Repeal Section 14 of the Canada Post Corporation Act

It’s not every day that a front porch is pictured on the front page of a national newspaper. But that’s what the National Post highlights today as part of an article by William Watson, a free market inclined economist at McGill University.

Watson received a notice from Canada Post telling him that his porch constituted a danger to letter carriers. The peril allegedly lies in the fact that Watson’s porch has no railings that delivery persons can hold onto when climbing the steps. Prof. Watson has been given until October 21 to install railings. If he doesn’t comply, his mail will be sent to a post office located about 2 km from his house, a service for which, get this, he would have to pay an estimated $15 per week.

Watson points out that private mail carriers, such as UPS and FedEx, have often delivered packages to his house, with no complaints. This is telling, for no private mail company would dare make delivery conditional on the installation of hand railings, unless the risk to carriers was manifest and compelling. Even then, they wouldn’t charge customers for the privilege of picking up parcels at their offices. After all, this is no way to win and keep customers.

Of course, the reason that Canada Post can do otherwise is that it has been granted a monopoly by the government over the delivery of letters. As Section 14 of the Canada Post Corporation Act states: “the Corporation has the sole and exclusive privilege of collecting, transmitting and delivering letters to the addressee thereof within Canada.”  The legislation stipulates various exceptions that allow courts to deliver summonses and private individuals to drop off letters for their friends.  Urgent letters are also exempted, but the price charged for delivery must be three times the equivalent rate for Canada Post.

The original rationale for the monopoly on the delivery of mail was that only one firm could achieve minimum costs of production in the industry– in other words, it was thought to be natural monopoly. That being the case, so the argument goes, the public interest is best served if the government oversees it. But the existence of several private delivery services operating in the market today reveals that logic to be no longer valid, if it ever was.

The only remaining argument for Canada Post’s monopoly is that opening up letter delivery to competition would adversely impact people in rural areas. Delivering mail to such areas would not be as profitable as serving urban routes. Rural businesses and residents would have to pay more.  With its monopoly, Canada Post can afford to keep prices low for these customers through the profits generated on the more lucrative urban business.

But this assumes that everyone should pay the same rate for letter delivery. Why should that be the case? Why should urban dwellers subsidize those who’ve decided to live in the country? People residing there also have to drive longer distances to buy groceries and run errands. If their mail is to be subsidized, why not their additional fuel costs as well? As no one is forced to live far away from a large city, a person deciding whether to do so should have to factor in the extra costs of mail delivery to a rural address against the benefits of living in the countryside.

Besides no longer being commanded to fix one’s house, opening up letter delivery to competition would also make it quicker and efficient.  It would probably not take so long for letters to get to/from the US and other countries. We might even get Saturday service.

Watson is right: the Harper government should use its majority to abolish Canada Post’s monopoly by repealing Section 14 of the Canada Post Corporation Act.

17 Responses to “Repeal Section 14 of the Canada Post Corporation Act”

  1. Steve S. says:

    Something letter carriers do daily every weekday — regardless of the weather conditions as per the Canada Post Corporation Act and not just occasionally as courier companies do when delivering parcels or packets to residential recipients.____Every day. Even when the steps are covered in snow and ice.____I've thought through this and the timing of the notice and suspect that Mr. Watson is unaware of a seminal change currently taking place within Canada Post called Postal Transformation. Unfortunately it places letter carriers in greater peril of sustaining injuries on the job however it has been deemed as being absolutely necessary in order for Canada Post to survive in the digital age and continue providing an affordable postal service to all Canadians. Without going into details (I'm not into minutae here unless necessary but if anyone is curious about what postal transformation is they should do some research…in other words Google it) I suspect that the changes that Canada Post is currently undergoing has necessitated that points of call such as Mr. Watson's front porch being upgraded with a handrail are, from a health and safety point of view, due to the changes being made to the way mail is delivered. (cont'd)

  2. Steve S. says:

    I'll get back to many of your fallacies when I can Redmond.

    How do you get more than about 500 characters around here btw?

    I'm commenting as a Guest if that helps.

    • Redmond says:

      The only fallacies are in your claims.

      I would imagine to are the kind of person who is OK with every single government run monopoly, but at the same time, in favour of anti-trust legislation.

      Anyways get yourself a WordPress or intense debate account, that might help.

  3. Steve S. says:

    Then again, maybe Mr. Watson simply doesn't care about workers such as letter carriers and placing them in peril and would prefer to smear Canada Post due to his academic beliefs rather than simply doing the right thing and making his home safer for letter carriers to deliver his mail and then doing some research (Google?) and writing articles of substance such as what the future holds in store for companies like CP in the digital age from the point of view of a free market economist.

