Malcolm Turnbull backs changes to Australia Post deliveries

Communications Minister Malcolm Turnbull has given his strongest indication the federal government will allow Australia Post to increase stamp prices and introduce a three day a week letter service to combat bleeding letter revenues.

Australia Post managing director Ahmed Fahour on Tuesday said the organisation would become a major drain on taxpayers without changes to its community service obligations. Australia Post is required to deliver standard mail to 98 per cent of homes five days a week and to have a uniform price for standard letter deliveries.

The comments came as the government released a Boston Consulting Group report validating Australia Post's projections of plummeting letter volumes and recommending sweeping reforms.

The company is forecast to make its first ever loss this financial year.

In a speech in which he ruled out privatising Australia Post in the foreseeable future, Mr Turnbull said the organisation would be washed away by a "technological tsunami" without changes to government regulations.

''Without regulatory change we are placing the company's viability and long-term sustainability at risk,'' he told a conference in Canberra. ''It's clear from the work that Australia Post and BCG has done, and from the experience of postal operators around the world, that a key to reform is to ensure the stamp price reflects the actual cost of delivery - something that is not currently the case in Australia.

''Another is to introduce a two-speed letters service - a priority service delivered on five days a week and a regular service delivered on three.''

Mr Turnbull said allowing Australia Post to offer more government services - including Centrelink and Medicare services - would boost the viability of post offices. Forecasts suggest Australia Post's letter business would post a cumulative loss of $12.1 billion over the next 10 years, with the company overall posting a $6.6 billion loss over that period.

This story Malcolm Turnbull backs changes to Australia Post deliveries first appeared on The Sydney Morning Herald.