William McLean HAMILTON

HAMILTON, The Hon. William McLean, P.C., O.C.

Personal Data

Progressive Conservative
Notre-Dame-de-Grâce (Quebec)
Birth Date
February 23, 1919
Deceased Date
June 7, 1989
business executive

Parliamentary Career

August 10, 1953 - April 12, 1957
  Notre-Dame-de-Grâce (Quebec)
June 10, 1957 - February 1, 1958
  Notre-Dame-de-Grâce (Quebec)
  • Postmaster General (June 21, 1957 - July 12, 1962)
March 31, 1958 - April 19, 1962
  Notre-Dame-de-Grâce (Quebec)
  • Postmaster General (June 21, 1957 - July 12, 1962)

Most Recent Speeches (Page 329 of 331)

January 15, 1954

Mr. Hamilton:

Turning now to the report, and the section regarding the financial and statistical controls, we find that it says:

It has been recognized in the department for some time that there is a lack of information on which to base policy decisions and control activities. The only existing data which can be used to compare the operations of two post offices is the dollar revenue received by the post offices. This is not an adequate measure of the volume of work performed by each.

The report continues with other criticisms along the same line, which I shall not set out in the record. I have no doubt that later on the Postmaster General will tell us about all the things he has done to implement the report and what he is going to do later on. He will tell us what a bright picture there will be. I would like to put on the record something regarding past history and what might have been done by a particular division. The report says:

A cost ascertainment division was established to devise a practical method whereby the cost of handling various types of mail could be established or estimated.

We know that the cost ascertainment division was established in 1946. Then quoting again from the report:

The division has made some progress and each year produces a statistical report in which the cost of the various postal services is estimated. During recent months-

And remember that is six years after.

-a few of the large post offices have been asked to estimate their expenditures in advance and submit monthly reports comparing their actual expenditures with these estimates.

And so, six years after we established a division to do something, the cost ascertainment division, they are still beginning to go into action. This is one of the reasons 1 hesitate to put any confidence in any statement to the effect that we are going to rush into action on all the recommendations in this report, or any statement that they have been already implemented or that they are going to be implemented very shortly.

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January 15, 1954

Mr. Hamilton:

I shall resume this talk, after the short speech that has been given by the minister. I want to thank him, because I was getting close to my 40 minute limit. I have another ten minutes. I think I shall start all over again now.

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January 15, 1954

Mr. Hamilton:

In the annual report of the Postmaster General for last year we find a sentence to the effect that the department has received assistance from the firm of J. D. Woods, Limited, management consultants. This was the report to which I referred yesterday in this house, saying that we had not seen it. The minister was kind enough to say that he would make it available to me for whatever use I wanted to make of it.

I want to thank him for doing so. I am sorry he could not lend me a copy of the report, because I did find it a little difficult working on the corner of his secretary's desk throughout this morning and studying the report while she dictated to a succession of three of her secretaries. Apparently there is no shortage of staff in the hierarchy of the Post Office Department. Perhaps that is the reason it just seemed to the minister yesterday that he had 50,000 people instead of the

44,000 he actually has.

Before we examine the statements made in this report, I think two general points should be made. First of all the report was commissioned by the department itself, which

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paid many thousands of dollars for it. I do not know how much. Perhaps the minister might tell us. From having seen other jobs of this kind done, I would imagine it cost between $10,000 and $15,000 for the complete job. It is quite obvious, therefore, that the department is to a certain extent, as in all these cases, in a position to suggest to the group doing the job the nature of the treatment that should be undertaken, and perhaps in a certain way how their remarks might be phrased.

I think this is particularly important, because as I understand it the government has a number of jobs of this kind which are done from time to time, and it is quite obvious that any firm would want to retain this connection. When the report is critical, it is no defence to say you will take measures to correct this situation unless the criticism contained in this report is very limited. Throughout the whole of this report we find generalized criticism of the department which indicates a state of affairs that can only be solved by a general housecleaning. There has been no indication in the department's annual report or in anything that has been said in this house that there is going to be any general housecleaning of the Post Office Department.

We must remember also that in its own report for this year the Post Office Department has said that it has for a number of years been devoting a great deal of time and effort to management and organizational problems.

