From the Fraser Institute

By Jake Fuss and Alex Whalen

In the latest chapter of a seemingly never-ending saga, Canada Post workers are on strike again for the second time in less than a year, after the federal government allowed the Crown corporation to close some rural offices and end door-to-door deliveries. These postal strikes are highly disruptive given Canada Post’s near monopoly on letter mail across the country. It’s well past time to privatize the organization.

From 2018 to the mid-point of 2025, Canada Post has lost more than $5.0 billion, and it ran a shortfall of $407 million in the latest quarter alone. Earlier this year, the federal government loaned Canada Post $1.034 billion—a substantial sum of taxpayer money—to help keep the organization afloat.

As a Crown corporation, Canada Post operates at the behest of the federal government and faces little competition in the postal market. Canadians have nowhere to turn if they’re unhappy with service quality, prices or delivery times, particularly when it comes to “snail mail.”

Consequently, given its near-monopoly over the postal market, Canada Post has few incentives to keep costs down or become profitable because the government (i.e. taxpayers) is there to bail it out. The lack of competition also means Canada Post lacks incentives to innovate and improve service quality for customers, and the near-monopoly prohibits other potential service providers from entering the letter-delivery market including in remote areas. It’s clearly a failing business that’s unresponsive to customer needs, lacks creativity and continuously fails to generate profit.

But there’s good news. Companies such as Amazon, UPS, FedEx and others deliver more than two-thirds of parcels in the country. They compete for individuals and businesses on price, service quality and delivery time. There’s simply no justification for allowing Canada Post to monopolize any segment of the market. The government should privatize Canada Post and end its near-monopoly status on letter mail.

What would happen if Ottawa privatized Canada Post?

Well, peer countries including the Netherlands, Austria and Germany privatized their postal services two decades ago. Prices for consumers (adjusted for inflation) fell by 11 per cent in Austria, 15 per cent in the Netherlands and 17 per cent in Germany.

Denmark has taken it a step further and plans to end letter deliveries altogether. The country has seen a steep 90 per cent drop in letter volumes since 2000 due to the rise of global e-commerce and online shopping. In other words, the Danes are adapting to the times rather than continuing to operate an archaic business model.

In light of the latest attempt by the Canadian Union of Postal Workers to shakedown Canadian taxpayers, it’s become crystal clear that Canada Post should leave the stone age and step into the twenty-first century. A privately owned and operated Canada Post could follow in the footsteps of its European counterparts. But the status quo will only lead to further financial ruin, and Canadians will be stuck with the bill.

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Alex Whalen

Director, Atlantic Canada Prosperity, Fraser Institute

From the Fraser Institute

By Jake Fuss and Grady Munro

Rather than directly spend money on critical infrastructure such as roads, bridges, ports or even electricity grids—things that traditionally are considered capital investments—the government plans to spend money on subsidies and tax breaks to corporations (i.e. corporate welfare) under the umbrella of “capital investment”

The Carney government’s long-awaited first budget is almost here—expected Nov. 4—but Canadians may not recognize what they get. Early on, the new government promised a new approach to spending. Thanks to a decade of record-breaking spending under Justin Trudeau, the federal deficit sits at a projected $48.3 billion while total debt has eclipsed $2.1 trillion. But the Carney government’s plan announced this week appears to rely on accounting maneuvers rather than any substantive spending reductions.

According to the latest details released by the government, the Carney government will separate spending into two categories: “operating spending” and “capital investment.” Within this framework, the government plans to balance the “operating budget” within three years.

But of course, if the government eventually balances the operating budget, that doesn’t mean it will stop borrowing money to pay for“capital investment”—a new category of spending the government can define and expand whenever it deems necessary.

Currently, according to the government, capital investment will include any spending or tax expenditures (e.g. tax credits and deductions) that “contribute to capital formation”—the creation of assets (such as machinery or equipment) that improve the ability of workers to produce goods and services.

In other words, rather than directly spend money on critical infrastructure such as roads, bridges, ports or even electricity grids—things that traditionally are considered capital investments—the government plans to spend money on subsidies and tax breaks to corporations (i.e. corporate welfare) under the umbrella of “capital investment,” so long as this spending will somehow “encourage” capital formation. But clearly, corporate welfare doesn’t belong in the same category as the expansion of a critical port, for example, and the government shouldn’t pretend that it does.

Put simply, because the term “capital investment” is so broad and malleable, the government can seemingly use it whenever it wants. For example, to meet NATO’s spending target of 2 per cent of GDP, a key point of contention in Carney’s negotiations with President Trump, the Carney government could (inaccurately) categorize some defence spending as capital spending. And in fact, the Parliamentary Budgetary Officer—Ottawa’s fiscal watchdog—views the Carney government’s definition as “overly expansive” and suggests the inclusion of corporate tax breaks and subsidies will “overstate” the government’s actual contribution to the creation of capital.

This approach by the Carney government will not help Canadians understand the true state of federal finances. While Finance Minister François-Philippe Champagne recently said that the “deficit and the debt will be recorded in the same manner as in previous budgets,” on budget day and beyond the government will undoubtedly focus on the operating budget when communicating to Canadians. So, the government will only tell part of the story.

After years of fiscal mismanagement with large increases in spending and debt under the Trudeau government, Canadians need a government willing to make the tough decisions necessary to get federal finances back in shape. But the Carney government appears poised to shirk accountability and use tricks to cloud the true state of federal finances.

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Grady Munro

Policy Analyst, Fraser Institute