Australia Post is famous for its “we deliver” slogan – but when it comes to letters, it may soon need to add the caveat “but not as often as we used to”.
The government released a discussion paper on the future of Australia Post on Wednesday, with question marks once again sitting over its obligation to provide daily letter deliveries.
The government has not yet made a decision and is instead consulting on the future of the postal service and seeking input from the public in a review, as digital technology makes its traditional role as a letter carrier increasingly obsolete.
Parcel delivery, not traditional letters, has become the linchpin of Australia Post’s business. There were 66% fewer letters sent in the last financial year than in 2007-08, when 4.6bn were sent.
Posties delivered 1.6bn letters across Australia last year, and less than 3% of those were sent by consumers. Businesses and government are the main letter senders, with people sending 15 a year on average for personal reasons, usually during birthdays and seasonal holidays such as Christmas.
While letter volumes have declined, delivery points have increased, with new homes and businesses added to the network. In 2007-08, when letter deliveries were at their peak, posties were visiting 10.5m premises each day. In 2021-22 that grew to 12.6m delivery points daily – between 175,000 and 220,000 were added each year as the population grew.
Australia Post’s letter service is legally required to “reasonably meet the social, industrial and commercial needs of the Australian community”. This is defined in regulations as a daily (except on weekends and public holidays) delivery to 98% of all “delivery points” in the country, and at least two days a week to 99.7% of all delivery points.
But as Australians embrace more digital technologies and fewer people send letters, posties can go days before stopping at a home.
The postal service reported a $255.7m loss in its letters business for 2021-22 and $189.7m in losses related to letters in the first half of 2022-23, continuing the downward trend seen over the last decade.
On current projections, by 2032 Australians would receive less than one letter each week, with the volume of letters sent expected to fall below 500m a year, the discussion paper said.
And it wouldn’t be your grandmother sending you a letter, but a business, utility or government agency, according to the paper. For each postie, that would mean a bag with 150 letters a day instead of 640. For Australia Post, it would mean an unsustainable business model, the paper said.
Paul Graham, the chief executive of Australia Post, last month said there were concerns over the viability of the letters business and that all options were on the table, including reviewing the frequency of deliveries.
Nearly 10m households shopped online in 2021-22 and Australia Post is the nation’s largest consumer parcel delivery service. Nearly 70% of business-to-consumer parcels went through Australia Post’s networks and more than half a billion parcels were delivered by the postal service in the financial year, with the pandemic accelerating Australian’s switch to online retail services.
But with so many resources tied up in the letters business, expansion in the e-commerce and parcel business is limited, according to Australia Post.
The role Australia Post will play in the future and the fate of physical post offices will be up for discussion as the communications minister, Michelle Rowland, and the finance minister, Katy Gallagher, attempt to map out the service’s long-term financial sustainability.
“The consultation announced today will ensure Australia Post maintains the long-term financial stability it needs to continue supporting small businesses and providing essential community services – particularly in our rural, regional and remote communities,” Rowland said.
The review will accept submissions from the public until 27 April.
Changes to Australia Post’s regulations, including fewer letter deliveries, were temporarily made to help the service through the height of the pandemic and border closures.
In April 2021 the former Australia Post boss Christine Holgate spoke publicly about a secret review of Australia Post which advocated for further privatisation. The Coalition government did not implement the suggested changes.
