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New Zealand: New Deed of Understanding Allows for Reduction in Mail Delivery Services

(Oct. 25, 2013) On October 23, 2013, it was announced that the New Zealand government had agreed to a new Deed of Understanding with New Zealand Post that will allow for mail delivery frequency to be reduced from a current minimum of six days per week to a minimum of three days for the majority of households and businesses in the country. (Press Release, Hon. Amy Adams, Update to New Zealand Post’s Deed of Understanding (Oct. 23, 2013).) The changes to the Deed will not apply until June 30, 2015. They do not require a reduction in service at any point, but rather are intended to provide greater flexibility in the future commercial decision making of New Zealand Post. (Id.)

The New Zealand Post company is a state-owned enterprise that was established in 1987 during a period of privatization of particular government assets and subsequent deregulation of certain markets, including the postal market. State-owned enterprises are required by law to operate as successful businesses and be “as profitable and efficient as comparable businesses not owned by the Crown.” (History of New Zealand Post, New Zealand Post website (last visited Oct. 24, 2013), referring to the State-Owned Enterprises Act 1986, s 4.) The legislation creates an arms-length relationship between the government and the relevant companies “by distancing management tasks from political control.” (History of New Zealand Post, supra.) Profits are returned to the government consistent with its shareholding level, while the government is required to fund any non-commercial activities that it wants carried out. (State-Owned Enterprises Act 1986, s 7.)

The new agreement provides that while New Zealand Post will have the discretion to introduce a minimum three-day delivery service to urban areas, it must maintain at least five days of service to rural delivery areas. (Press Release, Amy Adams, supra.) The new Deed will also provide greater flexibility with regard to the retail network maintained by New Zealand Post. While the current Deed requires a “bricks and mortar” approach of providing in-person services in postal centers, the new Deed allows for the same 880 points of presence to include self-service kiosks, with a requirement that personal assistance be available in 240 outlets. (Id.; Questions and Answers on Our Proposal, New Zealand Post website (last visited Oct. 24, 2013).)

The current Deed of Understanding between the government and New Zealand Post was signed in 1998. Changes to the Deed were first proposed by New Zealand Post in 2012, with the government releasing a discussion document in January 2013 and seeking public submissions on possible changes. (Press Release, New Zealand Post, New Zealand Post Seeks Flexibility for the Future (Jan. 29, 2013); Questions and Answers on Our Proposal, supra.; Consultation on Proposed Changes to New Zealand Post’s Deed of Understanding, Ministry of Business, Innovation & Employment website (last updated June 13, 2013).)

Both New Zealand Post and the government noted that the volume of postal items has reduced dramatically in the past 11 years, since a peak in 2002. The Minister of Communications and Information Technology, Amy Adams, stated that “[i]t is clear that if changes are not made to the Deed, then significant and on-going government subsidisation in excess of $30 million [about US$25 million] per year may be required.” (Press Release, Hon. Amy Adams, supra.)