Australia Post’s mail modernisation

After the Albanese government’s discussion paper in March warned that Australia Post’s existing community service obligations were “no longer financially viable”, federal cabinet appears set to approve the publicly owned mail carrier’s plan for posties to focus on delivering parcels five days a week, with letter deliveries limited to every second day or so.

This new model – which has been trialled across six locations – may also be accompanied by some closures of full-service post offices in city locations. Rather than nostalgically pine for the lost times of the daily ice or milk delivery, the scaling back of Australia Post’s loss-making daily letter delivery service – news of which was exclusively revealed in The Australian Financial Review on Monday – is a sign of the times of instantaneous, electronic communication. As more businesses and individuals communicate by email or text, the average number of letters received by households has dropped from 8.5 per week to just 2.2 per week since 2008. That added up to a more than 50 per cent jump in letter losses to $384 million last financial year, which in turn led to Australia Post recording a $200 million overall loss.

Amid concerns about the potential need for a multibillion-dollar taxpayer-funded bailout, financial reality should be allowed to catch up with technological change and the trend of continued declines in letter volumes. In essence, the plan appears to be for the national postal service to be modernised and its business model realigned with the contemporary world of online shopping and e-commerce.

The postal union appears to be on board, otherwise the restructure would have been vetoed by the Labor government. Australia Post’s parcel delivery service cross-subsidises its letter delivery, which is no longer an essential service for most consumers. When the overwhelming number of letters these days are bills and statements sent by banks, electricity and insurance companies, regulation forcing Australia Post to charge businesses and pensioners the same stamp prices might be a form of corporate welfare. Reducing letter deliveries will help the government business enterprise compete against privately owned parcel businesses. But that also prompts the question of why the government needs to own a postal service in this day and age.