CTU Media Release

14 June 2013

Fee for mail delivery inequitable and doesn’t fix problem

“The suggestion that households may have to pay if they want a five or six day postal delivery service is inequitable and fails to resolve the underlying problems New Zealand Post faces”, says CTU Economist Bill Rosenberg. He was reacting to a suggestion by Communications Minister Amy Adams made to the Commerce Select Committee.

“Some of the people most in need of a daily service, such as people who are ill or elderly, are those who could least afford the additional cost”, he says.

“Instead, the Minister should be considering whether NZ Post’s competitors in mail delivery are paying a fair share of the cost of running a five or six day delivery service. Just as Telecom’s competitors are required to contribute financially to its obligation to provide toll-free and rural home phone services at a controlled price, NZ Post’s competitors should also be paying a share of its home delivery and postal outlet obligations.”

“At present there is an uneven playing field. NZ Post has the service obligation which competitors don’t have to contribute to. On top of that, competitors can offload their mail into NZ Post’s much more extensive delivery network when it is cheaper for them to do so. They can cherry pick the lowest cost deliveries with no downside of having to provide high cost deliveries as well. No wonder NZ Post is finding it hard to maintain the six day delivery service.”

“In addition, people are making more use of electronic communications rather than conventional mail, reducing mail volumes. Obviously things do have to change. But nobody can tell us how much of NZ Post’s problem in paying for its service obligation is due to changes in how mail is sent, and how much it is due to loss of market share to competitors it is effectively subsidising,” says Rosenberg.

“Making people pay if they want a more frequent service doesn’t fix these problems. Competitors will be given a greater advantage against NZ Post, and the charges will have to rise continually. It’s high time we got adequate data and a proper analysis that will fix the problem NZ Post and households face.”

ENDS

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