Brief country report: New Zealand

Transcription

1 Brief country report: New Zealand 1.1 Summary The New Zealand postal market has been liberalised since However, perhaps due to its small scale, little is known about the results of the introduction of competition. New Zealand Post has been a state-owned enterprise since 1987 and privatisation is not to be expected in the near future. There is no universal service in the New Zealand postal market, but its main operator is, by means of a contract, bound to perform certain social obligations. 1.2 General information Table 0.1 General country information (2007) New Zealand Population (in million) 4.1* Size of the country (1,000 km 2 ) 270.5* Population density (inhabitants/km 2 ) 15.3* Degree of urbanisation 86.2** Number (and percentage) of inhabitants 5 largest cities 1.6 million (40%)*** Sources: * UPU (2006), ** UN (2005), *** World Gazetteer (2008 estimation). 1.3 Regulatory developments New Zealand postal reform started in 1986 with a national review of the structure and effectiveness of the state owned New Zealand Post Office, the Mason-Morris Review. The review recommended the separation of the organisation into three different businesses in order to overcome structural deficiencies. The government agreed and created three separate state-owned entities that governed the functions of telecommunications, banking and postal and agency services. The Postal Services Act 1987 implemented a reserved area within 500 grams to which New Zealand Post had the exclusive right to perform postal services. This Act also stipulated some information disclosure obligations that New Zealand Post was supposed to meet. Although the initial idea was to completely sell NZ Post and deregulate the postal market, in 1989 the New Zealand government announced to implement a staged programme of deregulation. Accordingly, in 1991, the reserved area was further dropped but completely abolished in 1998 with the introduction of the Postal Services Act Also, in February 1998, New Country report New Zealand 1073

2 Zealand Post concluded a new Deed of Understanding with the Crown, in which service standards were stipulated. In May 1998, the Postal Services (Information Disclosure) Regulations were implemented, which obliged New Zealand Post to disclose information regarding the number of delivery points, post centres and post shops, the quality of service and separate profit and loss statements for letters carried within New Zealand (for which a charge of not more than 80 cents is made) 1 and other services. (MED, 1998) Postal law and regulation Table 0.2 Postal law and regulation Postal law and Date of introduction Date of latest Remarks regulation amendment Postal Services Act Superseded Postal Services 1990 Superseded Amendment Act 1990 Postal Services Act The main postal act Deed of Understanding Agreement on service standards for the basic letter post. Postal Services (Information Disclosure) Information disclosure requirements Regulations 1998) Postal Services (Fees) Regulations Stipulating the registration fee for new operators Commerce Act General competition law Source: ECORYS desk research, MED (1998) Universal Service Obligation The Postal Services Act 1998 neither defines nor imposes a universal service obligation on the sector. Section 63 of the Postal Services Act 1998 designates New Zealand Post as a registered postal operator, whereas section 49 (1)(d) obliges it to disclose information as stated in the Postal Services (Information Disclosure) Regulations Other limitations on New Zealand Post s freedom are on a pure contractual basis (Campbell, 2002). The current Deed of Understanding has been in force since 1998 and stipulates service requirements or social obligations (Toime, 1997) which costs are fully met by New Zealand Post. On a quid pro quo basis, New Zealand Post was exclusively designated to the Universal Postal Union for five years. 1 Section 2 (1) of the Postal Services Act 1998 defines a letter as any form of written communication, or any other document or article, (i) That is addressed to a specific person or a specific address; and (ii) That is to be conveyed other than by electronic means; and (iii) For which a charge of not more than 80 cents (inclusive of goods and services tax) is made in respect of carrying, taking charge of, or sending it. The definition includes an envelope, packet, package, or wrapper containing such a communication, document, or article Country report New Zealand

