Government's funding for NZ Post has ruffled the feathers of competitors in the industry. Photo / Michael Craig
Government's funding for NZ Post has ruffled the feathers of competitors in the industry. Photo / Michael Craig
NZ Post has received more than $29 million in wage subsidies - on top of the $280m the Government allocated for the state-owned enterprise in its Budget.
As of Wednesday, the state-owned enterprise had received a total of $29,714,222.40 for 4384 employees, according to the Ministry of Social Development's searchtool.
The $29m subsidy does not include funding that the postal service's 1600 contractors may have independently accessed.
Last month the Government announced it would pump $280m into NZ Post as it was "no longer commercially viable" for it to maintain its current service level.
About $130m of that funding would come from the Budget over the next three years, while an equity injection of $150m would come from the Government's Covid Response and Recovery Fund.
The move has ruffled the feathers of competitors.
Scott Jenyns, chief executive of courier company Aramex New Zealand, said there needed to be "a more level playing field" within the industry.
This comes days after Freightways chief executive Mark Troughear slammed the move to keep the service afloat.
"We believe there needs to be a more level playing field, that ensures the long-term sustainability of all the businesses that make up the delivery network," Jenyns told the Herald.
Troughear last week said NZ Post would not need to be "propped up" if it "charged the right price for what they do".
He said mispricing had "been the bane of the industry for a while now".
Freightways, which holds the same share of the couriered parcel market as NZ Post through its CourierPost business, has been trying to lead prices up, particularly for business-to-consumer deliveries, to increase its margins.
"If you make a margin on it, you're incentivised to put the right resources in to keep that service at a really high level, which we have done," he said.
"We've been frustrated because we compete against NZ Post who we think don't act particularly commercially in that regard."
Last month the Government announced it would pump $280m into NZ Post as it was "no longer commercially viable" for it to maintain its current service level. Photo / File
Shane Jones, associate minister of state-owned enterprises, supported NZ Post's move to access the wage subsidy on top of the cash injection Government had earmarked for it.
"NZ Post, unlike its competitors, has a responsibility under the Deed of Understanding with the Government to provide a letter service to 2.5 million delivery points across the country - a network which its competitors use themselves to ensure delivery to parts of the country their own networks don't reach," Jones said, adding that competing business could too access the wage subsidy.
The funding mitigated the financial impact of the Covid-19 pandemic on NZ Post which - despite current high demand for its services - was significant, he said.
Shane Jones. Photo / Mark Mitchell
The capital would also enable NZ Post to invest in its parcel business, he said.
"Without this support from the Government, NZ Post would need to consider actions such as significant price increases, cuts to staffing and reduced levels of service. This support also keeps open the possibility of investment by Post in its parcels business, which is profitable and well-positioned for further growth."
DHL declined to comment on the matter when contacted by the Herald.
Freightways operates courier services New Zealand Couriers, Post Haste Couriers and Castle Parcels.
