New Zealand: Where the Words ‘Profit’ and ‘Postal Service’ Belong in the Same Sentence
There must be some mistake. Our Postal Service announced in early August it is hemorrhaging at the rate of $14 billion this year. So disappointing.
On the same day, the New Zealand postal system announced its disappointing results. It will earn profits of only $72 million for 2010. Disappointing because they are down a few million from last year. Did you ever expect to see the words “profits” and “postal system” appear in the same sentence?
If this is not enough to capture your attention, let us do some conversions. The $72 million New Zealand dollars are equal to about $51 million U.S. dollars. And New Zealand’s population is only 4.3 million. Multiply by 72 to reach our population of 310 million.
Multiply the profit of the NZ postal system by 72. Yes, the system will make a profit this year equivalent to $3.7 billion. That is in U.S. dollars.
Wait. The pain intensifies. This is the expected after-tax profit. Last year their postal system paid the equivalent of $1.15 billion in taxes to the New Zealand government (calculated in U.S. dollars).
It also pays hundreds of millions in dividends to its only shareholder — the New Zealand government. That is, the taxpayers.
In its August 5 announcement our postal service predicted it could go broke. It may run out of cash by next year. You may catch a whiff here of the service’s plan to hit up taxpayers for another fix.
Meanwhile, the New Zealand system projected its profits will rise. To $4.3 billion next year. And to over $6 billion the year after. (Calculated in U.S. dollars and multiplied by the population difference of 72.) And yes, mail volume is slowing there. Email is growing there too. Their system faces the same challenges ours does. The difference is that they are up for the challenges.
Our postal system has lost money in 14 of the last 16 quarters. Their postal system has made money every year for the last 22.
Guess which company was named New Zealand’s most trusted retail brand for the fourth time in five years in a Reader’s Digest survey?
Guess which postal service operates in full competition, with no monopoly protection? Certainly not ours. Theirs does. And by competition, I mean there are 25 individual postal carriers in New Zealand.
Makes me proud to be a Kiwi. Copy – paste, copy – paste and you Yanks will have a profitable postal service.
It can’t be rocket science to duplicate what the Kiwis are doing. Let’s face it they don’t even have rockets…
I suppose you can keep being original in your support of a failing postal service and keep saying, “we did it our way”, or just simply copy success.
New Zealand is like the Israel of the South Seas – innovative and proud of its achievements, especially our world champion rugby team – The All Blacks, and its postal service too.
I see they’re in partnership with DHL which is a German owned company if my memory is correct. I also recall seeing DHL trucks on Postal property in this country and suddenly they were gone. I don’t see DSL trucks anymore as a matter of fact. It’s as if they were yanked into the sky.
How did Kiwi Bank get such a sweet deal with New Zealand? Is that bank government owned?
Regardless, I will look into the issue because I have to say that there is nothing more infuriating than some guy coming up to you when your down and taking his thumb an sticking it in your eye. The United States Postal Service has gone to Congress and addressed their financial situation and proposed ways to improve, streamline, and condense mail delivery to five days a week. It is up to Congress to address this issue as the Postal Service in under their command.
This has to do with the government which you are a part of with your vote and with your voice you can work to make a differance instead of mocking the Postal System which has served this nation well and is a part of the nation that is affected by the downturn in the economy. They are also under strict regulation for funding their retirement program which ties their hands when it comes to addressing the loss of revenue in this recession. The post office employs men and women in “your neighborhood” who contribute to the life and health of “your community”. It is not some giant machine churning out mail and spitting it into your mailbox. These are real people that work everyday, come to your house whether you have mail going out or mail coming in. They follow the direction of their employer and the employer follows the direction of the Congress.
I see postal trucks on the freeway and sometimes still marvel that I could send a letter from one end of the country and in a few days it arrives at the other end, starting from my house and going through all the steps to get to it’s destination. The infrastructure of this country is a true marvel when one stops to think off all the things that come together so that I can type this on my laptop and you can write an article critisizing our infratruture why touting the more better New Zealand way.
