Australia Post boss Paul Graham warns of government handouts without reform

In the midst of a landmark modernisation review, the national postal service has reported it has lost $384 million on its declining letter businesses, contributing to a full-year earnings loss for the first time since 2015 and the second time since it was established as an enterprise in 1989.

It is expecting further losses down the line after announcing on Thursday a loss before tax of $200.3 million for the 2022-23 financial year, down from a $55.3 million profit in the previous year.

Australia Post's group chief executive and managing director said "logical reform" was needed around its legislated community service obligations - stamp prices, letter and parcel deliveries, and the post office network - or "we'll be going to the government for a handout" down the track.

"Way down the track is not a decade away," Paul Graham told ACM, publisher of this masthead.

"It is probably in the next five years if we don't get meaningful reform we will be in a situation where we will not be able to fund our operations because we will have sustained losses and therefore we'll be looking to our shareholder, which is the government, to fund those losses."

Australian Post reported letters volumes were down by 2 billion, a 7.8 per cent decrease on last year. The losses in the letters business were reported at $384.1 million, up 50.2 per cent from the previous financial year.

The average Australian household receives just 2.2 addressed letters per week, with the vast majority (98 per cent) being bills or mortgage letters. This is down from 8.5 letters a week in 2008 and the figure is expected to almost halve in the next five years.

In a few years, Mr Graham said there would be no physical mail, but he would not put a number on days per week letters should currently be delivered. Posties, he said, should be "visible in the community five days a week".

It was a different story for the more profitable and competitive parcels and services revenue. This was reported at $7.3 billion, up 0.9 per cent from last year.

"So having more commercial freedom to set the price of a stamp," Mr Graham said.

"We are currently prescribed to deliver mail five days a week to every household. We have seen 800 million less letters since 2018, but we've increased our delivery points by 800,000. So that is economic madness.

"Therefore having more flexibility to deliver mail that suits the community's needs, but also the ability for our posties to deliver more parcels in line with the growth that we see in that particular product that we have, which is going very well."

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The national post office network is also a key business lever, but Australia Post wants the government to update the rules around how a post office is classified as needed. The current rules are based on the out-of-date 1991 census.

Australian Post said it was mindful of its legislated commitment to rural and regional areas.

"The 1199 locations and country towns where we're now the only banking service, we're absolutely committed to their presence," Mr Graham said.

"However, in metropolitan areas we see significant overlap of post offices that has been built up over many, many decades. And we're looking for some freedom in relation to how we redesign that network to meet future community needs and are in line with modern parameters."

The Australia Post boss is also lobbying the government hard on pulling more government services into post office one-stop-shops, and sought to stop any talk of selling off the profitable "StarTrack" eCommerce and parcel delivery service by saying: "Not on my watch."

"Now is the time for action, not just supported by our current financial losses, but with the fact that the clock is ticking," Mr Graham said.

Australia's Communications Minister said changes were needed.

"Today's results show that the company faces significant structural headwinds, from changing consumer trends to growing digitisation," Michelle Rowland said in a statement.

"The Albanese government is committed to supporting Australia Post modernise so that it can continue delivering the essential services consumers and small businesses rely on to stay connected.

"Change will be needed to ensure that a high quality and sustainable letters and parcels service is maintained."