3 1.3.3 Reserved area Initially, the Postal Services Act 1987 established a reserved area up to 500 grams delivered for a rate of no more than NZ $ In the Postal Services Amendment Act 1990 it was further dropped to 200 grams for a rate up to NZ $ The Postal Services Act 1998, however, completely abolished the conventional version of the reserved area and fully opened New Zealand postal services to competition. Table 0.3 Liberalisation of postal services and the reserved area (2008) Postal product Bulk mail and consolidation B2B non-bulk mail Individual item mail Cross border mail Unaddressed mail Parcel mail Express mail Within reserved area (Yes, no, partially or unclear) Remarks Source: ECORYS desk research NRA There is no active postal regulator in New Zealand, nor are there any regulatory restrictions on New Zealand Post s business activities, other than those stipulated in general competition law, the Commerce Act The Ministry of Economic Development (MED) governs the register to which all persons carrying out business as a postal operator must apply. Other than being able to deny registration when a person has committed certain offences, the MED has few, if any, intervening capacities. The Postal Services Act 1987 already required New Zealand Post to disclose some financial information. During the transition period towards full liberalisation the New Zealand government saw reason for expanding the information disclosure obligation by implementing the Postal Services (Information Disclosure) Regulations This might indicate that the government initially underestimated the competitive problems posed by deregulation (Campbell, 2002). Currently, New Zealand Post is required to disclose the following information: the number of delivery points in each of the categories specified in the Deed; the number of post centres and post shops at the close of each financial year; in relation to the delivery of letters within New Zealand, the results of an independent survey on the percentage of letters delivered within advertised deadlines, the percentage delivered within three days of advertised deadlines, and the percentage not delivered within three days of advertised deadlines; separate profit and loss statements for letters delivered within New Zealand and other services; Country report New Zealand 1075

4 each set of standard terms and conditions, together with the price usually charged for the carriage of letters on that set of terms of conditions, and discounts of more than 20%; the full details of all access agreements with other postal operators within 15 working days. Prior to liberalisation, informal complaints were sometimes issued about crosssubsidisation from the reserved area. However, these never led to formal complaints. Since the complete liberalisation of the postal market, there has been some concern with respect to New Zealand Post s charges to accessing post office boxes. These concerns were, however, not supported by evidence that New Zealand Post is misusing its dominant position (OECD, 1999). Table 0.4 Regulatory powers NRA Powers Yes//Unclear Remarks Require data from USP Yes Stipulated in Postal Services (Information Disclosure) Regulations 1998 Require accounting system Yes Require new data studies Cancel unlawful rates Levy Fines Yes Failure to comply with the information disclosure requirements is liable to a fine of not more than NZ $ 200,000 and, if continuing, an additional fine of not more than NZ $ 10,000 per day during which the offence continues Seek judicial order Unclear Set new rates for USP Require downstream access Require data from non-usps Unclear Designated postal operators must disclose information with respect to their UPU obligations. The Postal Services (Information Disclosure) Regulation 1998 is, however, only directed at New Zealand Post. Source: ECORYS desk research, MED (1998) Licences New Zealand also does not have a licensing scheme, but the MED does keep track of the registration of postal operators. Section 28 of the Postal Services Act 1998 obliges postal operators to register before commencing business as a postal operator. The Chief Executive of the MED may decline an application only if a person has been convicted of 1076 Country report New Zealand

