The Australian Competition and Consumer Commission has knocked back Australia Post’s bid to increase the price of a basic stamp from 55c to 60c, just a year after Australia Post raised the price from 50c to 55c.
The Australia Post case was based on a big fall in demand for postal services between 2007-08 and 2008-09 and forecasts of a further fall in demand in the coming years.
But the ACCC casts doubt on Australia Post’s predictions.
“The relationship between demand and costs is a critical issue,” ACCC chairman Graeme Samuel said.
“The ACCC recognises that some of Australia Post’s costs are fixed. However, overall the cost base would be expected to respond as demand declines. The proposed costs of Australia Post in the material provided to the ACCC do not reflect this decline.”
Australia Post spokesperson Alex Twomey said the Government agency was “surprised and extremely disappointed” with the ACCC’s decision and said the falls in demand for postal services may actually be much greater than it told the ACCC.
“The basis of our volume forecasts comes from the same method used in the 2002 and 2008 notifications. We have only predicted a modest decline of 2.3% on average over the next three years at a time when other postal organisations are expecting declines of well over 5%.”
Twomey also said the postal service is under pressure due to cost increases caused by the growth of western Sydney, south-east Melbourne, south east Queensland and parts of Western Australia, which will see 2.5 million new delivery points added over the next decade.
Australia Post’s problems have been compounded by the threat of industrial action from its workers, including work stoppages and bans on checking for properly-stamped cards or letters – which could mean cheap or even free mail for consumers.
Australia Post and the Communications Electrical Plumbing Union have been in negotiations regarding a new workplace deal since April. The unions want protection of penalty shifts and rosters and the end to the company paid doctors, who the unions claim are forcing employees back to work even when they are still sick.
“In the end, our members got sick of being told by a senior management team that took home $8 million in salaries last year that Post can’t afford to consult better on workplace change, promote job security and full-time work, improve safety or protect penalty rates and take home pay,” union president Ed Husic said in a statement.
Nearly 80% of workers voted in favour of industrial action.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
