The postage stamp revolt

MICHAEL ROSE November 17 1986

The postage stamp revolt

MICHAEL ROSE November 17 1986

The postage stamp revolt

Michel Côté was finally ready. After nine arduous months of consultation, negotiation and delay, the Conservative cabinet minister responsible for Canada Post Corp. had approved the release of a comprehensive five-year business plan for the embattled Crown corporation. The ambitious document outlined how the post office would eliminate its $184-million operating deficit by March 31, 1988—as ordered by the government—while at the same time improving postal service.

But just hours before Côté’s scheduled statement last week, a revolt by angry Tory MPs forced him to postpone announcing a crucial part of the plan: a twocent increase in the price of a first-class stamp and unspecified increases for other types of mail. Among them was an anticipated 30-per-cent hike in rates for Maclean's,

Saturday Night and other periodicals. Declared Tory backbencher Dan McKenzie: “I can’t see any reason for a rate increase until service has improved.”

Clearly flustered by the sudden turn of events, Côté emerged from a tense threehour caucus meeting and ordered officials to revise hundreds of press kits. Instead of announcing the planned price increases, the new documents said that Côté had referred the contentious issue to a parliamentary committee for further study. Another of the rebellious MPs, William Kempling of Burlington, Ont., called it “a great day for Parliament and a great day for the backbenchers in particular.”

But the government’s failure of nerve was a setback for Canada Post. It stands to forfeit about $12 million for every month the proposed rate increases are delayed—a serious threat to its hopes for solving tough financial and operational problems. Post Office

president Donald Lander, appointed last February after his predecessor, Michael Warren, quit in a dispute with the government over post office policy, was clearly taken off guard by the eleventh-hour political manoeuvrings. The affair also underlined the chronic

problem of political interference in post office management decisions. And it indicated that many Tory backbenchers were not inclined to accede blindly to politically sensitive directives from cabinet, especially after the government’s handling of the CF-18 maintenance contract competition.

Although the delayed rate increases dominated discussion last week, several other elements in the five-year plan could prove equally controversial. Already approved by the government are plans to:

• Limit door-to-door mail delivery.

Although no one now receiving such service will be cut off, new suburban subdivisions will be served by community mailboxes only.

• Consider yearly increases in postal rates, linked to the Consumer Price Index.

• Impose new, more relaxed delivery standards. First-class letters would be delivered locally in two days, between cities in the same province in three days and between major centres across the country in four.

• Eliminate 8,700 positions in the post office’s 62,000-member workforce by 1991.

• Allow more contracting-out of postal services to extend hours and improve service.

According to the plan, the changes would erase the corporation’s deficit in two years. The year after that, it would turn a $53-million profit. However, the corporation will also seek a special injection of government funds—$103 million this year and $161 million in 1987-1988—to cover the cost of new equipment and vehicles needed to achieve its goals. The high-cost make-over was necessary, Lander said last week, to “restore our credibility and make Canada Post an organization we can all be proud of.”

Côté had originally expected to table the new plan by April. The deadline was subsequently extended, partly because of uncertainty about how Parliament would establish a new regulatory authority to approve rate increases. Aides to Côté were also dissatisfied with a proposed advertising campaign to sell the new plan to Canadians. Officials close to Côté denied reports that he had simply resisted making a politically risky decision, as he reportedly did with controversial pharmaceutical legislation last spring, while serving as Consumer and Corporate Affairs minister. The plan was ultimately approved by cabinet on Oct. 17, after final negotiations with Canada Post.

According to insiders, most Tory MPs were willing to accept Côté’s proposals, including the contentious community mail boxes. But many were adamant that they could not justify a rate increase to their constituents. Côté had attempted to avert backbench grumbling by consulting a caucus committee before the corporate plan was drafted. However, aides to the minister acknowledged that those meetings did not review the rate increases. As a result, when Côté rose in the Railway Committee Room of the Centre Block last Wednesday to alert caucus colleagues to the imminent announcement, he was stunned by the angry response. Acknowledged one senior government official: “We knew caucus would be the toughest hurdle, but we didn’t expect them to be so obstinate.” After the meeting, Côté huddled in the House of Commons lobby with Deputy Prime Minister Don Mazankowski and senior officials from the Prime Minister’s Office for nearly an hour before finally reading a formal statement to Parliament. Lander, meanwhile, received a phone call shortly before he was to leave for the National Press Building on Wellington Street informing him that there had been a sudden change in plans. However, in an interview with Maclean’s, Côté said he was confident that the committee would finish its review by Christmas and approve a rate increase. New stamps would then be issued sometime in March, after the 60-day notice period required by law. Even if the committee advised against raising rates, Côté said later, the government would not be bound by the recommendation. Said the minister: “We feel there is a need for an increase. There are not too many alternatives.”

By week’s end, the Canada Post plan was under attack from all quarters. The post office’s powerful unions charged that the proposals would reduce service to the public and threaten the job security of employees. In a rare joint statement, the unions vowed to fight the changes “at the bargaining table” or to “make this a very hot issue in time for the next election.” Meanwhile, opposition MPs predicted that Canadians would not accept the decision to limit home delivery to existing routes, even though about half the country now gets door-to-door delivery by letter carriers. Said Liberal MP Alfonso Gagliano: “The government has just created two classes of citizens—one gets home delivery and the other has to brave our Canadian weather to fetch the mail.”

In response, Côté noted that Canadians had an opportunity to state opinions about post office reform when a special private-sector committee toured the country last year. Many of its 43 recommendations were included in the post office plan. But the document failed to grapple with one major problem cited by the committee—interference by politicians. The committee’s solution: a strengthened Canada Post board of directors and a thirdparty regulatory agency that could not be overruled by cabinet. Côté insisted last week that once the new post office plan was in place, the Crown coporation would operate free of political interference, much as Air Canada does now. But as last week’s events illustrated, the line separating politics and the post office is often difficult to discern.

— MICHAEL ROSE in Ottawa