Australia Post set to raise the price on everyday essential

The unmistakable red and white branding of Australia Post graces every corner of the country, with their branches standing poised to facilitate the seamless delivery of countless letters across the nation.

As essential as this longstanding service is, it’s unfortunately not immune to the recent prices that have plagued everyday items due to the rising cost of living, with the cost of sending a letter set to increase.

Australia Post has recently submitted a draft notification to the Australian Competition and Consumer Commission (ACCC), that proposes an increase in the Basic Postage Rate from $1.20 to $1.50 from January 2024 onwards.

The proposed increase is intended to address the rising costs of delivering letters and reduce losses related to letter delivery. Australia Post reported a $384.1 million loss in its Letters business over the 2022-2023 financial year. It also reported the estimated cost of meeting its Community Service Obligations, as required under the Australian Postal Corporation Act 1989, to be $442 million.

In a recent media statement, Group Chief Executive Officer and Managing Director Paul Graham emphasised that Australia Post remains focused on delivering for all Australians and that this increase would be necessary to ensure that the business remains financially sustainable.

“We’re committed to maintaining the letters service for communities across Australia and increasing the Basic Postage Rate will help us continue to deliver for all Australians,” Graham said.

“We’ve made a number of changes in the past year to improve and simplify our business but, as we are entirely self-funded and receive no ongoing government funding, we need to ensure we reduce losses in our letters business.

“Each year, our Posties are required to deliver to more households, with approximately 200,000 new delivery points added to postal rounds in the last financial year. At the same time, letter volumes continued to decline, and we expect them to halve in the next five years.”

Australia Post has long been the country’s national postage service, but it does not receive any direct government funding and is expected to be its own self-sustaining business. As a result, in addition to the upcoming price rise, it has also introduced a host of measures over the past decade in order to remain profitable.

While the increase is significant, it is worthwhile noting that Australia’s domestic stamp rate is one of the lowest in the OECD. The price of basic postage has increased by just $0.20 in the past seven years.

The proposed increase is projected to cost the average household about $4.50 extra a year. However, to dedicated philatelists and pen pals, this increase has the potential to make their postage costs much higher.