5 certain offences under the Misuse of Drugs Act, a dishonesty offence under the Crimes Act, an imprisonable offence under postal legislation, or an equivalent offence in overseas jurisdictions (MED, 1998). Furthermore, the Postal Services (Fees) Regulations 1998 obliges each postal operator to pay a registration fee of NZ $ 95. Table 0.5 Entry regulations Instrument Services allowed under Conditions for obtaining Number of licences the licence the licence approved (2008) Registration All postal services, except Having a clean 29 2 those reserved for the sheet with respect to designated postal several offences; operator and stamps Registration fee of NZ $ 95. Source: ECORYS desk research, website MED Access Because New Zealand Post owns the network of post office boxes throughout the country, access agreements between private operators and New Zealand Post are essential to competition. Section 17 of the Deed of Understanding requires New Zealand Post to provide access to its network on terms and conditions that are no less favourable than those offered to customers in the same circumstances. Accordingly, access is privately negotiated and is not fixed by the government. The terms and conditions of access agreements are governed by section 36 of the Commerce Act 1986 regarding the abuse of a dominant position. New Zealand has a tradition of a rural delivery of mail. Rural delivery contractors are typically based at rural post shops or at provincial mail services. These contractors gain contracts by public tenders called by New Zealand Post. Initially, rural delivery mail contractors had to pay a rural delivery fee, but this was abolished in 1995 (Campbell, 2002). Table 0.6 Network access Upstream/downstream Form of access Regulated? (Yes,, Unclear) Upstream Access to street letter boxes Access to outward sorting centres Downstream Access to inward sorting centres Access to delivery offices Access to P.O. Boxes Source: ECORYS desk research. 2 The Ministry of Economic Development most recent register update is of 1 April Country report New Zealand 1077

6 1.3.7 Price regulation Following section 11 of the Deed of Understanding, New Zealand Post shall not reintroduce the rural delivery fee, as mentioned above. With the introduction of the Deed of Understanding in 1998, a price cap for medium letters was set at NZ $ 0.45 until February 2001, whereas the 1998 price was NZ $ Since 2001, price levels are unregulated, as competition law and market forces are expected to suffice (PWC, 2006). The Postal Services (Information Disclosure) Regulations 1998 require New Zealand Post to separate its profit and loss statements for letters delivered within New Zealand and other services, and disclose each set of standard terms and conditions, together with the price usually charged for the carriage of letters on that set of terms of conditions, and discounts of more than 20% Quality of service Regulation of the quality of service that is to be maintained by New Zealand Post is governed by the Deed of Understanding, which stipulates, on a contractual basis, requirements with respect to the frequency of deliveries and the number of postal outlets to be maintained. Although the Deed does not require New Zealand Post to meet specific transit time of mail delivery, New Zealand Post sets its own standards. Accordingly, New Zealand Post issued a study on its letter delivery performance to be tested against its own criteria. Table 0.7 Quality of service USP Standard Threshold Performance USP Remarks Deed of Understanding requirements Six day per week deliveries >95% of delivery points 96.62% Five or six day per week deliveries >99.88% of delivery points 99.89% One to four day per week deliveries 100% of delivery points 100% Number of PostShops and Post Centres > PostShops Post Centres = 986 Internal on-time delivery standards Total within specification * 95.5% Total within three days of specification * 99.7% More than three days later than specified * 0.3% Source: Deed of Understanding, New Zealand Post Annual Report te: * Research International conducted a measure of New Zealand Post s letter delivery performance against the following criteria. For Fastpost: delivery the next working day between major towns and cities across New Zealand; for Standard Post: delivery the next working day for letters whose destination is within the same urban centre; delivery within three working days for letters to other destinations than New Zealand Country report New Zealand

7 1.4 Market developments Mail market overall Little information is available with respect to mail market volumes in the New Zealand Postal market. New Zealand Post saw a decline in mail volumes recent years. In 2006, total mail volume declined with 3.2%. 3 Parcel volumes and international revenues, on the other hand faced growth of more than 10% in Bulk mail service comprises just under 50% of total domestic volumes. 5 New Zealand Post provides a delivery service to 130,000 rural delivery boxholders. Rural delivery represents some 8.9% of mail delivery points and 10% of mail handled annually. (MED, 1998) The following figure summarises recent development in New Zealand Post s total revenue, including financial services. Figure 0.1 New Zealand Post s operating revenue ( ) (million $ NZ) Source: Annual Report New Zealand Post 2003, Annual Report New Zealand Post 2006, p. 12. Annual Report New Zealand Post Annual Report New Zealand Post 2005, p. 6. Country report New Zealand 1079

