Canada Post Review
NAMMU was briefed this morning by the Minister’s Chief of Staff, Matt Stickney, prior to the speech that Minister Qualtrough made at Gateway. This speech announced the government’s decision on the Canada Post review.
Here are the highlights:
Termination of the Community Mailbox conversion program.
Development of an enhanced accessibility program for those with accessibility issues. Minister Qualtrough has been a provincial and national leader on accessibility issues. As a blind Paralympic athlete, she has strong credentials and a clear interest in this issue – especially as it relates to community mailbox access. There will be an Advisory Board established.
Change in management & Board. There is a new chair, Jessica L. McDonald. Most of the Board will turn over this year and there will be a new CEO as Deepak Chopra is retiring March 31, 2018.
Changing the corporate structure so that profits can be reinvested in the Post by the Post rather than being paid out as dividends to government from Commercial Crown corporation. Canada Post was one of three Commercial Crown Corporations whose mandate was to provide a return on investment to the Government in the form of Dividends. Canada Post has not paid Dividends for nearly 10 years.
Promotion of their remittance services. This is a money-wire type service that is often used by first generation Canadians to send money back home to international recipients.
The freeze on regulated stamp prices that has been in place during the review.
Canada Post has been instructed to do the following:
Improve relationships with Labour. Current management had no relationship with Labour. Fresh start with new Board Chair, new Board, new CEO.
Explore automated lockers for parcel delivery.
Consider Alternate Day Delivery.
The Postal Task Force studied Alternate Day delivery. These are their conclusions:
"A recent analysis conducted by Canada Post concluded that savings of $74 million per year would be achievable but only after a lengthy implementation period that could take up to five years”.
Some of the issues identified for the implementation of alternate day delivery are:
Implementation challenges: Route and depot consolidation, parcel delivery integration and community mailbox conversion;
Operational complexity: A letter carrier could have more than one route;
Need for an alternate parcel delivery approach: Parcel delivery would remain time sensitive and would need to be delivered daily;
Potential reduction in Neighbourhood Mail revenue: Delivery schedule of Neighbourhood Mail may no longer be possible so advertisers may prefer other options; and
Requirement to renegotiate some collective agreements and make changes to the Canadian Postal Service Charter.
Despite the implementation challenges identified above, this option is strongly supported by Canadians. It is reasonable that in an environment of declining mail volume and in consideration of the $74 million in potential savings, this option could be investigated further but should be implemented through the use of pilot exercises.”
Postal Task Force Report
What the announcement doesn’t address
Regulator: The notion of a Regulator had been proposed by several groups including NAMMU. Canada Post will maintain the same flexibility it has in pricing today. No Change!
Rural Moratorium: Maintaining the moratorium costs the Post Office $150 million per year. Mailers pay for this social program through higher postage fees. The Government has not addressed this issue and is content to have Canadian Business Mailers pay for this social program.
Long Term Viability: The Government has not addressed the business model issues. The Task Force report predicts that Canada Post will be losing in excess of $700 mm by 2026. There are only minor tweaks in this review that will not come close to filling the financial void.
As expected the Government has kicked the can down the road and has not seriously addressed the business model erosion that Canada Post faces. For NAMMU, there are three critical issues coming from this announcement:
Alternate Day Delivery
1. Labour Certainty:
The government is hoping the appointment of new Board Chair, New Board and New CEO will allow for a productive relationship with CUPW. It is clear that the Government doesn’t want a repeat of the summer of 2106. CUPW has demonstrated its skill in the negotiation process. In the past 2 negotiations, The Corporation has been aggressively pursuing concessions, and CUPW has been playing defence. It appears for this round they may have the opportunity to go on the offensive.
So this round will be different from the last two rounds. It is unlikely that Canada Post will lock the Union out. Therefore, one would expect to see rotating strikes from CUPW occurring in the Fall not the summer.
2. Alternate Day Delivery:
Politically this is a winner for the Government as most Canadians thought that they didn’t need mail delivery everyday. It is not good for the Business mailer who pays the bill as it will make Mail and especially Marketing Mail less competitive against its digital competitors.
3. Price Certainty:
There is no change to the way pricing is set. NAMMU must be vigilant to ensure Canada Post doesn’t try to fix or band aid its business model issues by taking extraordinary price increases,
Trojan Horse? Change from A Commercial Crown Corporation to a Crown Corporation:
Canada Post was one of three commercial Crown corporations, the others being the Canadian Mint and the Business Development Bank. The change means that Canada Post is not required to earn a return on investment or pay dividends to the Government; it hasn’t paid dividends in 10 years.
This change may mean nothing, or it may, along with the leadership change, bring a less commercial attitude at Canada Post. There is no doubt that Canada Post direction is more of a policy mandate than commercial. It certainly moves it further away any form of privatization. This direction is the opposite of the international scene where Posts such as the UK have gone through an IPO or such as Belgium where 50% of the Post is held by private investors. Accenture, in its annual study of Posts, consistently concludes the most successful posts are the ones with less political interference and distance from Government.
It is a time of uncertainty in the Canadian Mailing Industry as Canada Post struggles with its business with the limitations placed on it by the shareholder. NAMMU and its membership must be vigilant and ensure its issues and concerns are well understood by the new management team.