Small businesses can expect to pay more for postage next year after the competition watchdog said it will not oppose a hike of the basic postage rate from 70 cents to $1.
Australia Post will launch a formal notification of a price increase shortly, with the Australian Competition and Consumer Commission’s final decision on the price change expected to be handed down next month.
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The national postal service says it will keep the price of concession stamps at 60 cents until 2017, so as not to negatively affect people on low incomes.
Ahmed Fahour, managing director of Australia Post, said in a statement the proposed price increase will help the postal service ensure a “sustainable letters service” for all Australians.
“Post Office licensees will receive, on average, a $25,000 boost per annum, which is part of the additional $125 million increase in annual payments that Australia Post has committed to for the licensee network,” Fahour said.
“It will also allow Australia Post to recover more of the cost of the service while maintaining five-day a week delivery and continuing to meet our important community service obligations.”
A two-speed letter service is also expected to be introduced early next year.
But what will the increase to the cost of stamps mean for Australian small businesses?
A price increase is good news for licensed post offices
Angela Cramp, chair of the Licensed Post Office Group, told SmartCompany she is “absolutely delighted” that the ACCC has decided not to oppose the potential price increase.
“It’s the first decent pay rise licensees have had for 15 years,” Cramp says.
“We only get a pay rise when the BPR [basic postage rate] goes up, and for one period it was static for 11 years. It’s crippling for small businesses who are doing the work and not matching the CPI increases that go up every year.
“We have to pay our staff and rent and that goes up every year, but our income does not.
“It means many, many more licenced post offices have now got a chance to survive.”
Cramp says she is not too worried about licensed post offices potentially copping flak for a price increase from disgruntled customers.
“They [the prices] have simply caught up to the CPI,” she says.
“Australia has been basically getting an underpaid postage rate for a long time. We’re simply catching up.
“The licensed network may well cop the flak, but it is actually better for us to cop that flak and explain to our customers it’s the reason we can stay open.”
As for a whether a price increase will mean businesses turn away from sending letters via Australia Post and use email instead, Cramp says this trend is happening anyway.
“Businesses will go to digital and then they will realise people don’t open their emails,” she says.
“Eventually, people are going to come back to the post. It’s quite documented now that if you send your invoices out via email, your payment cycle blows out.
“But if you send a piece of paper to someone’s letter box, you’re much more likely to get that payment within 30 days.”
But will an increase to the basic postage rate hurt other small business owners?
Should the basic postage rate go up from 70 cents to $1, small businesses that regularly use Australia Post to send letters and invoices to clients will have to spend more.
However, the vast majority of SMEs contacted by SmartCompany were not too concerned by the price increase, mostly because they have already migrated to email to communicate with clients.
Lisa Burnell, the co-owner of Ronald Young & Co Builders in Hobart, told SmartCompany she is not too concerned about the price increase because it has been coming for a long time.
“We saw this coming and we now send out things to clients via PDFs, such as our brochure ranges instead of posting them,” Burnell says.
“Because our clients are more and more of the younger generation, they expect things straight away.”
“So we do things digitally now anyway.”
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