Australia Post gets approval for 17% postage rate increase from 31 March

The Australian Competition and Consumer Commission (ACCC) has approved Australia Post’s proposalsubmitted in January to increase the basic stamp price by nearly 17% with the aim to help fund the

With effect from March 31, 2014, the basic postage rate (BPR) for standard letters is due torise from 60 cents to 70 cents. But Australia Post plans to freeze the price of a basic stamp at 60cents until 2017 for consumers with an Australian Government concession card. The postal operatorearlier explained that the new “concession rate” stamp would be available to the 5.7 millionAustralians, including pensioners, job-seekers and low-income earners, with a government concessioncard. This stamp price would be held stable until 2017.

Australia Post has justified the price increases by saying that it has only increased the BPRthree times over the past 22 years, with the last one taking place in 2010. During this period, theprice of a basic stamp in Australia has increased by 33% (from 45 cents to 60 cents), whereas theConsumer Price Index has increased in the same period by more than 70%, and most operating costs byover 100%, it pointed out.

ACCC Chairman Rod Sims showed himself optimistic about Australia Post not over-recovering theefficient costs of providing monopoly letter services. “The ACCC found that there is increasingfinancial pressure on Australia Post’s letter services as a result of fewer letters being sent.Australia Post is currently under-recovering on its reserved services costs. The magnitude of theunder recovery is such that even with the proposed price increase, Australia Post is unlikely torecover more than an efficient level of costs.” Therefore, ACCC has decided not to object toproposed price increases.

Under the Competition and Consumer Act 2010, the ACCC is responsible for assessing proposedprice increases by Australia Post for its reserved ordinary letter services including the BPR.

In addition to the ACCC’s approval, Australia Post must also inform the Minister ofCommunications in writing about the price increases who is legally entitled to disapprove themwithin 30 days after receiving the notification but is rather unlikely to do so.