CABINET has approved a proposal by Communications Minister Malcolm Turnbull to introduce a two-tiered pricing scheme for letter deliveries that is expected to see basic stamp prices increase to $1.
The reforms will allow Australia Post to introduce a "regular" and "priority" letters service. Letters send with a "regular" stamp will arrive an average of two days later than they do currently, with mail within metropolitan areas to arrive a day later than the current timetable.
Australia Post is expected to apply to the Australian Competition and Consumer Commission (ACCC) to increase the cost of a "regular" stamp from 70 cents to $1 when the new regulations come into effect.
Safeguards will be put in place so that prices remain frozen at current levels for concession card holders, including pensioners.
Australia Post will be able to charge what it likes for a "priority" stamp, which would see a letter delivered on the current timetable. Priority stamps are expected to cost around $1.50 when they are introduced and prices could rise to $2 in later years.
Mr Turnbull is expected to officially announce the new regulations on Tuesday.
The reforms are aimed at stemming the bleeding in Australia Post's letters division. Australia Post last week announced a first-half profit of just $98 million - a dive driven by mounting losses of $151 million in its letters business.
A report by the Boston Consulting Group, commissioned by the government, forecast that Australia Post's letters business would lose $12 billion over the next decade. Australia Post management hopes the reforms announced by the government will cut these losses in half to $6 billion.
The new regulations do not require changes to legislation but can be disallowed by the Senate.
More to come
