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End the Monopoly Now: Privatizing Canada Post

By the end of the decade, Canada Post is predicted to be losing as much as $1 billion per year.  As of last year, its pension plan was underfunded by about $6 billion, and their losses are predicted to just keep on growing. This service is costing the Canadian taxpayer more and more each year, but what are we really getting for that service? The short answer: a monopoly on postal services that is unable to remain productive or keep costs low. With Britain’s decision last year to sell off most of the Royal Mail and many other European countries doing the same, the time has come for Canada to offer up Canada Post to investors and competition.

This is not the first time that Canada has considered privatizing crown corporations.  In fact, past governments have auctioned off businesses such as Air Canada, CN Rail, and Petro Canada. Canada’s largest airline is now a profitable corporation and is ranked Skytrax’s “Best International Airline in North America.” CN Rail and Petro Canada, both privatized in the 1990s, have become large and successful players in their respective industries. If Canada Post were to follow suit, it could become a more streamlined and economically efficient business through increased competition and the need to realign.  Just look at New Zealand, which has had a competitive postal service since the 1990s.

The traditional mail industry is over; at least in the way that generation before us conceptualized the postal service. Technological innovation has meant that the industry must adapt to account for both the decrease in letters sent each day, and the increase in packages sent from online retailers. Increased competition from abroad and package services such as UPS have also encroached on Canada Post’s services. If the corporation were to be privatized, it would have greater flexibility and would be more likely to become a leaner, profitable company.

However, not everyone has seen the issue through a capitalist lens. Across the pond, many Brits are frustrated jeux de casino en ligne with the government for selling off their five-century old postal service. The Independent reported that 70% of Brits were opposed to privatizing the Royal Mail, whereas Canadians are on the whole less fiercely opposed to the idea. I spoke to an English colleague of mine, who said that while British people were generally proud of their old postal organization, there were certainly problems with a monopoly on the postal service. In addition to the Royal Mail costing taxpayers’ money, but “there were few options available, you had to stick with Royal Mail”. Since it’s privatization last year, “prices have gone up” on stamps and mailing services in Britain. However, Canada Post has been consistently raising the price of stamps, and in 2009 Canada Post announced that 20% price increases were to be phased in through to this year.

Many Canadians, particularly those outside of large urban areas, fear that the privatization of Canada Post will lead to less comprehensive delivery, as a smaller government stake in the company may mean that the postal service no longer fulfils its universal service obligation. Britain imposes universal coverage on its newly privatized Royal Mail under the watchful eye of a government regulatory body. While this intervention in the private market for postal services may not be perfectly efficient, for-profit firms will find cost effective ways to cover everyone.  All the government needs to do is include the provision in Canada Post’s privatization.

Many other developed countries such as Germany, Sweden, Austria, and the Netherlands, have privatized their postal services with success. Studies into the matter, such as one conducted by the Montreal Economics Institute, found that countries that had private mail services frequently had lower costs for stamps, as well as higher productivity and better service. With increasingly large annual losses and growing inefficiencies, it would be best for Canada if the government were to privatize a large stake in Canada Post relatively quickly.

 

-Michael Swistara

 

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About Michael Swistara

Michael graduated from McGill University in 2015 with a double major in political science and economics, and currently attends Columbia University where he is pursuing a master's degree. As former Editor-in-Chief of the Political Bouillon, Michael continues to occasionally contribute articles on his favorite topics, including American politics, economic policy, and foreign affairs.

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