Academics claim “strong case” for privatising Canada Post
Two public policy experts from the University of Toronto have questioned the need for the Canadian government to have any ownership in the mail system. Professors Edward Iacobucci and Michael Trebilcock published a paper this week looking at the role of government in sectors including mail delivery, arguing that there is a “strong case” for privatising Canada Post.
They suggest that the main reasons for government involvement in any market is to correct market failures, or to achieve a particular social outcome.
In mail, they argue that there is “no apparent market failure” despite Canada Post’s declining mail volumes. And, they state that fears about the survival of the universal service obligation under a privatised postal service are unwarranted.
The professors claim that the only thing keeping Canada Post publicly-owned is a government keen on the potential income from the organisation and unions with their “clear political agenda”.
“Genuine policy debates about privatisation, including alternative means of ensuring the realisation of social goals, are often swept aside by interest group politics,” said the paper, suggesting that unions are more interested in their own well-being post-privatisation than the public interest.
The paper concludes: “In many cases, focused government intervention in a privatised market will accomplish the same goals as public ownership, but at a much lower cost.”
Reform
The paper, which was published by the University of Calgary’s School of Public Policy, suggests that some kind of reform is necessary for Canada Post to head off its declining mail volumes and cope with competitors outside its reserved letter monopoly.
The professors argue that in other countries, liberalisation of postal markets leads to improved performance, but that where it happens without privatisation of a national postal operator, competition levels are “has not always been substantial”.
But, even where there hasn’t been many new entrants to a market, Iacobucci and Trebilcock said the threat of competition alone is enough to push postal incumbents to up their games.
The big challenge to liberalisation or privatisation is protecting the universal service obligation, the professors point out.
Their paper suggests there may not be a strict need for uniform country-wide postal rates and service standards.
An answer to the USO within a privatised or liberalised system could be differential rates for rural delivery, reduced delivery frequency or a move from door-to-door delivery to communal alternatives.
The professors point out that rural communities already pay more for transportation costs because of their location, offsetting the benefits of living in remote areas, and suggest that it would be “reasonable” to increase mail prices to rural areas in similar fashion.
Other solutions to loss-making universal services could be more use of targeted subsidies, such as are already seen for blind customers, local newspapers and the shipment of perishables to northern communities in Canada.
