Just months after its first request was sent back marked "return to sender", Australia Post has again asked the competition watchdog for the right to bump up the cost of posting a standard letter by five cents to 60 cents.
The government-owned postal service has told the Australian Competition and Consumer Commission the number of letters sent has fallen even further than expected when its earlier plea for a price rise was rejected last December.
At the time, the ACCC argued Australia Post was able to cuts its costs in order to meet the expected decline in letters. But in the latest application the postal service argues it has increased its cost-cutting effort but is still struggling under the financial strain of providing the service, which last year posted a loss of $67 million.
In its latest application, Australia Post said it now expects letter volumes to fall 5.8 per cent this financial year, greater than the 2.3 per cent fall it expected when it applied last year. For next year, it now expects the number of letters delivered to fall by 4.3 per cent.
The number of items sent through the post has plunged dramatically in recent years as people rely more on communicating via email and increasing numbers of companies charge for bills to be sent in the post.
Australia Post argues the global financial crisis prompted people to change their behaviour, including moving towards cheaper substitutes for mail, and those new habits were staying even as Australia emerged from the downturn.
The postal service said it had taken steps to reduce costs since the initial knockback, but appeared to make no guarantees of future cost reductions.
Under its government-imposed service obligation, Australia Post is required to maintain a network of more than 4000 post offices around the country and offer daily postal delivery to most homes and businesses.
As the monopoly provider of basic postal services, Australia Post is required to get the approval of the ACCC whenever it wants to increase prices.
In his letter to the ACCC, Australia Post chief executive Ahmed Fahour says "the depth and duration of the decline in letter volumes has been significantly greater than we anticipated" and the further decline in letter volumes has "led to us ramping up our efforts in cost reduction".
He says prices on stamps have risen only twice since 1992, with no price change for the GST. He argued that excluding the GST, overall inflation was at 58 per cent over that period, while postage prices had risen 11 per cent. A further five-cent increase would bring that postage price rise to 22 per cent.
The latest attempt is the first major move by Mr Fahour in his role as managing director after the former senior National Australia Bank executive took over the reins at the start of February.
Submissions to the review of prices can be made until the end of April.
