The federal government is warning taxpayers may have to step in to prop up Australia Post, with the budget sounding the alarm for the organisation’s financial position.

It is the second year running that the budget papers have pointed to potential government intervention for the postal service, which is reshaping its services to deal with a drop in demand for letters and a surge in parcel delivery.

Australia Post reported a pre-tax annual loss of $200 million in the 2022-23 financial year – its first loss since 2014-15 – although its performance is improving.

The organisation has reported a $33.6 million profit in the first half of the 2023-24 financial year, off the back of strong demand for parcel services.

Despite that, the warnings remain in the budget about long term prospects for Australia Post. 

“It reflects the way in which digitisation of the global and national economy is changing how many people and businesses use postal and related services,” the budget papers stated.

The mail and parcel carrier has been a government business enterprise for more than 30 years – it is owned by the Commonwealth, but run as a commercial operation.

“Australia Post does not receive financial support from the Australian government but is required to meet a range of community service obligations,” the budget papers stated.

Treasury officials have tempered their phrasing of Australia Post’s fortunes — in last year’s budget they described it as a “deteriorating financial position”, compared to the “uncertainty” present now.

Australia Post’s decision to drop daily letter delivery to focus on parcels is designed to shore up the mail carrier’s operations, with the changes coming into force last month.