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Postal and telephone services and facilities - Statement by Postmaster - General, August 1973 .

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1973— Parliamentary Paper No. 116





AUGUST 1 9 7 3

Presented by Command 21 August 1973 Ordered to be printed 11 September 1973


Printed by Authority by the Government Printer of Australia

Statement by the Postmaster-General relating to proposed

Postal and Telecommunications Charges

In his Budget Speech the Honorable the Treasurer referred to new postal and tele­ communications charges to be introduced in 1973/74. The legislation relating to these

will be introduced during this Session.

Details of the proposed adjustments are set out in schedules now available to

Honourable Members. In the main, the effective date of variations would be 1 October 1973.

The Government inherited a Post Office in financial difficulties caused by hidden subsidies and misallocation of resources to uneconomic areas of investment. These

difficulties can not be removed in one year but a major start can be made.

The previous Government blamed in­ creases in charges on the staff—because the staff were awarded better wages and

conditions through the arbitration process. They urged restraint on the workers but not on businessmen whose prices were subject to no arbitration process. We rejected that reasoning then and we reject it now.

The increases in charges I propose now would be unnecessary if business principles had been followed by the previous Govern­ ment in setting tariffs.

Concessional and Uneconomic Services

Most of the $49m to be raised in 1973/74 from higher charges will come from

concessional and uneconomic areas of Post Office activity.

The registered newspaper and periodical service would have lost about $10-5m in 1973/74 because of the concessional postage rates which apply. Significant losses have

been made on this mail for many years. This has been met by other customers and the taxpayer. Progressively, and over a

three year period, this service will be placed on an economic basis. Telecommunications charges to press, broadcasting and television organisations will also be brought into line

with those payable by other businesses and the general public.

Private branch exchange switchboards and intercommunication units used by businesses are currently rented to customers at unprofit­ able rates. The new schedule of charges will

move towards correcting this position and help to ensure that the business sector of the community makes a more equitable contribution towards the cost of providing

services. Telephone subscribers in metropolitan areas have paid much higher rentals than people in country areas, although costs of

providing service in country areas are much higher. It is recognised that a telephone service is valued by ail sections of the

community and it is not appropriate to perpetuate this difference in rentals. The Postal Service continues to operate at a substantial loss. A major cause is the

postal interest burden due to past losses on concessional and uneconomic services. The question of interest is one which will no doubt be considered by the Australian Post

Office Commission of Inquiry. In the meantime, however, unprofitable postal rates have been reviewed to minimise the expected 1973/74 Postal loss to a level where all

costs except interest are covered. The basic letter rate has not been increased. In determining how the financial needs of the Post Office for capital and operating

purposes are to be met, the Government has had to make some judgments as to the extent to which customers on the one hand, and taxpayers on the other, should con­

tribute to meeting these needs. Account has been taken of the report of the Coombs Task Force which has made a close scrutiny of the continuing

expenditure commitments of the previous Government to enable their importance to be assessed compared with the possible introduction of programmes derived from

the Government’s own overall policies.

Post Office Trading Result As indicated in my White Paper on Post Office Prospects and Capital Programme 1973/74, re-invested profits enable the Post Office to meet demand for service at


a higher level than would be possible if finances were restricted to borrowings avail­ able through the Budget. In 1972/73, these re-invested profits were about $42m; a Postal loss of $22m was offset by a

Telecommunications surplus of $64m. The amount available for re-investment in 1973/74 will be of about the same order as 1972/73 at $50m— a Postal loss of

$14m and a Telecommunications surplus of $64m.

Without the proposed adjustments to charges, the Post Office would come very close to being in an unprofitable situation and be less able to pay for expansion costs.

In financing Post Office capital invest­ ment, 57% of funds in both 1972/73 and 1973/74 will be provided through the Budget.

Metric Conversion

Post Office tariffs and conditions will be expressed in metric terms from 1 October 1973. The conversion to metric has been made after determining the tariff adjustments necessary as a result of heavy Postal trading losses and in order to increase the contri­ bution towards telecommunications capital

investment. Notice of Post Office metrica­ tion was given on 17 May this year.

Because of mandatory international requirements and the desirability of con­ sistent domestic and international tariff structures, a 20 gram first weight step for letters has been adopted. 97 per cent, of letters up to 1 ounce weigh no more than 20 grams. The remainder consists almost entirely of business letters. A 20 gram step has a negligible effect on the general public.

