IN BRIEF
- Australia Post says it will keep home delivery, ruling out community mailboxes for Australian suburbs and towns.
- Letter deliveries could become less frequent as Australia Post adapts to falling volumes, Graham says.
Australia Post has warned the cost of sending a letter could eventually rise to $2, as the postal service grapples with a continuing collapse in mail volumes.
Chief executive Paul Graham told SBS News that Australia Post will need to make further changes to the way letters are delivered as fewer Australians use the service, but has ruled out any plans to follow overseas postal services that have moved away from traditional home delivery.
"We continue to see letter decline, 15 per cent last year and we're now seeing letter volumes that we haven't seen since the 1930s," Graham said.
The company has already reduced letter deliveries to every second day and increased the price of a standard stamp, but Graham said further price increases and efficiencies would be needed as letter volumes continued to fall, including potentially reducing delivery frequency even further.
Graham said the company is "in the fight of our lives", as it navigates structural change and fierce parcel competition squeezes margins.
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Stamp prices could reach $2
Graham said Australia Post's current $1.85 lowest-cost stamp remained among the cheapest in comparable economies.
He said that price of a stamp could eventually rise, but argued the increase would have a relatively small impact on individual households.
He estimated a further increase to $2 would add less than a dollar a year to the cost for a typical household.
The changes are being driven by the widening gap between the cost of maintaining a nationwide letter service and the number of letters being sent.
Australia Post delivered 1.42 billion letters last financial year, almost 15 per cent fewer than the previous year.
At the same time, its parcels and services business continued to grow, generating a record $8.01 billion in revenue.
No plans to follow in the footsteps of global services
Despite the pressure on its traditional letter business, Graham said there were no plans for Australia Post to follow postal services overseas by abandoning home delivery or shifting customers towards community mailboxes.
He pointed to the different nature of Australian cities, suburbs and regional communities as a reason.
"The nature of our suburbs and regional towns does not lend itself to that solution," he said.
Instead, Graham said Australia Post wanted to tailor its services to the needs of different communities.
He said the organisation remained "absolutely committed" to ensuring efforts to reduce costs did not come at the expense of people living in regional and remote Australia.
Australia Post currently operates more than 4,000 retail outlets across the country, with about 2,500 in regional and remote areas.
Letters still have a future, though it is changing
Graham acknowledged there was a risk Australia Post could eventually require taxpayer support as its letter business continued to decline.
But he said the organisation had a pathway towards financial sustainability, which would require support from government, stakeholders, customers and the broader community.
The company recorded a pre-tax profit of $31.8 million for the latest financial year, although that result was supported by returns from property sales.
Graham said further changes to the postal service would be necessary as Australians increasingly shift from letters to parcels and digital communication.
He urged Australians to continue using Australia Post and supporting its network of licensees across metropolitan, regional and remote communities.
"We'll continue to deliver letters until the last letter needs to be delivered."
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