Here is a link to send a letter “within New Zealand”. Looks expensive, you decide. http://www.nzpost.co.nz/Cultures/en-NZ/OnlineTools/Ratefinder/LettersNZ
Due for a rate increase in October 2010.
http://www.nzpost.co.nz/Cultures/en-NZ/Personal/Miscellaneous/October2010Changes
Kiwi Stamps not such a bargain for a state the size of WHAT?
Lynn: I just visited http://www.nzpost.co.nz/Cultures/en-NZ/OnlineTools/Ratefinder/LettersNZ. I did a little work converting dimensions, weight and price and believe my math is right. In NZ the standard letter can be up to @ 5.25″ X 9.25″ X 0.25″, weigh just over one pound, and cost US$0.35 to send. You think that’s expensive? USPS would charge @ US$4.90 to send a one pound 9″ X 12″ letter. Competition can truly, but not surprisingly, work wonders.
Didn’t see the pound sign saw the dollare sign. Are they the same?
http://en.wikipedia.org/wiki/New_Zealand_dollar
The New Zealand dollar (sign: $; code: NZD) is the currency of New Zealand. It also circulates in the Cook Islands (see also Cook Islands dollar), Niue, Tokelau, and the Pitcairn Islands. It is divided into 100 cents.
one dollar = 100 cents.
Here: http://en.wikipedia.org/wiki/New_Zealand_dollar
One New Zealand Dollar = 100 New Zealand cents.
I saw the dollar sign, not the pound sign. It is a New Zealand dollar with 1/100 a cent and 100 cents for each dollar.
Hey, where did Rick go! Hello, hello, hello, anybody out there?
http://www.xe.com/ucc/convert.cgi?Amount=1&From=USD&To=NZD&image.x=43&image.y=12
The above link would be for anyone who is interested in trading currency. One U.S. dollar equals approximately one dollar forty three cents N.Z.
The New Zealand Kiwi stamp would be a bargain for U.S. citizens who exchanged the U.S dollar for the New Zealand dollar, but not necessarily for New Zealand citizens who get paid in New Zealand dollars.
Two things, first, population density is being misused as a metric in this article. Density does not equate to distribution.
Secondly, David states “New Zealand is like the Israel of the South Seas..”
Sorry David, no it isn’t. New Zealand is more aptly discribed at the “Cuba of the South Seas”
New Zealand the Cuba of the South Pacific? Hah! If compared with Cuba one would almost have to say it is nearly the polar opposite. It is one of the most free market economies on earth and shucked off most vestiges of socialism decades ago. Like Cuba? You must be kidding.
Decades? seriously, Helen Clark was PM until only 2 years ago.
Yes, decades. Please take time to read about Roger Douglas and his Rogernomics of the early 80′s. One of – perhaps the biggest shift away from socialism without a revolution ever.
Yup, Rogernomics was the real thing – a rare plunge into commonsense by a political leader and his government. The question is why should any government be in the business of delivering mail? Even when they make a profit like the NZ posties it’s just a tax farm. Government should govern. What part of governing includes delivering utility bills and love letters?
I imagine it’s not that hard to run a profitable mail delivery in a country about the same size and population as Colorado, with about half the land area (or more?) pretty much unpopulated and most of the population centered around a fairly small area on one island.
Population is spread over three islands, huge mountains down the middle, 1000 miles. C’monnn, you are stretching to try to defend an embarrasing loss in the billions year after year by our system and shuttering your eyes to one of the world’s most successful and profitable systems. Given the immensity of the difference in profit and loss between the two don’t you think maybe, just maybe we might swallow our pride and see if we might emulate – rather than belittle- the Kiwis?
David’s comment above exemplifies the usual grace with which Kiwis handle comparisons between themselves and other countries. They are very proud of their tiny remote insular little spot down here (yeah, I live here) but go to
expatexposed.com or
emigratetonewzealand.com
and also check out a few candid posts on city-data if you want the real dope on New Zealand. The gloss is very high on the surface.
A question for the author: does he know if it would take a change to the constitutional requirement for a post office in order to privatize, or could the government fulfill that without amendment by simply contracting out the services of the post office, hopefully for profit?
