Canada Post should contract out services, report says

The debate is back about the value of the people that deliver your mail.

A new C.D. Howe Institute report is calling for the shakeup Canada Post through increased outsourcing and the subsidization of rural services - ideas the union behind the letter carriers are calling stale and destructive to workers.

Both sides do agree on one thing: Canada Post is losing money as more people communicate over the Internet, and something needs to be done.

“Canada Post is at a critical juncture: facing large current – and larger looming – financial losses, it must undergo reforms in order to contain costs and stem losses,” says the C.D. Howe report.

It calls on the federal government, which owns Canada Post, to outsource more mail services to help stave off financial losses as a result of lower mail volumes, growing pension commitments and obligations to maintain common prices for services in both urban and rural Canada.

The report cites countries such as United Kingdom, which it says has fully privatized its mail services, as one model to consider. However, it says a better approach for Canada would be the “gradual introduction” of contracting arrangements for Canada Post services.

“It is time that Canada's postal service caught up with those in the rest of the world,” says author Benjamin Dachis, a senior policy analyst at the Institute.

Canada Post says Canadians mailed a billion fewer letters in 2012 versus six years earlier, as more customers move to online bill payments and communicating online through email and live video. At the same time, Canada Post notes that growth in online shopping has led to an increase in parcel deliveries.

Union warns on layoffs

Although the study cautions against large-scale layoffs of Canada Post employees, the Canadian Union of Postal Workers (CUPW) isn't convinced.

It says the approach will likely lead to service cuts and government subsidization.

"The C.D. Howe institute was making the same case for deregulation and privatization in 2007, while Canada Post was making profits" says Gayle Bossenberry of the CUPW. "These are tired old ideas, not viable solutions for a valuable public service.

The union cited a spring poll that shows 71 per cent of Canadians oppose deregulating or privatizing postal services. It also says Canada Post should consider expanding services, instead of cutting them. For instance it says operators in France, Italy, New Zealand and Brazil that have expanded into banking and financial services.

The C.D. Howe report follows a Conference Board of Canada study released earlier this year showing Canada Post faces an annual operating loss of $1 billion by 2020 as the volume of mail is expected to fall by another 27 per cent.

The Conference Board report also called on major changes from alternate-day delivery or slowing mail speed as possible cost-saving measures.

In response to the C.D. Howe report, Canada Post put out a statement citing that it’s at a “turning point” in its history and highlighting the ongoing national discussion it’s having on its usefulness in today’s market.

“With the relentless decline in letter mail resulting in ongoing financial losses at the Corporation, fundamental changes are needed to transform the business,” Canada Post stated, saying the C.D. Howe report, “provides further reflection on these challenges and the growing need for change.”