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Vol. 141, No. 26 — June 30, 2007 Regulations Amending the Letter Mail RegulationsStatutory authority Canada Post Corporation Act Sponsoring agency Canada Post Corporation REGULATORY IMPACT ANALYSIS STATEMENT (This statement is not part of the Regulations.) Description Rate changes These amendments to the Canada Post Corporation (Canada Post) Regulations, effective January 14, 2008, will increase the rates of postage for domestic letter mail items other than the basic domestic letter rate (letter mail items up to 30 g). The proposed rate increases are as follows:
These proposed rate increases represent a weighted average increase of 3.8%. Alternatives The Canada Post Corporation Act requires the Corporation to establish rates of postage that are fair, reasonable and sufficient to defray the costs incurred in the conduct of its operations. While Canada Post takes measures to contain costs to the extent possible, letter mail rate increases remain necessary to offset growing operational costs. Canada Post's exclusive privilege is designed to finance the provision of universal postal service at affordable rates. However, the economic value of the exclusive privilege has declined significantly in recent years. Driven primarily by electronic substitution, such as email and electronic bill presentment and payment, traditional mail volumes per capita are declining in Canada and throughout the world at varying rates. The pervasiveness of the Internet is also having a major impact on mail volumes. By the middle of 2006, 82% of Canadian adults (18+) had access to the Internet from any location, significantly more than the 77% reported the previous year. Furthermore, the decline in transaction mail volumes is hastened by a growing trend toward the consolidation of invoices by large companies whereby two or more operating divisions combine separate billings into one single invoice. The value of the exclusive privilege is also eroding due to changes in the types of mail being sent: 52-cent pieces of transaction mail are being replaced by lower-priced pieces of advertising mail, if they are replaced at all. The financial objectives of the Corporation are not being met solely through rate actions. Substantial increases in productivity in all areas and components of the business are necessary. To that end, Canada Post is embarking on a series of initiatives with several key objectives, including enhanced operational performance, increasing employee engagement, standardizing operating procedures and enhancing information systems. Benefits and costs Canada Post's mandate is to establish and operate a postal service both within Canada and between Canada and places outside Canada at affordable rates. In doing so, Canada Post commits to consistently delivering letter mail within the following delivery standards: two business days within the same metropolitan area/ community; three business days within the same province; and four business days between provinces. An independent professional services firm tests the service performance levels of letter mail in the Canadian postal system. The results of these independent tests reveal that in 2006 Canada Post achieved an on-time service performance score of 96.4%. The proposed rate increases are designed to ensure that the Corporation is able to continue to provide this service while at the same time meet the objective of the Canada Post Corporation Act to be financially self-sustaining and of the Financial Administration Act to be profitable and pay dividends to the shareholder. In doing so, the Corporation is ensuring that the responsibility of sustaining postal services in Canada continues to be borne by the users of the postal system and not taxpayers. The increased revenue associated with this rate action will help defray the increased costs associated with the provision of postal service. For instance, the number of points of delivery that the Corporation must service annually is increasing by approximately 240 000 each year, adding some $20 million to $30 million to the Corporation's annual cost base. Other major areas where costs are increasing significantly are with employee pension and health-related benefits. Given the very nature of its operational activities, Canada Post is also very susceptible to increases in fuel and utility costs. In recent years, the level of investment in both physical and intellectual assets has lagged behind the needs of the Corporation. At the current level, it is insufficient to replace obsolete equipment and does not begin to address the required modernization of the postal system. Indeed, it is estimated that the level of annual capital investment will need to double from the current level of $300 million in order to rejuvenate the company's asset base and capture emerging market opportunities. The current state of the asset base may actually jeopardize Canada Post's ability to remain financially self-sustaining. The proposed rate increases will play an important role in addressing this issue. Even with the new rates, letter mail rates in Canada will continue to compare very favourably with those in other industrialized countries, despite the country's vast geography, low population density, harsh climate and other factors that impact significantly on the costs associated with providing letter mail service. Despite the plethora of alternatives, letter mail continues to offer great value to its users:
It is anticipated that the proposed amendments to the Canada Post Corporation Letter Mail Regulations will not have a serious impact on postal users or market share. These products continue to provide good value for the Corporation's customers. Consultation As required by the Canada Post Corporation Act, these amendments are being published in the Canada Gazette, Part I, thereby initiating a formal 60-day period in which interested persons can make representations to the Minister of Transport, House of Commons, Ottawa, Ontario K1A 0A6. All such representations should cite the Canada Gazette, Part I, and the date of publication of this notice. Compliance and enforcement These Regulations are enforced by Canada Post under the Canada Post Corporation Act. No increase in the cost of enforcement is expected as a result of the proposed changes.
Mrs. Manon Tardif Notice is hereby given, pursuant to subsection 20(1) of the Canada Post Corporation Act, that the Canada Post Corporation, pursuant to subsection 19(1) (see footnote a) of that Act, proposes to make the annexed Regulations Amending the Letter Mail Regulations. Interested persons may make representations with respect to the proposed Regulations within 60 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to the Minister of Transport, House of Commons, Ottawa, Ontario K1A 0A6. CANADA POST CORPORATION REGULATIONS AMENDING THE LETTER MAIL REGULATIONS AMENDMENTS 1. The portion of paragraph 1(1)(b) of the schedule to the Letter Mail Regulations (see footnote 1) in column II is replaced by the following:
2. The portion of subitems 2(1) to (3) of the schedule to the Regulations in column II is replaced by the following:
COMING INTO FORCE 3. These Regulations come into force on January 14, 2008. [26-1-o] S.C. 1992, c. 1, s. 34 SOR/88-430; SOR/2003-382 |
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