Here in microcosm is an illustration of the great problem of our time. Government needs to be limited and should not do anything that can be reasonably done by the private sector. Government run businesses lack competition to keep them honest. They do not need to make a profit and so never have to be run efficiently or reasonably. They are operated by an ever expanding labor pool that basically forms into a cartel that negotiates high salaries, over-the-top benefits and overly lax work rules with politicians beholden to their support.
Once established there is too much “pain” to privatize. You can hear Obama saying: “I will not put all these hard working people out of work just so some fat cat private sector executives can underpay them and then overcharge the people of the united states for postal services!”
You see, it always comes down to socialism versus capitalism – the socialists being very adept at ignoring economic realities in deference to their ideology. As I said, the great battle of our time and, btw, we are losing.
In my little town, the post office opens at 9:30, closes for lunch, closes for good at 3:30 and does not open on the weekend. It is old and shabby. In the area that remains unlocked, the stamp vending machine was having difficulties accepting perfectly good dollar bills so the reaction was to remove it for good. There is no scale to self weigh your letter or package, there is no chart showing postage rates. Unless you are retired or unemployed, you are forced to take all of your business to DHL, UPS or your local mailbox store. Can you see a private business doing this?
The NZ Post Office is not privately owned. It is a State Owned Enterprise (SOE) owned by the NZ government but expected to return a profit to the shareholder the NZ Government and the NZ people. They are run as private enterprises.
There are a number of SOE’s in NZ. A compromise between socialism and capatlism. NZ is still mainly a socialist country that was making leaps and bounds with Rogernomics in the 80′s that reformed a lot of the excesses until PM Lange decided to stop to “have a cup of tea” (NZers Will understand what I mean).
We had nine years of Helen Clark, aka the bilious bitch and all I can say is that the UN and her deserve each other
You hit the nail on the head when you spoke about “my little town”. A privatized postal service would not have a post office in your little town. It does not make business sense to have a local retail outlet in small locations. Care to guess how many outlets were shut down in New Zealand when they were tasked with efficient operation?
just for chits and grins could anyone come up with the data to compare NZ with an individual state or two ?
The Australian postal service seems profitable as well and in geographic terms it is nearly the same size as the USA with a population of only around 23 million.
http://www.smh.com.au/business/australia-post-profit-slumps-as-letter-volumes-fall-20091015-gyoz.html
I moved to NZ three years ago, and postage rates have gone up at least twice since I’ve been here. While domestic postage is fairly reasonable, international first class mail is quite expensive. A letter to the U.S. costs $2.30 NZD (about $1.65 USD); it will go up to $2.40 NZD in October. U.S. first class international for a letter is .98 cents.
Nice Story, shame about the facts. See http://www.nzpost.co.nz/Cultures/en-NZ/AboutUs/MediaCentre/MediaReleases/20Aug2010.htm
The NPAT is $1.3 million (or pretty close to break even). The $72 million underlying operating net profit to which you refer (actually $73.6m, down from $77 million last year) refers to earnings before one off expenses were taken out. As a State owned enterprise, it is obliged to pay a dividend to the state. Last year this was NZ$6.42 million. Not hundreds of millions.
Profits are profits. (As opposed to endless losses by the U.S. Postal Services) In 2009 – a somewhat typical year – NZ Post made a “profit before income tax of $NZ93.5 million. It paid taxes of $NZ21.7 million. Think about that. It actually paid taxes! Instead of sucking them up. In U.S. dollars it would be about $15.3 million. Since NZ is one-72nd of the size of the U.S., it is equivalent to about US$1.1 billion. You mentioned it also paid dividends to the NZ government. Yes, the equivalent of a paltry US$351 million in 2009. Meanwhile, shareholder equity of NZ Post (the value of the assets of the company to the NZ public) has grown to the equivalent of about US$34 billion. Ignore reality if you wish. The truth is the Kiwis are doing something smart when it comes to their postal system. We are doing something not so smart, year after year. Their postal system has made huge profits and has returned huge amounts to taxpayers. Ours has lost massive amounts and cost our taxpayers countless billions.
Even a profit of 1 cent – US or NZ – is a LOT better than the huge losses the US postal service has.
