Thursday, March 5, 2015
No rubber stamp from ACCC on postage price increase; regulator to consider Australian Post universal service obligations
The Australian Competition & Consumer Commission says it could take six to nine months to consider Australia Post's plans to increase the cost of a basic postage stamp.
The ACCC chairman Rod Sims told AM the regulator will need to undertake wide consultation to determine the fairness of increasing the stamp price from 70 cents to one dollar.
"The tricky bit is the cost allocation. Usually the cost systems that companies have don't provide the sort of cost allocation. So we need to understand what the efficent cost of a standard letter service is," Mr Sims said.
"Consumers have a right to a particular service at a price that's fair and reasonable so we need to assess what that fair and reasonable price is.
"We'll need to consult with particular users to get their input as well. These things always take time."
Mr Sims said the regulator is yet to formally hear from Australia Post since federal cabinet approved the proposed reforms earlier this week, but confirmed informal discussions had recently taken place with Australia Post chief executive Ahmed Fahour.
Australia Post wants to implement wide reforms to it's business that would include a two-speed postage service for its loss making letter deliveries business so it can focus on the lucrative opportunities in freigh and parcel deliveries.
The ACCC will also examine Australia Post's universal service obligations part of the review given a charter to provide a postal service at an affordable price that meets social and commercial needs of the community.
"Of course, technology has changed but you've got to look after those people who, for one reason or another, whether they be businesses or households still want to send letters. So there is a clear case for having a regulated price on that standard service," Mr Sims said.
"All part of the logic of having the regular service must meet certain universal service obligations and having to work out the efficient costs of that versus the premium service is what we'll be wrestling with."
Mr Sims said the ACCC would examine the proposed postage stamp increase in the same way it consider increases for other utilities like gas, electricity and water.
"I think you just can't take that service away. You've got to keep providing it, certainly for the foreseeable future. The question is what price people should pay. But I think having that universal obligation makes a lot of sense."