A 50 gram first weight step for Other Articles has been adopted instead of the present 2 ounce step. The main group affected will be those mailing printed matter. It is expected that most mailers will adjust to the new weight by decreasing the number or weight of enclosures.

For parcels the usual weight unit will be 500 grams.

Because of the relatively high price of overseas airmail letters, the present i ounce weight step will be converted to a 10 gram step and rates reduced.

Chargeable distances for trunk calls have been rounded up to the nearest 5 kilometres to ensure no charges will increase as a result of metric conversion. In fact some calls will cost less as a result of the rounding up.

For private lines, charges have been con­ verted on the basis that 1 mile is equivalent to 1 ■ 6 kilometres with provision to ensure that existing customers are not penalised.


Mr. Speaker, I turn now to Telephone and Telegraph charges, detailed in the schedule, which are expected to raise $31m in 1973/74.

Service Connection Fees At present, a connection fee of $50 is payable where a new telephone service or the removal of an existing one involves the provision of new lines or equipment to complete the installation. Since its inception in 1956 this fee has been regarded as a

small contribution to the cost of providing a telephone service. As a measure of the contribution, the average cost of adding a telephone service to the network in a capital city is about $1,600.

An existing subscriber must not only pay the $50 fee for his initial installation, but also $50 each time he moves his service to a new address where a telephone service is not already installed. This is considered unfair— it is proposed to reduce the fee to $30 where an existing subscriber moves his service in such cases.

Because of higher costs, it is proposed to increase the $50 fee to $60 where a

new applicant, as distinct from an existing subscriber, applies for a telephone service and connection to the network involves new lines or equipment.

Where a new applicant can be connected by using existing lines and equipment, including the telephone instrument, the fee will be $30. For an existing subscriber, the equivalent fee will be $15.

Adjustments are also being made, as shown in the schedule, to connection fees for temporary services and for the recon­ nection of services disconnected through

non-payment of accounts.


Telephone Rentals Rentals for subscribers connected to exchanges in the State capital cities,

Canberra and Newcastle local call areas will not be increased. Country rentals, except for those services connected to non-continuous exchanges, will be increased from $27 or $37 to $55

annually, the same as metropolitan rentals; to recognise the limited service available at non-continuous telephone exchanges it is proposed that these rentals should be

increased by only $8 annually, that is from $27 to $35. This will increase receipts in 1973/74 by $16m. Cheaper rentals have applied historically

in the country. The reason given has been that a subscriber in the country has access to fewer subscribers than his metropolitan counterpart at the local call fee. However,

this ignores the great differences in the average cost of providing a telephone service in country areas— and especially in rural areas— than in metropolitan areas. This is

illustrated in information supplied by the Post Office to the Commission of Inquiry regarding a study of the costs per net

connection in the various areas: • Capital cities and Newcastle $1,600 • Local call areas with more than 2,000 subscribers $3,600

• Local areas with up to

2,000 subscribers . . $9,000

Trunk Call Fees The present charges in the first telephone trunk charging step (up to 30 miles) are 19 cents during the day and 15 cents at

night, for three minutes. It is proposed to reduce these charges to 15 cents and 10 cents, respectively, to narrow the gap between the local call fee and the first

trunk charge, as well as to round the

distance up from about 48 kilometres to 50 kilometres. Many trunk calls are made through Departmental telephonists when they could

be dialled by the callers using STD.

The telephone network has been developed extensively around the principle of automatic service for both local and trunk calls. It is reasonable that a caller who wishes to have personalised service should pay

extra for the operator time, equipment, and other costs incurred. This is in line with

the practice of a number of overseas

countries. The extra fee, which is still less than actual cost, is 20 cents a call. Because of the changes in business hours over recent years, including the staggering of staff hours, more business calls are being made before 9 a.m. It is proposed, there­ fore, that the charges for day rate trunk

telephone and telex calls will apply from 8 a.m. to 6 p.m. in lieu of 9 a.m. to 6 p.m. as at present.

Private Line Rates These rates will be re-arranged by

increasing the charges for the short distance lines and by reducing the rentals for the long distance services to bring them more into line with relative costs and overseas

bases of charging. It is also proposed to vary the relationship between telephone and telegraph private line charges to better reflect cost factors. A number of telegraph circuits can be derived from a telephone circuit. At present, the annual rental for longer distance private telegraph lines is about 60% of that for

private telephone lines. It is proposed to reduce these charges to about 50% of the private telephone line rate.

