Budget 2014 is rated a fizzle by telecom analysts who cast the agenda-setting document as a rehash of old news releases and long-promised reforms. Cabinet again pledged to cap wholesale roaming fees, and again suggested amendments to penalize companies that violate the Wireless Code: ‘They said it before’.
Cabinet is again imposing new curbs on Canada Mortgage and Housing Corporation amid fears of the housing bubble, including an 18% cut in its annual portfolio, and new payment of guarantee fees: “They’re trying to undo previous mistakes in an orderly manner”.
Transport Canada is proposing new safety requirements at railway grade crossings. Neither the Railway Association nor Federation of Canadian Municipalities would comment on the regulations, aimed at reducing the 130 casualties a year at train crossings nationwide.
The Government of Canada vows it will attempt to regulate bitcoin, the rule-free pseudo currency, under the guise of curbs on money laundering. Online casinos will also fall under the Proceeds Of Crime & Terrorist Financing Act.
Cabinet promises to balance its budget for the first time in seven years in 2015 on higher tax revenues, including billions in surplus Employment Insurance premiums and a $685 million-a year increase in tobacco levies: “One would always hope one is setting one’s self up for the next election”.
Finance Canada proposes to abolish “discrimination” in cross-border retail pricing amid warnings the initiative may be pointless and unenforceable. The department said it will introduce a bill in the Commons compelling retailers to account for differences in costs of identical goods in Canada and the U.S. A Senate study earlier concluded Finance Canada’s own tariffs were often to blame: “We have to take a very, very close look at this”.
Cabinet is being pressed to release confidential Canada Post files detailing a “win-win” management plan to launch the nation’s largest banking network. MPs demanded the release of more than 700 pages of censored files documenting a postal bank plan that was abruptly cancelled: “What is their motive?”
Taxpayers will not support any new CBC subsidy to offset lost hockey revenues, says an influential member of a Senate panel reviewing the public broadcaster’s mandate. CBC friends have appealed for more aid after losing $120 million in annual hockey revenue to Rogers Inc.: “Canadians definitely do not want that”.
The Senate is weighing a private Liberal bill to undo cabinet powers to borrow money without consent of Parliament. The measure would repeal obscure changes adopted in 2007: “This goes back to the fundamentals of responsible government”.
Canadian food processors are under “considerable pressure” from foreign competition but can thrive despite plant closures, cautions a leading analyst. The forecast at a farm economics conference follows the recent announced shutdown of factories by two famous firms: “It is changing”.
Consumers are watching for price cuts on ebooks after anti-trust investigators at the Competition Bureau persuaded four publishers to comply with fair trade practices: “Publishers shouldn’t be able to get into a room and decide what prices will have to be”.
Secret Canada Post files obtained by Blacklock’s show executives rated postal banking a “win-win” before cabinet apparently killed the scheme in favour of drastic rate hikes and service cuts this winter.
Confidential documents indicate managers spent years on research, polling and focus group study that concluded Canada Post could profitably launch the largest banking network in the country.
“This would be a win-win strategy”, read one management report Banking: A Proven Diversification Strategy. Executives poured over profit margins at domestic banks and foreign post offices, even drafting a “vision for Canada Post financial services”. Instead the Crown agency opted for 35% rate hikes this year and elimination of all home mail delivery nationwide.
“It is encouraging to see they spent more than three years looking into it, but the question remains – why didn’t they proceed?” said George Floresco, of the Canadian Union of Postal Workers national executive. “I suspect somewhere between Canada Post and Parliament Hill a phone call was made. It appears the government stepped in.”
The Crown corporation publicly denied any interest in offering insurance, savings deposits and consumer chequing accounts. “It is not our core business,” spokesperson Jon Hamilton said earlier; “Canadians have many options to serve their banking needs. It would require a huge investment to serve a niche market.”
However the confidential records show Canada Post quietly assembled a massive file on postal banking and concluded the venture was profitable. Blacklock’s obtained the records from the corporation’s general counsel through Access to Information. Of 811 pages a total 701 were censored. The files are dated between 2009 and 2013. “The implication is they were taking this very seriously,” Floresco said. “To spend years looking at this issue reflects an in-depth analysis.”
Canada Post’s chief financial officer Wayne Cheeseman did not comment. Records show Cheeseman received reports on retail banking as recently as last October 22, just seven weeks before the post office abruptly announced its winter austerity plan.
“I am shocked,” Floresco said. “They told us nothing about this. We had no idea they were doing this kind of intensive study. We pressed Canada Post on this issue and were told that private banks were already looking after the market.”
Records show the corporation’s CEO and directors had the Canada Post Research Group conduct polls and focus groups on “reaction to Canada Post offering financial services”, according to a 2010 report. The corporation operated Postal Savings Banks for a century till 1968 when management disbanded the system. Canada Post currently has 6519 offices nationwide – a bigger network than the Royal Bank’s 4214 automated banking machines, the largest of any financial institution in Canada. “Some posts including La Poste (France) and New Zealand Post have effectively and successfully created their own banks,” management noted.
Data concluded banking was a proven money-maker, accounting for 13 percent of profits for the U.K. post office; 25 percent for Australian post; 30 percent for France’s La Poste; 54 percent in Switzerland; 71 percent at New Zealand Post Group’s Kiwi Bank; and 78 percent of profits for Italy’s Banco Posta which “was not able to obtain a banking license due to heavy lobbying by existing Italian financial institutions”, but since 1999 has offered government-backed savings accounts at a commission: “This arrangement has proven to be successful for them as banking and insurance represent close to half of revenues.”
Documents indicate Canada Post also examined profits of domestic banks, including smaller on-line institutions like ING Bank of Canada, and even researched Bank Act regulations and minimum capital requirements.
“Virtual banks such as ING have no physical branch network and rely on phone and web access, along with competitive service offerings,” read on 2011 report to Canada Post directors, Financial Services Opportunity. “Hybrid banks (‘clicks and mortar’) emphasize virtual access while leveraging physical retail market position and reach to attract customers.”
The Crown corporation noted ING saw a 33% profit margin on annual revenues of $543 million, with lower margins reported by PC Financial Inc. and Canadian Tire Bank. Profits in Canadian banking averaged 20.5 percent a year, research concluded.
The documents identified no obvious risk to banking, instead urging Canada Post executives to weigh “the size of the prize”, according to the report Banking: A Proven Diversification Strategy. The research identified a single postal bank that failed to show a profit – Ireland’s AnPost, which collapsed along with the nation’s economy in 2010, when the republic qualified for a $127 billion bailout from the European Union and International Monetary Fund.
By Tom Korski 
Canada’s revenue minister is being sued by three tax theorists who allege the Income Tax Act is unconstitutional. The trio are affiliated with the fast-growing “natural person” movement, whose adherents claim a tax exemption due to Scripture and English common law: “People are tired of being stomped on by the government”.
Railways “have not lived up to their obligation” to improve service despite reforms promised in federal legislation, says the nation’s largest agri-business. An executive with Richardson International of Winnipeg said shippers still face inexplicable delays in rail service: “Nothing has changed”.
The Commissioner of Lobbying is proposing new legislation this year to tighten scrutiny of advocates on Parliament Hill. Karen Shepherd said she will propose at least 11 amendments to the Lobbying Act. It follows a first-ever conviction for illegal lobbying last August: “Most lobbyists want to comply”.
