Monday, 30 November 2015
Questions without Notice
Thanks, Senator Back, for the question. Mr President, on Friday last the ACCC released its preliminary view that it would not object to Australia Post's proposal to raise the price of the basic postage rate from 70c to $1 for the regular service. While, as you know, decisions of the ACCC are matters for the commission, in its preliminary decision the ACCC noted that the new stamp price will have an important financial impact for Australia Post.
Australia Post reported a full-year after-tax enterprise loss for 2014-15 of $222 million, including a loss of $381 million in its letters business. This loss is driven by the continued decline of 7.3 per cent in letter volumes compared to 2013-14, with ordinary stamped letters falling by 10.3 per cent. Australians are now sending one billion fewer letters a year than they were in 2008, and the government is committed to ensuring that Post can maintain a sustainable and self-funding postal service for all Australians. Without reform, Post would be unable to stem accelerating losses in letters, threatening the sustainability of the entire business. On current projections, Post is projected to face losses of up to $6.6 billion over the next decade, and letters losses are projected to reach $12.1 billion over the same period.
That reform is essential to ensure that Post can continue to deliver a world-leading postal service. Post intends to introduce a new two-speed letter service, with postage for regular letters at $1, on 4 January 2016. It is important for all colleagues in this place to note that the concession stamp price will be frozen at 60c for 5.7 million concession card holders and that the Christmas stamp price will also be frozen at 65c for all Australians.
The ACCC noted that increasing the basic postage rate to $1 will assist Australia Post to reduce the losses from its services as a result of declining letter volumes. Even with this increase, the ACCC does not consider that Australia Post will recover revenue in excess of its costs in delivering its letter service. The ACCC's preliminary decision was backed by advice from independent consultants, which found that Australia Post's 'reform our letter service' program is an appropriate response to declining letter volumes based on overseas experience. And now that the ACCC has released its preliminary view, Australia Post will lodge its formal notification to the ACCC, and the ACCC is required to publish its final decision within 21 days of receiving this formal advice.
Mr President, I ask a further supplementary question in response to the answer just given by the minister. Can he tell us what the changes will mean for operators of licensed post offices, including those operating in regional Australia?
An increase in the basic postage rate to $1 will provide a welcome and substantial boost to payments to around 2,900 licensed post offices, including those 1,600 in rural and remote communities. Many licensees and their representatives wrote to the ACCC supporting the proposed increase, noting it would significantly improve the sustainability of the post office network. The proposed increase would lead to a 43 per cent increase in delivery-related payments and an estimated increase in LPO payments of $75 million per year. Importantly, combined with other measures announced by Australia Post over the last two years to support LPOs, this will mean around $125 million extra in annualised payments to licensees. All of these elements combined would be good news for LPOs but also good news for the sustainability of Australia Post.