If pensions are a problem for the post office – what are they to the rest of us?

December 19, 2013

By Ray Rivers

BURLINGTON, ON.  First it was the milk man and now its the letter carrier.  The post office is losing money, again, and will be shedding eight thousand letter carriers as it brings an end to an era of time-honoured service. Losing money is not a novelty for Canada Post Office.  This organization, originally created as a government department at the time of Confederation, last spent 32 years in the red (1957 to 1989) only to get out of that hole by lifting the price of stamps.  And I presume it hopes that strategy will work again this time.

I examined alternate-day mail delivery while at Canada Post back in the seventies and discovered that cutting delivery in-half wouldnt automatically cut labour costs in-half.  Even worse, valuable customers like Time Magazine might have been lost with such a radical service change.  I suspect the current postal management will experience some of that.  For example, installing and servicing group boxes in built-up areas may end up being more costly than originally imagined by the bean counters at Canada Post.   And watch the movement to e-mail accelerate.

Another study, I reviewed, demonstrated the potential cost-effectiveness of Canada Post installing facsimile machines in every Canadian household, as an alternative to letter mail.  This was before Al Gore had been credited with inventing the internet.  Isnt that what is happening now?  I already receive and pay most of my bills via the internet, and next year my Christmas cards will all be electronic.  Mailing is becoming too expensive.

A picture is worth a thousand words.

Isnt Canada Post heading in the wrong direction?   Buy anything on the internet and its delivered to your door pronto, sometimes by the Canada Post owned Purolator.  There will always be a demand for to-the-door delivery; for the junk-mail distributors, political pamphlets and for all those on-line purchases.  Perhaps their strategy is to make letter mail so pricey and unattractive that you decide to choose their premium Express Post service rather than lick a stamp. Its called up-selling. 

There was a time when a penny got the letter mailed.  Today – $1.

But Business 101 tells us that increasing your price while simultaneously reducing the quality of service is a mugs game.  Only a mad man would do this, unless he/she wanted to go out of business.  If that is Mr. Harpers strategy, then why not just privatize mail delivery while there is still market share and value, as other nations have done and some pundits are demanding?

Its hard not to be suspicious that something else is in the soup, as we hear more and more about how pensions are imperiling the profitability of Canada Post.  That seems to be the flavour of the month for a government that has no truck with enhancing the nations pensions.  The federal finance minister just shut the door on expanding the miserly Canada Pension Plan (CPP), at a meeting this week with his provincial counterparts. 

Better pensions – for everyone?

He called it a payroll tax and mumbled something about not wanting to raise taxes.  But he is only partly right since half of the CPP contribution is paid by the employee, as a kind of forced saving in order to be able retire with dignity.  You see Flaherty knows that we either consume stuff or we save our money.  And this government wants us to spend more on consumption in the run up to the 2015 election, so his GDP numbers will look healthy as we go to the polls.   Retirement issues are too far off in the future for a government determined to win a second majority mandate, and complete its transformation of Canada from that liberal society Mr. Harper inherited

Flaherty either doesnt know or doesnt care that two-thirds of Canadians dont have a workplace pension scheme, and a third of Canadians have no savings at all.  Today’s CPP is a light-age away from what it was originally intended to be.  At about $12,000 a year it is pathetic.  Yet, for the first time in over a decade Canadians have started saving more of their own money, so wouldnt this be the perfect time for an expanded CPP program to lock in those savings?

Finance Minister Flaherty – the man with the answers.

The irony is that instead of enhancing CPP so people can live on their savings, the Harper government would prefer that the federal government keep on handing out Old Age Security (OAS) payments.  OAS is a kind-of seniors welfare program – where the working generation subsidizes those retired.  How could that make any sense to a government that claims to be big on fiscal responsibility?  Why would saving so you can live off your own money, instead of the governments, be anathema for a government that believes in personal responsibility?  It makes no sense. 

Chopping 8000 letter carriers as early as possible will save the mismanaged Post Office pension scheme some money, no doubt.  And Deepak Chopra, the CEO of the Crown Corporation. is also asking postal employees to allow him to cut their pension entitlements. But I have to ask why Mr Chopra, a passionate, modern executive with a very impressive biography, doesnt offer to lead by example.  For that matter, what about the minister responsible for the Post Office, Lisa Raitt , Mr. Flaherty or Mr. Harper.  Why dont they offer to cut their gold-plated pensions if they really feel public sector pensions are too generous.


