08 Feb 2010: Vexation over out–of–date compensation

Australia Post has rejected a Postal Industry Ombudsman (PIO) recommendation to review the level of compensation payable to customers whose mail has been lost or damaged, even though the dollar figure is the same as it was 22 years ago.

Releasing the findings today of his investigation into how Australia Post determines levels of compensation, PIO Professor John McMillan said he disagreed with Australia Post’s view that postal compensation levels were adequate and should not be reviewed.

‘Postal customers would expect that the level of compensation for service failure would be reconsidered in light of changes in the Consumer Price Index (CPI), or at least be reviewed whenever the cost of basic postage is reviewed,’ the Ombudsman said. ‘If present compensation levels are adequate, that should be explained following a proper review.’

Professor McMillan noted that the maximum compensation for items sent by ordinary post in both 2010 and 1987 was $50 but, with inflation, the real value had halved. If the pricing had kept pace with the CPI, today the figure would actually be more than $100.

The maximum basic compensation for registered post and cash on delivery items was set in 1996 at $100 but, with the CPI increasing by 39% in the past 13 years, $100 in 1996 is worth only around $70 today. Customers of those services can, however, choose to buy ‘Extra Cover’ of up to $5,000 for an item.

‘One result of the declining real value of compensation for ordinary items is that people must now buy more expensive products and services to secure the same level of cover.

‘This can disadvantage residents of remote, regional and rural Australia, in particular, who may have only limited access to postal services run in competition with Australia Post.’

Professor McMillan rebuffed Australia Post’s suggestion that compensation provided for ordinary items should be set as a proportion (half) of that for registered items.

‘This forges an unwarranted link between compensation for Australia Post’s monopoly of the ordinary letter service and the registered service that is open to competition,’ he said.

In addition to recommending a review of Australia Post’s compensation levels, Professor McMillan suggested that they be looked at by the Australian Competition and Consumer Commission whenever it considered proposals to increase the basic postage rate.

In 2008–09, 2,219 complaints about Australia Post were made to the Ombudsman’s office, of which 470 (21.2%) concerned loss of a postal item. In May 2008, Australia Post advised a Senate Standing Committee that, in 2007, its centralised enquiry number received 224,000 complaints about missing items.

Download the report: 01|2010 — Australia Post: Determining levels of compensation for loss or damage of postal items, February 2010

Media contact: Fiona Skivington, Director Public Affairs, 0408 861 803

Date of release: 8 February 2010