A modern regulatory and policy framework for a changing country
As a federal Crown corporation, Canada Post operates under a complex legislative, regulatory and policy framework that governs much of its operations across the country. This includes the Canada Post Corporation Act (enacted in 1981, revised statutes in 1985), which created the postal system as we know it today. Under the Act, Canada Post has a dual mandate to serve all Canadians and operate in a financially self-sustaining manner, based on revenue generated by the sale of products and services, not taxpayer dollars.
Over the last 40 years, successive governments have introduced several reviews, policies and regulations impacting Canada Post that were meant to ensure Canadians were well served by their postal service. However, the mailing and delivery needs of Canadians have changed significantly over the last four decades.
Outdated regulatory and policy framework
Today we operate with legacy regulatory and policy measures that are out of balance with the competitive realities of our industry. Much like our outdated delivery model and collective agreements, these legacy government measures limit our ability to change, compete and meet the evolving needs of Canadians. Together, they are constraining the Corporation, fuelling its financial crisis and making it impossible to find the balance required to meet Canada Post’s dual mandate.
The rapid changes in our current environment have outpaced the regulatory and policy framework, adding to the substantial pressures on our business that we already face from restrictive collective agreements. Rushing to deliver a letter from Nova Scotia to British Columbia, for it to sit in a community mailbox for three days before a customer picks it up, no longer makes sense to Canadians today.
Changes needed to better serve Canadians
Urgent reviews and changes are required to the regulatory and policy framework to protect Canada Post’s long-standing role as a vital national infrastructure for Canadians and Canadian businesses. Canada Post needs greater flexibility to respond quickly and align its services and rate-setting process with the changing needs of the company and country, while operating with modern regulatory checks and balances. This includes flexibility to tailor mail and parcel delivery to Canadians’ current and future expectations, as well as greater autonomy to set regulated stamp prices.
Canadians expect Canada Post and the Government of Canada to work together as stewards of the national postal service. Together, we must ensure the postal system evolves to better reflect what Canadians need, where they live, how they shop and how they use the postal service.
To better serve the current and future needs of Canadians, and meet their expectations in a financially sustainable way, Canada Post requires the following:
- A timely and thorough consultation and review of the Canadian Postal Service Charter. Significant changes are needed to update service standards and delivery frequency to match evolving expectations, and also transition from a proximity-based model for post offices to a modern model based on service and convenience.
- An updated process for calculating and implementing regular letter mail price increases within a shorter timeline, while ensuring proper consultation, government oversight and advance notice for customers.
- Update or replace the moratorium on rural post office closures and conversions with a modern policy framework that continues to protect rural service.
- End the moratorium on community mailbox conversions, which protects a costly, premium service for less than 25 per cent of Canadian addresses in established urban neighbourhoods. More than 70 per cent of addresses already receive delivery to a centralized location.
These reforms, discussed in greater detail below, would reflect the changing needs and mailing habits of Canadians and help put the postal service on a path to financial self-sustainability.
More information on these proposed changes can also be found in Canada Post’s submission to the Industrial Inquiry Commission. The Commission was established by the Minister of Labour to review the collective bargaining dispute between Canada Post and the Canadian Union of Postal Workers (CUPW), as well as the Corporation’s broader financial situation and competitiveness.
Canadian Postal Service Charter (2009)
The Government of Canada established the Canadian Postal Service Charter to lay out its expectations for Canada Post’s service standards and how the Corporation provides postal services to Canadians. A review of the Charter is required by the government every five years. However, it was last done in 2018 and is overdue for review.
The Charter hasn’t changed since it was implemented in 2009 – when letter mail was the Corporation’s primary source of revenue – and has not evolved to keep pace with the changing needs of the country. The Charter reaffirms the government’s commitment for Canada Post to operate in a financially self-sustaining manner while meeting the obligations and expectations set out in earlier directives.
For example, the Charter reinforces:
- Canada’s universal service obligation to serve all 17.6 million addresses and provide affordable postal services;
- The moratorium on rural post office closures and conversions;
- Letter mail to be delivered five days a week;
- Service expectations that Canada Post delivers letter mail:
- within a community within two business days;
- within a province within three business days;
- between provinces within four business days.
