Postmaster-General explains increase in charges

Press, Volume CXI, Issue 32720, 24 September 1971, Page 11

Postmaster-General explains increase in charges

It is not Intended that the Post Office should make a large profit, says the Post-master-General (Mr McCready) in reply to the writer of a letter to “The Press,” who asked for an explanation from Mr Me Cready in view of the recent increase in Post Office charges. The letter, from “Disconnection,” said: “Would the Postmaster-General please explain the following: (1) Why should the Post Office have to make a large profit? (2) Is it necessary to penalise the private telephone subscriber to pay for its loss? (3) How much does the Post Office reap from philatelists’ sales where the Post Office has to give no service? The Post-Master-General, in reply, says: (1) It is not intended that the Post Office make a large profit. In 1969-70, the last profitable year, a profit of $2.4m was shown. While in isolation this is a large amount, it should be looked at in relation to the size of the Post Office operation. For example, in 1969-70, the costs

of running the Post Office Amounted to $117,086,940, the profit for that year thus representing only 2.06 per cent on costs. Also, the average value at cost of the fixed assets employed by the Post Office in 1969-70 was $365,808,874, the profit representing only 0.66 per cent on this amount. Profits earned are used to help finance capital expenditure within the Post Office, thus reducing the demand on loan moneys on which interest at the rate of 5 per cent per annum is paid, and curbing the growth of the annual interest bill.

The use of the $2.4m profit in 1969-70 in that way means that in subsequent years the annual interest bill is $120,000 less than it would otherwise have been.

In the 1970-71 year, revenue increased by about $10.4 million but costs increased by about $26.5m, with the result that a loss of $13.7m was shown. As I mentioned when announcing that loss, almost slBm of the increase in costs was attributable to general salary increases resulting from surveys in the private sector. Since the end of the 1970-71 year, further substantial general salary increases have occurred—and the increases in charges which come into effect from October 1 are necessary to prevent a substantial loss this year. (2) The increases in charges not only apply to private telephone subscribers but also to business subscribers and the users of a range of other Post Office services. Private telephone charges have been increased at a lower rate than business charges.

(3) Known philatelic sales for the year ended March 31, last totalled $671,694. Although no special service is provided at postal counters, the cost of providing philatelic services including the provision of philatelic sales offices at Auckland, Wellington, and Christchurch, and the Philatelic Bureau in Wellington, which handles requests from all over the world.

In addition, various post offices throughout New Zealand provide a first-day cover service.