The precarious state of postal subsidies

At the time of writing, both the magazine and community newspaper industries are waiting impatiently for news of proposed increases to Publications Mail rates and their effects on the Publications Assistance Program (PAP) administered by the Department of Canadian Heritage (DCH).

Everyone fears the worst.

With increases to Unaddressed Admail averaging 2.1 per cent next April, and increases to First Class postage pegged at two-thirds of the Consumer Price Index, Canada Post is warning of double-digit increases in Publications Mail rates, possibly in the range of 10-12 per cent.

Adding insult to injury, there will be two increases within nine months. The first increase will be effective April 1, 2002; the second increase, of a similar amount, will be applied nine months later on Jan. 1, 2003 as Canada Post moves to a calendar year increase schedule. On their own, the increases for those using Publications Mail are staggering. More than 40 per cent of magazines distributed in Canada use this service with no subsidy. Those publications face an increase of up to 24 per cent during less than one year. This is on top of increases of 29 per cent experienced during the past three years according to figures developed for members of the Canadian Magazine Publishers Association. The real jolt comes to those publications, including some 400 community newspapers, that receive support under the PAP. Those increases could be in the range of 25 to 40 per cent based on best industry estimates. This is the result of a PAP fund that is fixed at no more than $46.4 million annually. The program is nearly maxed out. Any increase in volumes, or any price increases from Canada Post, will be charged directly to participating publishers.


What’s at fault here? Well, the subsidy program is certainly hobbled by a fixed contribution amount that leaves no room for normal increases in costs and usage.

Department officials are reviewing the program but the outcome is 12-18 months away. In the meantime, with the existing economic climate, a short-term financial fix is highly unlikely. The real culprit, almost everyone agrees, is a postal system that has the nerve to introduce double-digit price increases at a time when the Consumer Price Index hovers at 2.3 per cent and when the North American economy is in a tailspin. Canada Post argues that its margins are lower for this service than for other product lines in offers. It apparently hasn’t produced concrete evidence of this, but CPC officials point to increasing costs for fuel and a senior, well-paid and well-entrenched work force at the top of its pay scale.

Sound familiar? The same refrain can be read daily in the business pages of newspapers. The difference is that privately and publicly held corporations seek to trim costs, while CPC looks for its fix on the revenue side.

Unaddressed Admail, a service facing fierce competition from daily and community newspapers as well as private carrier forces, has been held to a 2.1 per cent increase. Regulations passed by Parliament limit First Class postage to less than the CPI. Publications Mail, however, benefits from a government program (PAP) that delivers over $70 million annually in volume on a total monopoly basis.

Perhaps it is time to introduce a bit of competition into the equation?

Enough grousing. What’s to be done in the short term? CCNA has determined that the only hope is to apply political pressure on Canada Post through the minister most concerned about the fallout from this unconscionable increase. A letter has been sent to the Hon. Sheila Copps, minister for the DCH. The letter urges the minister to make representations to Canada Post and its parent ministry, the Department of Public Works, on behalf of her ministry’s postal subsidy program. The letter argues that double-digit increases now will not only harm the program itself, but will put enormous stress on the many