By Mathieu Laberge
Wednesday, May 14, 2008
Abolish the postal monopoly now! | Postes Canada: un peu d'air frais SVP!
Here is the transcript of a paper I published this morning in the National Post.
If Ottawa wants to continue to subsidize rural areas, it can
By Mathieu Laberge
Bill C-14, the examination of which resumed last week at the House of Commons, could open a small crack in the monopoly of Canada Post. If this bill is adopted, it will serve to abolish Canada Post’s exclusive privilege in the sending of letters abroad.
In an interview published on April 28, Canada Post president Moya Greene recognized that some of the corporation’s equipment is ageing — the United States Postal Service has actually relegated similar equipment to the National Postal Museum — and that decision-making processes in the public sector are more ponderous than in the private sector.
A few days after, in response to a recent controversy over the awarding of lobbying contracts, another Canada Post official stated in the Montreal daily La Presse that this organization “does not operate like other government departments because, in principle, it is a commercial Crown corporation” and is “a self-sufficient and competitive business.” If all these statements are true, why maintain a public monopoly on postal delivery?
The change involved by Bill C-14 is timid, however. Why not go further and challenge the entire Canada Post monopoly? The corporation itself does not necessarily seem opposed to this. In an opinion piece published in the National Post earlier this year, Canada Post’s president stated: “If the delivery of letters were opened to competition, we would respond to that challenge, too — as long as we were given the means and the same freedom to compete as others in our markets.”
Other countries, including Japan, Sweden, the Netherlands, New Zealand and Germany, have succeeded in reforming their postal monopolies while continuing to provide service everywhere within their borders. In New Zealand, for example, the government has opened all of the public corporation’s services to competition. The corporation must maintain its universal postal service, but is not required to keep prices uniform. In Japan, the government set up a fund to absorb the deficits of regional post offices. In every instance, there were improvements in productivity and in the quality of service.
By 2011, all postal services in European Union countries will be fully open to competition. This decision, taken last year, means that the last sector still reserved for the former public monopolies, non-express letters under 50 grams, will soon disappear.
In our era of Internet and wireless phones, the traditional post office is no longer an essential service, as it might have been in the 19th century. It should also stop being seen as a privilege of national sovereignty. Such symbolic concerns should be left to stamp collectors. These anachronisms must no longer serve as a pretext for blocking a fuller modernization and liberalization of postal services.
The post office really is just a service like any other for which consumers, including those in rural areas, should pay a realistic price set by market conditions. If the government wished for political reasons to continue subsidizing service in these areas for a certain time, it could do so in a more targeted way. Private postal service companies could be required to contribute to a fund to finance maintenance of service at reasonable cost outside urban areas. At a time when computers and cellphones are ubiquitous, consumers should have just as great a choice of supplier when they wish to post a letter as they do when they use these new technologies.
Mathieu Laberge is an economist at the Montreal Economic Institute.
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La version française de ce texte a déjà été publiée dans La Presse et a fait l'objet d'un billet ici.