- Post office coverage so that:
- 98 per cent of consumers have a postal outlet within 15 kilometres of their home;
- 88 per cent of consumers have a postal outlet within 5 kilometres of their home;
- 78 per cent of consumers have a postal outlet within 2.5 kilometres of their home.
Delivery standards built for a previous era
The Charter sets delivery standards that were built when the country, and the economy, relied on letter mail. A letter from Halifax to Vancouver must be delivered within four business days, which means it must be sent by plane at a higher financial and environmental cost than by ground or rail.
When the Charter was passed in 2009, letter mail had started to decline but there was still enough volume to cover the cost of meeting these requirements. By 2018, this was no longer the case, and the company has reported significant annual losses since. Letter mail remains important, but the effort and cost required to deliver within the service standards no longer align with the expectations of Canadians receiving it.
The Charter also focuses on proximity-based service requirements for post offices, and doesn’t reflect changing demographics and population density based on census data. As a result, Canada Post can’t evolve the footprint and service offerings to align with Canadians’ needs, and where they work and shop – making it difficult to provide equitable service across Canada. The service requirements in the Charter, combined with restrictions from other regulatory and policy measures, mean we cannot ensure Canadians have the access they need to postal services.
A sustainable service tailored to today’s needs
Canada Post believes the Charter should be updated to provide the Corporation with greater flexibility, while ensuring a sustainable service that is tailored to the needs of Canadians today. For example, the Corporation urgently requires changes that would allow it to do the following:
- Align the service standard and frequency to the revised needs of Canadians.
- Offer a base level of service (in terms of standards and frequency) to all Canadians, while providing Canada Post with the flexibility and discretion to outperform service standards or delivery frequency where it is advantageous, such as for parcel products.
- Transport, at its discretion, all products in a manner that Canada Post determines, whether that be by road, rail or air.
- Provide access to essential postal services through retail postal outlets and other solutions that, for example, include kiosks and self-service outlets.
- Provide equitable access to postal services to align with a community’s needs, and redefine service accessibility to focus on Canadians’ ability to access essential postal services, instead of metrics based on population and distance.
- Have autonomy to determine whether corporate-owned post offices are required in certain areas or whether dealer-owned post offices are more appropriate.
Regulated process for letter mail price increases
The Canada Post Corporation Act restricts Canada Post from increasing stamp prices without Governor-in-Council approval. In addition, under the policy framework established by the Government of Canada, the company also cannot increase stamp prices higher than the rate of the consumer price index (CPI) without Cabinet approval.
The mandated process for increasing postage rates is also lengthy and cumbersome. It can take up to nine months from the date Canada Post proposes a price increase to the date it takes effect. For the rate increases that came into effect in early 2025, Canada Post initiated the process in spring 2024. The proposed changes were then published in the Canada Gazette in early September 2024 and received final regulatory approval in late November 2024. The rate increases ultimately took effect on January 13, 2025.
The need for more pricing flexibility
The lack of flexibility in this process prohibits Canada Post from responding quickly and aligning its prices with a changing economic environment. While the CPI has increased, the company has not had enough flexibility to price stamp and letter mail products at rates that cover the cost of delivering the mail. At the same time, our delivery costs have continued to increase due to inflationary pressures and the growing number of addresses served.
While Canada’s stamp prices have not kept pace with the rising cost of providing postal services, they are also underpriced in comparison with many other western postal administrations.
The erosion of revenue from domestic letter mail is further exacerbated by Canada Post’s lack of pricing autonomy. For example, the current regulatory process resulted in postage rates being maintained at 2020 levels through 2023. As a result, stamp prices fell significantly behind the rate of inflation, which had a negative financial impact on the letter mail business and Canada Post overall.
The Corporation urgently needs a new, more flexible process for calculating letter mail price increases and implementing them in a timely manner, while ensuring customers receive proper advance notice to help them plan.
Moratorium on rural post office closures and conversions (1994)
We understand how important our network of post offices is to Canadians across the country, especially in rural and remote regions. However, the moratorium on closing or converting rural post offices has challenged Canada Post’s ability to serve the changing needs of smaller, rural communities and is a root cause of some of the company’s financial challenges.