If the department has been doing that for a great many years, and a report is written concerning their operations at the end of 1952, we would logically expect to find the department in fairly good shape. On the other hand, if after all this an independent organization paid by the government to study a government operation is still critical of that operation, then surely we are correct in assuming there is something wrong with that department. The department has demonstrated its inability to correct the situation.

We come now to the report itself. It opens with a glowing sentence praising the Post Office Department. As I have already said, that is what we would logically expect to find. After all, the government paid for it. The opening sentence says that the firm has been impressed by the over-all efficiency of the department, the basic soundness of its administration and organization. That is almost standard in any reports where companies are involved, as any of you who have seen these reports know. As we have said, the government is paying for it. This is very

much the same sort of thing as the Dale Carnegie principle which says that you say something nice before you criticize. It is along the lines of the standard sales technique which is to the effect that everything you say is fine, but-and then you give the fellow the truth.

We must not be misled, therefore, by a few statements-and there are a few-in the report which commend the department. I leave those for the minister to bring up later. The basic fact is the report recommends a complete and sweeping reorganization of this department, implying that it is poorly organized, poorly run, inefficient in many cases, and that savings of hundreds of thousands a year could be made in one operation in one city.

It is said that previous recommendations by the civil service commission for increased efficiency have not been followed; that physical facilities presently available for the receipt, storage and dispatch of postage stamps and unemployment insurance stamps are inadequate, both from the viewpoint of security and material handling. Later on I am going to bolster all this with specific quotations from the report.

The report makes over 75 major recommendations of one kind or another. To my mind that is a clear indication of the sorry state of the department now. The recommendations in that report, and I am not going to list them here, range from radical reorganization of lines of authority, decentralization of much activity, and complete changes in the personnel operation, to the establishment of new divisions, increases in the special delivery rates and improvement in the service and reorganization of the tender procedure. The report continues by suggesting such things as the introduction of a system ensuring direct review of services provided for the public so that the complaints and requests of the public may be anticipated.

If 75 sweeping changes of this nature can be logically recommended by this organization, then something is certainly wrong within the department.

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January 15, 1954

Mr. Hamilton:

I thank you, sir, for that. These are notes. I presume I can start over again and have another 40 minutes because of these interruptions.

Now let us turn to an examination of some, not all, of the specific charges made in this report. Here is what the report says regarding planning:

It is apparent that the number of clerical staff presently available for this type of work is completely inadequate to deal with the problems being encountered throughout the department.

That idea is bolstered again in another section of the report. We shall now deal with the section having to do with the present method of operation. It says:

Many of the problems raised by the postmasters . . . are referred to the operations branch at headquarters for decision. This system requires the staff at headquarters to deal with a multitude of individual problems . . . The staff at headquarters operate under continuous pressure and there are many delays in dealing with comparatively minor matters. The staff are so occupied in this routine that they are unable to develop and apply policy decisions which would eliminate many individual requests.

If I may say so, it is necessary that I put this on the record because the report is not available to us. I have had the opportunity of studying it, and this is the only way I can put it on the record so the people of Canada can see what is happening in the Post Office Department. In giving these quotations I am abbreviating somewhat but retaining the nature of the quotation and the words used in the report.

With regard to the operations branch the report says:

The work of the operations branch has over the years increased to the point where the staff at all levels are overloaded with a multitude of routine problems and correspondence. No one has had the time to develop policies which can be applied on an over-all basis.

Is it any wonder, when we see these things unfolding before us, that the Post Office Department finds it necessary to come and ask for an increase in the postage rates? Is it any wonder they should do that with this type of internal organization?

Turning to the buildings which are used by the post office we find the report saying:

It is essential that detailed consideration be given to new construction in order that the most efficient operating methods be incorporated in the design.

Quite properly, the postal superintendent in charge of the buildings division has concentrated on this phase of his activities. All the staff in the division have been so engaged. They have not had time to seek out and introduce operating economies throughout the existing post offices. Our survey has disclosed that there is room for substantial savings through better layout, equipment and control.

