Proposed changes to Deed of Understanding
This section provides an overview of some of NZ Post’s primary service obligations as outlined in the Deed, and proposed changes to these as part of the 2024 Review, for your feedback.
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Review of current obligations under the Deed
MBIE and NZ Post have been in discussion about providing greater flexibility in the Deed as part of the 2024 Review. The funding that NZ Post received in 2020 has now been exhausted. NZ Post now needs to operate a commercially sustainable mail service, i.e. without operating at a financial loss or seeking funding from the Government (e.g. funded by the taxpayer).
The proposed changes in this section are intended to allow NZ Post sufficient flexibility to achieve commercial sustainability while still responding to New Zealanders’ ongoing need for mail.
The Deed obligations are minimum standards. These minimums do not prohibit NZ Post from providing a higher level of service based on demand, or continuing current service levels where it is viable to do so. Any significant changes would be subject to customer communications by NZ Post ahead of the planned change, in addition to NZ Post’s internal processes.
The following sections outline key service obligations in the current Deed, and proposed Deed changes. We are interested in hearing your feedback on the proposals outlined below.
Changes to minimum delivery frequency
| Area of Deed | Current obligations | Proposed future obligations |
|
Mail delivery frequency The minimum number of times per week NZ Post must deliver mail to delivery points on its network. Note: A rural address has a rural delivery number, which you can confirm by checking your address on the address and postcode finder tool on the NZ Post website. |
Minimum 3 days per week in urban areas. Minimum 5 days per week in rural areas. Minimum 5 days per week to PO boxes and Private Bags. Urban delivery days must be non-consecutive (i.e. there is a space between days on which mail is delivered). |
Minimum 2 days per week in urban areas. Minimum 3 days per week rural areas. Minimum 2 days per week to PO Boxes and Private Bags. Language around non-consecutive days will be removed to provide operational flexibility, noting that NZ Post has commercially set, published targets on mail delivery timeframes. |
Looking at actual mail volumes, addresses in urban areas currently receive around two letters per week and addresses in rural areas receive three. The proposed changes bring the minimum requirements on NZ Post in line with how New Zealanders are currently using the service.
We are also proposing to provide a mechanism for NZ Post to update its classification of rural and urban areas based on objective demographic change (for instance, zoning or Statistics NZ data). Currently the Deed defines rural areas as places to which NZ Post’s rural delivery service delivered to as of 30 June 2013. Changing this would reflect the growth of urban areas and provides flexibility for NZ Post to redesignate areas as appropriate.
Questions for stakeholders
8. How would the proposed delivery frequency changes impact how you send and receive mail, if NZ Post were to operate at the proposed minimum levels?
9. Do you believe your area is correctly classified as either urban or rural (i.e. you have a Rural Delivery number in your address). If not, why not?
Changes to where NZ Post would be required to deliver mail
| Area of Deed | Current obligations | Proposed future obligations |
|
Commitment to add new delivery points For example, when there is a need to extend the mail network for new addresses to be able to receive mail. |
NZ Post must add new delivery points to the extent there is demand for it, unless operationally impracticable, or if to do so would jeopardise the commercial sustainability of the postal services it provides pursuant to the Deed. |
Retain this requirement, but explicitly clarify that new delivery points can include a range of collective forms, such as communal delivery points including nests (at the developer or another’s cost), counters, community mailboxes and other communal delivery points. |
|
Conversion of pre-existing delivery points This concerns the number of existing individual delivery points NZ Post may be permitted to turn into communal delivery points. |
No more than 3% of total delivery points may be comprised of counter services or community mailboxes. |
NZ Post will not switch more than 5% per year of its pre-existing delivery points to communal delivery points. Reasonable notice of these changes must be provided. |
|
Overall limit on communal delivery points |
No more than 3% of total delivery points may be comprised of counter services or community mailboxes. |
To facilitate the changes above, this limit will be removed. As detailed above in this table, any new delivery points can be communal delivery points, but NZ Post is not allowed to switch more than 5% of its pre-existing delivery points to communal delivery points per year. |
Delivery points are physical locations at which you can receive mail. These could include letterboxes, PO Boxes, localised communal hubs or collection points. Mail is currently typically delivered to letterboxes.