    I guess only he could answer that though but do wish that he wouldn't make comments upon something that he knows very little if anything about other than that his mail always gets delivered to his mailbox.

    Please take careful note of the previous statement too Mr. Bragues.

  4. Steve S. says:

    Germany versus Canada?

    Hmmm….

    Germany has approximately 82 million people and an area of 357, 021 square kilometres which works out to a population density of 229/km2 for DHL to deliver to.

    Canada is closing in on 35 million people spread over an area of 9,984,670 square kilometres which works out to a population density of 3.41/km2 for Canada Post to deliver to.

    Now I know why Canada Post isn't profitable like DHL!

    Thanks for pointing your finger at Germany as a comparable Redmond!

    DHL wouldn't even dream of touching us if we went private. Our country would bankrupt them.

    • Redmond says:

      So again by your logic, ups dhl etc etc could not make a profit in Canada.

      So why do they operate here?

      You also fail to note that the postal service is going bankrupt because of technological change, not any other reason.

  5. Steve S. says:

    As for Watson look at his credentials.

    He's a free market economist. He automatically loathes monopolies regardless of the previously mentioned benefits of having one in a country the size of and as sparsely populated as Canada.

    Too linear of a thinker in my opinion.

    Nevertheless he decides to take out his economic bias against Canada Post after being asked to have a railing installed on his front steps leading up to his mailbox anytime within a several month period in order to make it safer.

    Wow! That was worthy of a national newspaper's headline?

    And newspapers wonder why and bemoan the fact that they are losing readership and becoming increasingly obsolete in this day and age?

    Its no wonder to me when I won't buy a newspaper because the headline is, in this particular case, from someone whining about having to make their porch safe for letter carriers to deliver mail going to them on a daily basis.

    • Redmond says:

      Too linear of a thinker in my opinion.

      I find it laughable that a person who thinks that small pieces of paper can only be transported by a government enforced monopoly thinks that SOMEONE ELSE'S thinking is too linear.

      I am glad that you aren't on the board of directors at apple.

      Oh yeah, one other historical note, before Canada existed who delivered the mail? The Hudson's Bay Company! Though they may have been granted a monopoly by the English crown.

  6. Steve S. says:

    I wonder who's going to feed the urban dwellers if they follow the latter advice and if they are asked to pay more for mail delivery while conducting their businesses in rural areas would they will simply not pass the cost back in the prices charged for the food sent to feed the urban dwellers?

    That might be more equitable but its a slippery slope leading to a "nickling-and-diming" system that would be too unwieldy to operate. Should we also start charging more for homes in the city that have a lot of steps for letter carriers to climb? Hand out rebates to homes serviced by community mailboxes?

    Imagine going into another Canadian institution like Tim's and complaining that you should pay less for a black coffee versus someone that asks for it "regular" (that's one cream and one sugar for those parts of the country that don't use that term) or heaven forbid, somebody who wants their coffee double-double?

    Is this starting to make sense to you Mr. Bragues?
    (cont'd)

    • Redmond says:

      I wonder who's going to feed the urban dwellers if they follow the latter advice and if they are asked to pay more for mail delivery while conducting their businesses in rural areas would they will simply not pass the cost back in the prices charged for the food sent to feed the urban dwellers?

      If Farmers have higher costs, they will raise their prices, that is the way it works for every business

      Of course there is no reason to suppose that a private mail delivery company such as DHL or FEDEX would charge more to the outlying areas for first class mail, the letters are so small, they might even offer the service for free as a competitive advantage! There is also no reason to believe that they wouldn’t do exactly what Canada Post does right now, and slightly subsidize mail service to outlying areas with the more profitable intra and inter-city services.

      One point though, look at Home Depot, they have a store in Downtown Toronto, not far from where I live, and they have a store in Huntsville Ontario. Do you suppose they charge a different amount for their 2 x 4’s in each location? Or for the refrigerators, washers and dryers? Based on the website information I could find they do not.

      So right there you have an example of a private company retailing far greater variety of products and charging exactly the same amount no matter where their stores are located – something you think would be impossible with something as simple as mail delivery service.

      Of course when it comes to monumental government bureaucracies, nothing is ever simple, is it?

      That might be more equitable but its a slippery slope leading to a "nickling-and-diming" system that would be too unwieldy to operate. Should we also start charging more for homes in the city that have a lot of steps for letter carriers to climb? Hand out rebates to homes serviced by community mailboxes?

