Australia Post today announced a $51.4 million boost in payments over the next four years to support Licensed Post Offices (LPO) and Community Postal Agencies (CPA) across Australia.

With this announcement, and dependent upon reform approvals, Australia Post has over the last two years pledged $125 million in annualised additional payments to support the sustainability of its LPOs and CPAs. These payments follow recommendations of the Senate Inquiry into the relationship between Australia Post and its Licensees.

Changes include:

  • a new small Post Office support plan to increase the minimum annual payment to nearly 1000 smaller Post Offices; and
  • increasing the street carded parcel rate, which will benefit more than 1800 LPOs.

Ahmed Fahour, Managing Director & Group CEO, said LPOs and CPAs represent over 80 per cent of the national Post Office network and play a vital role in connecting communities.

"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," Mr Fahour said.

"The new small Post Office support plan will immediately strengthen the future sustainability of 478 LPOs and 495 CPAs across rural and remote Australia.

"We have also more than doubled parcel handling payments – with the street carded parcel rate increasing from 60 cents to $1.60 (including GST)."

Today's announcement follows an independent review by Partners in Performance (PiP) into the payment structure for LPOs. The review was commissioned by Australia Post and the LPO Forum.

PiP examined two key areas – the work effort to complete transactions to determine if the current payments 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. This includes increased payments for street carded parcels, where the work required to administer this service exceeds current payments.

"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."

In response, Australia Post plans to introduce a new payment for Licensees to share in revenue when MyPost account customers complete a transaction online and identify their "home" post office. This payment will be finalised over the coming months.

The increase to payments outlined today will be effective 1 July 2015, however the sustainability of these payments is contingent on the successful reform of Australia Post's Letters service.

"Unless the planned changes to reform our letters service proceed, Australia Post will have no capacity to provide this form of sustainability payments to our important partners into the future," Mr Fahour said.

"We've been clear that we will be seeking an increase to the current Basic Postage Rate of 70c to $1, to better recover the costs of delivery. This increase would flow directly to the LPO network contributing $75 million of the $125 million in annualised payments."