In the modern world in which people communicate via email, texts, and phone calls, government-run postal monopolies are becoming increasingly obsolete. At the same time, courier services can deliver parcels for consumers quickly and at a predictable pace.
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Why, then, does Canada need a government-run postal service? The short answer is that we don’t.
The topic of Canada Post is back in the news because of the threat of another postal strike. Many Canadians remember all too well the postal strike that took place last November, a strike the union timed to inflict maximum damage on consumers and small businesses ahead of the Christmas season.
The government finally ended the strike by ordering workers back on the job, pending the outcome of negotiations with an end date of May 22. But more than a week later, there is still no deal in place between the union and Canada Post. That means the threat of another strike looms large.
Because of all of this labour unrest, many Canadians are wondering why a government-run postal service is needed. That’s even more the case because of the losses that are piling up: Canada Post has failed to run a profit since 2017. In fact, over the past five years alone, Canada Post has posted annual losses of between $490 million and $841 million. Traditionally, Canada Post has covered its losses through reserves. But this past January, the feds had to give Canada Post a $1-billion bailout. And with declining usership and strike threats, that could only be the beginning.
Even Canada Post’s CEO, Doug Ettinger, seems to recognize the problem. Back in 2006, Canada Post delivered an average of seven letters per week to a given address. As of last year, that number had declined to just two.
“Our current structure was built for a bygone era of letter mail — the status quo… is not an option,” said Ettinger in a news release.
The executives at Canada Post, of course, want to see reform. Canada Post has proposed cutting service to stave off bankruptcy, which has in turn riled up the union.
But what Canadian consumers and taxpayers should want to see is not just reform, but a complete overhaul of the system.
The bottom line is that it’s time to get the government out of the postal business. It’s time to finally privatize Canada Post.
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It’s the Canada Post monopoly itself that’s at the very heart of the problem. As Vincent Geloso of the Montreal Economic Institute said quite eloquently in Maclean’s Magazine, “If taxpayers can bail out Canada Post, why would it control costs? If you have a monopoly, why not pass out costs to consumers in the form of higher prices? After all, they can’t go elsewhere.” Countries like Germany, Sweden, Belgium, the Netherlands, and Austria have all privatized their postal services, many with great success. In the German case, Deutsche Post, now private, continues to deliver some of the best service in the world and posts solid profits in doing so. Deutsche Post has far better service outcomes than does Canada Post, according to the Universal Postal Union.
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And in European countries that privatized their postal delivery services, stamp prices actually fell between 11 and 17 per cent over the first decade of privatization, after accounting for inflation.
Privatization also protects taxpayers from bankruptcy, which Canada Post is barrelling towards without fundamental change.
To get Canada Post employees on board with privatization, Geloso suggests giving them shares in a newly privatized company, so that they would have a stake in its success and would be willing to see fundamental reforms occur.
After that, the market could liberalize, with competitors allowed into the marketplace over a certain time period.
After that transition period, the rest of the Canada Post shares could then be sold at market price.
With a privatized Canada Post and more options for delivery, Canadian consumers and small businesses would never again face the possibility of being held hostage by a union strike. Without a monopoly, a strike at a privatized Canada Post would have a much more limited impact.
It’s time to end this consumer and taxpayer nightmare. Canada should follow much of Europe, privatize Canada Post, open up the marketplace, and change mail delivery in Canada for the better.
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