Australia post made a profit before tax of $402.8 million in 2012-13. In the last 4 years its combined profits were more than $1.25 billion.

Australia Post is experiencing a trend decline in the volume of letters it delivers and a trend increase in the volume of small parcels it delivers. As described above, its overall profitability is growing. The trend decline in the volume of letters is a worldwide phenomenon which is explained by a growing reliance on electronic communication, however, while there is little doubt about the decline in the volume of mail, estimates of the rate of decline vary significantly and assertions that the trend decline will continue for a decade or more are based on no empirical evidence.

While the costs of maintaining a delivery network for letters is large it is important to note that the costs of this network underpins not just the delivery of letters but of small parcels as well. While Australia Post and the Boston Consulting Group have recently argued that the delivery of letters is placing an ‘unsustainable’ financial burden on Australia Post, in fact the delivery network used for letters is actually the foundation on which the rapidly growing, and highly profitable, small parcel delivery business is based.