NZ Post chairman Jim Bolger has floated, in a letter to State Owned Enterprises Minister Simon Power, reducing delivery to every second day, dropping Saturday deliveries, price increases, developing a two-tier mail system where premium letters cost more and were delivered quicker, and combining courier and mail delivery services.
Mr Key said neither he nor Communications Minister Steven Joyce liked the idea.
"I would take a lot of convincing. I know New Zealanders use electronic mail these days an awful lot, but a lot of New Zealanders still rely on the postal service. They would want to receive the mail six days of the week and to not receive mail on Saturdays would, I think, cause a lot of concern to them.
"So personally I would take a lot of convincing from New Zealand Post that this is a good move."
Mr Bolger told NZPA something needed to change.
"We wouldn't want to be subsidising the delivery of mail, at the very least we would want to break even. If we continue with our change, we rapidly - much, much less than five years - we rapidly move to a position where we would have to subsidise mail from somewhere.
"There's one thing absolutely certain out of this discussion that we will have is there will be change. The question is 'what is the best way to make that change that has the least impact on the majority of New Zealanders?'"
The volume of mail dropped 4-5 percent last year - tens of millions of items less to deliver.
"To maintain an efficient and profitable postal service, given the very substantial drop in the volume of letters, we had to look at all the options. We have not firmed up as a board, let alone with our ministers, what the options should be. But we wanted to alert the minister where some of our thinking was."
The board would also look at overseas innovations such as hardcopy mail and electronic mail being married up.
Another idea was a bank of boxes to serve a small community where they got an email alerting them when mail had arrived.
"The base line to remember is there are far fewer letters going to people and you cannot continue to maintain a service as it was when there were a whole lot of letters going to people. That decline carries on everyday. Hard copy mail is on the wrong side of communication history."
Mr Bolger said the Government was investing considerable sums of money in broadband which would further see the move to electronic copy.
The board would work up its preferred options and then talk to the ministers.
"This was a no surprises early advice to minister of what we needed to do."
Former NZ Post head Sam Knowles last year suggested to a parliamentary select committee that he wanted the state owned company to get into offering services such as being able to accept payment for fines, tax, issue passports, drivers' licences and register births and marriages.
"The options that Sam raised are absolutely valid options and we are pursuing some of those but that doesn't take away from the issue that we wouldn't want to be subsidising the delivery of mail," Mr Bolger said.
