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Post Loss Inevitable Consequence Of Deregulation

“New Zealand Post’s significant loss over the last three months fulfills the predictions of those who campaigned against postal deregulation and is certain to put increasing pressure on the universal price-equalised service,” Trade Union Federation Secretary, Michael Gilchrist, said today.

“We don’t believe electronic media are chiefly to blame for this shocking result. Hard copy communication has grown with electronic media.

“Neither is it one-off expenses. The critical factor is deregulation. Deregulation means increasing competition for mail volumes and continuing pressure on Post to undertake a costly diversification strategy.

“Deregulation is the root cause of Post’s rapidly decreasing profitability - and it will only get worse.

With the loss of the monopoly on cross-town business mail, NZ Post will find it increasingly difficult to charge the same price for a letter to all parts of the country. Either it will have to increase prices across the board, driving short range customers into the arms of private local competitors, or it will have to charge more for out of town letters.

“Either way, it means the loss of a valuable vehicle for regional development and the continuing devaluation of one of our last remaining publicly owned assets,” Mr Gilchrist said.

Mr Gilchrist was among Posties who blew the whistle – literally – on Postal Deregulation in a protest from the public gallery of Parliament as the law deregulating the service was passed in late 1997. He said that being right was no consolation.

“We still feel particularly bitter about the role played by the management of New Zealand Post who advised the Government and stated publicly that NZ Post would continue to be profitable in a fully deregulated environment while also fulfilling its social obligations as set out in its deed of understanding with the Government.

“These obligations include maintaining a universal price equalised service, inflation indexed price control for the standard letter, six days a week delivery and a minimum number of retail outlets.

“We believe that the deed of understanding will become unsustainable. As the Business Round Table said at the time of the deregulation, firms can cross-subsidise in a competitive market but they will be put under increasing pressure to meet particular client’s needs for fear of losing market share or profits.

“The end of NZ Post was clearly foreseen in the deregulation of the postal market. The only thing that can save it is re-regulation, in line with the practice in 99% of developed nations. The sooner a review of the Postal Services Act 1997 is begun, the better,” he concluded.

For further information contact Michael Gilchrist 04 384 8963 or 04 237 7566

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