Why Canada Post should be expanding services

| June 12, 2013
Photo:  Ochinko / flickr

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John Snobelen, Minister of Education in Mike Harris' Ontario Government famously said, "we need to invent a crisis in order to bring about change in the education system."

This was not just some slip of the tongue. He further elaborated: "There are two theories of change management; one is this: shortening down the survival period or … bankrupting the organization … that's kind of ugly because that means putting your foot right down to the floor and saying, 'Oh boy, there's a wall coming' and stepping on the gas."

Ugly though it may be, this has been a key page of the neoliberal playbook for decades; Snobelen simply made the mistake of saying it in public.

So as we hear daily from Canada Post that the sky is falling, mail volumes are dropping, the business model is failing and taxpayers are going to be on the hook for every penny, we can't help but wonder if there isn't something nefarious afoot at the Crown corporation. Normally corporations, even Crown corporations, like to give the public the rose-coloured view of their business model. Yet it is precisely the opposite that we are hearing from Canada Post.  

The Sno(belen)w Job

 In April 2013, an independent study was released by the Conference Board of Canada about the challenges facing Canada Post. The report painted a scary picture indeed, projecting steep declines of mail volumes and a billion dollar a year deficit at the post office by the end of the decade. Such a damning report from an independent organization such as the Conference Board of Canada must be taken seriously! After all, they have 'no horse in this race.' Right on the first page of the report they say they are "objective and non-partisan. We do not lobby for specific interests."

Canada Post Corporation (CPC) was quick to jump on this report, immediately launching a campaign asking for public input about the future of the post office. But what was left out of CPC's talking points was the fact that they actually commissioned this report. It was paid for by Canada Post. And to raise even more suspicions, Deepak Chopra, the CEO of Canada Post, also sits on the board of directors of the Conference Board of Canada. But surely, this couldn't have any impact on the integrity of the report? Surely, this report is nothing but a sound, sober analysis of the impending doom of Canada's mail system?

The Conference Board of Canada predicts a steady increase in losses at the post office. Let's see how those numbers match up to reality. The report projects a $250 million loss for 2012. But wait, Canada Post actually reported a profit of $98 million for 2012, just a few days before the report was released.  Amazingly, they didn't even get current numbers correct.

How is such a staggering oversight even possible?  Well as they say, the devil is in the details. Part of the problem is that the authors of the report estimate the decline in mail volumes by comparing year over year numbers between the third quarter of 2011 and 2012. They don't account for the fact that 48,000 CUPW members, the bulk of Canada Post's employees, were locked-out until the end of the 2nd quarter of 2011. So the mail volumes of the 3rd quarter were artificially inflated as workers cleared the backlog. By basing their projections on these numbers, they make the situation look drastically worse than it actually is.

Within hours of this report being released, Canada Post had launched a campaign seizing on this gloom and doom. They set up a space for public input on their website that essentially asks Canadians what services they would be willing to do without. They are floating ideas about cutting door-to-door delivery in favour of community mailboxes, or even moving to alternate-day delivery so people would only get mail a few times a week. They continue to close post offices, remove mailboxes and cut the very infrastructure that the mail system requires to function. If old John Snobelen had never let the truth slip out back in the '90s, we might think of these actions as mere incompetence. Instead, it appears to be part of a broader campaign to first destroy, then restructure or privatize Canada Post.

It is also worth noting that in his previous position Canada Post CEO Deepak Chopra was the President of the Canada and Latin American division of Pitney Bowes -- the largest private mail-supply company in the world. Oddly enough, only a few months ago Pitney Bowes issued a similar report about the U.S. post office, arguing for its privatization. But of course, we assume that Mr. Chopra left all those old ideas behind when Harper brought him into Canada Post. Surely his only allegiance now is to the effective operation of this valuable public service.

All of this seems suspiciously timed to prepare public opinion ahead of next years' review of the Postal Charter. In 2014, the government of Canada will review the charter that forms the basis of Canada Post's service obligations. If there is any attempt to cut mail delivery, deregulate mail service, or privatize components of Canada Post, it will likely come then.

The sky isn't falling

 While letter mail volumes are certainly down as a result of increasing electronic communication, the situation isn't nearly as bleak as the Conference Board of Canada would have us believe. In fact, parcel shipping is massively expanding in lock-step with the decline of letter mail. This is precisely a result of the increase in online shopping, proving that the postal industry is not a dying industry, just a changing one. Still, this alone will not completely make up for lost revenues. Luckily, we know that these problems can be tackled with a little bit of ingenuity, because post offices around the world are currently experiencing the same thing. So how are other countries weathering the storm? By expanding services.

The simple fact is that Canada Post has both the most extensive distribution network in the country and the largest retail network in the country. Are we really to believe that there is nothing that can be done to make up for lost revenues? The idea that such massive infrastructure has no other potential use is absurd. Canada Post has the ability to put individuals on every doorstep in the country every single day. Yet, Canada Post seems completely unwilling to discuss these ideas. Furthermore, they continue to pursue initiatives such as E Post which actually undermines their core business.

One of the most promising areas that Canada Post could expand into is banking and financial services. Most Canadians don't realize that many countries around the world already offer financial services through their post office. In fact, over one billion people on the planet currently have accounts with postal banks. This would not only bring in additional revenue to offset falling letter mail volumes, but would also play a valuable social role.

Many of society's most vulnerable people are unable to open bank accounts due to their financial situation.  They are forced to use dodgy cheque-cashing companies that charge a premium simply for giving them their own money. A public bank, operated through the post office, would be invaluable to tens of thousands of people in this exact situation. Furthermore, there are hundreds of rural communities in Canada that do not have a single branch of any bank in town, but they do have a post office.

Even the Conference Board of Canada was forced to admit the impressive track record of postal banking in their report saying, "The addition of financial services through postal outlets offers many potential benefits. For instance, it can facilitate financial inclusion in rural areas while also mitigating the decline in postal revenues. Postal banks serve large markets, but can be low in incremental cost because they make shared use of the postal retail network."

In bizarre fashion they then claimed without explanation that somehow this could not work in Canada because the "conditions that allowed other postal administrations to succeed in banking do not exist in Canada." There is no mention of what these conditions are. Are they referring to the level of competence of Canada Post's Board of Directors? Or are they implying that Canadians are all perfectly happy with the services they are currently receiving from the big banks? The lack of explanation almost leads one to believe that this was a predetermined conclusion.

But why would Canada Post refuse to even consider the possibility of postal banking? Could it be because Canada Post's board of directors list reads like a directory of big business and they are not eager to establish competition for those companies? No, this couldn't be the reason. That would be a glaring conflict of interest and breach of public trust. Surely the good bosses at Canada Post have only the best interest of Canadians at heart!

But postal banking isn't the only service Canada Post could be looking at. There are a million different ways they could be leveraging their existing infrastructure to bring in additional revenue. In France, the post office operates a service where letter carriers will check in on elderly citizens each day to make sure they're alright. In Venezuela, they trained letter carriers as lactation consultants for new mothers. Even simply placing a cell phone tower on top of each Canada Post facility would create the largest and most extensive cell phone network in Canada. Certainly this is something that could be done at minimal cost.

The sky is the limit in terms of what can be done with the current infrastructure at Canada Post, if only those in charge were willing to look at alternatives.

Yet the Conservative government and Canada Post bosses seem completely unwilling to discuss any proposals for developing new business. It is as if they were intentionally trying to drive the post office into the ground. And even John Snobelen could be less obvious about it.

 

Mike Palecek is a National Union Representative with the Canadian Union of Postal Workers.

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