Should Canada Post be privatized

[Chuck U. Farlie]

While reading the other thread regarding public service unions, some members discussed Canada Post's monopoly on mail delivery and seemed to be against it.

I, for one, am against privatizing Canada Post. I think it would be a big mistake in a country of this side.

On this website I found a summary of countries that have or are trying to privatize their postal services.

In particular, I think the problems that would arise include:

Around the world, many national postal services are having their monopoly status revoked on letter mail. Many academics see this type of deregulation as leading to a “downward spiral” for national postal services, as private sector competitors will be able to carve out just the profitable services—leaving the high-cost work to the public bodies. For instance, a delivery service may decide to only carry utility bills in New York City, taking away valuable business from the USPS. Of course, they would not consider extending their network throughout Alaska.

In addition, the private competitors will be able to adjust their prices to attract the lowest-cost deliveries, and add surcharges to the high-cost services—though the public postal systems would not be allowed such business flexibility.

Most privatization schemes go even further: allowing the private networks to collect and sort mail, then dumping it on the public postal system for delivery at severely reduced prices.

In essence, the public postal networks have always been granted monopoly status in exchange for universal service (which is costly) and uniform pricing. Under many of these new arrangements, private companies are allowed to compete without those restrictions, while the public systems continue to retain those responsibilities without the benefits given to private competitors.

By privatizing Canada Post we could eventually lose both universal service and universal pricing. Many of our rural Canadians might not receive any postal service at all, or if they do it might become very expensive.

Considering this, I would like to see what arguments exist that we should privatize Canada Post, and additional arguments as to why we should not.

Edited December 17, 2008 by Chuck U. Farlie

[Smallc]

Rural areas lose money for Canada post right now. Its only because of their mandate that they really do it. IF a private company had the contract, they would need to be heavily regulated in order to ensure that they continue service to these areas. The other option would be to charge people in rural areas much higher prices.

[capricorn]

Canada Post should not be privatized. Postal service is one of the few services provided to Canadians across the board and does not cater to a targeted demographic of our society. Private firms would not be inclined to provide service to Canadians in many rural areas simply due to the cost of service delivery. Neither would private firms feel any obligation to keep Canadians connected through maintaining postal services as they are now.

The Conservatives had occasion to show they place value on postal service to rural Canadians. They made that clear when employees at Canada Post complained that in some cases, rural delivery was a health concern.

The Conservative government is ordering Canada Post to protect rural mail delivery and maintain a fund that subsidizes postage for Canadian magazines.

Transport Minister Lawrence Cannon announced Wednesday he has directed the Crown corporation to implement a plan to restore and maintain mail delivery to rural roadside mailboxes within 18 months.

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"I expect that Canada Post will do its utmost to restore and maintain mail delivery to rural roadside mailboxes while taking into consideration the health and safety of their employees, and respecting all applicable laws," Cannon said in a news release.

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More than 50,000 rural homes across Canada have lost direct mail delivery because of the safety concerns of mail carriers.

The risks relate to traffic safety and ergonomics as letter carriers are forced to reach and lean to deposit mail into rural boxes.

http://www.cbc.ca/canada/story/2006/12/14/...ost-cannon.html

The Government of Canada recognizes that Canada Post has already implemented certain measures to improve the safety of rural and suburban mail carriers (RSMCs) and to ensure continued mail service to affected customers, including equipping RSMCs' vehicles with flashing lights and reflective signage. The Government of Canada will continue to monitor the situation closely as Canada Post strives to ensure that rural residents are provided with safe, efficient and quality rural mail services.

http://www.tc.gc.ca/mediaroom/releases/nat/2006/06-h178e.htm

[Renegade]

By privatizing Canada Post we could eventually lose both universal service and universal pricing. Many of our rural Canadians might not receive any postal service at all, or if they do it might become very expensive.

You should distinguish between them being privatized and them losing their monoploy status. They could be privitized but still retain their monopoly status. That would permit them to continue to maintain the same rate structure.

I for one think that subsiding rural service by overcharging urban user is not either sensible nor fair. The rural user should pay the true cost of postal service, and that would encourage the use of alternatives (such as e-billing). If Canada Post wern't forced to overcharge urban users, no doubt the price would drop.

At one time if you had a lot of mail to send, it made sense to drive to the border and send it via USPS. Not sure if it is still true today, but it seems insane that due to postal policies we encourage nonsensical behaviour.

[Canadian Blue]

I'd allow them to lose their monopoly status.

[Goat Boy©]

Write a contract;

You are required to provide X services to Y areas for Z cash compensation. If you fail, we will bail you out, but you will be penalized.

How many public services would go over budget in a scenario such as this? Would get rid of mushroom effect too, all the top level bureaucrats earning 6 figures to do essentially nothing.

[Chuck U. Farlie]

I wonder though, if they are privatized but allowed to stay a monopoly, then what is the point of privatizing them?

As it is they are a crown corporation, and although I can't find a reference I have heard that if a crown corporation isn't profitable for a certain number of years, then the gov't can elect to privatize them. Canada Post has been profitable for at least the past 13 years...

If their monopoly is removed then they would be no different than any other courier company. Since they would lose a lot of the profitable city business, it is very likely that as a company they would no longer make a profit since the rural service costs so much to maintain. In the end they would no longer provide the rural service in order to at least break-even. The ones that would suffer would be rural Canadians.

