Major Australia Post shake-up spells end of the daily postie

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Australia Post will reduce its daily letter delivery service to every second day in a shake-up aimed at combating financial losses.

While new government standards will require parcels and priority mail to be delivered every day, Australia Post has argued that demand for letters continues to fall and daily delivery is now unsustainable.

The federal government says changes to letter delivery will mean that while local posties will continue to be a visible presence in suburbs and towns across Australia every day, they will spend less of their day delivering letters and more of their shifts delivering parcels.

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The changes to letter delivery are expected to be rolled out over the next 12 to 18 months.

The government says the reforms will not reduce the minimum number of local post offices that Australia Post must provide, including in regional, rural and remote areas.

In August, the service posted a significant $200 million loss in its full-year results.

Australia Post revealed its letter volumes were 2 billion, down 7.8 per cent on the previous year.

The postal service said Australian households now receive on average 2.2 addressed letters each week, down from 8.5 in 2008.

It expected this to halve in the next five years.

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Australia Post had refused to provide any compensation after the ordeal, Colin Chapman said.

Australia Post's CEO Paul Graham said "urgent mail" will continue to be a priority.

"Urgent mail will still be delivered as it always has, and the reforms announced today do nothing to diminish our unwavering commitment to the service and support we provide across Australia," he said.

"By allowing Australia Post to change the way it manages priority mail, which now accounts for only around 8 per cent of addressed letters, it can deliver priority mail more sustainably.

"We will also continue to prioritise and protect vulnerable people, maintaining discount stamp pricing for pensioners and charities, while continuing to offer some of the lowest stamp prices in the developed world."