It’s 2013, mail in Canada is still run by the government and it seems nothing can usher in transformation at Canada Post. The crown corporation which handles mail in this country has a remarkable ability to survive and resist every innovation reality throws at it. If the rest of the dinosaurs were as resilient and stubborn as Canadapostasaurus we mammals would be at the bottom of the food chain today, frustratingly trying to etch out a living in a world still ruled by reptiles. Meteors? Canadapostasaurus would eat those for breakfast, Climate change? Terrifying disease? Minor inconveniences which make the lengthy, sluggish stroll to the local watering hole a little lengthier. A makeover is desperately needed; the time has come for the Federal Government to privatize Canada Post.
From an economic point of view there’s really nothing too special about mail delivery, it’s a business that’s been around for a while. Yes it’s tedious and organizationally and logistically complex, but it doesn’t necessitate state control by default, there is no inherent market failure in mail delivery. Mail has largely been dominated by governments for a simple reason: they want their monopoly to grab our money, nothing outlandish about that at all. Unfortunately for the government, Canada Post incurred losses of $1.5 billion from 1982 to 1999. When the company does generate profits, they are usually very low in comparison to other public and private competitors. It’s true that these profits head directly for Federal government coffers, and yes, they pay for services which Canadians expect and depend on. The problem though, is that the money which Canada Post produces comes out of the pockets of ordinary Canadians through higher prices because of the absence of competition.
No competition also means that service quality and efficiency are abundantly lower than in a free market. If Canadapostasaurus competed with the other mail giants, the resulting absence of tax revenues would simply result in more money in the pockets of Canadians through lower prices and better service. Postal privatization and market competition has been introduced in a number of advanced, developed economies including Sweden, New Zealand, Germany, Japan, and Argentina. The German and Japanese cases, both full on privatizations, have been extremely successful, and Deutsche Post now competes with DHL and FedEx. The Conservative-Liberal Democratic coalition in Britain has announced plans to privatize the Royal Mail in 2013. Deregulation has almost always resulted in lower prices, higher quality service, and greater operational flexibility.
Apart from the economic basics and the need for heightened service efficiency, there are several central truths which should inspire privatization here in Canada. The first is that technology, email, texting and other digital mediums are resulting in lower and lower volumes of mail – the result will be falling revenues. Canada Post is also in desperate need of private capital to modernise and enter the 21st Century, a quick trip to a local post office should validate this claim. Canada Post has a $3.3 billion pension deficit, is it not fair for taxpayers to foot this bill given the fact that Canada Post employees already enjoy solid benefits and exceptional pay.
Finally, Canada Post is riddled with ineffective, lazy management and an aggressive, nasty, uncompromising and greedy union. Hard working front line staff and taxpayers suffer when the two clash, the inexcusable three week long 2011 labour dispute is a perfect example. A successfully privatized Canada Post would end further liabilities for the taxpayer, deliver lower costs, better service, and a stronger, freer economy overall. The time has come for Canadians to emancipate themselves from the superstition that Canada Post should affectionately remain in public hands, it’s time to let this dinosaur roam free.