When I think about all the mail I get in the course of a year, here are the categories:
- advertising (ranges from newspaper sized flyers full of this week’s bargains at Walmart or whatever to single sheet coupons for takeout food or one of the local fitness club)
- the few bills that I still don’t pay via pre-approved checks
- the occasional newsletter from my member of parliament (I’m Canadian living in Canada); they come 4 or 5 times a year
- very very rare letters from local, provincial or federal government (I get an enumeration notice for local elections every four years and a census form every 5 or 10 years)
- a very few personal letters (I have two friends that still send Christmas cards and one that sends a birthday card)
Advertising represents 98% of the mail I get. I don’t ask for any of it and I never look at it; it just gets tossed straight into the recycling box. I could easily change to pre-approved cheques for the bills I still get delivered. My member of parliament could just as easily post her newsletter online or send it as email. The personal letters I get – all three per year – could be done via email. Two of my three correspondents live within a five minute drive of me and they could hand-deliver their letters.
So just why do we need a postal service in the first place??
The very few things that would probably still have to be delivered could be handed over to courier companies easily enough. Even if individual items cost a few cents more via courier, think of the savings we’d have in not having the albatross of a barely-used but very expensive postal service in the first place!
The USPS is the only commercial entity in this country that is required to pre-fund its disability retirement to the tune of $5 billion per year. Regardless of the island hopping done in New Zealand, the total miles covered by the USPS dwarfs any other mail delivery service in the world. That makes it very susceptible to fluctuations in gas prices. Every little spike in fuel prices costs the post office millions of dollars. Add all that to the economic downturn and the subsequent drop in advertising mailings, increase in e-mail and online billings, etc., and there’s bound to be some financial problems with the USPS. Don’t get me wrong, there’s plenty of ham-handed stupidity in postal management, but the basic service model is not unsound.
While I have no reason to doubt the NZ mail system is probably one of the most efficient on earth, it’s somewhat disingenuous to (try and) compare it to USPS. USPS is charged by law in delivering to EVERY address in the U.S. Soooooooo, if you live in splendid isolation at the ‘end of the lane’ in WY, for example, and the end of the lane is 6 miles off the main hi-way, the mail vehicle MUST traverse those 12 miles (there and back)to deliver a single letter. Kinda hard to be as profitable as NZ under those circumstances. Just sayin’, mind you.
First of all, the US Postal Service does NOT receive any tax dollars; it’s income comes soley from sale of postage and services. Secondly, a big reason the USPS has posted losses is the Congressional requirement that they pour $5 BILLION or more into pre-funding retirement benefits – something no other US private or government entity must do. If that obligation wasn’t required USPS would have posted a profit instead of a loss for most of the past few years. And according to GAO & the Inspection Service USPS actually has overpaid into the civil service retirement fund to the tune of $75 BILLION or more. Give them back that overpayment. Next, I don’t know how many regulations the NZ postal service has but the USPS can barely do anything without the Board of Governors, the Postal Rate Commission or Congress studying it for months (years?) and then making a decision or passing a law. The postal service was established to provide a method of communication that was the same rate to anywhere in the country, plus it is monitored by the Inspection Service which provides security and privacy of the mail. If the service were privatized, companies might provide service in the big cities (read – profitable), while those who rely on the postal service the most in rural areas and places like Alaska and Hawaii would end up with expensive, poor service. Ever checked out the difference between USPS’s rates to AK & HI and those of UPS or FedEx? BTW, there really isn’t anyone who wants to “buy” the Postal Service as long as they have to work under the mandate of universal service for the same price. And if lots of private companies have access to your mailbox and mail, and something is stolen or your identity is stolen, whose going to prosecute? Not the Postal Inspection Service because they won’t exist.
Tom, you’re dreaming. There is no profit from postal and there is in effect no competition.
NZ Post Group is profitable, but the postal operations are not. It’s only Kiwibank (mainly) that props the group up. Also there is no real competition. The so-called ‘competition’ on the national level operate under an agreement with NZ Post whereby they sell their own stamps and maybe have a few letter boxes – but basically all competitors national mail gets processed and delivered by NZ Post who gives them a few percent from the stamp price for their troubles. HaysDX is a little different, but they operate a very small network of selected customers.
Postal operators in real competitive environments are Sweden and Norway. Norway Post delivers more mail in Sweden than they do in their home market and they make real money doing it.