The ACCC does not object to Australia Post’s proposed price increase for its reserved ordinary letter service.
The 25 per cent increase, proposed to take effect in April this year, would raise the price for reserved ordinary letters delivered to the regular timetable from $1.20 to $1.50 for ordinary small letters.
Australia Post intends to increase the prices for ordinary large letters up to 125 grams from $2.40 to $3.00, and ordinary large letters between 125 and 250 grams from $3.60 to $4.50.
Importantly, there will be no price increases for concession stamps, which will remain at 60 cents each or 5 for $3 for eligible concession card holders. The price of seasonal greeting cards will not increase either, remaining at 65 cents.
“After assessing the proposal in line with our regulatory role, we don’t object to Australia Post’s proposed price increases on a cost-recovery basis,” ACCC Commissioner Anna Brakey said.
However, the ACCC identified some concerns through its assessment process and has made several recommendations to improve Australia Post’s financial modelling, particularly if further price increases are proposed in the future.
“Our recommendations seek to improve how Australia Post incurs and accounts for the costs of its reserved letter services, so consumers are not paying more for stamps than they should,” Ms Brakey said.
“We acknowledge the concerns raised in our consultation processes about the impact of the price increase on consumers and businesses, especially in light of cost-of-living pressures.”
The average Australian sends approximately 15 small letters a year, so the price increase would mean an additional cost of $4.50 per year. However, the ACCC recognises consumers will be impacted differently depending on the number, size and type of letters sent, as well as their ability to access concession options.
The ACCC’s decision paper is available at ACCC decision.
Australia Post’s formal price notification is available at Australia Post price notification.
Background
Australia Post’s proposed price change was outlined in a draft price notification provided to the ACCC in August 2023. It was later revised in November 2023 and corrected in December 2023.
In this draft notification the ACCC found declining letter volumes, combined with an increase of delivery addresses, continue to explain Australia Post’s shortfall between its costs and revenue for the reserved letter service.
Following initial consultation in September 2023, the ACCC published its preliminary view in January 2024, proposing not to object to Australia Post’s proposed price increase.
The ACCC conducted a second consultation and, after further assessment, confirmed its view on the decision to not object to the price increase.
Under the Competition and Consumer Act, the ACCC is responsible for assessing proposed price increases by Australia Post for its reserved ordinary letter services delivered to its regular timetable. The ACCC must consider Australia Post’s proposal to increase the price of these services and may decide to:
- not object to the price increase
- not object to a price that is less than that proposed, or
- object to the price increase.
It is not the role of the ACCC to approve any proposed price increase under the Australia Post price notification framework. Only the Minister for Communications has the power to reject a price increase proposed by Australia Post.
The price notification assessment was conducted concurrently with the Australian Government’s modernisation review into postal services. The initial outcomes of this review were announced in December 2023 and include a range of proposed changes to Australia Post’s performance standards.
The ACCC has considered the implications of the modernisation announcement in making this assessment.