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Return to sender

By Jonathan J. Ariel - posted Thursday, 2 January 2014

Canberra's antiquated policies, combined with rising internet use, are killing Australia Post. Or so Australia Post wants you to believe.

True, letter volumes in aggregate are down over 19 percent since 2008, and yes, the decline is most pronounced in the non-business, non-government so-called "individual" sector, which has collapsed by 29 percent.

But tellingly it is the composition of the mail that has changed dramatically. Most mail is now business-originated commercial (or as consumers see it, "junk") material.


Australia Post's Community Service Obligation's catch cry of being "reasonably accessible to all Australians" (see Section 27 of the Australian Postal Corporation Act 1989) is just about obsolete when individuals around the country, or for that matter, around the world these days communicate instantly and cheaply via the internet, and receive mostly shopping catalogues and corporate (or political) promotion by post.

To ram home the message that things are dire at Australia Post, on Thusday the ABC reported that the corporation said it needed to lift the price of stamps by at least 10 cents next year if it is to reduce the size of its losses.

The postal service says that as letter volumes have ebbed worldwide it is no longer financially sustainable to continue holding prices below inflationary levels. (This of course assumes that its pre-inflationary starting price was fair and not unjustly high).

In its submission to a Senate Committee, Australia Post says inflation has galloped by 70 per cent during the past 20 years while postage stamps price rises have only cantered by about 30 per cent and that its letter business has spilt $400 million of red ink over the past three years.

Without knowing anything else, the reader – as Australia Post no doubt hopes – could realistically conclude that Australia Post is losing money. As an aside, is that such a bad thing? After all, it is a government organization charged with a community service obligation?

But the fact is Australia Post is indeed, making money. Yes Sir. Making money. In spades.


While the business of carting letters has tanked, resulting in a trading loss on that product of $147 million for the year, overall the postal monopolist raked up a consolidated net profit in 2012-13 of $312 million.


Even if we agree that standard letter delivery should be a function (perhaps even a loss making one) of Australia Post, a host of questions still come to mind that must be asked by the Senate inquiry currently underway and due to report by the end of March.

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About the Author

Jonathan J. Ariel is an economist and financial analyst. He holds a MBA from the Australian Graduate School of Management. He can be contacted at

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