Australia Post extends $50 million olive branch to licenced post offices

Australia Post has pledged $51.4 million in payments to save hundreds of its licenced post offices and community postal agencies across rural and remote Australia.

The move follows last year’s senate inquiry, which recommended Australia Post compensate franchisees for the failure of the mail agency’s franchise network.

Australia Post’s relief package will include an increase to the minimum annual payment for nearly 500 licenced post offices from July 1, from $20,000 to $30,000 a year, as well as a minimum annual payment of $7500, which will be introduced for around 500 community postal agencies.

It will also include an increase to the street carded parcel rate from 60 cents to $1.60 where the work required to administer this service exceeds current payments, which Australia Post says will benefit more than 1800 post offices.

Ahmed Fahour, Australia Post managing director and group chief executive, said in a statement the move would immediately affect the future sustainability of 478 licenced post offices and 495 community postal agencies in regional areas.

“We’ve been working closely with our licensees to identify how to best support them in the face of digitisation, a significant challenge facing our traditional letters business,” Fahour said.

There has been significant strain on the relationship between Australia Post and its franchised and licenced post offices in recent months following the senate inquiry, as Australia Post moves to restructure its own business to become more sustainable following a decline in its letter business.

Franchisees, such as the Licensed Post Offices Group, have previously hit out at the time it took Australia Post to act on senate recommendations, claiming some post offices would be forced to close due to the inaction.

Australia Post launched an independent review in conjunction with the Licence Post Office forum through consulting firm Partners in Performance, which examined if the current payments to licences were fair, including the total cost incurred by licensees to run their businesses, and how revenue compares to expenses at a store level.

“The survey concluded that for most transactions, licensees are being remunerated appropriately, however we recognise there are some areas where we can support our operators better,” said Fahour.

“The findings of the PiP study show the complex nature of the challenges facing our LPOs. The study also showed the need for LPOs to have diverse revenue streams in light of declining mail volumes.”

Christine Corbett, executive general manager of postal services at Australia Post told SmartCompany, the payments are another “tangible example” of the steps Australia Post is taking to support its licensees.

“We are absolutely committed to supporting our LPO and CPA network to ensure that we can continue to provide essential services to communities right across the country,” she says.

Post Office Agents Association director Bob Chizzoniti told SmartCompany this morning he welcomes the package but says the deal is not the ideal long- term solution that POAAL was pushing for.

“These measures will help guarantee the income of smaller LPOs,” says   Chizzoniti.

“Licensees are happy to receive the assistance from Australia Post. But an increased minimum payment is no substitute for a long-term strategy for delivering sustainable postal services in rural Australia,” he says. 

“It’s a good bridging arrangement nonetheless,” he adds.

Angela Cramp, chair of the Licensed Post Office Group, told SmartCompany she and her members are delighted with the relief package, although more still needs to be done.

“We’re only too willing to say we will still need more, but it’s a terrific start for a huge amount of post offices,” says Cramp.

She around 500 regional post offices, where the majority of mail is delivered through PO boxes or by mail contractors, are hoping for the olive branch to be further extended to them.

“We’re still being trapped by the flat rate fee, but it is becoming clear to all and asunder that it needs an adjustment,” she says.

“It’s a fantastic relief for around 2,500 post offices, but there is still another 500 of us desperately trying to get in under it as well.”