Can building a bank save Canada Post?
As Canada Post prepares to undergo an in-depth government review, the major unions representing postal workers across the country say the key to the corporation’s future may actually be found in the past.
For over a hundred years, Canadians could waltz into their nearest post office and open a savings account or cash a cheque. Postal banking ended here in 1968, but it is still a viable model in many countries around the world, according to the Canadian Union of Postal Workers (CUPW) and the Canadian Postmasters and Assistants Association (CPAA).
With the new Liberal government preparing to launch a review of the postal service, the unions say the time is right to bring back postal banking for the 21st century.
“The Liberals need to consider what a 21st century post office could be doing for all of us,” said Brenda McAuley, national president of the CPAA.
The unions have joined forces to launch a social media campaign this week in support of the idea, arguing that banking profits could help boost Canada Post’s bottom line. After making a profit in the second quarter of last year, the Crown Corporation reported a loss of $13 million in the third quarter.
Providing banking services in post offices will also improve access for people living in rural communities or on Aboriginal reserves, the unions argue.
WATCH: Union president Mike Palecek says public being ‘misled’ about financial health of Canada Post
According to Mike Palecek, the CUPW’s national president, postal banking could be especially beneficial for low-income Canadians, migrant workers and precarious workers. Anyone without a bank account currently pays hefty remittance and cheque-cashing fees, he said in a prepared statement.
“Postal banks are an alternative to payday lenders, providing basic financial services to the millions of people currently excluded from access to Canada’s big banks.”
According to Dr. Robert Campbell, current president of Mount Allison University and an expert in postal systems, there are several things to consider when it comes to postal banking in Canada.
“There was a reason why it went out of business in the late 1960s, and that was that it wasn’t being used to any great extent,” said Campbell, who chaired the federally appointed committee that reviewed Canada Post’s mandate in 2008.
“The countries in the world which have a history of postal banking, for example in Europe or in Japan, they were countries in which the ordinary citizen did not have as easy access to banks as in North America.”
In addition, Campbell added, the government would likely need to change Canada Post’s mandate and possibly even invest money into the new venture. The banking and postal services would need to remain separate financial entities, he said.
“You can’t have a monopoly provider of mail (service) cross-subsidizing a competitive business. People would be up in arms about that.”
Then there’s the question of the corporation’s ability to launch a banking service while still fulfilling its mandate to reliably deliver the mail. It would need to build up an expertise and hire staff, then train them.
“I would have some concerns that it would be taking its eye off the ball,” Campbell said. “There would have to be an unbelievably compelling business plan.”
No comment from Canada Post
Canada Post has apparently been examining the feasibility of reviving the postal banking model for years. A mountain of documents on the subject was obtained through an access to information request made by Parliamentary news site Blacklock’s Reporter in 2014.
The material was heavily redacted, but Canada Post concluded that it could successfully launch a profitable banking network that would rival those already in place in countries like New Zealand and Japan.
A spokesperson for Canada Post would not comment specifically on postal banking, saying only that “we will work with the government to determine the best way forward given the ongoing challenges faced by the Canadian postal system.”
Testifying before a Parliamentary committee last month, Public Services and Procurement Minister Judy Foote confirmed that the upcoming review of Canada Post by an independent task force will “look at other avenues of business” that could “enable Canada Post to have more revenue to carry out its responsibility to deliver mail.”
Foote said the task force, which was initially supposed to be formed in late 2015, would likely be established within a month.
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