8 Table 0.8 Size of the mail market in turnover (million NZ $) Postal product Bulk mail and consolidation B2B non-bulk mail Individual item mail Cross border mail Letters deliveries (AR2007, p. 75) Un-addressed mail Parcel mail Express mail Total* , Source: Annual Report New Zealand Post 2007, p. 64. te: * excluding financial services (NZ $ million and NZ $ million in 2005 and 2006, respectively) Market opening Since 1998, the New Zealand postal market has been fully opened to competition. With the absence of a reserved area and without a licensing scheme, New Zealand Post can be challenged on all segments of the postal market. As of 1 April 2008, there were 29 licences granted to operators. These, however, exclude rural delivery contractors. According to MED (1998), the rural delivery service represents some 8.9% of mail delivery points and 10% of mail delivery Cross border mail As a designated postal operator, section 49 of the Postal Services Act 1998 obliges New Zealand Post to act as a representative of New Zealand at the Universal Postal Union and the Asian Pacific Postal Union, and comply with the obligations that follow from this role. Besides this, private operators are free to provide cross-border mail services National postal operator/universal Service Provider New Zealand Post was established as a state-owned corporation on 1 April It was part of a transformation process in which the former Post Office, a government public service department, was split into New Zealand Post, Telecom New Zealand and Postbank (Toime, 1997). As a state-owned enterprise, the company is owned by the crown, whose ownership interests in the company are the responsibility of the Minister of State-Owned Enterprises and the Minister of Finance (MED, 1998). Whereas the governed had, as a part of the postal market liberalisation process, announced in 1988 to sell New Zealand Post, it has remained a state-owned enterprise. In 1989, the government announced that instead of a big bang, there would be a staged programme of deregulation. Further privatisation of New Zealand Post is not expected in 1080 Country report New Zealand

9 the near future as both in 1993 and 1996 statements were made that the sale of New Zealand Post was ruled out for the foreseeable future. 6 New Zealand Post s main divisions include: the Postal Services Group, which is responsible for processing and delivery of letters and small parcels within New Zealand; the Enterprises Group, which handles inbound and outbound cross-border mail; Express Couriers Limited, a 50:50 joint venture between New Zealand Post and DHL; Datamail Group, specialise in information, document and print management and business process outsourcing; Retail; Kiwibank; ECN Group. 7 MED (1998) distinguishes between Post Shops (i.e. post offices) and Post delivery centres (postal agencies). Post Shops are staffed by New Zealand personnel and offer a variety of services from postal requirements to financial transactions. Post delivery services, on the other hand, offers over the counter postal services to the public, including, but not limited to, the purchase of stamps and the postage of postal articles. Table 0.9 Postal network of the national postal operator New Zealand Post 2007 Number of post offices 324 Number of postal agencies 662 Number of delivery points: Residential Business Private Box Farmers Private Box/Bag, Individual and Business Counter, Community Mail Rural Total 1,335,999 67,748 5, ,684 13, ,892 1,842,275 Source: Annual Report New Zealand Post 2007, p Country report New Zealand 1081

10 Table 0.10 Division of turnover of the national postal operator per market segment Postal product 2006 % (in million NZ $) Bulk mail and consolidation Letters deliveries: % B2B non-bulk mail Individual item mail Cross border mail Un-addressed mail Parcel mail Express mail Source: Annual Report New Zealand Post , % New Zealand Post has established a joint venture with DHL in order to combine expertise in New Zealand courier and logistics market with DHL s international network, products and services Competitor postal operators Table 0.11 Overview of main competitors on the postal market (2007) Postal Market Volume mail # of Service level Coverage Operator / Turnover employees (number of mail deliveries per week) New Zealand All NZ $ 1, days per 100% Post Limited million week New Zealand B2B 100% Document Exchange Limited t/a DX Mail Fastway Post All???? 100% New Zealand Limited Fastway Post was the first to set up a nationwide network of retail outlets. Fastway Group is a franchise organisation operating in 14 countries. 9 As of yet, Fastway Post has 129 post locations throughout the country. Fastway Post plans to offer a variety of postal products from a stand within a store, and deliver by using its own network. The target is to establish 400 postal outlets throughout the country Annual Report New Zealand Post 2007, p. 24. New Zealand, Australia, England, Scotland, Wales, Ireland, rthern Ireland, Germany, Spain, France, Canada, the Netherlands, Luxembourg and Belgium Country report New Zealand

