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”.
The Supreme Court has rejected a claim of privacy by a Canada Revenue employee who wanted to prevent her union from calling the house. Justices in a 5-2 ruling said the auditor was not entitled to withhold contact information while enjoying union benefits: “It’s an important decision”.
VIA Rail must spend the $10 million required to save a New Brunswick track and assure the future of its Atlantic passenger service, say Opposition MPs. However the Crown railway warned it has no budget to buy the line: “John A. Macdonald’s national dream of passenger train service from coast to coast will be over”.
Veteran Affairs
is closing 8 offices.
On the positive note,
WWI is commemorated
in an extraordinary display
of a majestic, illuminated sculpture
made of 100 blocks of ice
right here at Confederation Park,
the most prestigious spot
for winter art
in the National Capital.
Bring your camera, family and friends;
it’s a must-see centrepiece
of Ottawa’s 2014
Winterlude.
(Editor’s note: poet Shai Ben-Shalom, an Israeli-born biologist, examines current events in the Blacklock’s tradition each and every Sunday).
The Competition Bureau is clearing the way for a key merger in hockey retailing. The agency last night ruled a Canadian Tire takeover of a major rival does not violate anti-trust laws, though it leaves the retailer in control of a thousand stores.
Airline passengers are not getting the “security” they’ve paid for at Canadian airports through a security surcharge that’s become a federal money-maker, say union executives. Profits from the fees are to increase ten-fold by next year: “This is a tax on the flying public”.
Cabinet has misrepresented the number of sick days federal employees take, according to Parliament’s Budget Office. Authorities dismissed claims a typical government worker takes 18.26 paid sick days annually, noting the actual number is far lower: “It’s really unfortunate”.
A bill to extend tax credits to tradespeople who move for work may become law in time though MPs killed it by a 149 to 126 vote, says its New Democrat sponsor. An all-party Commons committee had endorsed the plan to ease local labour shortages: “This is a mom and apple pie initiative”.
Dairy farmers and processors warn they face a “giant wave” of subsidized imports under a Canada-E.U. trade pact. European cheese makers stand to gain thousands of tonnes of new tariff-free sales: “We could see a giant wave of cheese coming across the water into our market”.
9 in 10 government scientists caution federal cuts have gone too far, according to a pre-budget survey by the Professional Institute of the Public Service. Pollsters questioned scientists in fisheries, agriculture and the Canadian Space Agency: “I can relate to what these scientists are saying”.
