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Australia Post stamp hike -

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PETER CAVE: Australia Post wants to hike up the price of stamps by another five cents saying it's
being squeezed by higher business costs.

Analysts say that a price rise is fair because so called snail mail isn't cheap to distribute
across Australia.

The changing face of communication in Australia has been hurting the postal service's traditional
business with email becoming the preferred method of communication.

But social demographers say there's a new trend that will keep Australia Post profitable and that
is internet shopping.

Di Bain reports.

DI BAIN: It'll be the second price hike in nearly two years but Australia Post's spokeswoman
Elizabeth Rich says it's not about increasing profits but covering costs.

ELIZABETH RICH: We have applied to the ACCC to increase the price of basic postage, that is the 55
cent stamp by five cents and what the ACCC will do is assess that before deciding whether or not to
object. So it's the first step in the process where the independent umpire looks at whether what we
want to do is reasonable.

DI BAIN: Why do you need to increase the price of a stamp when it was done just last year?

ELIZABETH RICH: Rapid growth in places like western Sydney, south-east Melbourne and south-east
Queensland is going to add an extra 2.5 million new addresses over the next decade to Australia
Post's network. And to put that in perspective, that is the equivalent of having to deliver to
another Queensland or nearly four Adelaides by 2020.

So we need the increase to help cover the escalating costs of delivering to that rapidly expanding
network.

DI BAIN: Since becoming incorporated in 1989 Australia Post has been trying to diversify its
business model.

It's increased stamp costs from 39 cents to the current 55 cents. It's been selling off land,
franchising post offices, setting up retail arms and providing bill paying and identification
services.

But keeping up with the changing face of communication is still taking its toll.

IBISworld's senior analyst Raghu Rajakumar says the government-owned enterprise is likely to
continue increasing its stamp costs in coming years.

RAGHU RAJAKUMAR: There is definitely a chance that that may happen. I mean there was a recent one I
mean last year so it's not expected to happen in the near future. But as competition does increase
from rival products for example more and more internet penetration in Australia, more people
logging onto the internet and using that as their primary means of communication, then there may be
a time when costs are rising to the extent where another price rise is required by the Australia
Post.

DI BAIN: Dr Mark Gregory is a communications lecturer at RMIT University in Melbourne. He says
emails are taking over the snail mail but the internet shopping is a revenue winner.

MARK GREGORY: There is a lot more parcels being transmitted around but I wouldn't look at it as
people sending parcels or people receiving parcels from suppliers where people have been buying
goods over the internet.

DI BAIN: Demographer Bernard Salt who's with accounting firm KPMG say emailing, Facebook messages
and Twitter are popular ways of communicating but many people underestimate the letter writing
habits of the older population.

He says there's also a new trend emerging. The younger generation sees traditional letter writing
as a romantic way to communicate.

BERNARD SALT: I just recommend caution in assuming that this new technology is going to replace
traditional mail. I think it will augment and I think there might be specific areas where it might.

But who is to say that it's actually going to generate more mail. Remember the theory with when
home computers came in or computers came in we would have the paperless office because everyone
would be doing everything electronically.

Well actually quite the reverse happened. The demand for computer paper absolutely skyrocketed
because everyone wanted to print something out.

It may well be that because of mobile phones, because of text, because of email, because we are
communicating so much more that then generates the need to send more stuff through the post.

PETER CAVE: Demographer Bernard Salt ending that report from Di Bain.