11 Other registered operators supply postal services in market niches. For example, DX Mail is operating as a specialist in business-to-business mail communications, both in the domestic and in the cross-border market Competition New Zealand Post still has a market share of over 80% in the basic letter market (LECG, 2007, 13). Table 0.12 Number of competitors and degree of competition (2006) Postal product Market share USP Number of competitors Bulk mail and consolidation >80% B2B non-bulk mail Individual item mail Cross border mail Un-addressed mail Parcel mail Express mail Total Concentration ratio C Competition issues Although there has been some concern with respect to New Zealand post pricing behaviour, no evidence has been found that it is misusing its dominant position in the postal market (OECD, 1999). Besides the fact that New Zealand Post is a designated operator, the New Zealand postal market has few, if any, level playing field issues. However, as of yet, the government has insisted to maintain its 100% ownership of New Zealand Post, which prevents it from being just another private company (Campbell, 2002) Results of competition The effects of full market opening of the New Zealand postal market are still developing. During the entire process of postal reform in New Zealand, starting in 1986, some developments have been attributed to postal market competition. In the decade after the corporatisation of New Zealand Post ( ) the following effects were observed: while anticipating to deregulation in 1988, New Zealand was allowed to close more than a third of its post offices, retaining local shops to take over counter operations, and substantially increased its annual rural delivery fee (Campbell, 1998); an increase in productivity: 40% fewer staff since 1987 handled 30% more mail (Toime, 1997); Country report New Zealand 1083

12 an increase in profitability: A loss of $ NZ 37.9 million in 1986/1987 changed to a $ NZ 47.7 million after-tax profit in 1996/1997 (MED, 1998); a substantial real price reduction; an increase in the quality of service 11. The following effects have been observed since full market opening in 1998: in the twelve months after the introduction of the Postal Services Act 1998, 23 other postal operators were registered 12 ; New Zealand Post has not reported problems in maintaining service quality 13 ; indications of lower prices 14, higher quality services and new services (PWC, 2006) Price performance: tariffs The following figure summarises the development of letter prices in real terms between 1985 and Figure 0.2 Standard letter price in real terms Source: MED (1998) Country report New Zealand

13 minal letter prices were the same in 1998 as in 1987, i.e. $ NZ New Zealand Post was obliged to keep a standard letter price below $ NZ 0.45 between 1998 and In 2007, New Zealand raised its standard letter price for the first time in three years from $ NZ 0.45 to As of yet, the price is still $ NZ Recently, New Zealand Post introduced a new pricing system for all standard domestic mail. Following this system, letters and parcels sent within New Zealand will be priced in direct proportion to their size and weight, whereas previously parcels have been priced mainly on weight. Table 0.13 Public tariffs (in $ NZ) Postal product Letter post 1 st class 1.00 Letter post 2 nd class 0.50 Letter post cross-border 1.50 (Australia & South Pacific) Parcels Differs per shape & size Parcels cross border Differs per shape & size Registered item Insured item Bulk mail, 20g Bulk mail, 100g Bulk mail, 300g Total Source: Employment The introduction of both corporatisation and liberalisation of the New Zealand postal market led to a substantial reduction in employment levels at New Zealand Post. In 1987, for example, the government announced that out of a postal network of 1244 post offices, 600 were considered uneconomic. New Zealand Post attributes the reduction in employment, from 12,006 in April 1987 to 6,892 full-time equivalents at March 1997, to a substantial increase in productivity. 15 More than nine years after corporatisation, New Zealand Post reports to handle 30% more mail with 40% fewer staff. The following table summarises the gradual decrease in staff numbers between 1987 and Country report New Zealand 1085