The post office needs information; it needs controls. Here is one of the things the report has to say regarding controls:

The branch is operating under a severe handicap as there are no standards established to measure the relative efficiency of a given method of operation. The lack of such standards is particularly

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felt when requests are received for additions to staff or accommodation. The only relative comparison of the volume of work in various post offices is the revenue received by each for the services it renders to the public. It is recognized by the department that this is not an adequate yardstick due to the varying conditions under which post offices operate. The lack of such a standard also makes it difficult to appraise the benefits which might be obtained from improvements in methods and equipment.

We have here another indication why the department is operating largely in the dark, yet it comes to us asking for an increase in rates. We know now, on the basis of the information which is going on the record, that really this department knows not whereof it speaks.

Another section of the report deals with the mechanical engineering division, which is a new department suggested by this report, and I quote:

A mechanical engineering division should make a detailed examination of the equipment and layout presently in use in post offices. This study will disclose great differences in the equipment. In some instances, equipment installed many years ago was continued in use although more efficient equipment is now available. No attempt has been made to standardize on the most efficient equipment.

The report goes on:

There is a need for a reappraisal of the services being provided at various centres across the country. The department should be continually examining the nature of services provided and prepared to make alterations as required to keep pace with changing conditions.

There is very clearly a suggestion there that the department is not doing that; that it is static; that it is not keeping abreast of what is going on in the world.

We now come to another section of the report, regarding a methods and procedures division. The report says:

This division would be responsible for preparing and amending operating manuals. This is presently the responsibility of the services, methods and examinations division. The staff available for this work has proved inadequate and the existing manuals were, in many cases, issued years ago and are now in a large extent obsolete.

The production of up-to-date operating manuals should more than repay the expenditure involved in staff salaries required to prepare them. At the present time there are numerous errors occurring throughout the service and the correction of each one requires the expenditure of time and labour.

We now come to the question of workshops which the department is operating. I never knew that the post office operated workshops. This is what the report says:

At headquarters in Ottawa and a number of the large centres across the country workshops under the supervision of local plant engineers have been established . . .

Then comes an interesting point, because we find that these workshops have been

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greatly enlarged so that they are doing something else. Here is the quotation from the report:

It was noted during our survey that a number of these workshops have extended their activities to the manufacture of equipment such as cupboards, wastepaper containers, binneys, and skids, and to the repair of typewriters and other office equipment.

The Post Office Department is in the office equipment business. The report goes on:

These workshops were not established for this purpose and it is questionable if this type of work is economical.

It is suggested that a detailed study of the actual staff requirements to carry out the essential repair work be made and the staff be reduced to a minimum required to perform these duties.

I should now like to give hon. members an item in the report which vjjll capture the imagination of Canadians across this country more than anything else in it. After all, what I have shown so far is fundamental; terribly important, but it is fundamental; it is the organization and operation of the department. Here are three ideas for this committee which show clearly where the department is not taking advantage of current operating methods and the information available to it in order to save the taxpayers' money. Item 1 has to do with floor space and reads as follows:

Floor space,-a redesign of a letter-sorting rack in the forward letter section of the Toronto post office, and improved layout of these racks would result in a 45 per cent saving in the floor space used for this purpose. The changes would not have any significant effect on the labour cost of the operation as it is presently performed.

Item 2 is as follows:

Equipment design. The use of conveyor belts and changes in equipment would allow two operations to be combined.

I understand that this refers to Toronto. Hon. members understand that I have not the report immediately in front of me. The minister has it. There are minor matters which I have no doubt he will correct me on, but there are no major ones.

I am giving just a few of the quotations from the report, which goes on to say that a change in the equipment used would allow these operations to be combined.

While this plan will require further development there is an indicated annual saving in the forward letter section of the Toronto post office alone of approximately $200,000 per annum.

This is referring only to Toronto, and it states it will require further development; but there is indicated an annual saving in the forward letter section of the Toronto post office alone of approximately $200,000 per annum. Let us make it quite clear that this $200,000 saving is possible after the

necessary equipment and everything else connected with the operation is installed. That would mean the taxpayers of this country would have to pay to the Post Office Department $200,000 a year less. Putting it another way, the expenses of the Post Office Department would be $200,000 a year less.

With regard to the work place lay-out, the report states that a rearrangement of the lay-out equipment used for sorting tables would increase the efficiency of the operation by from 10 to 26 per cent, with resulting reductions in staff.

