NAMMU: Canada Post kicks serious issues down the road

BY PATRICK BARTLETT

Public Services Minister Carla Qualtrough announced the government’s decision on the Canada Post review on Jan. 24, 2018. The highlights included termination of the Community Mailbox conversion programme, development of an enhanced accessibility program for individuals with accessibility issues, promotion of remittance services and exploring the use of automated lockers for parcel delivery.

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 matter — especially as it relates to community mailbox access. There will be an Advisory Board established to help ensure access.

Canada Post has been instructed to do the following:

• Improve relationships with labour. The current management had no relationship with labour. Instead there is a fresh start in 2018 with a new chair of the Board of Directors, Jessica L. McDonald, a new CEO, as Deepak Chopra is retiring March 31, 2018 and most of the board will turn over this year.

• Change the corporate structure so that profits can be reinvested in Canada Post, rather than being paid out as dividends to the 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

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  . This is a moot point as Canada Post has not paid dividends for nearly 10 years.

• 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.
• 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

Here are the issues that the Minister’s announcement does not 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 programme.
• 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 million annually by 2026. There are only minor tweaks in this review that will not come close to filling the financial void.

NAMMU position

As expected, the government has kicked the can down the road. It has not seriously addressed the business model erosion that Canada Post faces. For the National Association of Major Mail Users (NAMMU), there are three critical issues coming from this announcement:

1. Labour certainty

The government hopes the board and CEO changes will allow for a productive relationship with the Canadian Union of Postal Workers (CUPW). It is clear that the government doesn’t want a repeat of the summer of 2016.

CUPW has demonstrated its skill in the negotiation process. In the past two negotiations, Canada Post 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 out the union. Therefore, one would expect to see rotating strikes from CUPW occurring in fall 2018, 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 every day. But this plan is not good for business mailers which support Canada Post financially as it will make mail, and especially marketing mail, less competitive against 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.

Is the change from a Commercial Crown Corporation to a Crown Corporation a Trojan Horse?

This change may mean nothing at all. Or it may along with the leadership change, bring a less commercial attitude at Canada Post.

There is no doubt that Canada Post’s direction is moving to more of a policy mandate than becoming a commercial entity. It certainly moves Canada Post further away from any form of privatization. This direction is the opposite of the international scene where postal services, such as the UK have gone through an IPO or such as Belgium where 50% of posts are 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 greater distances from governments.

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.

—

Patrick Bartlett is executive director, National Association of Major Mail Users