Here comes the $1 letter

Photo: Getty Images

Posting a letter will cost at least $1 from next year after the competition watchdog, the Australian Competition and Consumer Commission (ACCC) signed off on Australia Post’s plan to increase the price by 43% from the current rate of 70 cents.

In September, Australia Post announced its first full-year loss in more than 30 years, ending up $222 million in the red thanks to a $381 million loss in the mail business.

The number of letters posted fell by 7.3% last financial year and the business is shedding 2000 jobs over three years.

In a bid to stem the losses, CEO Ahmed Fahour proposed a two-tier system with a basic postage rate (BPR) of $1 for letters delivered on a new timetable, which can take up to two business days. The change is due to kick off in January 2016.

Commissioner Cristina Cifuentes said the ACCC came to the view that despite the hefty rise, Australia Post remained unlikely to recover revenue in excess of its costs as the letter business continued to decline.

“It’s important that Australia Post continues its focus on achieving cost reductions and operational efficiencies. We will look closely at Australia Post’s progress in this area in considering any future proposal for price increases,” she said.

The competition watchdog does not formally approve the price increase, but is expected to assess it under the Competition and Consumer Act.

Having endorsed the draft proposal ACCC will issue its final decision next month and Australia Post has one more hurdle to clear – sign off from the Minister for Communications.

The Australian Government recently regulated to allow the introduction of a two-speed letter service by Australia Post, which will distinguish between letters delivered at a priority and regular timetable.

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