Finance Minister Bill English is leaving the door open to a possible split between New Zealand Post and Kiwibank.

Photo: RNZ / Alexander Robertson

New Zealand Post has announced it will shed a further 500 jobs by July as it faced falling annual revenues of up to $30 million, with 60 million fewer letters being sent each year.

Mr English said New Zealand Post was continually adjusting to the reality of a lot less traffic.

"And working out how to become a bit more of a logistics company, and they've done pretty well in the circumstances.

"New Zealand Post is government owned and we're going to be keeping it so they have to find a solution," he said.

Last year New Zealand Post reported an underlying profit of $128m, with Kiwibank accounting for $127m of that profit.

Photo: RNZ / Alexander Robertson

However, Bill English said it was not completely one-sided, with New Zealand Post still acting as a guarantor for Kiwibank and shouldering some of the bank's costs.

He was asked if there were any plans to change to change the current structure, under which Kiwibank was a subsidiary of New Zealand Post.

"Well it's always under review because it [Kiwibank] has grown, while New Zealand Post has shrunk, they've been working away at what's the best long term arrangement between the two of them, so you know we'll just see where that gets to."

But Mr English would not comment when asked whether the government would go ahead with a formal split.

"But the government's been working with the Board for two or three years on what's going to work best in the long run."

Green Party co-leader James Shaw questioned what would happen to New Zealand Post, if it was split off from Kiwibank.

"The mail business is changing massively and that presents a huge challenge to the service, but of course Post Shops are in many places around New Zealand the main point of contact that a lot of people have with the government and a whole range of services," he said.

Photo: RNZ / Alexander Robertson

The government could be faced with the option of either subsiding New Zealand Post, or letting the mail service fail, Mr Shaw said.

"If you split off Kiwibank from New Zealand Post you still have to solve the problem of what you do with New Zealand [Post], because just using Kiwibank's profits to subsidise New Zealand Post's losses is clearly not fixing the problem and the real problem here is what do we do with that network."

Labour Party finance spokesperson Grant Robertson said Mr English should be clear about the government's intentions.

Photo: RNZ / Alexander Robertson

"I think we can see the two of them together as a core state asset and once they're separated out it would make it easier for a National Party that has got a track record of selling assets to do the same.

"Let's have Bill English come clean with New Zealanders about what his plans are for New Zealand Post, which we all know have to change, and what his plans are for Kiwibank," Mr Roberston said.

New Zealand Post board chairman Sir Michael Cullen said he had no comment about a potential split, except that Treasury had been looking at this issue for a couple of years, and no final decision had been made.