TERRAZZANO: Ottawa should be selling Canada Post and not bailing it out 

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Here’s a bold prediction: Canada Post won’t pay back a dime of the $1-billion bailout it’s taking from taxpayers.

The federal government gave Canada Post up to $1 billion in “repayable funding” to “prevent insolvency.”

Canada Post is supposed to pay that funding back to taxpayers “insofar as (Canada Post’s) revenues are sufficient.”

With Canada Post bleeding money, taxpayers shouldn’t hold their breath waiting for that money to be paid back.

Canada Post lost $841 million last year. It was the Crown corporation’s seventh straight year losing money, with losses totalling $3.8 billion over those years.

“Canada Post is facing an existential crisis: It is effectively insolvent, or bankrupt,” according to the report of the Industrial Inquiry Commission.

And as bad as the last few years were, Canada Post’s financial situation could get worse.

“The funding does not solve the Corporation’s structural issues,” Canada Post wrote. In its 2023 Annual Report, Canada Post warned of “larger, unsustainable losses in future years.”

The nature of taxpayer bailouts is that more bailouts soon follow. And Canada Post appears ready to go back to the government with cap in hand.

“(Canada Post) welcomes the federal government’s announcement of the repayable funding and may require additional short-term borrowing to remain solvent through 2025,” Canada Post said. “In its current financial situation … (Canada Post) will need additional annual funding going forward to maintain operations and meet employee obligations.”

There are three things any would-be champion of taxpayers in Ottawa should do with this situation.

First, members of Parliament should oppose taxpayers bailing out Canada Post. If Canada Post is to exist, then it should be forced to operate like a business and stand on its own two feet. Second, MPs should hold Canada Post accountable to paying back every dime of the $1 billion it takes from taxpayers. If Canada Post doesn’t pay every cent back, MPs should ask a simple question every day in the House of Commons: Who is getting fired?

Third, and most importantly, MPs should push for the real solution: Sell Canada Post.

The government should sell Canada Post and use the money to start paying down its $1-trillion debt like other countries.

“By selling (Royal Mail), we help that important national business to prosper and invest in the future, while we use the money we get to pay down the national debt and pay less interest on that debt as a result,” said George Osborne, then-United Kingdom chancellor of the exchequer when the country privatized its postal service.

Other countries like Germany, Portugal, the Netherlands, Japan, Israel, Belgium, Malta and Austria sold or partially privatized their government postal company. In Europe, the delivery of all letters has been open to competition since 2013, effectively ending postal monopolies.

“Austria, the Netherlands and Germany privatized their state-owned mail services,” and “in these countries, inflation-adjusted stamp prices fell between 11% and 17% within 10 years,” explains economist Vincent Geloso.

Contrast that with the experience of Canada Post since it became a Crown corporation.

“Almost immediately, stamp prices increased steeply, from 17 cents to 30 cents, and since then, Canada Post has consistently increased prices faster than inflation (to $1.44 today),” according to Geloso.

Canada Post is not worth its cost to taxpayers and consumers. Instead of bailing out the failing Crown corporation, MPs should push to sell Canada Post.

Franco Terrazzano is federal director of the Canadian Taxpayers Federation