The number of post offices across Australia could be slashed, stamp prices would rise and letters would stop being delivered five days a week under ambitious reforms being considered by Australia Post after the mail service revealed a $200 million pre-tax loss for 2023.
The $200 million pre-tax loss has been triggered by the continued decline of snail mail, with chief executive Paul Graham warning more losses are on the way unless there is a rethink on how the group delivers its services.
The nation’s postal carrier, which has been warning for months that it would record a loss this year, revealed the scale of the damage on Thursday when it confirmed it had recorded a full-year loss of $200.3 million, down from a $55.3 million profit in 2022.
Graham said the postal service needed more freedom to raise the price of corporate stamps, which is currently linked to consumer stamp prices, adding that mail frequency – Australia Post is currently required to deliver five days a week – was a “huge part of our cost base”.
“In metropolitan areas, we have in some places a significant overlap of post offices. And we would look to have reform that would allow us over a long period of time to ‘right size’ that network,” he said.
“In Brunswick, for example, in Melbourne, we have over 70 post offices in that neighbourhood. That does not make sense to us. Places like Bendigo [in regional Victoria] with 18 post offices, will we always be in Bendigo? Absolutely. Do we need 18 post offices 10 years from now? Maybe not.”
Under one of a series of options being considered by Australia Post, up to a third of the 4276 postal outlets across the country could be closed, but the postal service would ensure that the 2500 postal offices in rural and regional areas would be protected given the key role they play in delivering other services such as banking.
Graham declined to comment when asked if the option of cutting a third of all post offices was put to him, but did not deny it was an option.
“We have a regulatory requirement to have a minimum of two and a half thousand [post offices] in regional and rural Australia. So, we’re very committed to that footprint of regional and rural. But we do have significant overlap in metropolitan areas.”
Revenues remained largely flat at just under $9 billion for the year, and it was ballooning losses in the group’s paper letters business, which caused most of the pain.
Letter volumes dropped by 7.8 per cent compared with last year, and losses in the group’s letters business were up by 50.2 per cent to $384.1 million. Parcels and services revenue was up by 0.9 per cent to $7.3 billion.
“In [financial year 2023], over-the-counter transactions continued the downward trend and have declined 20.9 per cent” since 2019, the group said.
The losses declared on Thursday represent just the second loss Australia Post has recorded since becoming a government business enterprise in 1989 and set the scene for a possible major overhaul to Australia Post’s footprint and services to keep it sustainable.
Graham was clear on Thursday that the group needed the support of government to ensure it was sustainable for the long term.
“If we do everything in our power to run this business well, and we get a favourable regulatory response towards modernisation, I’m confident that Australia Post will return to profit. Without this support, the [financial year 2023] loss will be followed by many more. Inaction could result in a greatly devalued Australian asset,” he said.
The review has placed a number of reforms on the table, including changing regulations around how the group sets letter pricing and reviewing the frequency of letters delivery.
In its own submission to the review, Australia Post highlighted that its letters business was no longer sustainable and pointed to three key areas for modernising the service. It suggested a simplified regulatory approach to letter pricing, considering changes to letter delivery and making sure its retail network is fit for purpose.
“Running our retail network cost more than $1.3 billion in [financial year 2022]. Yet retail transactions (or purchasing goods and services) in Post Offices continues to decline, a trend also observed overseas,” the postal carrier said.
The group has been investing in measures to amp up its e-commerce offer, including a launch of next-day delivery offer for metro businesses.
Hundreds of jobs have also been axed at the group’s head office this year as it looks to simplify its corporate structure.
Source: Thanks smh.com