Printing Industries has slammed the Australian Competition and Consumer Commission (ACCC) over its decision to approve a 43% hike in regular stamp prices from 70c to $1, which opens the door to increases for business letters.
“We are absolutely disappointed but the ruling was not unexpected,” said Bill Healey of Printing Industries Association of Australia (PIAA). “The problem with the decision is the consequences it will have on the prices of business mail.”
Australia Post waited until after the ACCC announced its decision last week before informing its mailing house customers in an email that the decision would lead to price hikes between 9.5% and 41.8& for all business letters:
As you’re aware, Australia Post lodged a draft notification with the Australian Competition and Consumer Commission (ACCC), seeking an increase to the BPR from 70 cents to $1, which will apply to the new Regular delivery timetable. Today the ACCC released its view on our draft notification, which states that it does not object to the proposed ordinary (stamped) letter prices, including the increase of the BPR to $1.
From 4 January 2016, the weighted average price increases for business letters are in the range of 9.5% and 41.8% for products using the Regular timetable. Whilst the proposed increases for some products are significant, we are only seeking to recover our costs. For the 15/16 financial year, with a combination of price increase and cost reductions, we will still report a large loss.
Healey said the increases would affect 150,000 people who contribute $14.1 billion in gross value added to the economy, not just the 30,000 that Australia Post employs.
“The ACCC has ignored the PIAA report on the economic contribution of the Australian mailing industry that clearly highlighted the need for the commission to take on a more appropriate role, similar to the energy regulation model, when setting price.”
Healey called on the federal government to consider privatising further business divisions of Australia Post. “They’ve already privatised courier services and other areas of the business could also be open to contestability,” he said.
“The Australian Government needs to pursue its competition agenda through the application of micro economic reform to Australia Post, as well as continuing the exploration of privatisation viability, in order to introduce innovation models that will deliver a more streamlined and modern enterprise. We also call for open and transparent future pricing forecasts. Australia Post secured the price and structural reforms that they have indicated they desperately need to return their mail business to even; we do not believe that there should be any justification for price increases over the next three years when everything required has been delivered by the ACCC."
The retiring CEO of PIAA said Post had “failed to highlight any improvements and benefits that businesses would be expected to provide their clients with accompanying any price increase.
“We certainly acknowledge that the demand for business mail will continue to decline as more businesses become online, however, not at the rapid pace Australia Post has been modelling. This has been reinforced with the ACCC stating in the report that they do not accept Australia Post’s letter volume forecasts and considers that the decline is overstated,” said Healey.
The announcement by the ACCC that it 'does not object' to the proposed ordinary stamped letter prices was welcomed by Australia Post CEO Ahmed Fahour, who described the decision as “the second, critical step in letters reform” after approval was granted in September by the federal government for a new two-speed letters service.