[Goat Boy©]

I wonder though, if they are privatized but allowed to stay a monopoly, then what is the point of privatizing them?

As it is they are a crown corporation, and although I can't find a reference I have heard that if a crown corporation isn't profitable for a certain number of years, then the gov't can elect to privatize them. Canada Post has been profitable for at least the past 13 years...

If their monopoly is removed then they would be no different than any other courier company. Since they would lose a lot of the profitable city business, it is very likely that as a company they would no longer make a profit since the rural service costs so much to maintain. In the end they would no longer provide the rural service in order to at least break-even. The ones that would suffer would be rural Canadians.

Not necessarily privatize, but contract it. In BC Translink contracts bus driver service to the Coast Mountain Bus Company, TC/CATSA contracts out screening jobs to various security companies. It's cheaper, you don't get these ridiculous government job expenses, budgets are smaller..........but most of all, their is accountability.

[Renegade]

I wonder though, if they are privatized but allowed to stay a monopoly, then what is the point of privatizing them?

Privitazing implys a change in ownership to private interest. They could go public as CN and Air Canada have done and the dirving force for their managment will be to contain cost and show a profit. As a government institution, what motivation do they have to do so? A private institution is motivated to constantly become more efficient.

As it is they are a crown corporation, and although I can't find a reference I have heard that if a crown corporation isn't profitable for a certain number of years, then the gov't can elect to privatize them. Canada Post has been profitable for at least the past 13 years...

Not sure where you got this. The most opportune time to privatize a business is when it is showing a consistent profit. Not many people want to buy into an pernnial money loser. The government sold off Air Canada years ago. Now it looks like a stroke of genius.

If their monopoly is removed then they would be no different than any other courier company. Since they would lose a lot of the profitable city business, it is very likely that as a company they would no longer make a profit since the rural service costs so much to maintain. In the end they would no longer provide the rural service in order to at least break-even. The ones that would suffer would be rural Canadians.

Of course. Cost to maintain rural service is much higher. If rural users didn't want to pay the true cost for the service, they shouldn't get the service or the same level of service. What I suspect is that rural users would get reduced or higher cost service. For example, they may get weekly delivery of mail, or it may be delivered to a central location for pick-up. Also, rural users wouldn't get junk mail because it wouldn't be cost effective to send it to them. In addition any mail to/from rural locations will likely cost more.

If you see courier rates, it varies by source/destination. They do so because it has a bearing on the cost and efficiency. It makes sense to do so for mail as well.

There was once a day where mail was the only form of communication and so it made sense to subsidze it in the name of "national interests". It is no longer true and we should shed these artifacts of our legacy.

[OddSox]

I don't think there is any longer an argument for mandating that each and every Canadian has mail service to their home. In fact, in many of the newer urban and suburban areas residents are required to pick up their mail at a central location.

It would be better to spend the money ensuring that each and every Canadian has access to high-speed internet services...

[fellowtraveller]

Most of the arguments for retaining the monopoly are not business arguments, they are political in nature.

All communities in Canada are poresently serviced by some form of truck, air or boat service.

All. None of that changes with opening mail delivery up to anybody. The mail will still be carried on exactly the same boats, planes and trucks, but it will cost more in those communities. It would be far, far cheaper to subsidize those few letters and parcels directly, instead of requiring millions of Canucks to vastly overpay for every letter they send next door.

Another ripoff is home delivery, another massive expense retained purely because nobody has the balls to get it right. Rural Candians pick up their mail at community boxes or a post office box. Anybody living in a neighbourhood newer than 1985 does the same. Only those living in older neighbourhoods have it delivered to their mailbox on their house, a riduclous systme that costs hundreds of millions annually.

End it.

[White Doors]

I voted No.

There are alot more pressing things to be privatized before this.

CBC being the first on the list and the rest of the Petro-Can shares. (although they may want to hang on to them for another 12 months or so

[fellowtraveller]

CBC shoulkd be turned into a subscriber supported network, not privatized.

They have many supporters, let them put their fat wallets where their fat mouths are.

[White Doors]

CBC shoulkd be turned into a subscriber supported network, not privatized.

They have many supporters, let them put their fat wallets where their fat mouths are.

Yes, like PBS. Privatized with support from donors/subscribers and perhaps some support from the governmnet IF they made good quality stuff like they do with PBS in the States (ie: shows like Nature)

[fellowtraveller]

Yes, like PBS. Privatized with support from donors/subscribers and perhaps some support from the governmnet IF they made good quality stuff like they do with PBS in the States (ie: shows like Nature)

I was thinking more like the wonderful CKUA , a province wide subscription station in Alberta.

If you like it, you send money. Lots of people do like it.

[Smallc]

I was thinking more like the wonderful CKUA , a province wide subscription station in Alberta.

If you like it, you send money. Lots of people do like it.

I like that idea. I think it's what they do with the BBC, or something similar anyway.

[Smallc]

I don't think there is any longer an argument for mandating that each and every Canadian has mail service to their home. In fact, in many of the newer urban and suburban areas residents are required to pick up their mail at a central location.

It would be better to spend the money ensuring that each and every Canadian has access to high-speed internet services...

First point, if it weren't for their mandate, my parents would have to drive 30 minutes or more for mail...and our business gets a lot of mail. The would not serve rural areas at all. The post offices that are there would disappear. Its not about home delivery, its about having some kind of access.

Second point, Canada is one of the best wired countries for high speed. It is installed in more communities all of the time as it is a government priority.