The ´ºÉ«Ö±²¥ Union of Postal Workers started a national strike on Nov. 15, disrupting letter and parcel delivery across the country. As ´ºÉ«Ö±²¥s on social media discussed the postal service in the days leading up to the strike and once it began, many said taxpayers foot the bill for Canada Post and its workers. This is false. The post office is a federal Crown corporation that operates as a business and, aside from compensation for certain services, currently does not use federal funding to operate.
Some statements on social media were critical of Canada Post, which has consistently lost money in recent years.
One such , formerly Twitter, said Canada Post is a "behemoth that has drained taxpayers 3 billion dollars since 2018."
, from Shopify CEO Tobi Lutke, who has more than 360,000 followers on X, said that "Canada Post gets (a) tax payer subsidy" in response to a post about rural mail delivery.
Rating: False
Canada Post says its mission is to serve all ´ºÉ«Ö±²¥s and operate in a financially self-sustaining manner based on revenue generated by the sale of postal products and services, .
The Crown corporation has frequently turned a profit over the years, but it . In 2023, it recorded a loss before tax of $748 million.
Canada Post funded itself last year primarily through the use of cash on hand, money generated from operations and pension plan funding relief permitted by legislation, said the company's .
Canada Post's reserve funds have played a significant role in keeping it afloat.
A combination of annual operating losses, pension and employee benefit contributions, and modernization investments have eaten up nearly $1.2 billion of the corporation's cash, cash equivalents and marketable securities since 2021, said .
A provision in the allows it to request a loan of up to $500 million from the federal government.
In addition, if the post office cannot meet its financial obligations, it can ask the government to step in and cover the expenses.
"That hasn't happened to date," said Jon Hamilton, a Canada Post spokesman.
'You balance your own books'
In the 1980s, Canada's post office became a Crown corporation after a long history as a department of the government. The Canada Post Corporation Act, which became law in 1985, sets out the structure and powers of the organization.
"The company is told that the mandate is, 'Stand on your own two feet. You balance your own books,'" said , an associate professor of marketing at McMaster University.
In retaining ownership as Canada Post's lone shareholder, the federal government deliberately followed a pattern seen in most postal organizations in the industrialized world, noted a .
"Indeed, notwithstanding the corporatization and commercialization of the posts, and notwithstanding the advent of electronic communication alternatives, postal activity remains a highly sensitive service, and retains a public policy character for large parts of the population."
Under the Canada Post is committed to universal service, affordable rates, frequent and reliable delivery, and convenient access to postal services.
In 2023, 17.4 million ´ºÉ«Ö±²¥ residential and business addresses were served, and international inbound and outbound services were offered to 192 countries, Canada Post says.
The act governing Canada Post grants it the exclusive privilege of collecting and delivering letters in Canada.In keeping with the charter, the post office charges a uniform rate for letters of similar size and weight, regardless of the distance within Canada they must travel.
Mounting losses
Ryder points out there is no competition on letter mail because the private sector "wants nothing to do" with it. "So if Canada Post doesn't deliver letters, I don't know what we're going to do, because nobody else wants to do that."
Households across the country were receiving an average of seven letters per week in 2006, but it has fallen to two a week, said Canada Post's . The post office was once the leader in the ´ºÉ«Ö±²¥ parcel delivery market but it now faces heavy competition.
"Without additional borrowing and refinancing, we expect to fall below our required operating and reserve cash requirements by early 2025," said.
Canada Post has up to $2.5 billion from lenders other than the federal government. It has current loans and borrowings of $1 billion on its books as a result of a 2010 debt offering consisting of two series of bonds, . In July next year, $500 million of this is due for repayment.
"At least $1 billion in new borrowings or other liquidity measures are required for 2025, including refinancing $500 million in existing debt," the annual report said. "In the current financial situation, at least $1 billion will also be needed in 2026 and each year afterward to maintain operations and meet our employee obligations."
Tightened spending
In response to its "challenging financial situation," the company has tightened operational spending and significantly scaled back planned investments.
The postal service is also exploring new services, saying last month it will be offering a chequing and savings account in partnership with Koho Financial Inc.
Such ventures could ease pressure on the government to dip into the treasury to help the post office, suggested , an associate professor of political science at the University of Winnipeg.
"Canada Post would say, 'Look, we can make some cash here, and that means you don't have to give us a subsidy.'"
The law governing Canada Post allows for the mailing of letters to members of Parliament and certain others at no charge, and it provides for free mailing of material for the use of people who are blind or partially sighted. Canada Post received compensation of approximately $22 million in 2023 to help offset the cost of these initiatives, the .
Ryder said that is akin to a rounding error for a corporation with billions of dollars in revenue. "It doesn't amount to a hill of beans."
Sources
Claims can be found on Facebook () and () and on X (), () and ()
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Canada Post 2023 annual report and (, )
The ´ºÉ«Ö±²¥ Encyclopedia ()
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– December 2008 ()
Canada Post to launch chequing and savings account with Koho – The ´ºÉ«Ö±²¥ Press, Nov. 8, 2024 ()
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