Australia Post chief Ahmed Fahour has told a Senate committee that commercial mail is being subsidized by the taxpayer, setting off a new round of speculation that the national carrier is again preparing to increase prices for business mail.
“There’s no question that we have been trying to reduce the losses because the majority of the mail is business mail and we lose money,” Fahour told the Senate Environment and Communications Legislation Committee in Canberra.
“The reality is that business customers have been getting a fairly substantial discount on the efficient cost, which is what the ACCC reviews. And what the ACCC is saying is that the prices we are getting from business customers gives them too big a discount for us to comply with the requirements of making a commercial rate of return. We are not making a commercial rate of return and still do not make a commercial rate of return. We don’t even make a profit on that business mail.
“97 per cent of our mail is business mail and social mail makes up only three per cent," said Fahour, under questioning from Senator David Leyonhjelm (pictured). The PIAA had approached the senator before the hearing and asked him to take up the issue of business mail with Fahour.
"We’ve lost money every year since 2009 on letters," Fahour told the committee. "So, in effect, what’s been going on in the last five years is that the taxpayer has been cross-subsidising businesses through us to send mail at a discount price.
“Businesses pay a 25 per cent or so discount off what consumers pay, so businesses are actually getting a cheaper price in the order of 65 or 70 or 75 cents versus the consumer who’s paying a dollar.
“Every business out there is going on line and encouraging their customers to go on line. What we’re saying is they’re all substituting as fast as they can to digital forms, and what we need to do is at least recover our costs for the service that we provide.”
Mary Jo Fisher, the PIAA’s director of government relationships, says Fahour's intentions are obvious. “Reading between the lines of his evidence, it’s clear that an increase is imminent. Australia Post intends to continue to put the squeeze on business mail and it intends to do so without any transparency or accountability.
“There’s supposed to be a clear discount for bulk mail but Australia Post has refused to tell us how that discount has been calculated and applied. Either there’s a discount or there’s not, or is he just making up the amount of the discount on the run? You’d have to expect that there’s another increase on the way soon. It means our members can’t plan in a business sense and we don’t think that’s acceptable.”
Last year, after a widespread industry backlash against a new range of price increases, Australia Post responded by announcing a 25 per cent discount on promotional mail as part of a new 'customer support package.'