Miscellaneous Telecommunications Facilities Charges for switchboard equipment and intercommunication units will be increased. At present, most of the charges are

unprofitable, some of them highly so. The adjustments will raise $13m in 1973/74. It is also proposed to increase the charge

for appointment and reminder calls provided by the Post Office. The present fee (9-5 cents) is clearly uneconomic and an increase to 20 cents is justified.

Certain other incidental telegram and telephone fees which are highly unprofitable and which have not been altered for many years will be increased.

Concessions to Press, Broadcasting and Television Organisations As indicated earlier, concession charges to press, broadcasting and television organisa­

tions in respect of telegrams, telephone and telex calls and the lease of private telephone lines will be discontinued from 1 October 1973.


Charitable Institutions Present legislation allows a 50% con­ cession on local call charges for charitable institutions which have for their object the relief of the poor or afflicted within

Australia. Because STD calls and local calls register on the same meter for charging purposes, the legislation cannot now be applied in the manner intended. Moreover, organisations having access to STD are benefiting more than those which do not.

It is proposed, therefore, to replace the present concession with a concession pro­ viding for a one-third reduction in rental charges for exchange lines and associated

equipment. The concession will also apply in respect of the fees charged by the

Department for maintenance of contractor- installed P.A.B.X.’s.

Revised criteria which will widen the eligibility for the concession will apply.

Provision of Telephone Services in Country Areas

In 1970, the previous Government announced that in future the Post Office would progressively provide and maintain all telephone subscribers’ lines. Since then, lines up to 15 miles radially from an

exchange have been provided without any contribution from the applicant. Beyond that distance, applicants have been required

to pay for each additional radial quarter mile at a standard rate.

The implementation of this policy has already cost about $28m. This policy is diverting a disproportionate amount of resources to high cost areas to the detriment of applicants in metropolitan, outer metro­ politan and other growth centres where the need for service is just as great and is certainly more economic to provide. Faced with this position, the Government has decided to revise the policy.

In future, the Post Office will provide line plant free of charge up to a radial

distance of 8 kilometres from an exchange. The Department will still provide and maintain line plant for applicants located beyond this distance in automatic exchange areas or in those areas programmed for automatic conversion but, in both of these cases, the applicant will be required to contribute to the cost of the line beyond

8 kilometres radially from his exchange. For the convenience of those applicants, the contribution may be paid over a three year period. In manual exchange areas, applicants will generally be responsible for providing and maintaining their own lines from the 8 kilometre point to their premises.

Similar principles will apply in regard to existing services with private sections of line plant, in that if the subscribers are located within 8 kilometres radially of an exchange, their lines will be replaced progressively by Departmentally provided and maintained line plant on conversion to automatic service. If the subscribers are beyond this distance, they will be required to contribute to the

additional cost beyond 8 kilometres.

In 1973/74 the previously planned

expenditure of $16m will be cut by about half. However, even under the restricted policy it is expected that some 1,400 new lines will be provided and 1,900 services



Mr. Speaker, I now turn to the Postal Service. It is expected that the increased charges will bring in $18m in 1973/74.

The schedules to which I previously referred contain complete information about the proposed postal charges. I would like to comment on the more important of these.

Letters and Other Articles

The basic rate of 7 cents is unchanged but the rates for heavier items which were not changed when tariffs were last adjusted in 1971 are increased.

Domestic Airmail

Small and medium size letters will

continue to be carried by air without

payment of an additional airmail fee subject to the previous dimensions and to a 20 gram weight limit. A single airmail rate schedule for all other items except parcels replaces the present cumbersome system whereby the fee is determined separately from and on a different weight basis to the postage rate and then added to it.


Domestic Parcels Rates will be increased and the maximum parcel weight will be increased from

10 kilograms (22 lb.) to 20 kilograms.

