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Postage stamp prices expected to rise to $1.50 under Abbott government plan

The cost of postage stamps is expected to double to $1.50. File photo.The cost of postage stamps is expected to double to $1.50, and could rise as high as $2 within three years, under a two-tiered pricing system being considered by the Abbott government.
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But Fairfax Media understands the government has stalled on plans to loosen the regulations governing Australia Post because of concerns about a political backlash to increased stamp prices.

Although Communications Minister Malcolm Turnbull finalised an Australia Post rescue package several months ago, the reforms have not made it onto the Cabinet discussion paper this year. This means any changes will not be approved until February at the earliest.

This is despite repeated calls from Australia Post management for urgent government action and signals from the Labor Opposition that it is prepared to offer a bipartisan approach on the issue.

There are fears that licensed post offices around the country will be forced to close unless Australia Post is allowed to increase stamp prices and introduce a two-tiered pricing system for letter delivery.

Australia Post’s proposed “priority” service would run on the current timetable of guaranteed next-business-day delivery for metro mail and guaranteed second-business-day delivery for metro to country mail.

Letters would take an extra day or two days to be delivered within metro areas in the proposed “regular” service.

Under a range of scenarios outlined in Australia Post’s latest Corporate Plan, which has not been released publicly, a “priority” stamp would cost $1.25 to $2. A “regular” stamp would cost 70 cents to $1.

Sources familiar with the corporate plan said the most realistic scenario would be for a regular stamp to cost 80 to 85 cents in the short term, with priority stamps costing around $1.50.

Safeguards would apply so that concession card holders – including pensioners – would continue to pay only 60 cents for a basic stamp.

The reforms are based on the premise Australia Post should be able to recoup the costs of letter delivery – estimated at $1 per letter.

Australia Post chief executive Ahmed Fahour has warned that the company faces $12 billion in losses over the next decade and will require a taxpayer bailout unless the government changes its customer service obligations.

“This business is disappearing in front of our eyes,” MrFahourtold Senate committee hearings last month.

“We are not recovering our costs, which is why we are losing a tonne of money.”

Ahmed Fahour

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