It is evident that if Canada Post sticks to the status quo, its future sustainability will be jeopardized. A competitive and unpredictable e-commerce sector is now exacerbated by the growing insignificance of postal mail, as well as the loss of personalized postal services. This unstable environment is further complicated by Canada Post’s need to follow through on the universal service obligation, requiring the delivery of fewer letters to more Canadian addresses. These realities call for substantial change. For commonwealth countries such as Australia and the U.K., change has come in the form of privatization. In Canada, this prompts the question: should our national postal service be privatized as well?
Canadian public enterprise
Any discussion on Canadian privatization, usually interpreted as the sale of federal Crown corporations to private investors, requires a little history. In contrast to the U.S., Canada has often been considered a “public enterprise country.” This set an arguable precedent that, at least in part, influenced the command and control of the nation’s railway, aviation and oil sectors for several decades. In this context, the topic of privatization at Canada Post evokes mixed, unresolved perspectives, some of which stick to the old ethos, while others champion a new vision consistent with some modern trends and standards.
Within this unsettled sphere, large companies such as the Canadian National Railway, Air Canada and Petro-Canada privatized ownership structures in tune with contemporary commercial demands.
Considering Canada’s public, federally oriented roots, Canada Post’s Crown-controlled arrangement has endured beyond what some critics take to be its “best before” date.
From a sociological perspective, University of Toronto law and economics professor Michael Trebilcock claims Canadians have been largely indifferent to privatization waves that began picking up speed in 1986. In 2007, Trebilcock took note of this nonchalant reaction while co-authoring a report on privatization titled Rerouting the Mail: Why Canada Post is Due for Reform.
“Privatization happened and most people couldn’t care less. There might be some resistance but don’t count on it enduring forever,” says Trebilcock.
Interest in privatization is hardly black and white however. Around the time that federal privatization took off in 1985 with the sale of Northern Transportation Company Ltd., the Economic Council of Canada reported in 1986 that public enterprise was, “…deeply embedded in the fabric of Canadian society.”
Foreign postal mail privatization
Considering Canada’s public, federally oriented roots, Canada Post’s Crown-controlled arrangement has endured beyond what some critics take to be its “best before” date. On an international scale, industrialized countries akin to Canada have, since the late 1980s, moved increasingly towards deregulation. Reforms in countries such as Finland, Germany and the Netherlands have concentrated on commercial, liberalized objectives in shifting the nature of postal mail systems.
G7 postal mail ownership structures
Map Legend Move map to see all points
These transformations are highly contested. In 2013, this was seen in the sale of the U.K.’s Royal Mail, which was, according to many taxpayers, severely undervalued by the government. On the flip side, privatization is known to bring many attractive benefits. For instance, due to the effects of competitive conditions, private entities often have improved management incentives. This becomes all the more evident when contrasted with government ownership incentives, which are frequently influenced by politics and bureaucracy.
Private performance
Enhanced performance in commercial settings has resulted in financial gains for many commercialized Canadian companies. For instance, in a 2012 University of Calgary paper on major Canadian federal and provincial privatizations, it was found that among firms that transitioned between the mid-1980s and the mid-1990s, profitability increased. On average, sales grew each year following a three-year post-privatization model.
Source: University of Calgary
While managerial and financial benefits are tied to several cases of Canadian privatization, features unique to the postal mail sector make privatization all the more complex. Unlike other competitive enterprises, Canada Post’s mandate is focused on breaking even, separating it from private operations seeking returns roughly equal to or greater than the competition.
“There are different ways of privatizing…Canada Post could contract out its delivery and pickup services while still setting the parameters about how Canada Post works in the country.”-Benjamin Dachis
This minimalist return system is premised on Canada Post’s primary objectives, which include the provision of a public good grounded in consistent service and pricing, even when there are zero prospects of generating excess revenue.
At CUPW, members are concerned that privatization could threaten the quality of Canada Post’s operations, as well as its capacity to offer uniform fees across the nation. CUPW research director Geoff Bickerton is confident that this would be the case if the federal government were to sell Canada Post to a private bidder.
“Canada Post is not driven by the economics of where the money in the country is or where the large populations are based…without a public policy mandate, there would be less incentive to have one price for letters throughout the country,” says Bickerton.
Geoff Bickerton at the CUPW national office. [Photo © Jordanna Tennebaum]
“There are different ways of privatizing…Canada Post could contract out its delivery and pickup services while still setting the parameters about how Canada Post works in the country,” says Dachis.
No matter the privatization framework, some Canada Post employees on the inside of the corporation are concerned that commercialization would put workers in a compromising position. Although Tyrer is a Canada Post veteran, she predicts that profitability will take away from labour security.
“Privatization means the goal would be bigger and bigger profits. Bigger profits come about through price increases as well as cost cutting. There would be downward pressure on wages and benefits,” says Tyrer.
Political influence
Unfortunately for unionized employees in agreement with Tyrer, the potential privatization of Canada’s postal mail industry depends heavily on political factors. According to a 2014 access to information request submitted by Ottawa’s Blacklock’s Reporter, the Prime Minister’s Office conducted a highly secretive study assessing privatization. As the analysis was issued just months before Canada Post announced its five-point plan cutting services and jobs, some Canadians speculate that the Conservative government aims to attract private investors to a more appealing, downsized corporation.
Governmentally operated postal mail systems are increasingly incompatible with unregulated markets, fierce competition…and the near global presence of virtual communications.
Even at the upper echelons of the Crown corporation, senior staff members recognize that privatization options rest with the government. Canada Post media relations manager Phil Legault admits that ownership is determined by federal resolutions separate from his interests, not to mention those of his colleagues.
“Privatization is not an issue that we comment on. It’s not our decision. This is a question for the shareholder, the federal government, not Canada Post management,” says Legault.
Whether or not Conservative privatization speculation is warranted, the time is certainly ripe for new executive leadership. Governmentally operated postal mail systems are increasingly incompatible with unregulated markets, fierce competition from powerful international firms and the near global presence of virtual communications. In terms of Canada Post’s own position in this complex, transient environment, voices on either side of the public/private divide speak to a precarious situation with no clear end in site. No matter the result, the continued discussion of a privatized Canada Post amongst academics, public policy officials and the federal government suggests widespread recognition of dysfunction within the Crown corporation.