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Australia Post price rise approved by ACCC

Friday, 28 May 2010
By Print 21 Online Article

Anger from industry associations as ACCC allows Australia Post to proceed with proposed price increases.

The Australian Competition and Consumer Commission today issued its decision not to object to Australia Post’s proposed price increases, including lifting the basic letter rate from 55 to 60 cents. 

The price rises in letter services are proposed to take effect from 28 June 2010 and will apply to Small, Large and PreSort letter services.

The news has caused ire amongst associations, including Printing Industries, Australian Direct Marketing Association and the Major Mail Users of Australia, who lobbied against the proposal.

Printing Industries CEO Philip Andersen said it was now up to the Minister for Broadband, Communications and the Digital Economy, Senator Conroy, to intervene to stop the unjustified cost impost on the printing and mailing services industry.
 
“Senator Conroy needs to heed the concerns of the industry and prevent this price increase from taking place,” he said.
 
“Last year the ACCC correctly rejected the price notification stating that it was concerned that Australia Post’s costs were not falling in response to declining mail volumes.
 
“We feel however that another contributing factor behind last year’s decision was the general business environment.  While we have emerged out of the GFC crisis the business environment for our industry has not yet improved to the extent where it can sustain such unnecessary cost imposts.”
 
Printing Industries national manager for policy and government affairs, Hagop Tchamkertenian, said the ACCC decision was done in great haste from the release of the Issues Paper, to the deadline being placed on submissions.
 
“Today’s decision reconfirms industry fears that the whole process was a fait accompli and a charade from day one,” he said.
 
“Our submission clearly outlined the reasons why the 2010 price notification should be rejected. Printing Industries believes that Australia Post has not yet fully exhausted its cost based responses to falling letter volumes.
 
“We also believe that it is inappropriate for the ACCC to approve further price increases until such time that Australia Post’s current review of its business model has been completed and the findings have been made public.”
 
Hagop said a Printing Industries survey illustrated potential negative consequences flowing from the postage price increases.
 
This included 77 per cent of respondents saying they believed that the postage price increases would drive customers to alternative marketing channels. The increases would also affect industry profitability (82 per cent); lower production (59 per cent); reduce planned investments in mail fulfilment (52 per cent); lower employment levels (32 per cent); and place at risk the financial viability of businesses (27 per cent).

John Gillroy, chief executive officer of the Major Mail Users of Australia Limited said that the ACCC’s decision to allow an increase in the cost of postage from 28 June showed disregard for the flow-on effect of increased postage costs on all of the businesses and industries involved in the production of paper-based mail.

“The ACCC has pushed aside and disregarded the warnings of all major industry associations involved in mail matters that a price increase would only hasten decreased paper-mail usage and has subsumed its own mandate to watch over consumer interests in favour of Australia Post, the communications monopoly that has had no regard to working seriously with customers over the past six years on cost reduction and process improvements,” Gillroy said.

 

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