Economist delivers potential solutions to Canada Post’s troubles in new study

A new study is delivering some potential solutions to Canada Post's woes, including a recommendation that postage rates should be higher in rural areas than urban ones.

CALGARY — A new study is delivering some potential solutions to Canada Post’s woes, including a recommendation that postage rates should be higher in rural areas than urban ones.

The paper by the School of Public Policy at the University of Calgary paints a grim picture for the Crown corporation under the status quo: the number of letters delivered dropped by nearly a quarter between 2006 and 2013 and is expected to keep falling. The rise in parcels sent to online shoppers hasn’t been enough to offset the decline.

Meanwhile, the number of addresses in Canada is rising by nearly a quarter million a year.

Canada Post charges the same prices to all customers, even though delivery in urban areas is cheapest.

Philippe De Donder, the study’s author, said that results in “cross subsidies” — urban households essentially shouldering the cost delivering to rural areas.

“We think that for a market to work well, you need to have prices which are in line with the cost of production,” said De Donder, who is with the Toulouse School of Economics in France and has researched postal systems elsewhere in the world.

“And so if you sell different products and one product costs twice as much, there is no reason why the price of this product should be the same. The price should be twice as much as the other product.”

Although De Donder said Canada Post should have more power over pricing, he’s not advocating for unfettered freedom either. He said there should be an independent regulator to impose caps on prices, so that the cost to consumers doesn’t get so out of hand that they stop using the mail service.

As for how well that proposal would go over in rural Canada, De Donder said sees two scenarios unfolding.

One is that people who choose to live in less populated parts of the country accept that they should bear some of the additional costs for mail delivery. Or, the government can make those customers whole through tax rebates or some other mechanism.

“This way, it’s very, very transparent. What economists don’t like about playing with prices to redistribute is it’s totally not transparent at all,” said De Donder.

De Donder said that while immediate privatization to Canada’s postal service may not be the solution, he recommends introducing more free-market competition in the sorting and transportation of mail.

In 2013, Canada Post announced plans to phase out door-to-door delivery in a bid to cut costs and install community mailboxes instead. Shortly after taking power in October, the Liberal government put that process on hold, meaning some households have seen their service unchanged while others have made the switch.

In his paper, De Donder said one scenario could be an extra fee for door-to-door service.

“One could imagine offering a menu of contracts to recipients, with a higher price (in the form of a yearly membership fee, for instance) for door-to-door delivery, and a lower (or nil) price for delivery to community mailboxes.”

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Alberta has 1,910 active cases of COVID-19 as of Wednesday. Red Deer is reporting five active cases, with 108 recovered. (File photo)
Red Deer reports 25th COVID-19 death

415 new cases identified provincially Saturday

More than 120,000 Albertans have signed up to get the COVID-19 vaccine in the first two days of appointment bookings. (Photo courtesy Alberta Health Services Twitter)
Alberta Health Services apologizes after seniors struggle to book vaccine appointments

The CEO and president of Alberta Health Services is apologizing after seniors… Continue reading

Red Deer’s Kyle Moore, 26, will be a houseguest on Season 9 of Big Brother Canada. (Photo courtesy Big Brother Canada)
Red Deer man will be a houseguest on Big Brother Canada

A Red Deer man will be a houseguest on the upcoming season… Continue reading

Red Deer Public Schools says that in the absence of additional funds from the provincial government, there was no consideration of using alternate classroom sites in the district. (AP Photo/Gregory Bull)
Red Deer Public Schools launches online engagement process

Red Deer Public schools is seeking community input to help ensure a… Continue reading

Red Deer Rebels defenceman Mason Ward battles with a Medicine Hat Tigers’ forward during the WHL Central Division season opener. (Photo by Rob Wallator/ Red Deer Rebels)
Tigers come back to spoil Red Deer Rebels home opener

It’s been nearly 345 days since the Red Deer Rebels last played… Continue reading

An arrest by Red Deer RCMP is facing online scrutiny. No charges have been laid and the incident is still under investigation. (Screenshot of YouTube video)
Red Deer RCMP investigating violent arrest caught on video

Police say officer ‘acted within the scope of his duties’

Ottawa Senators goaltender Matt Murray (30) stands in his crease as Calgary Flames left wing Andrew Mangiapane (88), left to right, defenceman Rasmus Andersson (4), Matthew Tkachuk (19), Mikael Backlund (11) and Mark Giordano (5) celebrate a goal during second period NHL action in Ottawa on Saturday, Feb. 27, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Calgary Flames beat Ottawa 6-3 to end Senators’ three-game win streak

Flames 6 Senators 3 OTTAWA — The Calgary Flames used a balanced… Continue reading

Toronto Maple Leafs centre Auston Matthews (34) falls on his knees as he skates around Ottawa Senators defenceman Artem Zub (2) during third period NHL hockey action in Toronto on Thursday, February 18, 2021. The Maple Leafs will be without star centre Auston Matthews when they take on the Edmonton Oilers Saturday. THE CANADIAN PRESS/Nathan Denette
Toronto star Auston Matthews won’t play as Leafs face Oilers

EDMONTON — The Maple Leafs will be without star centre Auston Matthews… Continue reading

Crosses are displayed in memory of the elderly who died from COVID-19 at the Camilla Care Community facility during the COVID-19 pandemic in Mississauga, Ont., on November 19, 2020. The number of people who would have died from a COVID-19 infection is likely to be much higher than recorded because of death certificates don't always list the virus as the cause of a fatality, experts say. THE CANADIAN PRESS/Nathan Denette
Death certificates don’t accurately reflect the toll of the pandemic, experts say

The number of people who would have died from a COVID-19 infection… Continue reading

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a UHN COVID-19 vaccine clinic in Toronto, Thursday, Jan. 7, 2021. A single dose of Pfizer-BioNTech's COVID-19 vaccine is barely enough to cover the average pinky nail but is made up of more than 280 components and requires at least three manufacturing plants to produce. THE CANADIAN PRESS/Nathan Denette
From science to syringe: COVID-19 vaccines are miracles of science and supply chains

OTTAWA — A single dose of Pfizer-BioNTech’s COVID-19 vaccine is barely enough… Continue reading

Wetaskiwin RCMP say a Maskwacis man died after he was struck by a vehicle. (File photo by Advocate staff)
Clare’s Law in Saskatchewan used handful of times; Mounties review their role

REGINA — A first-of-its-kind law in Canada meant to warn those at… Continue reading

The Magpie river in Quebec is shown in a handout photo. THE CANADIAN PRESS/HO-Boreal River MANDATORY CREDIT
Quebec river granted legal rights as part of global ‘personhood’ movement

MONTREAL — With its kilometres of rapids and deep blue waters winding… Continue reading

Thorough sanding of a table top is usually the first step to renewing a finish. Wax contaminants can sometimes still remain on a surface like this after sanding. Cleaning with rubbing alcohol and a rag gets rid of these contaminants without leaving a residue behind. (Photo by Steve Maxwell)
Houseworks: Fixing wood finishes

Q: How can I stop polyurethane from beading up on a mahogany… Continue reading

Most Read