14 Table 0.14 Number of staff employed by New Zealand Post Year Approximation of number of staff employed , , , , , n/a 1993 n/a , n/a 1996 n/a ,890 Source: In 2003, New Zealand Post was the fifth largest employer and the 29th largest company in New Zealand, providing employment for 17,500 people. 16 New Zealand Post employees are not civil servants (OECD, 1999). Although New Zealand Post reports a substantial decline in its own staff numbers, the introduction of competition has resulted in entry of several competitors. Consequently, overall employment levels might have risen as a result of competition (OECD, 1999). New Zealand Post staff reports an even distribution between male and female employees as well as a wide range of employee ethnicity. 17 Table 0.15 Employment in the sector, in employees and [FTE] Operator New Zealand Post total 2003: 17, * 8616* [9058]* [7850]* New Zealand Post full-time 6998* 5817* New Zealand Post part-time 2838* 2799* Total Source: ECORYS desk research. te: * UPU Statistics New Zealand Post Annual Report 2008, pp Country report New Zealand

15 Employment conditions In the nine years after corporatisation, 1987 to 1997, New Zealand Post managed to achieve a reduction in the ratio of labour costs to total costs from 75% to 50% (Toime, 1997). New Zealand Post reports that in an international benchmarking study of in-house recruitment services in Australia, New Zealand and the United States, the New Zealand Post Recruitment Centre was ranked top three in every area Productivity The reduction in employment levels at New Zealand Post was to a great extent caused by an increase in productivity. As reported before, New Zealand Post reported to handle 30% more mail with 40% fewer staff in 1997 compared with Technological developments New Zealand Post innovates both their core business activities such as letters, express and logistics, and activities such as data processing, and mail and stamp production. 19 In 2005, New Zealand Post began a five-year modernisation process for their network costing approximately $ NZ 80 million. The process included the implementation of new processing technology in six main centres, three new mail centres, and the adoption of new postcodes and address standards. New Zealand Post strives for a machined mail standard of 80% at the end of this process. Currently, they are at just over 40%. 20 Table 0.16 Percentage of letter mail automatically processed Percentage Just over 40% (2007) Environment New Zealand Post has an environmental policy. This policy includes actions such as reducing energy consumption and improving the composition of packages from an environmental perspective. Moreover, New Zealand Post also strives to reduce its CO 2 emissions, which results can be seen below Annual Report New Zealand Post 2006, p Annual Report New Zealand Post 2007, p. 18. Country report New Zealand 1087

16 Figure 0.3 Reduction in carbon dioxide as part of New Zealand Post s environmental policy Source: New Zealand Annual Report 2007, p Sources Campbell Jr., James I Overview of the International Postal Reform Movement. In: Campbell Jr. James I Collected Papers on International Postal Reform. Campbell Jr., James I Modern Postal Reform Laws: A Comparative Survey In: Campbell Jr. James I Collected Papers on International Postal Reform. Campbell Jr., James I Postal Reform in Jordan In: Campbell Jr. James I Collected Papers on International Postal Reform. LECG Ensuring that consumers benefit from the opening of postal markets to competition. National Postal Conference Presentation. Ministry of Economic Development Postal Services in New Zealand. Report. Organisation for Economic Co-operation and Development Promoting competition in postal services. OECD Report. PriceWaterhouseCoopers The Impact on Universal Service of the Full Market Accomplishment of the Postal Internal Market in Study for the European Commission, DG Internal Market. Toime, E New Zealand Post Creating a Benchmark Organization. Long Range Planning, 30, 1, Country report New Zealand