Year: 1997

US report on postal reform in Canada

This briefing report responds to your request that we provide certain
information on Canada’s 1981 postal reform initiative, which created the
Canada Post Corporation (CPC). Our discussions with your staff revealed
that knowledge about Canada’s experience with postal reform would be
useful to the subcommittee’s current efforts to reform the U.S. Postal
Service. As agreed with the subcommittee, this report, which follows our
briefing of the Subcommittee on February 25, 1997, presents information
on selected aspects of (1) universal mail service in Canada, (2) CPC
ratemaking, and (3) key events affecting CPC since its creation in 1981.

Background The Canada Post Corporation Act (CPC Act) established CPC as a Crown
Corporation1 and gave it broad authority to address problems reported to
exist in the Canadian postal system. However, the CPC Act also provided
that the Canadian government will select the CPC Board of Directors,
designate a minister to oversee CPC, and approve proposed CPC regulations.
The government also is to approve CPC’s 5-year plans and annual operating
and capital budgets, and CPC is subject to Canada’s antitrust law, which is
administered by Canada’s Bureau of Competition Policy.

The CPC Act requires CPC to strive to operate on a self-sustaining financial
basis. CPC incurred operating losses each year through fiscal year 1988, and
reported its first profit (totaling Can$96 million, or U.S.$81 million)2 in
fiscal year 1989. CPC subsequently reported profits in 4 of the 7 fiscal years
1990 through 1996. In some recent years, CPC paid dividends and, since
1994, has been subject to federal income tax.

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