People's Bank Knocks Post: CCMAU
Sunday, July 29 2001
Secret Government papers leaked to ACT Finance spokesman Rodney Hide reveal for the first time the People's Bank's hugely negative impact on New Zealand Post's profits and postal services.
"The Government's SOE adviser, CCMAU, has written a confidential report that declares 'New Zealand Post Ltd's forecast profits and dividends are very low' and that this is 'largely because of the losses that are expected to be incurred in its banking operations'," Mr Hide said.
"The highly risky People's Bank is devastating Post's profits. CCMAU is 'concerned about the risks inherent in this project' and considers 'there is significantly more downside risk, than upside potential'.
"Post's 2001/02 Business Plan estimates after-tax losses for the bank of $23.6 million through to the 2003/04 financial year.
"Meanwhile, CCMAU reports that Post's core business faces a 'difficult environment'. The deterioration in Post's domestic courier and letters business 'is occurring more rapidly than had previously been expected'.
"New Zealand Post estimates 'about 60 per cent of total mail volumes are potentially at risk of substitution' by e-mail, electronic billing and bank statements, and from competitors such as Pete's Post.
In response, New Zealand Post is cutting costs by consolidating mail centres and "it also has some other longer-term options (e.g. moving from six-day to five-day delivery)'.
"The result will be a cut-back postal service. The People's Bank is damaging postal services as well as draining $80 million of taxpayers' money.
"The People's Bank will prove a fizzer. New Zealand Post will be placed under huge financial strain, it will require a taxpayer bail-out, and postal services look set to deteriorate further. It's well past time for SOE Minister Mark Burton and New Zealand Post Chair Ross Armstrong to be held to account.
"I challenge SOE Minister Mark Burton to release New Zealand Post's Business Plan so that New Zealanders can see for themselves just what the People's Bank is costing them.
"It's the People's Bank ' it's time the people were given the full facts," Rodney Hide said.