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Australia Post's chief executive has told federal parliament changes need to be made to the corporation's business model, as losses from its letter-delivery service continue to mount.
Key points:
- Australia Post is required to deliver letters to every Australian household five days a week
- The average household receives just over one letter a week
- Australia Post wants to invest in and focus on its parcel business
The letters arm of its business lost nearly $200 million in six months, according to half-yearly results released last week.
Australia Post is required under legislation to deliver letters to every Australian household five days a week, however those rules were suspended in some areas during the pandemic.
Chief executive Paul Graham told a Senate Estimates hearing there was a case to review the rules under which Australia Post was required to operate.
"Our letters business is in an unstoppable decline as volumes continue to fall and costs increase," he said.
"We have strategies in place and the determination to ensure that Australia Post is financially, socially and environmentally sustainable so we can continue making a positive contribution to the nation.
"But we will have to explore further changes to the way we operate to return the business to a stable financial footing."
According to Australia Post, the average household now receives just over one letter per week, and that is expected to keep declining.
"Corporate mail", such as bills and bank statements, account for 98 per cent of letters, with the remainder made up of personal letters and cards, and unaddressed marketing letters.
Australia Post benefits from regular events such as elections, and a requirement for banks to notify customers of rising interest rates.
And the costs of stamps increased recently from $1.10 to $1.20, but that is not expected to significantly offset the decline in letter revenues.
The burden of delivering daily to households is also growing as the number of households climbs, increasing at roughly 200,000 every year.
Mr Graham said the company was doing what it could to increase efficiency within its business but it might need the government to intervene.
"There are things we are regulated under that may need to be reviewed in light of changing customer habits we are seeing — the decline in mail, and the additional move to digital services, as opposed to coming into an Australia Post outlet."
Parcel business booming
Australia Post wants to invest in and focus on its parcel business, which boomed during the pandemic and has largely seen revenues hold since then.
But it says the letters business is causing a "continued and material decline" in its financial performance, as it runs a "two-speed business".
The federal government has opened the door to change.
In a statement issued after the half-yearly results, Communications Minister Michelle Rowland said challenges within the "cherished institution" need to be carefully considered.
"The Albanese government is committed to working with Australia Post to enable it to continue to provide the postal services that the Australian community needs both now and into the future," she said.
"In relation to the delivery of letters, the government will work with Australia Post to examine options to improve productivity, while also ensuring Australia Post can meet the needs of the community in relation to the growing demand for parcels delivery."
The government indicated during Senate Estimates that any future changes would come after public consultation.