Australia Post has revealed a $200m loss this year, its first since 2015, renewing political debate about increasing the cost of stamps, cutting the frequency of letter delivery and closing post offices in metropolitan areas.
In a statement on Thursday, Australia Post revealed that losses in its letter business had increased by more than 50% to $384m, warning that without regulatory changes its 2022-23 loss will be followed by “many more” and it will be “greatly devalued”.
Australia Post said its community service obligations, which include deliveries five days a week to 98% of delivery points, cost it $442m, up 27% on the previous year.
After recording a profit before tax of just $23.6m for the six months to 31 December, the chief executive, Paul Graham, had warned in February that Australia Post will report a loss this year for the first time since 2015.
The $200m pre-tax loss is just Australia Post’s second loss since it became a self-funded government business enterprise in 1989.
“Further losses are expected unless Australia Post can secure the necessary support required to modernise its business,” it said in a statement on Thursday.
Without regulatory changes, the terminal decline in letters is eventually expected to trigger losses commensurate with Canada Post’s C$548m loss and the UK Royal Mail’s £1bn loss.
On Thursday, Graham said “the headwinds Australia Post is facing into aren’t new and it’s my job along with the leadership team to transform and modernise Australia Post, so it can once again be a financially sustainable business”.
“If we do everything in our power to run this business well and we get a favourable regulatory response towards modernisation, I’m confident that Australia Post will return to profit.
“Without this support, the FY23 loss will be followed by many more. Inaction could result in a greatly devalued Australian asset.”
Australia Post will press the federal government, which wholly owns it, for a political commitment this year on legal changes. These include reducing letter frequency and closing some full-service post offices in metro areas while allowing more self-service options such as parcel lockers.
In a submission to the consultation on modernising the postal service launched by the Albanese government, Australia Post warned “without modernisation, our financial position will rapidly deteriorate, putting at risk the ongoing sustainability of the organisation and its services”.
Australia Post called for “incremental increases” in stamp prices beyond inflation and “deregulating aspects” of the competition watchdog’s oversight of the price of priority letters.
Despite 97% of letters coming from government and businesses, Australia Post is currently prevented from charging corporate customers more than households to deliver mail.
It noted that globally demand for letters had declined since 2008, with volumes in Australia down by almost 67%.
“It is predicted that by 2032, Australians will receive less than one letter a week.”
Australia Post is required to maintain 4,000 post offices. In the 2022 financial year it had 4,310 post offices, with 2,513 in rural and remote areas, which it said “cost more than $1.3bn” to run.
“Yet retail transactions (or purchasing goods and services) in post offices continues to decline, a trend also observed overseas,” it said, with retail transactions in post offices down by 39% in Australia since 2014.
The submission noted that “some metropolitan areas are oversaturated with post offices”, citing that there are 73 outlets within 7.5km of Darlinghurst in inner Sydney and 79 outlets within 7.5km of Brunswick in inner Melbourne.
“Australia Post is therefore seeking to remove both the minimum requirement of retail outlets within the performance standards and to also adjust proximity requirements.”
Closing some post offices in high-density areas “is not expected to adversely impact customers” and would help remaining post offices “become more financially viable due to increased demand”.
The communications minister, Michelle Rowland, said “Australia Post is a cherished national and publicly-owned institution” facing “significant structural headwinds”.
“The Albanese government is committed to supporting Australia Post modernise so that it can continue delivering the essential services consumers and small businesses rely on to stay connected,” she said.
“Change will be needed to ensure that a high quality and sustainable letters and parcels service is maintained.”
While some politicians are open to discussing the frequency of letters, closing post offices even in metro areas would be contentious.
The Liberal MP Keith Wolahan, who is campaigning against closures in the eastern suburbs of Melbourne, warned that “Australia Post is about more than letters and parcels”.
Australia Post branches are about more than letters and parcels. That is why the sudden closure of the Box Hill Central and Mitcham post offices has caused distress. Thank you to the many residents who came to today’s forum with @DavidColemanMP. pic.twitter.com/rRj12CefZ1
— Keith Wolahan MP (@keithwolahan) August 25, 2023
“People rely [on post offices] for a wide variety of services, from bills to passports,” he told Guardian Australia. “The recent closures in Blackburn, Mitcham and Box Hill are baffling given the significant expected growth in this booming corridor of Melbourne.”
Labor MP Carina Garland expressed “deep concern” about the closures in May.
The independent senator David Pocock agreed that post offices serve a “very important purpose”, including providing banking services and getting photos for ID.
“When it comes to the five-day delivery, there’s maybe not as much demand for letters,” he said.
“We know that their business is shifting towards packages and online shopping … But they are the national postal service and they play a really important role there.”
