The price of postage stamps is set to rise to $1, with the federal government approving Australia Post’s proposal to divide its services into regular and priority streams.
The new two-tiered system will come into force after September.
Letters posted in the regular service will be delivered two days slower than they are currently.
“Australia Post will continue to deliver mail five days a week to 98% of addresses, and the delivery speed will vary depending on the service. The priority service will be delivered to a faster timetable than the regular service,” the communications minister Malcolm Turnbull said.
Australia Post expects the Australian competition and consumer commission (ACCC) will approve its request to raise the price of stamps to $1.
“This is necessary to support a more sustainable letters service with an aim of breaking even over time,” Turnbull said. “Concession card holders will continue to be offered a concession rate stamp, which will be frozen at $0.60, and all Australians will continue to have access to a $0.65 Christmas rate stamp.”
Turnbull said the company faces massive losses as people continue to abandon paper letters in favour of communicating over the internet.
“While Australia Post has been able to offset these losses by growing its parcels business, losses in letters are now so large that they are overwhelming all profitable areas of the business. Without reform total projected company losses could reach $6.6bn over the next 10 years, with letters losses of $12.1bn,” Turnbull said.
Labor’s communication spokesman Jason Clare said he understood the need for reform within Australia Post, but wanted Turnbull “to rule out mass sackings and office closures”.
“Today’s announcement means stamps will cost more and letters will take longer to be delivered,” he said, without opposing the measures outright.
The decision to split Australia Post into two tiers was approved by cabinet.
Turnbull told Tuesday’s meeting of the Liberal and National parties that Australia Post must take an “open kimono” approach to transparency and corporate governance.
Australia Post revealed last month that profits were down 56% in the first half of the 2014-15 financial year compared with the same time last year.
Managing director Ahmed Fahour said the losses had “reached tipping point”.
“We urgently need reform of the regulations that apply to our letters service,” he said. “This year we are forecasting a full-year loss for the first time. It is urgent we make changes this year to ensure we can continue to maintain a reliable, accessible postal service for all Australians.”
