Mail delivery faces axe

HAMISH RUTHERFORD, VERNON SMALL
Last updated 13:33 29/01/2013

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A move to three day a week postal deliveries could come earlier than 2014/15 if mail volumes fell much faster than expected, NZ Post chief executive Brian Roche has warned.

NZ Post's proposal, put to Communications Minister Amy Adams for approval after a six week consultation period, was based on the current rate of decline of between 6 per cent and 8 per cent.

If that doubled - the "cliff scenario" - fewer deliveries could come earlier.

Roche told Fairfax Media his current thinking was that when the time came the service would go from six days a week to three in one go rather than phasing it.

'"If you are going to do it, do it once and do it properly."

He said it could come later or sooner than 2014/15 and it needed the option "in its toolbox".

It was logical at some point to go to three day a week.

"The irony is that even the submission process will probably be conducted primarily by email, not by letter."

There were other options, such as a subsidy from the Government, but NZ Post was not seeking that.

He was looking at posties covering two three day rounds, delivering to round A one day and round B the next.

So delivery days could vary from suburb to suburb.

Job losses seem inevitable, and Roche said staff numbers - currently about 7000 in processing and delivery - had been managed lower in recent years mainly through attrition and voluntary redundancy.

He was hoping that would apply to future job losses, but at some point redundancies may be needed.

"If that's what's required we would look at it," to keep the business sustainable.

But he had no exact number in mind.

He said rural deliveries were currently the best in the world, but he was aware rural customers would be more affected by the change than others.

NZ Post did not intend to make second class citizens of them, and it would work with rural contractors, who delivered other products as well as the mail, to see what could be done.

"We know the problem, can we get a solution?"

The most time-sensitive part of rural deliveries was newspapers, despite news being available online.

The proposal also included a minimum 1.91m delivery points.

As far as new developments and new delivery points were concerned, there was no guarantee now that they would be covered now, and they were handled case by case.

"This proposal does not change the status quo position with respect to developments and developers."

The issue was one of reasonableness - if someone wanted to set up house in a remote part of the Marlborough Sounds do they have a right to expect deliveries every day?

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"We think that is challengeable."

As well as cutting the number of days mail was delivered to a minimum of three days a week, the proposal included introducing more self-service kiosks.

"During the last 10 years mail volumes have dropped considerably, with 265 million fewer items being posted each year compared to 2002," Adams said.

"Within five years, mail volumes are forecast to be nearly half what they were in 2002.

"In light of those significant reductions in mail volume, New Zealand Post is seeking to make changes to the Universal Service Obligations it is bound by."

Adams said the changes would require Government approval and public feedback would be sought.

"In deciding whether to accept or reject the proposal or seek to negotiate a compromise, I will look to balance the interests of postal users with the need to ensure a financially-viable postal service," she said.

Adams conceded that changes to the postal service would be likely to have a greater impact on rural communities.

While some especially remote parts of New Zealand already only had mail delivered once a week, other areas were much more reliant on the postal service than the cities.

"For other parts of the rural communities it's an area of particular concern for us," she told reporters at Parliament today.

"Partly because, of course, their access to broadband isn't what it is in the cities and that replaces for many how they communicate.

"We will be wanting to talk particularly to rural communities, particularly to the elderly - people who do find it harder to communicate in other ways.

"But I think one of the things we have to accept, is the way we communicate has changed significantly."

The public would be invited to consider when was the last time they received a letter where waiting another day would have made a difference.

Minimum service requirements for New Zealand Post are set out in the deed of understanding it signed with the Crown in 1998. Adams said the deed had not been significantly reviewed since it was signed.

New Zealand Post said the last deed was signed before "the digital revolution" which had led to an unprecedented drop in mail volumes.

"That revolution has resulted in the rapid expansion of internet-based products and services which have fundamentally changed the way people communicate, do business and shop," the state owned enterprise said in a statement.

"There was 24 per cent less mail posted in 2012 than a decade before in 2002. Within five years mail volumes are forecast to decline further, to just over 600 million items."

Roche said the present deed was in "urgent need of a revamp" to ensure postal services remained sustainable.

"The time is now to make the necessary decisions for the future," Roche said.

"Every postal system around the world is facing similar challenges and they are beginning to act. We cannot stand still and simply hope the problems will go away.

"We are seeking an agreement that gives us the flexibility and certainty to be able to plan for that future. Without that flexibility, standard letter mail and postal outlet services will incur significant losses.

"Not gaining flexibility will leave us with some challenging and unsustainable options - asking for taxpayer-funded subsidies to prop up the letters business; operating the postal business at a loss which will degrade the business over time; or cross-subsidising from other parts of New Zealand Post, denying the business the opportunity to grow and invest."

Prime Minister John Key said the changes at NZ Post had been well-signalled.

"We live in a world that's evolving and changing and fundamentally people are sending less mail and therefore less mail's delivered. It makes sense for NZ Post to get itself sorted out and Michael Cullen as chairman has been leading that.''

It was an inevitable result of change in the way people communicated, Key said."A hell of a lot more is being done by text message and email these days."

Public submissions will be taken over the next six weeks.

- © Fairfax NZ News

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