P.O. charges will rise, says P.M.

Press, 18 February 1986, Page 4

P.O. charges will rise, says P.M.

By

MARTIN FREETH

in Wellington

Higher Post Office charges are on the way, probably later this week, as the Government extends its “user pays” approach in the funding of State activities.

The Prime Minister, Mr Lange, tipped the higher postal and telecommunication fees when he told reporters that the Cabinet yesterday discussed potential funding changes for the Post Office.

As one of the biggest Government trading agencies and also as one embarked on a huge capital spending programme, the Post Office is a clear candidate to be put on a more commercial footing as the Government seeks to restrain its expenditure. The programme of new telecommunications equipment is estimated to

cost $630 million in the coming financial year. Mr Lange made it clear the Government would look to Post Office users rather than taxpayers to provide the extra revenue needed.

Apart from the new capital programme, he said past Post Office profits were a comparatively low return on investment.

“It (the profit) seems such a big chunk of money, but nobody ever works out that the Post Office has 33,000 employees and has also a huge amount of capital. There can be few bodies with a bigger investment in buildings and land in communication anywhere in New Zealand.”

Mr Lange also pointed to changes intended to make the Post Office more efficient as a business. Two management

consultant reports are being prepared for the Government after the Post Office’s problems last year over home mortgage lending. Mr Lange dismissed a suggestion that the Post Office could be broken up into separate trading organisations as a result of the management reviews. He said there would “undoubtedly tend to be some streamlining.”

He indicated that the changes would mean greater fee increases in areas which in the past had been subsidised by other, more profitable areas.

Mr Lange also made a prediction on the Government deficit for the year to March 31, saying it would still amount to less than 4 per cent of New Zealand’s gross domestic product in spite of having to be revised upwards.

A revised forecast on the deficit, higher than the existing $1.6 billion official forecast, is expected to be announced by the Minister of Finance, Mr Douglas, tomorrow or Thursday. Mr Lange dismissed the likelihood of the forecast going up to $2 billion, as has been widely tipped by economists. However, he said it was bigger than the Government would like.

The final figure for the year would hinge on the size of the Government’s seasonal tax take in March, he said. The tax flow was very hard to predict, creating a lot of uncertainty about exactly how the deficit would turn out.

Questioned on interest rates, Mr Lange predicted they would "track along before tracking down towards the end of the year.”