Let those three examples be impressed in the minds of everyone as an indication of what is happening today in the Post Office Department, and the tremendous savings of hundreds upon hundreds of thousands of dollars that it would be possible to make if this department would smarten up and operate in the most efficient and economical way.

The report then goes on to refer to the special delivery service. It is interesting to note that for reasons best known to himself the minister decided this year to raise the other rates of postage but not the special delivery rates. The report states:

The cost Information available to the department discloses that the special delivery service is operated at a considerable loss. In some centres the postal rate for a special delivery letter is less than the contractor is paid to deliver the letter. The user of the special delivery service is interested in a rapid and assured delivery. It is believed that the majority of users would be prepared to pay considerably more for this service if their requirements were met.

The special delivery is used by only a small number of people, but it is not paying its way; yet in the case of another service the rates are increased. At this point I should like to make just a passing reference to another item in the report which I think is tremendously significant. I am surprised that neither the government nor the Postmaster General has seen fit to make some mention of this matter at some point. There is a suggestion in the report that the post office savings bank, once a most vital part of the economy of this country, has now largely outlived its usefulness, that there is little demand for it. The report recommends categorically that this operation of the Post Office Department be abolished, and it points out that a saving of $377,000 could be made in that one particular instance.

I am not committing myself, nor do I intend to get into a debate on the question of the abolition of the post office savings bank, but here is a potential saving of

$377,000 mentioned in this report of which we knew nothing. No one outside the confines of the minister's office, as far as I can find out, knew of this until last night when for reasons which I should like to think were good the minister made the report available to me.

With regard to the transportation and carriage of mail the report says:

Little effort has been made to appraise the whole transportation problem and to develop a rational plan or policy to govern future operations and methods.

The report continues with a discussion of subsidies as an important factor in the operation of the Post Office Department. It states:

The need for a subsidy should, however, become less as an area grows and the volume of normal traffic increases. In the past in negotiating contracts no effort has been made to set out the amount that has been paid as subsidy as opposed to what might be described as the normal cost of operation.

And again:

The subsidy may therefore be perpetuated long after the justification for it has ceased to exist.

Then with regard to the railway mail service division the report states:

At the present time there is no one senior officer at headquarters responsible for the over-all direction of the railway mail service.

There is much more in the report. Then another quotation:

A limited survey of the conditions in Toronto discloses that the planning of this pick-up and delivery service has not been given the consideration which it deserves.

I come now to a reference to how they handle their stamps, which represent money. The report states:

The postage supply section of the postage stamp division is responsible primarily for the receipt, storage and dispatch of postage and unemployment insurance stamps to postal depots and government agencies. The physical facilities presently available for this purpose are inadequate both from the viewpoint of security and material handling. Many improvements in procedure could also be made.

Then follows an important matter which I believe others of my colleagues will take up and comment on later. The report goes on to say:

We have reviewed a report of the civil service commission. A comprehensive analysis was made in 1950 of the method of keeping records and issuing stock. It is suggested that this report be reviewed and the suggestions put into practice.

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January 14, 1954

Mr. Hamilton:

Mr. Chairman, listening to

the explanations just given by the minister this afternoon I could not help going back to a remark made by a colleague of mine who said that the minister was such a charming man that the explanations he gave always convinced him that he was right until he could get away to think about them, at which time he came back to his original opinion.

This is an important matter we are dealing with. Our whole social organization has come to depend to a large degree upon the mail. Business in all its branches, the whole nervous system of the modern state, depends upon the quick transmission of information and ideas. We could not have arrived where we are today if it had not been for a reasonably effective international postal system. But this means that the indirect effect of any change in our postal system, even though it be small, is sometimes quite extensive or almost completely incalculable.

The Post Office Department is our largest civil government department, and this has been so throughout most of our history. The minister seems to feel that there are some

50,000 employees in the department, but I think the figure is just under 44,000. In the light of other things I have seen in this house, I am not surprised at the possibility of there being another 6,000 employees in the Post Office Department which the minister knows nothing about.

Of necessity our postal service must be a government monopoly. I do not think anyone could see anything wrong in that since the logic of the facts demands that that be so. But there is one thing we must remember. We should be as cautious with a government monopoly as with any other kind of monopoly. We must examine its actions very carefully in this house because we can be quite sure that there is no combines investigation legislation to look into the actions of the Post Office Department. I hope to show later on in my remarks this afternoon what can happen when you have two government monopolies working together, one in the field of transporting the mail and the other in the field of charging for the handling of the mail. It makes a very interesting and sorrowful picture from the viewpoint of the taxpayers of Canada.

