What the CD Howe Institute wants to do to our post office - The conservative hounds are on the loose...and they smell blood

Right wing forces have been chasing their dream of taking down the post office since the Conservatives came to power last year. In the most recent attempt, the conservative think-tank, the C.D. Howe Institute, launched a vicious attack on our public post office with the release of its study called Rerouting the Mail: Why Canada Post is Due for Reform. Not surprisingly, this study calls for the privatization and gradual deregulation of Canada Post. The Institute is well known for its pro-market economic research and analysis, especially its work in support of free trade, tax cuts, deficit reduction at any cost and privatization of our public health care system. The think-tank's research is largely funded by its members, mostly large corporations like Bombardier, Bell Canada, IBM, the Canadian Imperial Bank of Commerce and Deutsche Bank. Canada Post is also a member.

 

Highlights

Highlights from the Institute's study recommending reform at Canada Post follow:

• 'Postal service in Canada should be privatized and deregulated.” (page 19)
  
  
• 'reform may jeopardize universal service.'  (page 19)
  
  
• 'we would recommend the abolition of restrictions on Canada Post, such as a moratorium on closing unprofitable offices, or impediments to contracting out certain routes or tasks. (page 21)
  
  
• “Overall in Europe, basic letter and parcel rates have increased in the majority of member states since liberalization.” (page 16)
  
  
• 'In each of the countries where reform has taken place, employment in the postal sector have dropped as operators have sought to rationalize and lower costs.' (page 17)
  
  
• 'It could well be that competitive pressures would compel the reduction of Canada Post's workforce, or that there would be pressure on wages.'(page 21)
  
  
• 'The dominant union today is the Canadian Union of Postal Workers, whose strength creates difficulties for Canada Post when looking to improve efficiency and productivity.” (page 4)

The Institute’s study also suggest ways of dealing with postal workers.

• The theory is clear: there is an ownership benefit from privatizing and a competition benefit from deregulation and liberalization.' (page 19)

Additional details follow.

 

Is Canada Post at risk?

If you believe the CD Howe Institute's study, Canada Post is on its last legs and in need of radical reform. A summary of the report claims that the model of a government owned monopoly with a universal service obligation is 'anachronistic and incapable of responding to the worldwide changes that are transforming the postal sector.' (eg. email, increased competition, developments in information systems). It says that 'Failure to rethink the role and mandate of Canada Post, given the dramatic technological transformation that is occurring in the communications sector, would be...to acquiesce in 'a slow-motion train wreck.' ' (page 11)

For years, people have been predicting that changes in the communications sector would deal a fatal blow to our post office. In reality, communications needs are very difficult to predict. Many people thought that facsimile technology would eliminate mail between businesses. Email and the internet certainly pose a threat to mail volumes, but internet shopping also provides new potential for both parcel delivery and addressed admail.  Will text-messaging replace the use of email and the internet? Will a series of serious computer viruses reduce the use of the internet for bill payments? What does the future hold? No one really knows.

What we do know is that Canada Post is doing very well.  The corporation has been profit-making for 11 years. The standard postage rate is among the lowest of G8 countries. Service has consistently improved and ranks with the best in the world, thanks to the hard work of 54,000 postal workers. While union-management relations are sometimes difficult, there has been relative labour peace for close to a decade.

 

Volumes

The study claims that 'mail volumes are decreasing' (Page 3 ). This is not true. Letter volumes have increased slightly.

 

Privatization and deregulation

'Canada Post at present enjoys a statutory monopoly over certain mail classes....Abolishing Canada Post's protection from competition would potentially boost incentives to keep costs down, and enhance service quality and innovation.'(page 19)

'Under a privatized regime, Canada Post would be owned by shareholders, who would have greater stakes in performance and a greater say over management than the taxpayers, who are the current owners.' (Page 19)

This assumes that the taxpaying public does not have an active interest or stake in Canada Post's performance. Thousands of rural residents who have had their mail moved from roadside mail boxes to community boxes would beg to differ.

Of course, the CD Howe Institute is not really interested in ensuring that Canada Post is owned by shareholders who have more of a stake in the corporation so much as ensuring that these shareholders are private sector investors, not the public. It's all about overall objectives and figuring out who benefits.

A public post office's main goal is to provide a service, not make profits. The public benefits. Communities and small business also benefit from having a stable infrastructure. A private post office’s main goal is to make profits, which means focusing on major customers rather than the public. Large corporations benefit. Small businesses do not.

Anyone considering the Institute's study should ask themselves a simple question: why would the people who built and paid for our public post office - the public - be interested in privatizing if they don't benefit?

 

Universal service obligation

'In our view, abolishing the current universal service policy infrastructure would be a positive development, whether or not universal service itself is socially meritorious. At present, any subsidy to fund universal service is obscured within the general accounts of Canada Post. It would be an advance to shift to a transparent system of explicit subsidies to promote universality, which would encourage clear debate over the scope of the obligation. Should it exist at all? Should customers expect identical service in sending mail to remote or underpopulated areas as exists in metropolitan areas? Creating explicit subsidies for universal service would reveal costs to the public and inform debate on the optimal approach.'

It is highly unlikely that the government or anyone else would agree to subsidize service to rural and remote regions in a country the size of Canada.

Besides, why would the public or government want to turn around and subsidizea public institution that has contributed almost half a billion dollars to the national coffers in dividends in the last ten years?

 

Postal Workers

'The postal union in Canada has stated their opposition to privatization and/or deregulation...
One policy option is to press on with a move to unshackled competition in the name of principle, regardless of the self-interest of postal workers. The problem with such an approach is that the postal workers form a potentially powerful interest group that could present an obstacle to reform. In our view, the politically sensible approach is to compromise...A politically pragmatic approach is to compensate existing postal workers for their welfare losses from reform, but not to account for future losses to would-be workers. The obvious approach here would be either to offer generous packages to workers who lose their jobs, or, probably more feasibly, to rely on attrition to reduce the size of the work force and real wages... If existing postal workers are not harmed by reform, they are much less likely to resist it. While this may perpetuate some inefficiencies in the short run, it is better to accept these costs than to risk the reform enterprise altogether.'

Obviously, the proponents of privatization and deregulation have organized to push their agenda, which includes dealing with 'self-interested' postal workers who may resist reforms. You can start preparing to resist this anti-public interest, anti-postal worker agenda by reading CUPW paper's called Postal Deregulation: Its Impact on Postal Workers and the Response of a Postal Union. This paper, which was presented at the Rutgers’ 2005 Postal Economics and Delivery Conference in Geneva, provides ten compelling reasons why people should oppose deregulation of postal services. You can get a copy of this paper as well as Our Vision of the Post Office from your local or the union’s website: www.cupw-sttp.org

 

Institute's Vision Not Pretty

The CD Howe Institute's vision of postal service leaves a lot to be desired. In their dog-eat-dog postal world, competition prevails, big business benefits and the rest of us are left licking our high-priced stamps and waving good-bye to universal, public postal service. Fortunately, this is by no means a done deal.

The upcoming election will give us a chance to ask members of Parliament (MP) whether they support public postal service or the sell-off or deregulation of our post office. The period following the election will also be crucial. Stay tuned for information and action updates.