Postage is non negotiable. Of course postage within SA (Adelaide presumably) is cheaper - it works under different rules.

You've pretty much stuffed yourself by refunding $5. A tacit admission that you've overcharged. If you refund expect a neg. Also look at Click and Send - $12ish for properly tracked 3kg satchels. After 9 years one would expect you would know the ins and outs of postage...