In the current Deed, NZ Post must maintain delivery to at least 1,910,010 delivery points. Since 2013, NZ Post has already extended its delivery footprint beyond this minimum number, so it has been outdated for some time. For clarity, under the proposed change to the Deed, NZ Post would retain its obligation to extend its network while allowing for it to convert some existing delivery points to communal points as outlined above.
Question for stakeholders
10. If you were moving to a location that was not currently within NZ Post’s mail network footprint (e.g. not receiving mail delivery), how would you feel about receiving mail at a community collection point, or other means than through a letterbox at your property?
Changes to requirements regarding NZ Post’s retail presence
| Area of Deed | Current obligations | Proposed future obligations |
|
Total number of postal outlets For example, NZ Post branded post shops or other stores that offer postal services on behalf of NZ Post. |
At least 880 points of presence, comprised of physical outlets and self-service kiosks. At least 240 ‘manned’ points of presence where customers can receive personal assistance from an NZ Post employee or agent and can access a wider range of products and services over and above basic postal services. |
Minimum of 500 points of presence, with a possible step down to a minimum of 400 over time. NZ Post has indicated that rural areas would not be disproportionately affected by this proposed change in comparison to urban areas, given certain urban areas are currently overserved. NZ Post has noted that over half of its retail service points are in a location where another store is also serving that neighbourhood. |
In the current Deed, there must be a minimum of 880 points of presence (which can include self-service kiosks) around the country, and at least 240 of these must offer personal customer assistance. Most of these 880 service counters are inside other retail shops. This means practically that many people have access to postal outlets where they can go to buy stamps, send letters, or make an enquiry about the mail services that are available.
Under the proposed changes for a revised Deed, NZ Post would be required to maintain at least 500 points of presence initially, possibly allowing it to decrease to a minimum of 400 over time. This reduced requirement reflects the cost to NZ Post to maintain its network of postal outlets, as we understand that it currently overserves certain urban areas to reach this requirement. The 880 minimum was set in, and has remained unchanged, since 1989.
While the proposed change would be a reduction in the minimum required number of points of presence, NZ Post has commercial incentives to retain its retail network to meet customers’ needs given the rise in parcel items being sent through its network. Its retail stores are also used for people to drop-off parcel items.
NZ Post has said that any change, if made as a result of a new minimum number, will not disproportionately impact rural areas compared to urban areas. We note rural customers can also access mail services directly from the rural delivery driver in their area. Changes would also not be implemented immediately following Deed changes or without appropriate notice.
In addition to the proposed reduction in the minimum number of points of presence, we are interested in hearing the public’s views on whether the existing requirement that NZ Post must maintain at least 240 ‘manned’ points of presence should be carried over into the revised Deed.
Questions for stakeholders
11. Do you typically require assistance when sending mail items (not parcels) at a postal outlet and what type of assistance do you require and/or receive?
12. Do you believe the existing requirement of at least 240 manned points of presence should be maintained in the revised Deed?
Future Review date for a revised Deed of Understanding
The Deed has been required to be reviewed every five years. Given the rapidly changing environment that NZ Post is operating in with regards to increasing costs and declining mail volumes, we propose that a shorter term would be more appropriate for the next Review of the Deed, following any changes from this 2024 Review. The proposal would be to include the requirement for a review to be conducted three years after the date a revised Deed is signed.
We are also considering including the option of an earlier review if mail volumes were to decline more rapidly than anticipated, such as if they were to fall below 120 million mail items per year, there may be an additional reduction in minimum requirements. This additional provision would recognise that at substantially lower volumes, the changes proposed in this discussion document may not be sufficient for the Deed requirements to be commercially sustainable.
Questions for stakeholders
13. Do you have any feedback on the proposal for the next Review of the Deed to take place by three years from the date of any revised Deed following the 2024 Review?
14. Do you have any thoughts about the trigger point for an earlier review in the case of steeper mail decline?