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
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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.
Topic: POST OFFICE ACT
Subtopic: AMENDMENT TO INCREASE POSTAGE ON LETTERS AFTER APRIL 1, 1954