The history of this department is a proud and interesting one. As you go back you find that the first carriage of letters in Canada occurred shortly after the British capture of Quebec. Interestingly enough, we 83276-71*

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find that at that time a letter posted in Montreal on Monday evening arrived in Quebec on Wednesday morning. From various indications I have seen, we have not made a great deal of progress since, at least on that particular route. However, at that time there was another service which was definitely inferior to anything we have today because it took almost thirty days to get a letter from Quebec to Halifax. I congratulate the Postmaster General on having improved that service.

Even as early as 1800 the subject of post office surpluses was a subject for debate, primarily on the question of whether they arose from one class of mail or another, and since I will be dealing with these surpluses in detail in my remarks it is interesting to note that the history of this contentious subject goes back as far as that.

There is another little item of history of direct interest to us today and that is the fact that the early post offices before confederation were operated under the direction of the Postmaster General in London, and he instructed his deputies in Canada to operate only those routes which were economically profitable. The result was that the various provinces, in order to give what they considered adequate service, were driven to making grants-in-aid so that certain other routes could be operated. It is interesting to note that an authority on the subject, Mr. A. D. Smith, in his book "The Development of Rates of Postage", states, on this question of grants-in-aid:

This development is noteworthy. It has always been found in Canada that for a large part of the country the circumstances are such a postal service adequate to the necessities of the inhabitants cannot be self-supporting, but the legislature has never hesitated to make grants from general taxation in order to provide means of communication.

If the minister has read this book I want to forestall him. I admit immediately it was published just before 1920, but the history of the department, as I shall show in a moment, bears out the statement made by this authority.

The question of the amount of the increase in rates is interesting. Instead of examining it from the viewpoint of the present rate to the proposed rate, let us look at it between 1942 and the date of the proposed rate. In 1942 our local rate was 2 cents for the first ounce. It is now proposed to make it 4 cents-an increase in the past twelve years of 100 per cent on local mail. In 1942 the long distance rate was 3 cents. It is proposed to make it 5 cents, an increase of 665 per cent.

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It seems to me, Mr. Chairman, that this increase far outstrips the increase over that period in the cost of living, and the increase we have seen in almost any other field of endeavour, or the increases which business has seen fit to put into practice. These increases are tremendous.

Even as late as 1951 we had a 100 per cent increase in our third-class mail-the second-class mail situation is hardly susceptible to debate here in so far as rate increases are concerned because of its complexity.

Now, let us turn for a moment and look at the fascinating financial history of the Post Office Department. We find that from 1869 to 1901 the department had a clear record -a deficit every year. From 1902 to 1932 it had twenty-two surpluses totalling $30,970,000, and nine deficits totalling $21,480,000. In other words, in this intermediate period in the second thirty years of its operation it was coming somewhere near breaking even.

From 1934 to 1953, the last twenty years, the department has had eighteen surpluses, totalling $94,658,000 and it has had two tiny deficits totalling $1,495,000. I will have occasion to refer to this later on, but I cannot emphasize this point too much, that the post office has turned from a department which was on a break-even basis-it was offering services to the public of Canada on an even keel-to a department which year after year after year has piled up surpluses and it has amassed money which it is putting into the treasury of Canada.

I also want to put on the record, Mr. Chairman, the figures for the past five years. In 1953 there was a surplus of $6,470,000-I am giving round figures-in 1952 the surplus was $6,649,000; in 1951 somebody made a mistake and there was a deficit of $1,327,000; and in 1950 there was a surplus of $1,889,000; and in 1949 a surplus of $2,976,000.

Let us examine the effect of an increase which happened in the past in the Post Office Department so that we can evaluate the possible effect of this proposed increase.

In 1943 the rate for both local and out-oftown first-class mail was raised to the present rate although other rates remained the same as is proposed under the new procedure. The gross revenue of the department, which had been going up slowly but steadily, and which had increased $3,698,000 the previous year, jumped $13,829,000 the first year of this increase, and the surplus, which had been $4,127,000 the previous year, was $12,586,000 the next year.

