Post bosses hint of more cuts

New Zealand Post will not rule out further cuts to mail services and PostShops after yesterday outlining plans to move to three-day-a-week letter deliveries and to replace some Postshops with self-service kiosks.

The proposed shake-up of postal services would cost "in excess of several hundred" posties, mail processing and PostShop staff their jobs, chief executive Brian Roche said.

Letter volumes have been falling steeply in recent years - almost 7 per cent last year alone - because of increasing use of email and texting.

NZ Post said the "fundamental redesign" required to ensure profitability of its letters business was constrained by its "Deed of Understanding", the agreement with the Government under which it must provide minimum levels of service.

Unless the changes went ahead, the letters business was likely to become unprofitable by 2018.

Mr Roche said despite the move to thrice-weekly deliveries, NZ Post would still be a six-day-a-week operation. "It's just that at the very front line the postie would deliver to household one on Monday and household two on Tuesday and then back again".

NZ Post also wants the deed changed to allow some of the 880 PostShops it is obliged to operate to be replaced with self-service kiosks.

But Mr Roche said it would be "imprudent" to guarantee there would not be further changes "because ultimately it depends on how people use the mail service".

"What we're saying is this model is sustainable for a number of years on current forecasts. If something happens outside our forecasts, an event where there's a rapid decline of mail, we would have to move quickly."

Mr Roche said the changes under consideration would allow NZ Post's letters business to run at a profit "for a number of years" by delivering savings of "several hundred million dollars" over a five-to-10-year period.

Raising the price of stamps was not an option as it was likely to increase the pace of decline in the business.

Proposals to replace some retail outlets with self-service kiosks would not affect Kiwibank branches, some of which shared premises with PostShops, Mr Roche said.

NZ Post employs 7000 to 8000 staff across its post and retail businesses including about 2200 posties, but Mr Roche refused to say exactly how many jobs would be lost until staff and unions were consulted but said it was likely to be "in excess of several hundred people".

NZ Post will also consult the public over the next six weeks before the Government decides whether the changes should go ahead.

"It will be a big change, a significant change and that's why we need to have a good conversation with the public", said Communications Minister Amy Adams.

Labour's SOE spokesman, Clayton Cosgrove, said it was "appropriate" that NZ Post look at its business model but it had to justify any changes and also consider the impact on businesses, on various groups including the elderly and on those in rural areas where there was no broadband.

NZ Post

# A state owned enterprise formed in 1987 when the old Post Office, a government department, was split into three parts, NZ Post, Telecom and PostBank

# Under the Postal Service Act 1998 which allowed competition in the letters market, a new "Deed of Understanding" required NZ Post to meet a series of social, stamp price, and service obligations

# Under that deed NZ Post must provide five or six day delivery to 99.88 per cent of delivery points or postal addresses

# It also has to maintain at least 880 postal outlets and post centres

# While letter volumes have fallen sharply in recent years, the number of delivery points has increased, squeezing profits

# The letters business is now barely breaking even and is forecast to produce a $25 million loss by 2018 unless changes are made

- Adam Bennett of the NZ Herald