Australia Post's letter delivery to drop to every second day

The outcomes of the landmark modernisation review of the national postal service, which also includes an increased focus on more profitable parcel deliveries, come after Australia Post reported a full-year earnings loss in August for the first time since 2015 and the second time since it was established as an enterprise in 1989. About $384 million was lost alone on its declining letter businesses.

Communications Minister Michelle Rowland, Australia Post CEO Paul Graham, and Communication Workers Union National president Shane Murphy will announce the reforms, which will come as amendments to Australia Post's performance standards, on Wednesday at a Sydney mail delivery centre.

Changing customer postal needs and digitisation have led to the average household only receiving just over two addressed letters a week.

"Australia Post can't stand still. Consumer and small business demands are changing, and Australia Post also needs to adapt," Ms Rowland said in a statement.

"These new processes will mean Australia Post continues to deliver the high-quality letter service many Australians rely on, while also growing its booming parcel business for the benefit of consumers, small businesses, and its hardworking staff."

The reforms come after consultation with the public, businesses, unions, post office licensees, and agents, and have been informed by co-designed workforce trials. It comes as Australia Post seeks to increase in the cost of a basic postage stamp from $1.20 to $1.50.

Mr Graham, who had warned earlier this year that the enterprise would be looking to government to fund losses within five years without meaningful reform, said it was a "significant day in Australia Post's history".

"As eCommerce continues to boom and fewer and fewer Australians send letters, the changes to letters frequency announced today will free up our posties to also focus on parcels and packages. This will further turbocharge eCommerce in Australia," he said.

"Urgent mail will still be delivered as it always has, and the reforms announced today do nothing to diminish our unwavering commitment to the service and support we provide across Australia."

Existing posties will continue to deliver in their one round, every business day, but they will be split into two parts, one with letters and one without. The trials showed expanded delivery points by more than 10 per cent per round and enabled postal workers to carry up to 20 per cent more parcels.

Posties were involved in the creation of the new model.

"This model allows posties to meet their changing day-to-day workloads without feeling like they're constantly falling behind - delivering better service outcomes for our communities, whilst securing our posties' jobs," Mr Murphy, the CWU boss, said.

The reduction in letter deliveries and other reforms will come in the form of new regulations, meaning legislative reform will not be required. There is a legislative requirement for an Australian letter service, but the regulations provide the details.

With letter deliveries changing to every second day, Australia Post will get an extra day to deliver regular letters across Australia.

"In an environment where customers are sending fewer letters and more parcels, it is important that the business structure of Australia Post reflects the needs of the modern Australian consumer," Finance Minister Katy Gallagher said.

The government will also allow Australia Post to deliver priority mail, about 8 per cent of addressed letters, at a more commercial rate and work with customers to set "appropriate" terms and conditions.

Australia Post is also getting an update on the rules around how a post office is classified as needed. The current rules are based on the out-of-date 1991 census. The government expects approximately 70 outlets will be reclassified to "Remoteness Areas" other than '"Major Cities" with no impact on the services provided at these outlets or on the prescribed minimum numbers of post offices that must be retained.

The government has also flagged that it will work with Australia Post to develop a pricing oversight mechanism covering the cost of basic postage.

The consumer and competition watchdog, the ACCC is currently assessing Australia Post's request to increase the basic stamps from $1.20 to $1.50, with a decision due in early 2024. Concession card holders still have 60c stamps, while Christmas stamps remain unchanged at 65 cents.