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Securing a Universal Postal Service

22 October 2009

Securing a Universal Postal Service

New Zealand Post is ensuring its nationwide letter delivery service remains fair for all New Zealanders through proposed changes to its access framework for other postal operators.

New Zealand Post Acting Group Chief Executive Sam Knowles says the proposed adjustments follow a review of how much other postal operators pay to access New Zealand Post’s network.

The proposal aims to set a fair access price that encourages competition while also maintaining a sustainable universal postal service.

The review found that New Zealand Post is providing postage rate discounts to other operators that are substantially higher than the legal minimum. This is commercially unsustainable and effectively means New Zealand Post is subsidising other operators.

“Given the decline in overall letter volumes due to electronic substitution, this is no longer tenable for New Zealand Post or for our shareholders - the people of New Zealand,” he said. “We can no longer afford to subsidise our competitors at a cost of millions of dollars every year.

“Having undertaken a review, we believe the proposal we are putting to the postal services industry is the only practical option for both retaining the universal postal service for all New Zealanders, and supporting a competitive environment with fair treatment of competitors using the New Zealand Post network.”

Under the Deed of Understanding with the Government, New Zealand Post is required to maintain minimum numbers of delivery points, to deliver six days a week to more than 95 per cent of New Zealanders, to provide competitors with access to its delivery network and to maintain a large PostShop network.

New Zealand Post is a state owned enterprise and has been operating in a competitive postal market since 1998. It has access pricing agreements with six of 27 independent postal operators.

Mr Knowles said New Zealand Post is consulting with the postal services industry on the proposed changes before making final decisions, which are expected prior to Christmas.

ENDS

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