Canada Post Changes   History of Canada Post Privatization  Privatization 2  Privatization 3   Pensions   CEO Canada Post

Ray Rivers writes weekly on both federal and provincial politics, applying his more than 25 years as a federal bureaucrat to his thinking.  Rivers was a candidate for provincial office in Burlington where he ran against Cam Jackson in 1995, the year Mike Harris and the Common Sense Revolution swept the province. He developed the current policy process for the Ontario Liberal Party.  While employed as a civil servant Rivers worked at Canada Post.

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8 comments to If pensions are a problem for the post office – what are they to the rest of us?

  • Gary Scobie

    Ray, the CPP was never meant to provide a high retirement income. It was meant to supply about one quarter of the average insurable income (basically the average Canadian worker’s income) at retirement, providing you had earned around the average income during your career and contributed until age 65. Its premise has basically remained the same for nearly 50 years.

    Canadians are supposed to take some responsibility of their own to save on their own (with RRSP’s and/or pension plans) if they want a higher retirement income. Some can’t, but sadly most of us just don’t.

  • Even Mike Duffy is completely aware Canada Post can no longer be considered a reliable delivery mechanism … Purely because it “meets the CPC agenda.” Mike is now using YouTube to say “hi” to the PM and all his former Senate friends.

  • Tony Pullin

    Omers pensions are matched 1:1 by the taxpayer. 4:1 or 5:1 for OPG pensions according to the CBC. What should the correct ratio be?

  • Susan Lewis

    If Flaherty/Harper expand the C.P.P., the 50% of the money that business would have to pay is considered an increase to payroll taxes. Remember, “No New Taxes”.

    As it is right now, O.A.S. is paid out of general revenue, and of course Big Business would like that to stay the same. Somebody has to pay for O.A.S. and currently it’s the Canadian taxpayer.

    In this case, the Federal Government has to either side with what business wants or what the people need. The choice has been made.

  • Susan Lewis

    The picture above of the “superboxes” makes me wonder:
    – Can Canada Post just stick up so many “superboxes” wherever they like?
    – Will the “superboxes” be on City property or on private property?
    – Are there any Municipal bylaws against such eyesores?
    – Is the City now responsible to clean up the garbage these things will generate?
    – Will these things interfere with the City’s snow removal of roads and sidewalks?
    – If there are no sidewalks, will people be walking and standing about on the roads?
    – Will Canada Post have to buy the property they use or will the property be expropriated?

  • Susan Lewis

    Once the government gets rid of door-to-door mail delivery, Canada Post would be much cheaper and easier to operate. Then Harper could sell Canada Post to Big Business at fire sale prices and Big Business could fire all the posties and replace them with contract workers at much lower wages and no benefits. The end result would be that the money that used to go to the posties would become profits for Big Business. We would still have poorer service and expensive mailing costs.

    As for Unions, the Federal Government gave the postal employees such great benefits because the Party in power wanted the union votes. It’s not the Postal Union so much as it is the Politicians that put us in this position. Furthermore, I consider Big Business Lobbyists to be the most powerful and costly unions in Canada and a more serious threat to our economy then the working class unions. As I see it, Lobbyists are the unions Big Business belong to.

    The reason so many seniors, disabled and working poor live in the city to begin with, is for the services the city has. (Or had.) In addition to mail delivery, there is also public transit, libraries, taxicabs, nearby hospitals etc. It’s a very long list.

    I question the wisdom of such massive layoffs of good paying, middle class jobs. The middle class is what keeps the economy healthy due to their spending. More poor people or people on E.I. is not healthy for our economy, especially if it’s the government that now gets to spend the money the union employees used to spend.

  • Bob Zarichansky

    The Tory red-neck policy of eliminating services to individuals while they generate continuous annual deficits and still provide more concessions to big business will prove to be their downfall. If their policies had allowed them to be fiscally responsible, they might have deserved some praise. By their record, they make Rob Ford and the stumblebums of Toronto city council look like beacons of prudence.

  • Fred Pritchard

    Ray. I don’t understand the rush to community mailboxes and the capital costs to install them and then the ongoing cost to maintain them.

    Why not just reduce the frequency of the service to every other day. So one week you get mail M,W,F and the next week you get mail on T,T. Personally we only check our mail boxes (home and work) once per week anyway.

    This would allow the immediate reduction of staff by 50%, cut the number of postal vehicles by 50% and no one would notice the reduced service levels.

    But they didn’t bother to ask anyone, and Ms Raitt is just a lap dog to the PMO and hasn’t had an independent or good idea in years.