ACCC to assess Australia Post's proposed price increases

The Australian Competition and Consumer Commission will closely examine Australia Post's proposal to increase the basic postage rate to 50 cents. Australia Post today announced its intention to apply the increased price from January 2003. The increase would be the first after 10 years at the 45 cent rate.

Australia Post has a legislated monopoly right to carry letters within Australia. Services covered by this right are called "reserved" services. In return for this monopoly right, Australia Post provides a universal letter service to all Australians at a uniform rate - currently 45c.

"Reserved postal services are declared under the Prices Surveillance Act 1983,” ACCC Chairman, Professor Allan Fels, said. "This means that Australia Post must notify the ACCC before it can increase the prices of these services. The ACCC has the role of assessing the proposed price increases.

"The ACCC will be examining the issues around Australia Post's proposal very carefully to ensure the best outcomes for all concerned", Professor Fels said.

Australia Post intends to submit details of the new pricing structure to the ACCC by the end of April. The ACCC plans to release an issues paper next month and hold public hearings around Australia in late June.

Background

Under the Australia Postal Corporation Act, certain postal services are "reserved" to Australia Post. This means that Australia Post has the exclusive right to provide these services. In particular, Australia Post has an exclusive right to deliver letters within Australia and an exclusive right to issue postage stamps.

There are a number of exceptions to the reserved services. Most notably, letters weighing more than 250g are not reserved, nor are letters that are carried for a charge more than four times the basic postage rate. Since the current postage rate is 45c, this means that letters carried for a fee of over $1.80 are not reserved.

Australia Post also has a universal service obligation. This means that it must carry and deliver standard letters at a uniform postage rate - currently 45c - to anywhere in Australia.