Australia Post wants to shut down post offices due to ‘oversupply’

Australia Post’s CEO Paul Graham spoke at Senate estimates on Tuesday evening, stating a need for regulatory reforms. Graham emphasised the need to consolidate or close post offices to keep the business going without help from taxpayer money.

This call for change follows a $200 million loss for Australia Post in the 2022-23 fiscal year, only the second dip into the red for the company since 1989.

The current government regulation, dating back to 1989, prescribes a minimum of 4000 post offices nationwide, with a particular emphasis on sustaining at least 2500 in rural and regional Australia. At present, the count stands at 4271.

Graham spotlighted the redundancy of many of these branches, especially in metropolitan areas.

“In Camberwell, in Victoria, there are 84 post offices in a 7.5km radius,” Graham said.

“The number of post offices in our major cities is not sustainable or sensible.”

While parcel delivery has remained a strong part of the business, Graham highlighted a significant decline in traditional letter services. Letters now account for less than 20% of Australia Post’s revenue, and post offices are costing $1.3 billion a year to operate.

“Most Australians no longer visit the post office, but we are required by regulation to operate a network larger than all the supermarkets combined,” Graham said.

Offering a sharp analogy, he quipped, “It’s easier to buy a postage stamp than a loaf of bread”.

A federal discussion paper from March on postal service modernisation suggested that automation would be one way for Australia Post to save some money. And there have been moves from the company to do this, with the partial removal of ‘sorry we missed you’ cards for MyPost customers.

Despite advocating for regulatory changes, Graham said that Australia Post was still committed to rural and regional Australia.

“We will never abandon the regions and rural Australia, but it makes no sense for Australia Post to keep the same number of post offices where there is a clear oversupply and where customers are simply not using the service,” Graham said.

His emphasis on not forsaking the hinterlands is a testament to the institution’s ethos of ensuring accessibility and service, regardless of geography.

Graham was candid in his assessment of the current scenario, noting that Australia Post’s relevance has been “challenged like never before”. He cautioned that without a rethink of the existing regulatory framework, the institution might soon lean heavily on taxpayer funds.

The writing has been on the wall with Australia Post for some time now. In addition to a sharp decline in its letter business, it is facing increased competition from international tech giant Amazon, as well as local parcel delivery startups such as Sendle.

Australia Post has also received negative responses to recent price increases, as well as delivery drivers leaving ‘sorry we missed you’ cards when customers were at home.

While it has maintained dominance over ‘last-mile’ delivery — reports from this week reveal that Amazon is also looking to challenge Australia Post here in the lead-up to Christmas as it opens more fulfilment centres across the country, utilises gig economy workers, and delivers in the evening and on weekends.