Please deliver us from Canada Post
Monopoly loses money while service declines
ometime next month, it is reported, the Royal Mail will officially be put up for sale, after nearly five centuries in state hands. The public offering is expected to raise more than $3 billion, making this the largest U.K. privatization since the railroads two decades ago.
Yet Britain is something of a latecomer to this game. A number of European countries have privatized their post offices in recent years, including Germany, the Netherlands and Sweden, in anticipation of this year’s Europe-wide deadline for member states to open their postal services to competition. Nor is this trend restricted to Europe: New Zealand has had competitive postal service since the 1990s.
And in Canada? Ah yes, what news from Canada Post? A quick review of some recent dispatches: ❚ An elderly Winnipeg couple had their mail service abruptly cut off because their front steps were judged a safety hazard, being two inches taller than the 12-inch maximum; ❚ Homeowners who post a “no flyer” notice on their mailbox have received letters from Canada Post warning them that by refusing to accept delivery of junk mail they are missing out on a chance to be “connected with your local community;” ❚ The corporation has fallen back into its old habit of losing money, after more than a decade in the black. A study by the Conference Board of Canada projects annual losses of $1 billion by the end of the decade. Indeed, as the National Post’s John Ivison has reported, Canada Post itself predicts it will run out of cash as early as next spring, helped along by a $5.9-billion unfunded liability in its pension plan; ❚ It has, however, settled a three-decade-old suit with the Public Service Alliance of Canada over pay-equity claims, at an estimated total cost of $250 million; ❚ Meanwhile, the corporation cannot explain what it got in return for hiring Dave Dingwall, the former Liberal cabinet minister, as a consultant, at a cost of a million dollars over six years.
Well, you get the picture. While other countries have reformed and streamlined their postal monopolies, leading to better and faster service — in New Zealand, for example, on-time deliveries jumped from 88 per cent to 97 per cent after competition was legalized — ours continues to sink under its own weight.
A monopoly that loses money is a remarkable feat. But of course Canada Post’s monopoly is of a peculiar kind, inasmuch as it comes with a twin monopoly, in the form of its unionized employees.
SOver the years, more and more of the corporation’s revenues have gone to its workforce, less and less to service. Six-day delivery was reduced to five; letters that had previously been considered late were redefined as “on-time;” home delivery was discontinued altogether on many rural routes, in favour of socalled “superboxes.”
And meanwhile, its statutory monopoly on first-class mail is turning to sand, disappearing in the face of email, electronic funds transfer and other technological developments, not to say its own spotty delivery record. The corporation’s absurd attempts to set itself up as a central online bills-paying portal are but the latest sign of its desperation.
So any suggestion that Canada Post follow the Royal Mail into privatization will run into an obvious objection: Who would buy it? Like its sister Crown corporations, Via Rail and the CBC, it remains in existence for no reason other than because no one can quite think what to do with it. But the rapid deterioration of its finances means it is no longer possible to put off the day of reckoning.
The first priority should be freeing the post office’s remaining customers: the notion that they should remain hostage to the monopoly, while rates are raised and service cut back — the Conference Board forecasts alternate-day delivery will be next — in order to save the corporation, has things back to front.
The question, then, is not who should own Canada Post, but who should deliver the mail. And the answer to that is, or should be: anyone fit, willing and able — including those newly competitive European postal services. Here the instant objection, that “only” Canada Post would deliver the mail on rural routes, is demonstrably untrue. Private couriers will deliver to the remotest addresses, provided the price is sufficient to cover their costs. What they won’t do is deliver it for the same price as for a letter across town, as is the current practice. (For that matter, as we’ve seen, neither will Canada Post.)
The argument that the monopoly must be preserved in order to maintain the uniform postage rate presupposes that uniform postage is itself a desirable objective.
Yet this dissolves under scrutiny. The practice essentially obliges all urban mail users, rich or poor, to cross-subsidize all rural users, poor or rich, the former paying too much for stamps so the latter can pay too little.
As the C.D. Howe Institute has recently proposed, if the policy is to subsidize rural routes, better to do so directly: They could be put out to competitive tender, on a least-subsidy basis. But there’s no reason even to do that. Lots of things cost less in the country — houses, for instance — without it being suggested these price differences should be suppressed. Why should postage be any different?
Social justice demands that we redistribute income from rich to poor — not from city to country. In any case, it is the job of the government, not the post office.