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Canada Post is not on life support, it is being murdered

| December 17, 2013
Photo: flickr/Pleuntje

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Canada Post’s recent announcement that they intend to end door to door delivery has shocked many. After all, Canada would be the first industrialized country to do so. Every other G8 country seems to be able to deliver their mail from door to door, but Canada Post has other plans.

The Harper government and their lackeys at Canada Post would have you believe that mail delivery is no longer financially viable. In fact, the company has only lost money once this century, and that was the year they decided to lock out their workers.

A quick look at the numbers shows that their arguments just don’t add up.

The Canada Post Group made a before tax profit of 127 million dollars in 2012; after 2011’s lock out and after being forced to settle a 200+ million dollar lawsuit they posted a loss of 327 million dollars; in 2010 they made a profit of 443 million dollars; in 2009 the corporation had a net profit of 281 million dollars.

Anyone can see these numbers for themselves in the financial reports on Canada Post’s website. Year after year, Canada Post makes profit, and yet year after year they cry poor. For postal workers, this is nothing new; it is the same old song and dance.

Having been challenged on the profitability of the corporation, Canada Post has scrambled to find a new excuse for eliminating door to door delivery. The new line is that the Canada Post Pension Plan is running a 6.5 billion dollar solvency deficit, forcing them to make these changes. This argument is patently absurd.

It is true that there is a solvency deficit with the Canada Post Pension Plan, but what does this mean exactly? It means that if Canada Post were to suddenly disappear, the pension plan would be 6.5 billion dollars short of being able to pay everyone’s pension.

In short, this is only a hypothetical scenario designed to test the stability of the plan. Other pension plans are not forced to meet this test and many would not pass it. On a going concern basis, Canada Post’s pension plan has no problem meeting its obligations.

Federal regulations require that Canada Post make special payments over a period of five years in order to eliminate the solvency deficit. But Canada Post has just been given a four year reprieve from these payments. This means that this pension deficit will not cost them a dime for at least four years. Again, their talking points do not hold water.

What’s more, the only reason for this solvency deficit is the federal government’s policy of keeping interest rates low to stimulate the economy. The Canada Post Pension Plan had no problems before interest rates hit historic lows. Rates will not stay this low forever and just a two per cent rise in interest rates would solve this problem. It is likely that the solvency deficit in the pension plan will take care of itself.

Canada Post is creating a crisis to justify its agenda. They talk of saving money with this plan, but they aren’t being forthcoming with the costs of implementing it.

How much will it cost to purchase, install and maintain community mailboxes for over 5,000,000 addresses? How about the thousands of new vehicles they will need to purchase, insure and maintain? Are they going to need a capital injection from the government, or do they plan to borrow more money as they did to finance their two billion dollar failure they call the Modern Post?

Canada Post’s main talking point is that they don’t want to become a burden on tax payers. Notice that this in itself is an admission that they are presently not a burden on tax payers -- quite the opposite!

Canada Post Corporation has actually returned one billion dollars to the federal government over the last decade in the form of dividends and corporate taxes. But what neither the Conservatives nor the corporation seem to want to admit is that eliminating 8,000 letter carrier jobs will cost the federal government as much as 50 million dollars a year in personal income tax. That isn’t counting the spinoff effects of good jobs being eliminated in communities across the country.

It is funny that the right wing defends trickle-down economic theories when they are justifying profits, but refuse to apply the same arguments to the economic impact of cuts.

The Conservative government has insisted that the only option for Canada Post is cuts. They refuse to entertain the idea of expanding services to bring in additional revenue as post offices around the world have done. This is because of an ideologically entrenched idea that a crown corporation shouldn’t do anything that the private sector is capable of doing.

This nonsense is the reason they refuse to consider postal banking as a viable alternative, despite a recent report from Canadian Centre for Policy Alternatives explaining multiple options for how they could do just that. This is the reason they refuse to sell a broader range of products in their stores, despite having the largest retail network in the country. The Harper government is more concerned with protecting the profits of private companies than ensuring the viability of the public post office.

Why would Canada Post want to impose such measures on itself if they weren’t absolutely necessary? It is no secret that Stephen Harper isn’t a big fan of the public sector. So when he needed a new CEO for this crown corporation, he hired the head of the Canada and Latin America division of Pitney Bowes.

For those who are not familiar with Pitney Bowes, they are the largest private mail supply company in the world. They are also a company that specializes in picking up the pieces of privatized postal services. Earlier this year, Pitney Bowes published a study urging the privatization of the United States Postal Service, and have been lobbying heavily to do exactly that.

Now, one of their top bosses is running Canada Post. His predecessor, Moya Greene was also a privatization expert. She oversaw the privatization of CN Rail before coming to Canada Post, but she moved on to the Royal Mail in the UK before she could finish the job here. The Royal Mail has just been privatized.

Canada Post CEO Deepak Chopra was not hired to fix the post office; he was hired to destroy it. The simple truth is that the public post office is one of the most valuable assets in the country. It occupies prime real estate in every city in Canada. Its retail network is the largest in the country, with over 6,000 locations. Its distribution network is also the largest in Canada, with thousands of delivery vans and tractor-trailers.

The private sector is salivating at the prospect of getting their hands on this network precisely because of the money they could make with it. But in order to do this, they first need to slash the service and push it over a financial cliff. When they finally move to privatize Canada Post, they want to get it cheap.

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Mike Palecek is a National Union Representative with Canadian Union of Postal Workers (CUPW).

Photo: flickr/Pleuntje

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