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Loss-making Australia Post may need taxpayer rescue

Australia Post’s chief executive believes his beleaguered letters business will never be profitable again. For a second year in a row, the budget sounds a warning.

The organisation’s near-term fortunes seem to have improved – helped by structural reforms. Last year Australia Post’s financial state was described as “deteriorating” whereas this year it is couched in terms of “uncertainty”.

“Given the uncertainty surrounding Australia Post’s financial position, there is a risk that the Australian government will need to consider providing financial assistance to Australia Post in the future,’’ budget papers said.

In last year’s federal budget papers the government conceded for the first time that it might have to financially prop up the national mail carrier as it sped towards its first financial loss in a decade, potentially punching a hole of hundreds of millions of dollars in the government’s finances.

The challenges still facing Australia Post, led by the continued losses from its traditional mail service, saw it report for the 2022–23 a full financial year pre-tax loss of $200m. It was Australia Post’s first annual loss since 2014–15.

“It reflects the way in which digitisation of the global and national economy is changing how many people and businesses use postal and related services. Australia Post does not receive financial support from the Australian government but is required to meet a range of Community Service Obligations,” the budget papers said reflecting on the loss.

To help arrest this decline and deepening black hole of losses, the government announced a package of reforms in December to enable Australia Post to boost productivity, increase its focus on parcel delivery services, and improve financial sustainability. These measures, which began in April, included stretching out mail delivery times for non-essential mail and also came with a lift in stamp prices to help boost revenues.

“The government will monitor the implementation of these reforms to assess whether they achieve meaningful financial benefits as intended.”

Australia Post chief executive Paul Graham believes his beleaguered letters business, which last year lurched to a loss of $385m, will never be profitable again and has lobbied the federal government to bring in much-needed reforms.

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