Why is Labour starving NZ Post?

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New Zealand Post has raised the cost of sending a letter, again – to $1.30 from July. Last year, they increased the postage from $1.00 to $1.20. In July 2016 it went up from 80 cents. They are raising prices, they say, because of the drop in volume.

The general manager, Matt Geor, says “New Zealand currently has one of the highest rates of decline in the world, as people choose to communicate more online.”

Indeed, people do communicate online, but that is only half the picture. The internet has reduced the number of letters but massively increased the amount of parcel post, as people shop online. The real story is that New Zealand Post has been deliberately rundown under successive governments and this latest price hike is another nail in the coffin of a once public service.

Until 1987 the New Zealand Post Office, which then included telecommunications and Post Bank, was a government department. Under Labour’s disastrous marketisation of public services Post Bank and telecommunications were privatised. The postal service was made a State-Owned Enterprise and obliged to operate commercially. New Zealand Post has a government-appointed board and reports to the minister for State-Owned Enterprises, currently Winston Peters.

From 2010 to 2016 the board chairman was former Labour finance minister Michael Cullen. Under Cullen’s stewardship, reporting to the National government, the postal service was rundown to give private companies, such as DX Mail, a chance to get into the market. Deliveries to residential addresses were halved from 6 to 3 days a week, post offices were closed and NZ Post postboxes deleted on a massive scale.

But NZ Post does not compete on a level playing field. Under its Deed of Understanding with the government it is lumbered with the costs of delivering to rural addresses five days a week. All the money is made on deliveries in cities while rural routes are subsidised. Private companies can offer lower prices on the routes that make money because they are not under an obligation to deliver ‘Farmers Weekly’ to the back and beyond.

If that’s not bad enough. Private companies are also able to undercut NZ Post on pay and conditions because their workers are fragmented and less likely to be in a union. Every NZ Post worker laid off is a worker with Kiwisaver, sick pay and penal rates – an expensive worker. All too often, a courier driver is a “contractor” working at rates below the minimum wage.

E Tū, one of the unions that organises postal workers, has been complicit in the erosion of the mail sector for years, taking at face value the shabby argument that the internet means less letters. That union’s leadership is complicit in the terrible working conditions of courier drivers.

The real culprits of this high cost, poor service system are the administrators of the market madness – the government. Why has the Labour Party not returned NZ Post to direct control to be run purely as a public service? Why did Jacinda Ardern give the SOE portfolio to Winston Peters? We know the answers to these questions: the Labour Party is still wedded to the free market doctrines brought in by the 1984-90 Labour government.