Australia Post has you writing your last letter in 2033

Article published 4 September 2023

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You're writing your last letter in 2033, says Australia Post

Mail deliveries and post offices are in the firing line at Australia Post: they're losing money. Is another essential service biting the dust?

THE strains of the digital age on a business delivering bits of paper wrapped in bits of paper (letters) are beginning to show.

Australia Post lost $200 million last financial year. It expects further losses unless it can “secure the necessary support required to modernise its business”.

Now, this necessary support could come in various forms, but it means one of two things: massive government subsidies to Australia Post so that it can keep delivering mail as always or fewer mail deliveries and fewer post offices.

Australia Post’s problem

Here’s the problem: in just fifteen years mail delivered has shrunk by 75 per cent. Today on average, households receive two letters a week. This was eight letters in 2008.

Despite post offices increasingly looking like mini K-marts, they too are losing business fast. Since 2019, 21 per cent fewer people have visited post offices. This may not be in outer suburban and regional areas, where post offices not only look after mail and parcels, but also offer bill payment and banking services.

All this means that the two parts of Australia Post is traditionally known for are now losing money hand over fist.

“The losses will snowball, our mail we believe will decline by another 50 per cent in the next five years, that’s a business that will never make any money for us,” chief executive Paul Graham told The Australian Financial Review. “At some stage in the next 10 years, there may be no mail to deliver.”

Possible solutions

“At the moment, the regulations have us committed to delivering mail five days a week to everyone in the metro area. What we want to do is to deliver five days a week, but we want that to be a combination of parcels and mail,” Mr Graham said.

The Australia Post CEO also wants to decouple stamp prices for business from consumers, so higher price rises can be imposed on business. A trial in the Hornsby area looks promising.

“There are 4,276 [post offices]  at present, including 2,500 required in regional areas, so there are more post offices than Coles, Woolies, Aldi, IGA, FoodWorks combined, so it’s easier to buy a stamp than it is to buy a loaf of bread,”, Mr Graham said.

“In metro areas, we have to have a post office within 2.5 kilometres of every citizen in metro Australia, which does not make any sense to us.”

While Australia Post’s Parcels business continues to grow, it’s not enough to compensate for losses on the mail and post office side. For example, mail lost Australia Post $348 million, so profitable parts of the business recouped some of that loss but the business overall ended up losing $200 million.

So, either the federal government starts paying subsidies to the tunes of hundreds of millions of dollars a year, or it allows Australia Post to deliver mail less frequently and close down post offices.

It’s pretty obvious what will happen.

Post offices, mail join cheques and bank branches

What’s likely to happen to mail deliveries is eerily similar to what’s happening to cheques (gone by 2030).

And what’s likely to be happening with post offices is eerily similar to what’s happening now with bank branches.

The only positive is that mail deliveries won’t stop right now and that post offices won’t be closed down right now. But it will happen eventually.

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