      Private package delivery services don’t do that with their current services, so I don’t see a reason why they would do that with 1st class mail. That being said, my Grandfather when he lived on a property in northern Ontario did not get mail service to his cottage, he had to go to a post office to retrieve the mail. Was he being "Nickel and dimed" by Canada post?

      Of course if the government hadn’t monopolized mail service for all of these years, who knows, maybe we would have done away with it altogether years and years ago.

      Imagine going into another Canadian institution like Tim's and complaining that you should pay less for a black coffee versus someone that asks for it "regular" (that's one cream and one sugar for those parts of the country that don't use that term) or heaven forbid, somebody who wants their coffee double-double?

      Tim Hortons could do that if they liked, but they probably wouldn’t because it doesn’t make sense to, it is the same reason DHL and FEDEX don’t charge varying prices for a building with a set of stairs vs. one with elevator access.
      So really your example falls far short.

      Just wondering, is it starting to make sense to you that there is absolutely no reason why there needs to be a government monopoly of mail services in the 21st century? Germany already privatized their own years ago, in fact DHL handles it! And they deliver 6 days a week, AT A PROFIT!

  7. Steve S. says:

    There's benefits and drawbacks to any monopoly but in a society based largely upon free enterprise such as ours the benefits must far exceed the drawbacks as they do in Canada for a company to be granted a monopoly. Our country is one of the largest countries in the world however we also have one of the smallest populations on a per square kilometre basis. Canada post MUST deliver mail as per the Canada Post Corporation Act to just over twelve million points of call within Canada each and every business day. No easy feat given the inverse ratio of population and size.

    To open this market up to competion would be ruinous for all and most importantly and ultimately, a disservice to Canada and Canadians.

    To also argue that rural dwelling Canadians should pay more for mail service is also very short-sighted. Go tell that to the farmers that are widely dispersed due to the nature of their businesses that they should pay more for mail delivery or else move to the city.
    (cont'd)

    • Redmond says:

      There's benefits and drawbacks to any monopoly but in a society based largely upon free enterprise such as ours

      In Canada, all levels of government spending combined makes up roughly half of GDP. On top of that, the various levels of government regulate almost activity in the public and private sphere. Hardly a society based on “free enterprise”

      Our country is one of the largest countries in the world however we also have one of the smallest populations on a per square kilometre basis.

      During the late 19th century, mail delivery in the parts of North America that had yet been incorporated into the USA was private, and it worked just fine. Also Lysander Spooner ran a first class delivery service in the USA in the 19th Century that outcompeted the federal service until it was shut down by the government.

      One other thing to note, you claim that due to it’s size the government must deliver mail at a loss within Canada. So how do you explain the fact that mail service was until recently monopolized by the government in even the tiniest nation of Europe? One might thin that there are other reasons for the government wanting to control the main method of communication in a society.

      To open this market up to competion would be ruinous for all and most importantly and ultimately, a disservice to Canada and Canadians.

      It would be wonderful, and it should have been done years ago.

      To also argue that rural dwelling Canadians should pay more for mail service is also very short-sighted. Go tell that to the farmers that are widely dispersed due to the nature of their businesses that they should pay more for mail delivery or else move to the city.

      Everything else that rural people do costs more because they live in a geographically remote area, why should mail of all things, especially in this, the twilight of physical mail delivery be any different? By your logic, the federal government should subsidize the cost of a litre of gas so people who choose of their own free will to live in the north can drive relatively as far as city dwellers do to receive the same services.

      The flip side of living in these remote areas is that other costs of living are quite low such as the cost of real estate and the associated property taxes.

      You might also note that mail subsidization only affects 1st class letters up to a certain size – anything other than that and you are paying full cost.

  8. Watson gained a notice from Canada Post telling him that his yard constituted a threat to letter bearers.

  9. George Bragues says:

    The natural monopoly claim makes the most sense on the assumption that the market for mail delivery is all of Canada. That this was the original thinking is confirmed by the fact that postal delivery was assigned to the federal government, as opposed to the provinces, in the BNA Act [see Sect. 91 (5)] Mail delivery was thus seen as constitutive of a nation. Loyalty and attachment to that nation was thought to demand that all citizens be able to communicate with each other.

    That being the case, if multiple firms were to be allowed to compete, the profits on the lucrative routes would fall for each firm, enough that no particular firm would have enough money to cross-subsidize delivery to remote areas. That's the argument, in any case.

  10. Redmond says:

    It was thought to be a natural monopoly?

    So why did it need the government to outlaw competition?

    Of course it is far easier for the RCMP to open your mail when the government is the only game in town.

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