The C.D. Howe Institute has some ideas for keeping struggling Canada Post solvent: contract out postal services and provide direct subsidies for mail delivery in remote areas.
In April, the Conference Board of Canada calculated that falling mail volumes could cost the national mail carrier $1 billion a year by 2020.
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Canada Post’s first-quarter results showed a $51 million pre-tax profit, but only because of the $109 million sale of its downtown Vancouver processing plant. Otherwise, the Crown corporation would have posted a $58 million loss. In the fourth quarter of 2012, Canada Post reported a loss of $73 million.
In its report, the C.D. Howe Institute says that Canada trails other countries that have ended the “monopoly status” of their national mail carriers.
For instance, the U.K. started changing its postal service gradually a decade ago and is now privatizing what remains of the national service. Sweden and Finland have ended the government monopoly on the pickup and deliver portions of postal service.
While full privatization may not be the way to go, says the think tank, Ottawa should start putting in place incremental reforms, starting with contracting out some services like pickup and delivery. The report notes that Canada Post already contracts out some postal service outlets, customer care centres and air and long distance transportation.
The C.D. Howe report recommends the federal government directly fund service to remote regions, rather than Canada Post finding the money by raising prices on other postal services and products.
Currently, Canada Post would not be able to contract out the bulk of its services because of labour agreements that prevent layoffs. But demographics may solve this problem.
“With nearly half of Canada Post’s workforce set to retire by 2021, or an average of 3,000 people per year … the organization could gradually increase the share of services it contracts out without relying on layoffs,” says the report.
