PIAA blasts Aus Post price hike

Printing Industries has slammed Australia Post’s proposed 10 per cent price rise for postage, accusing the provider of taking the easy way out by upping prices rather than improving its processes to better support printed mail.

Australia Post will today notify the ACCC of its planned increase in the basic postage rate from 60 to 70 cents. While the carrier has agreed to introduce a Concession Stamp Rate for eligible senders of domestic mail (including pensioners, job-seekers and low-income earners), it admits the rise will have a flow-on effect to the price of business mail, and “business customers will be contacted over the coming days with full details of any potential changes.”

Bill Healey, CEO of Printing Industries, says Australia Post is failing to address its own productivity issues because it is comfortable in its monopoly position. He tells Australian Printer, “There is no evidence that people have stopped wanting to get mail. Yes, the number of items has dropped. That is natural. But while the numbers are down, Australia Post is not taking measures to improve productivity – in fact it has expanded its delivery network over the last five years.

“We think the government should take a close look at how competition could ensure the real demand for print is maintained and catered to. It should not accept the doomsayers that say there is no future for print mail; it should give the market the opportunity to reinnovate. If we leave it to Australia Post they will ride it into the ground, and the mailhouses and printers that are involved in the preparation of direct mail – they are just going to fall by the wayside on the back of the assumption that this channel has no relevance, when actually the facts don’t stack up.”

Australia Post says it made a loss of $218m in its regulated mail business over the 2012-13 financial year, with letter volumes down by 231 million – or 6.4 per cent. Ahmed Fahour, managing director and CEO of Australia Post, says, “As more and more Australians communicate and transact online, letter volumes continue to decline at a rapid rate. Today, the average number of letters delivered per letterbox each day is 1.5, down from 2.0 in 2008 and a decrease of 25 per cent.

“The current stamp price no longer reflects the true cost of delivering each letter and price increases have not kept up with inflation. This 10 cent increase will allow us to partially offset the growing losses that we are seeing in our letters business. At 70 cents the Australian domestic stamp will remain among one of the lowest prices in the OECD.”

Despite Fahour’s gloomy outlook for printed mail, a recent study by Australia Post itself found that printed catalogues and direct mail are the preferred advertising medium of many Australians, and a consumer survey of 2012 revealed that 98 per cent of people actually open their mail as opposed to between 20 and 25 per cent for email.

Healey says the rise of the digital economy has seen Australia Post constantly question the future of print-based communication and so wriggle out of improving its processes. He says, “Australia Post has ignored its own evidence that print will remain a key part of the emerging multi-channel communication world. While it has retained a statutory obligation to deliver letters at a fixed rate this has often occurred with little commitment to driving productivity improvements. Australia Post is a classic example of how a monopoly is able to avoid the implementation of more efficient systems and processes that are demanded under market competition.”

Australia Post may be in line for privatisation as the Abbott government’s Commission of Audit considers selling it off in pursuit of a surplus. Healey says the PIAA is less concerned about privatisation and more about the opportunity for competition; he says, “Printing Industries hopes that the findings of the Commission of Audit and the proposed review of the Australian Competition and Consumer Law will challenge the view that mail has no place in our emerging digital economy and recommend the opening up of areas that support competition in the mail printed mail market.”

Australia Post defends the price rise, saying it has only increased its basic postage rate three times over the past 22 years, with the latest in 2010. However, it did raise the price of some registered post products, domestic and international products and services and packaging products last year. It also plans to up costs for post office boxes, common boxes, private bags, mail bags and locked bags on February 1.

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