Federal government should privatize Canada Post

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Appeared in the Toronto Sun, June 5, 2024
Federal government should privatize Canada Post

According to its annual report released last month, Canada Post lost $748 million in 2023, marking the sixth consecutive year the Crown corporation lost money despite a near-monopoly on postal services. Clearly, it’s time for the federal government to privatize Canada Post.

As a Crown corporation, Canada Post operates at the behest of the federal government. For decades, Canada Post has enjoyed a monopoly on a large segment of the postal market while competing with a few private firms in the parcels market. Consumers cannot go elsewhere if they’re unhappy with service quality, prices or delivery times, particularly when it comes to the delivery of “snail mail.”

Given its monopoly over much of the postal market, Canada Post has few incentives to keep costs down or become profitable because the government (i.e. taxpayers) is there to bail them out. Since it’s shielded from competition, Canada Post also lacks incentives to offer innovative products and services to customers. This is a failing business model. In the private sector, companies that are unresponsive to customer needs, lack creativity and continuously fail to generate profit go out of business.

There’s nothing Canada Post does that private companies can’t accomplish on their own in the postal market. Companies not named Canada Post deliver more than two-thirds of parcels in the country. Amazon, UPS, FedEx and others compete for individuals and businesses on price, service quality and delivery time. Private markets are perfectly capable of delivering snail mail, too.

There’s no legitimate reason why the government should operate a Crown corporation in the postal market. Yet allegiance to the status quo is staunch. Jean-Yves Duclos, a trained economist and the federal minister overseeing Canada Post, recently expressed his unwavering support, saying “Whatever we need to support Canada Post in supporting Canadians, it will be envisaged, as we need Canada Post in the future.”

If there was any doubt before, it’s clear now the Trudeau government wants to save the dinosaur from the asteroid. But the asteroid is surging toward its target—an archaic Crown corporation that bleeds money at every turn.

This opposition to change in Canada occurs despite other countries already providing a path forward for private mail delivery. In the early 2000s, three European countries—the Netherlands, Austria and Germany—privatized their postal operators and opened their markets to competition. In the subsequent decade, prices for consumers (adjusted for inflation) fell by 11 per cent in Austria, 15 per cent in the Netherlands, and 17 per cent in Germany.

In 2013, the European Commission issued a postal market directive declaring that all letters and parcels in Europe must be deregulated and open to competition, allowing other countries to follow suit. Research shows that deregulating postal services increases service quality, creates better products and produces more innovation in the market.

Privatizing postal services in Canada only requires Ottawa’s stamp of approval. Canada Post is a dinosaur on its last legs and it’s time we follow in the footsteps of European countries and open up competition in the postal market for the benefit of Canadians.

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