Australia Post gets ACCC nod for stamp price hike, noting it will still be too low

The Australian Competition and Consumer Commission has given its support to Australia Post to increase the prices of stamps for ordinary letter services from 60 to 70 cents.

The consumer watchdog also agreed with Australia Post’s proposal to freeze the prize at 60 cents for Australian government concession card holders until 2017.

ACCC chairman Rod Sims said the organisation was satisfied the price rise would not result in Australia Post over-recovering the efficient costs of providing monopoly letter services.

“The ACCC found that there is increasing financial pressure on Australia Post’s letter services as a result of fewer letters being sent,” he said.

He noted that Australia Post is currently not recovering its reserved services costs.

“The magnitude of the under-recovery is such that even with the proposed price increase, Australia Post is unlikely to recover more than an efficient level of costs.”

While the ACCC’s decision is not binding on Australia Post, its role in the matter was to inform the public about whether or not the proposed price increases might be more than necessary.

Australia Post must also give written notice to the Minister for Communications of its intent to vary its rates of postage. The Minister will have 30 days to disprove the proposal, otherwise the prices will increase.

When the price increase was first announced, Australia Post said it would be delivered as additional payments to Licensed Post Office operators.

At the time Australia Post managing director and chief executive Ahmed Fahour said the “current stamp price no longer reflects the true cost of delivering each letter and stamp price increases have not kept up with inflation”.

He said it was a “reluctant” but “necessary” move.

It reported that letter volumes were down 6.4% to 231 million in 2012-13, part of a decline of around one billion items over the past five years. In 2007-08 letter volumes were around 4.6 billion, and the previous financial year they were at 3.6 billion. It delivers to 11.2 million addresses nationally.

Post Office Agents Association Limited chief executive Ian Kerr told SmartCompany at the time that “in principle, POAAL supports Australia Post’s proposal to increase the basic stamp price from 60 to 70 cents”.

Kerr said it would be beneficial for its members as it is linked to multiple additional payments they receive, and it will benefit them in terms of commission, as “they will get a greater commission on a 70 cent stamp than a 60 cent stamp”.

Australia Post aims to increase the prices from March 31. The last increase for base price of a stamp was in 2010 when it increased from 55 cents to 60 cents.