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End of daily mail delivery looms as part of Australia Post rescue

Australia Post would be given the green light to end the daily delivery of standard mail and introduce a two-tiered pricing system by the end of the year under reforms being considered by Communications Minister Malcolm Turnbull.

Mr Turnbull is expected to present to federal cabinet within months a rescue package for Australia Post, including three-day-a-week delivery of standard mail.

He also is considering introduction of a two-tiered pricing system, similar to the UK's second class mail service, for non-urgent letter deliveries. Customers wanting speedier letter delivery would pay more than the standard rate.

Safeguards for disadvantaged Australians, including pensioners, would be included in the reform package.

Representatives from Mr Turnbull's office have told stakeholders the minister aims to take reforms to cabinet within two months and to change Australia Post's Community Service Obligations within six months. The final shape of the package will be influenced by Australia Post's corporate plan, to be handed to government next month.

Australia Post, which last week announced the loss of 900 jobs, is lobbying the government to remove rules requiring the company to offer a uniform rate for standard letter deliveries and to deliver mail five days a week to 98 per cent of the population. The company is pushing for regulatory change by the end of the year on the ground that plummeting letter revenues make the situation urgent.

Australia Post believes the reforms will allow its regulated mail business, which lost $218 million last year, to break even over the long term.

The push will gather pace next week when the government tables the executive summary of a Boston Consulting Group report into Australia Post's financial state.

Fairfax Media understands the review will validate Australia Post's projections of rapidly accelerating letter losses and will back the introduction of three-day-a-week letter deliveries and two-tiered pricing.

Australia Post managing director Ahmed Fahour briefed politicians from all sides on the need for reform during a visit to Parliament House on Tuesday. Mr Fahour announced a package to help struggling rural and regional licensed post offices by contributing an extra $40 million a year in annual payments and introduce credit card and eftpos services to 430 licensed post offices.

''While letter volumes decline, we are committed to not only keeping our post offices open and vital to the communities they serve but also growing their relevance by evolving them from a reliance on letters through increasing the trusted products and services they offer,'' Mr Fahour said.

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