The sale of Telecom in 1990 was a mistake and New Zealand Governments have generally proved themselves inept at privatisation, says former Prime Minister and departing NZ Post chairman Jim Bolger.

Telecom was split off from the NZ Post Office in 1987 and sold by the Labour Government for $4.25 billion shortly before Bolger's Government was elected in 1990.

Although Telecom's recent history as a listed company has been somewhat chequered, NZ Post is now facing severe and inevitable decline in its core business.

"With glorious hindsight you could say we hung on to the wrong bit," Bolger said yesterday.

However, he added that at the time the deal was done, the postal business was the "right bit" to retain.

Bolger said his comment was based on the fact that "digital technology applies much more easily to banking and to telecommunications that it does to the delivery of hard copy letters".

Looking back, he said "some of our privatisations were done for a song".

"Sir Roger Douglas was worse than hopeless at privatising, to be honest."

However, he said the $400 million his Government received for New Zealand Rail in 1993 was more than the Treasury thought it was worth.

He did not wish to comment on the price the last Government paid Australia's Toll Holdings for the rail business but believed "it won't make much difference in the grand scheme of things".

Bolger steps down as NZ Post chairman at the end of this month and was dumped as KiwiRail chairman earlier this year.

He said that while NZ Post was on the wrong side of history, KiwiRail, despite its well-reported need for new investment, would prove to be on the right side as energy prices inevitably rose.

He admitted to some sadness in presiding over NZ Post - an "institution that touches everyone every day" - during the inevitable decline in its core letters business in recent years.

The writing was on the wall for further declines as big generators of hard copy mail move to different communications, he said. NZ Post was now engaged in an intense search for a viable new business model for mail.

He said it would be difficult for some of the public who wanted the status quo to continue but that was impossible unless the service was to be subsidised, which was unlikely.

However, the irony that the taxpayer was to subsidise NZ Post's rival medium - broadband - for $1.5 billion over the next few years had not escaped NZ Post's attention, he said.

Meanwhile, Bolger said he took some pride in the rise of NZ Post's subsidiary Kiwibank, whose success had helped offset the decline in the postal business.

The fact that the bank had succeeded against the expectations of both major political parties and the Treasury "fits into my approach to life - how do you beat the odds?"