The moratorium was adopted by the federal government in 1994 and is directly incorporated into the Charter. The moratorium prevents Canada Post from closing – or converting to dealer outlets – more than 3,400 current post offices that were identified as being in rural areas in 1994.
The restriction on converting corporate post offices to dealer outlets remains a financial challenge for the Corporation and can impact service to customers. Many of these traditional post offices are in areas that are no longer rural, and where other dealer options are available nearby. Managed by retail partners such as pharmacies, dealer postal outlets often provide better hours and more convenience for customers. They are also far less costly to operate.
The moratorium also means that Canada Post is only able to close a rural post office in situations outside of the Corporation’s control. This can include the departure of a postmaster or changes to a property, such as a fire or the termination of a lease.
Need to keep pace with a changing Canada
Canada has changed dramatically since the adoption of the moratorium in 1994. In that time, the country’s population has increased from 29 million to more than 41 million people. Many areas that were considered rural in 1994 are now part of cities or developed suburbs. For example, some corporate post offices covered by the rural moratorium are in communities no longer considered rural, such as Abbotsford, British Columbia; Gatineau, Quebec; and Richmond Hill, Ontario.
Today, Canada Post has more than 5,700 post offices across the country. Of those, over 3,100 post offices (55 per cent) are in designated rural areas and slightly more than 2,500 (45 per cent) are in urban areas. The moratorium was enacted to ensure that Canadians living in rural areas had reliable and convenient access to postal services, but it has not been updated to account for more than 30 years of urban sprawl. As a result, Canada Post must maintain corporate post offices in areas that are now clearly urban with more service options nearby, which challenges the company’s ability to invest and maintain services in underserved rural areas.
To keep pace with our country’s changing demographics and the evolving needs of Canadians, Canada Post requires changes to the moratorium on rural post office closures and conversions. The Corporation needs a contemporary policy framework that:
- Ensures rural postal service continues to be protected, while basing service requirements on the most recent demographic and census data to determine what constitutes a rural area.
- Reflects that there are more convenient and cost-effective ways to serve Canadians than traditional corporate post offices. These include dealer post offices, regional community hubs and self-serve options.
Moratorium on conversion to community mailboxes (2015)
Less than a quarter of Canadian addresses currently receive letter mail at their door. For the past 40 years, homes built in new developments have received delivery to a community mailbox. As a result, more than 70 per cent of Canadian addresses now have some form of centralized mail and parcel delivery, such as community mailboxes, apartment lobby lockboxes, group mailboxes or postal boxes.
In 2015, the federal government implemented a moratorium that stopped the conversion of home delivery to community mailboxes, and then enshrined it as policy in 2018. The decision means approximately one in four Canadian addresses, mostly in established urban neighbourhoods, continue to receive letter mail delivery at the door – the most expensive delivery method per address.
It costs 78 per cent more to deliver door to door than to a community mailbox: $279 a year per address, compared to $157. That means almost 40 per cent of the annual cost of serving all Canadian addresses is spent on door-to-door service for less than a quarter of them.
The benefits of community mailboxes
As Canadians increasingly shop online and rely more on parcel delivery and less on letter mail, community mailboxes are a more practical delivery option than they were 10 years ago. For customers, parcels delivered to community mailboxes are more secure and safe from “porch pirates.” Canadians can securely pick up their packages and mail at their convenience.
We also understand that some seniors and other Canadians with functional limitations need viable alternatives to community mailboxes. Canada Post’s delivery accommodation program offers a variety of accommodations to help them access their packages and mail. These include mailbox key turners, sliding mail trays, adjustments to mailbox compartments, Braille markings and others. In some cases, we provide home delivery where it’s difficult for customers to get to their mailbox. The delivery accommodation program now supports Canadians at close to 17,000 addresses, with more added each year.
For Canada Post, delivering to community mailboxes significantly reduces labour costs while improving convenience for customers. We’ve also seen that delivery to community mailboxes improves employee safety compared to door-to-door delivery.
Canadians and the postal service would both be well served by having the government end the moratorium on community mailbox conversions. The current system protects a premium, high-cost service for less than a quarter of Canadian addresses, while adding to the significant financial pressures on Canada Post.