letter demand and revenues

•    The forecast improved financial performance of its monopoly letter business, and

•    Productivity improvements leading to operational cost savings expected from implementing a slower letter delivery timetable.

Submissions to the ACCC must be lodged by 15 October and the commission will publish its response to Australia Post’s draft proposal in November.

The issues paper and details of how to make a submission are available here.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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