A recent article in the respected Foreign Policy website declares that US Government is prepping the United States Postal System for privatization. Is a similar phenomenon happening in Canada?
Laurie Garret and Kavita Patel outline worrying results of this plan in their article, The U.S. Postal Service is a Threat to Your Life. The future road to privatization hurts those receiving support cheques and the timely distribution of medicine. They state the people effected in these categories is high.
There is no indication the Canadian Government is moving in this direction with Canada Post except one small note.
The Canadian Government made a small step where it could be a possibility. At some point between 1985 and 1993, the Canada Post Corporations Act included Canada Post employees as potential shareholders.(1) This change was a signal of the then Government shifting Canada Post into a private entity or at least entertaining the option.
Canada’s Modern Post contains numerous citations on the privatization of Canada Post. None of them from Government representation. The dialogue in public forums is not new.(2)
One of the greatest roadblocks to the sale of Canada Post is its ominous Pension problem that is in the billions. No potential suitor would take on this debt. Nor would the Canadian Government sell the Corporation and assume this debt. The pathway to Canada Post’s privatization is the resolution of the pension crisis.
The previous Conservative led Government was taking action to solve this problem by converting the Canada Post Pension Plan into a Target Benefit Plan.(3) The change was delayed by Liberal Government leadership after the election but not dispelled.
Bill Morneau, the then Finance Minister under the Liberal Prime Minister Justin Trudeau, sought to reintroduce the conversion in 2016. However, the Conservatives and NDP led an opposition that disputed such a change. They stated Bill Morneau and the affiliation with his company, Morneau Shepell, were in conflict of interest. His company would personally benefit from the transfer of billions of dollars from an independent Pension Fund into a different funding formula.(4)
This package of Pension Reform was aimed for institutions under their jurisdiction. The Federal Government exempted their public service employees except for Crown Corporations. Canada Post, being the largest Crown Corporation, was targeted for change.(5)
The Conservatives scored a political victory at the expense of their earlier creation of a Target Benefit Plan. An act to change the pensions was scrapped.
As a consequence, Canada Post’s pension problem is put aside again. A condition which means privatization is a faint reality unless there is a change in Government.
There are two more factors that keep privatization at bay. The intensity of the COVID crisis and a current minority Government. There is no appetite to make any substantial reforms in a unstable political climate.
When the Canadian Government is looking for much needed cash post-COVID, and there is a majority Government, they will look at the sale of Canada Post as an option and will resolve the pension crisis.
Footnotes:
(1) The Canada Post Corporations Act. Section 27.1 (2)ff Canada Post management has the discretionary power to give employees shares in the company. This employee share status, according to my knowledge, has not been implemented. A revision to this section occurred in “1993, c. 17, s. 2,” but what part, I do not know. Unfortunately, the 1993 or 1985 documents are not digitally available to see if the employee share was added in 1993 or was part of the original Act.
(2) See Dr. Ian Lee on the near future of Canada Post; Michael Warren’s Call for Privatization; Moya Greene, CEO of Canada Post in 2009, asked the Government to privatize the corporation. See A Brief History of Canada’s Postal Transformation for more info about a former Canada Post CEO, Moya Greene, request for privatization.
(3) For general information about Target Benefit plans read Wikipedia’s coverage of Target Benefit Plans. See also Morneau Shepell’s explanation: Government of Canada proposes target benefit pension plans.
(4) Here’s what Bill Morneau’s pension bill could mean for your retirement, by Rob Carrick. The Globe and Mail. Nov. 28, 2017; Ethics Commissioner launches examination of alleged Morneau conflict over pension bill by Bill Curry. The Globe and Mail. Nov. 10, 2017. Union’s across Canada were vociferously opposed. The Public Service Alliance of Canada/Yukon stated it was a game changer and a threat to the those who already owned a pension: Bill C-27 and the Threat to Your Pension. The Canadian Union of Postal Workers added the same rejective voice. No To Bill C-27: An Act to Amend the Pension Benefits Standards Act.
(5) Morneau Shepell’s article: Government of Canada proposes target benefit pension plans explains this in detail: “. . .the Department of Finance Canada has made it clear that the new TBPs would not apply to federal public sector employees, whose plans are not affected by the same legislation as crown corporations and federal jurisdiction employers.”
Canada's Postal Transformation Project 