Australia Post has asked the Australian Competition and Consumer Commission (ACCC) to allow it to increase the price of a stamp by more than 40 per cent to $1. It has lodged a draft notification asking for an increase in the Basic Postage Rate (BPR) from 70 cents to “better reflect the cost of the regulated letters service.”

It flagged the increase in March after its plan to introduce a two-tier mail delivery system, with regular mail deliveries reduced to three days a week and a more expensive first class service, were rejected by the Government.

“Consumers will be supported, with the concession stamp price frozen at 60 cents for 5.7 million concession cardholders and the price of a Season Greeting stamp frozen, for all Australians, at 65 cents,” said Australia Post in a statement outlining its submission to the ACCC.

Concession and Season Greeting (Christmas) mail comprise nearly half of all mail sent by consumers. The great majority (97 per cent) of regular mail now comes from business and government, with very few personal letters.

Mail has been declining for years as email, electronic funds transfer (EFT) and other forms of online communication have taken over. Australia Post says that the regular letter service has accumulated losses of more than $1 billion over the past seven years, and that the intended increase will still not return stamped mail to profit.

Australia Post makes a significant profit on its parcels business, which is growing strongly with the boom in online shopping. The government owned enterprise was restructured last year and reorganised into two brands, Australia Post (mail and retail) and StarTrack (parcels and express services).

“The changes will keep post offices open – including Australia Post’s vital regional and rural network. It will keep posties delivering five days a week and ensure Australians everywhere can still access a world-class delivery service. Business and government customers will continue to receive volume incentives at the same level as they do now, relative to the full rate.”

It wants to implement the changes in January 2016.

Australia Post has announced a profit after tax of last year $116.2 million, down 34.5% on last year, as the continued decline in mail volumes pushed the enterprise into an overall second-half loss – the first in its history. Losses on regular mail are now outweighing profits on parcel and express deliveries.

For the 2013-14 financial year, Australia Post increased revenue by 8.3% to $6.4 billion, but after-tax profit was down 34.5% to $116.2 million. Consequently, the declared dividend to the Federal Government in 2014 was just $78.8 million, down 59.1% on last year. The operating loss in the heavily regulated regular mail business grew by 15.2 per cent to $328.4 million.

Financial results for the 2014-15 financial year will be announced next week.