Postal Reform in Canada:

Canada Post Corporation's Universal Service and Ratemaking

GGD-97-45BR: Published: Mar 5, 1997. Publicly Released: Mar 5, 1997.

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J. William Gadsby
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Pursuant to a congressional request, GAO provided certain information on Canada's 1981 postal reform initiative, which created the Canada Post Corporation (CPC), focusing on: (1) universal mail service in Canada; (2) CPC ratemaking; and (3) key events affecting CPC since its creation in 1981.

GAO noted that: (1) the CPC act does not use the term universal service, but states that "while maintaining basic customary postal service" CPC must consider several factors in carrying out the act's objectives; (2) one such factor is providing a standard of service that will "meet the needs of the people of Canada and that is similar with respect to communities of the same size"; (3) although not required by the CPC act, CPC policy is to provide basic letter mail services at a uniform rate; (4) under the CPC act, CPC has the "exclusive privilege", i.e., a statutory monopoly, to collect and deliver most letter mail in Canada; (5) this letter mail accounted for about 50 percent of CPC's operating revenue in fiscal year 1996; (6) since its creation in 1981, CPC has made some changes that affect the extent of mail service; (7) from 1981 though 1994, CPC also converted about 50 percent of its post offices to privately owned, franchised operations that offer retail postal services, such as stamp sales and post office box rentals, and also closed some post offices; (8) with regard to postal ratemaking, CPC sets some postage rates through regulations; (9) under the CPC act, interested parties must be afforded a reasonable opportunity to comment on such regulations, and the regulations are subject to government approval; (10) at the time of GAO's review, CPC used regulations to set postage rates for basic domestic and international single-piece letters and some other categories of mail; (11) CPC sets postage rates for other mail services by agreement, without issuing regulations or obtaining government approval; (12) under CPC policy, the nonregulated rates must be approved by the CPC Board of Directors or others within CPC, depending on the particular mail service involved; (13) since reform, several key events have affected CPC's business practices; (14) for example, CPC's customers raised concerns, and legal challenges were made, regarding CPC's closure of rural post offices and its conversion of others to private ownership; (15) additionally, the Canadian government has made several reviews of CPC, some of which have resulted in recommendations for additional government oversight of CPC; and (16) at the time of GAO's review, the Minister Responsible for Canada Post was still considering most of the recommendations resulting from the 1995-96 review and had taken action on two of the recommendations, including continuing the moratorium on post office closings and discontinuing delivery of certain advertising mail.

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