If you want to see it even more clearly, the surplus for the five years preceding the rate increase averaged $2,028,000, and for the five years following the rate increase the surplus averaged $10,707,000. There was five times as great a surplus arising out of this tiny one-cent increase in the letter rate.

Now, to get to just one or two other figures on which I will subsequently draw, we have the fascinating case of the carriage of air mail by Trans-Canada Air Lines, the government's private airways. Every month the post office pays the Trans-Canada Air Lines $487,000 for air mail carriage in Canada and the United States. I am dealing only with domestic air mail and not overseas. Just to get the figures on the record, let us see what happens to T.C.A. as a result of these payments. In 1952 T.C.A. received a total revenue of $44,012,000 of which $5,844,000 was for air mail. Their profit was $1,625,000. In other words, if the revenue from the air mail was deducted-I will develop this subsequently to show just how much larger this revenue to T.C.A. is than it should be-T.C.A.'s revenue would consistently show an operating loss, because in the past five years-I do not want to take time to put the figures on the record -the revenue from the carriage of air mail has been from three to five times the amount of profit T.C.A. has made.

For those of us who want to do a job of evaluating the post office system it is difficult to study it adequately because it is not completely operated and accounted for in the way that would be adopted with regard to an ordinary business. For example, certain costs of the department are not charged to them. The most outstanding example is the cost of its buildings. It gets them free from the Department of Public Works. On the other hand, the department is burdened with the perfectly legitimate costs of other departments, to the tune of over $4 million a year through the use of franking. In the third place, when you come to discuss individual types of mail carriage, you find that you cannot differentiate very successfully between first and third-class, air mail, local and longdistance, since stamps of the same denomination or a combination thereof might be used for any type of carriage.

Another factor is that 32 per cent of our long-distance mail is now carried by air, of which 7 per cent is paid for at air-mail rates and 25 per cent is paid for at regular rates but is carried by air. Then, to increase these complications, we have the business of the excise tax, a tax which apparently comes off before an election in one department and in one field and goes on following an election in

another field and in another way. In my short tenure in this house or in the study I have made of the matter, I have never before seen anything which was more closely related than is this business of taking a tax off before an election and putting it back on immediately following an election. I certainly was glad to see the tax come off. I agree that the excise tax should be off cheques. But when, previously, has a minister of the government had the audacity to stand up in the house and say, regarding a measure of the government introduced immediately preceding an election and which had cost the government revenue, that that revenue was going to be recaptured by introducing another tax at the first session of the house following the election? I do not think that has ever been done before in our history. I do not think anybody has ever had the audacity to do it.

Despite the complications, we certainly know that the rate structure of the post office is designed to charge more for one type of letter than for another. The book to which I referred earlier says this:

The penny rate for the ordinary letter, though so moderate, is considerably in excess of the average cost even of long-distance letters. Its maintenance, therefore, depends not on economic, but on general political and financial considerations. The question is, what general considerations shall be allowed to govern the rate? Shall it be fixed on the simple basis of cost and revenue or shall it be fixed at such a level as to yield a surplus revenue?

We can see this in the case of newspaper rates, or the second-class rates, because in those cases the post office has a deficit. I quote here from the evidence of the deputy postmaster general given before a committee of this house last year:

The newspapers, even after an increase was put into effect in 1951 for handling them, still pay next to nothing for the service they get. This handling brings about a deficit of about ?13J million annually.

There is nothing wrong with the fact that there should be a deficit for the handling of newspapers through our post office. It is right that the government of Canada, at the expense of the taxpayers, should do everything possible to see that information is disseminated as widely as possible and is carried from one end of this country to the other. We must keep our people informed. We must distribute these newspapers and magazines because of their cultural interest. We must do it because we have, with public funds, brought into being a great radio and television system which we are subsidizing, and this system is certainly in competition with the newspapers and the magazines. There is every reason in the world why this $13J million should be spent for what it is being

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spent for, but there is absolutely no reason why it should be charged to other users of the post office services. We should not load one class of mail with the costs of another class but we should rather bring out into the open and pay from general government revenues any special costs of this kind in the operation of a department.