Registered Publications The original social purpose of the

concessional rates on registered newspapers, periodicals and books was to encourage the dissemination of news and information and to develop greater literacy. With the

growth of other media and educational facilities, this concession has become in effect a substantial subsidy to the printing and publishing industry and to a variety

of organisations. The Government considers this subsidy is not an appropriate charge on the Post Office’s finances and that it should not be

a drain on the Budget. It is by far the

greatest single source of loss to the Postal Service. The subsidy will be phased out over three years. The rates applicable to the economic

Category * C ’ will be paid on bulk postings of Category ‘ A ’ and 1 B ’ publications by 1 October 1976. The transition will be in stages comprising metric conversion from

1 October 1973 and increases on 1 March 1974 and 1975 and 1 October 1976 as detailed in the schedule. The general rates for registered publica­

tions including books and bulk pre-sorted books will not continue from 1 October 1973. However, the Category ‘ A ’ and 1 B ’ rates will then apply for non-subscriber

copies of Category ‘ A * and ‘B ’ publications posted in bulk by proprietors, printers, publishers, newsvendors and agents. Normal rates will apply to other than bulk postings.

Consistent with these moves, new applica­ tions for registration in Category * A ’ will not be accepted after 30 September 1973. Category ‘ B ’ was closed to new applicants

in 1971.

In some cases, a different timetable is warranted. Country newspapers and periodi­ cals issued more than three times weekly and those not now printed and published

in country areas are to be transferred from Category ‘ A ’ to Category 1B ’ from

1 March 1974. Similarly, newspapers and periodicals of educational, scientific and technical organisations will be placed in Category ‘ B ’ as from 1 March 1974. It is

considered that the recipients can either afford to pay or do not have special

grounds warranting preferential treatment compared with other organisations. Newspapers and periodicals (other than country) issued more than three times

weekly and those published by employer and professional associations will be trans­ ferred from Category ‘ B ’ to Category ‘ C ’ as from 1 March 1974. There is no need for the distribution of daily newspapers

to be subsidised. Similarly, members of employer and professional associations do not warrant special treatment in the light

of other needs. Employee association publications will remain in Category 1 B ’. A minimum bulk postage of $1.50 per lodgment will apply from 1 October 1973 for Category ‘ A ’, Category 1B ’ and

Category ‘ C ’ bulk postings other than those made by newsvendors and agents. No minimum applies at present. The Government recognises that many

organisations including worthwhile ones will be affected. However, a number of these bodies already receive other Government assistance through grants, taxation deduc­

tions, and other concessions. The Govern­ ment’s view is that, where voluntary work is necessary or desirable to meet community needs, any assistance by the Government

should be given in a direct form. Hidden subsidies cause taxes and charges by government business undertakings to be higher than necessary.

Special Services Increases are proposed for the unprofitable labour-intensive special services such as registered mail and certified mail. Increases

in the fees for private boxes, bags and receptacles are also proposed and an inter­ mediate rate has been introduced for boxes at specified post offices such as inner city

offices where operations are expensive.

Overseas Mail Airmail letter and card rates with the exception of New Zealand will be reduced following the decrease in the weight step from i ounce to 10 grams. Other Article

and Parcel airmail rates are unchanged, the variations to the weight steps being such that there are compensating increases and decreases. Aerogrammes will be increased

from 12 cents to 14 cents.


Papua New Guinea Papua New Guinea has been pressing for international postal accounting arrangements to be introduced because of the extra

revenue which this would give it. This is consistent with its movement to self- governing status and the change to in­ dependence in the relatively near future. The tariffs appropriate to nearby overseas countries will therefore apply to Papua New Guinea from 1 October 1973.

Money Transfer Services A $20 postal order will be introduced and fees for orders up to $2 will be

increased. Increased fees for overseas money orders will apply from 1 October 1973. Some bank cheque features will be incorporated into the domestic money order service. Although money order procedures will be streamlined it will still be a costly

and unprofitable service. An increase in charges is unavoidable in this situation. However, there will be a major move

towards a flat fee for money orders as

distinct from the current sliding scale of charges which is not equitable to customers sending larger amounts. The new fees from 1 October 1973 for ordinary money orders will be 50c up to $30 and 70c for higher amounts. The same charges will apply for telegraph money orders up to $100 with an extra fee of $1.25 for each additional $100 or part thereof.

This decision has been made after a close study of alternatives.

Redirection Fee

The redirection fee of $3 per month or part thereof for business and industry and $1 per month or part thereof for other

customers will be introduced on 1 October 1973 to recoup part of post office costs of redirecting mail. Britain, U.S.A. and New Zealand charge for redirection.

M r Speaker, when introducing the

necessary legislation later in the Session I will elaborate further on these matters.

19276/73 6