A move to increase the cost of postage stamps from 70c to $1 and -establish a two-tiered letters delivery service has won the support of the consumer watchdog, but it will not be enough to cover future revenue losses at Australia Post. 
The Australian Competition & Consumer Commission signed off yesterday on Australia Post's plans to raise the cost of stamps from   January 4, while putting in place a two-speed -delivery service that will slow down standard times.
The price hike will not apply to concession stamps, which will stay at 60c, or stamps for Christmas cards, which remain at 65c.
In its assessment of Australia Post's proposal to offset its continuing losses, the ACCC determined that the changes to boost revenue would fall $42 million short of costs over the next three years.
ACCC commissioner Cris-t-ina Cifuentes said Australia Post needed to continue to reform its cost structure to become more flexible and more responsive to volume declines.
"It's important that Australia Post continues its focus on achieving cost reductions and operational efficiencies," she said.
"We will look closely at Australia Post's progress in this area in considering any future proposal for price increases." Australia Post chief executive Ahmed Fahour said: "It will allow Australia Post to recover more of the cost of the service while maintaining five-day-a-week delivery and continuing to meet our important community service obligations."Australia Post applied for the increase after recording a $381m loss last year in its mail business. Letter volumes were down 7.3 per cent from the year before.