Internationally-set prices for letters and small package deliveries mean Australia Post is effectively subsidising deliveries to China, CEO Christine Holgate says.
Holgate also told Senate estimates on Tuesday the cost of Australia Post’s local letter delivery business continues to cut into the corporation’s revenue.
Holgate said the letters business cost the corporation A$191 million last financial year but it still made a A$40 million profit.
Australia Post, a government-owned corporation, has an obligation to provide a letter delivery service but it has recently announced a 10 cent increase to postage rates from January.
“If we exclude letters from our business in this first quarter, our underlying revenues are up 14 per cent,” Holgate said.
When it came to shipping rates set by the Universal Postal Union, Ms Holgate said 70 per cent of its losses under this international agreement were on its China leg.
Holgate said a cap on this price would be lifted in the next three years, allowing Australia Post to reassess the charge.
Holgate said while China pays Australia A$1 to send a letter here, Australia has to pay A$1.75.
She pointed to U.S. President Donald Trump who criticised how much his nation was paying to send letters and small packages to China.
“I guess the objections that Mr Trump had was that he sees China very much as the developed nation and didn’t accept the argument that countries like Australia, the USA and Canada should be subsidising their costs,” Holgate said.