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Australia Post has announced a proposed increase to stamp prices, to take effect from January 2020.It is important that Australia Post’s letters service is sustainable. The letters service should be self-funding, and not dependent on cross-subsidies from other parts of Australia Post’s operations – such as parcels.Australia Post is obliged to deliver letters at a uniform rate to all addresses for all Australians. Costs have increased since the last price increase in January 2016, while letter volumes continue to fall.POAAL will wait to see Australia Post’s modelling on how the price increase will affect letter volumes.The ACCC will evaluate Australia Post’s proposal, and as part of that evaluation it will seek submissions from stakeholders. POAAL will make a submission to the ACCC – as it has for every postage rate increase application.The letter is a powerful communication tool – and at $1.10, the letter represents good value for money.Concession stamps are not subject to the increase and will remain at 60c.The transfer of communications from letters to email (known as “e-substitution”) has been occurring for some years, at the current price point and at previous price points. An increase in letter pricing may accelerate the pace of e-substitution, however the downward trend in letter volumes is clear. It remains to be seen if volumes will decrease more steeply under an increased price.In response to rising delivery costs and the growing number of delivery points (that is, the number of households), Australia Post has two main alternatives to a letter price increase. Letter delivery could move from five days per week to alternate day delivery, or to-door letter delivery could be replaced with delivery to community mailboxes.These letter delivery options have been implemented in other countries in response to falling letter volumes and growing delivery costs.
