Under the Australian Postal Corporation Act 1989, letters weighing less than 250 grams are reserved to Australia Post unless they are carried for a price more than four times the basic postage rate. All of the other goods and services that we offer are sold in fully competitive markets, and they provide the majority of revenue and profit for our business. The graph below shows how an increasing proportion of our profit is derived from the sale of products and services in competitive markets (i.e. from non-reserved services).

To ensure that costs are fairly allocated to all products and services, our costing system is periodically subjected to independent, expert scrutiny. The last such review (by Trowbridge Consulting in 2000) concluded that the costing system “is an effective methodology for regulatory and compliance purposes”.

As of 2004/05, our financial results are subject to an additional audit by an external auditor as part of the ACCC assessment of whether any cross-subsidy exists from the reserved service to products and services sold in fully competitive markets. The ACCC has released its first public report, which decisively concluded that “Australia Post’s non-reserved services did not … receive a subsidy from reserved services in 2004/05”. For more information about trade practices compliance, click here.

Click here to view a larger version of this graph.