Certainly the Post Office Department is trying to stay within its revenues. That fact can be seen very clearly. I refer again to the evidence of the deputy postmaster general when he appeared before that committee on rural routes last year and when he said:

We have followed the policy of trying to stay within revenues. You can never do so exactly. Sometimes we get a profit and sometimes a loss, but by and large the policy is to try and have services paid for by users rather than impose it as a tax through income tax or other devices.

A policy of trying to stay within revenues! Mr. Chairman, if a policy of trying to stay within revenues is one that results, over a twenty-year period, in a total surplus of some $90 million, either the policy is wrong or the interpretation of it is wrong. I do not know which it is, but I certainly know that when you make $90 million over a period of twenty years, and when you make $6 million and sometimes $12 million a year through the operation of your department, you are going far beyond the principle which has been set out by the minister this afternoon and by others of his associates in information such as this which we have set out before us. I admit that the deputy minister is quite right when he says he can never stay within revenues exactly, but I think $90 million is much too far away from being exact.

As to air mail, this resolution proposes to eliminate all air mail postage special rates and to carry all forward letters by air where delivery can be speeded. This is a commendable idea but it is not as significant as it may seem. In the first place a great deal of the mail can be handled more expeditiously by train or by surface transportation than by air. I need only mention all the mail between Montreal and Toronto or within 300 miles of any central point, where it is loaded onto the train at night, is sorted while it is travelling and is delivered more quickly the next day.

We have already noted that almost one-third-32 per cent-of our mail is now going by air and that only 7 per cent of our air mail is actually prepaid as air mail. So do not let us think by any manner of means that this is a useful gesture or one which means a great deal. Let us not think that the Messiah has come down from on high and

Post Office Act

is now taking off the seven cent tax on air mail, something which will benefit every one of the citizens of Canada. It may be presented in such a way but it certainly is not so. In fact, I think that in the light of the things I have set forth it is highly unlikely that any really sound improvement or advantage is going to come from the proposed reduction in the air mail rate. Let us examine the weaknesses of the agreement with Trans-Canada Air Lines. It costs the Post Office Department at the present time approximately $1.20 a ton mile to ship mail by T.C.A. T.C.A. will carry freight at approximately 30 cents a ton mile, so the Post Office Department is paying four times as much for exactly the same type of cargo as commercial business or the man who is shipping freight by air. What does this show us in the over-all operation of this air line? How does the Post Office Department become implicated in it? It becomes implicated in it because in 1952, 59 per cent of the freight and express paid only 36 per cent of the air line's revenue from freight express and mail. Everything else was loaded on the post office.

Not only is this inequitable, not only is it most unfair, not only is this one of the major reasons why the department is in the position it is today, but it is an example of what happens when two nice little government monopolies get together. The government-operated air line needs some revenue at this point so it can make a good showing and not have a loss. Therefore the minister concerned comes along and presumably makes a private deal, certainly not one in the eyes of the public, with the minister responsible for the Post Office Department. They probably spend fifteen or twenty minutes over the thing. They work out their mutual problems, and we end up with the taxpayers being loaded with this burden which is transferred down through the Post Office Department.

As far as I can see, there has been absolutely no public discussion of this agreement, and this is in such marked contrast to what has taken place south of the border that I think it should be brought out into the open. I do not think any of us on this side of the house like these little private government deals by which two departments work out something so that they can put the best face on things as far as the public is concerned and so that they can bail themselves out when they get into difficulty. Here is a book of 400 pages entitled "Air Mail Payment and the Government" which is concerned solely with the practice in the United States. I should like to quote a few words from page 102 as to their rate-making technique with

respect to the charges which are made to the post office for the carrying of mail. The extract reads as follows:

The examiner studied the record of the hearing with a view to making a "proposed report''. Fortunately for the examiners the record was usually short in comparison with the records of long drawn out rate cases in other utilities. The longest record contained 1,975 pages, the shortest about twenty-five, and the average case only about 250.

I would love to know the length of the record by virtue of which the agreement between T.C.A. and the Post Office Department was made and how much examination was given to the facts of the case. I do not think that is the sort of thing that can be brought out publicly and laid before this house. I do not think anyone would dare because I do not see how it is possible for them to defend a case in which post office mail is carried at four times the rate for exactly similar commodities being airlifted for private firms or other organizations.

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