Regulations Amending Certain Regulations Made Under the Canada Post Corporation Act: SOR/2024-67
Canada Gazette, Part II, Volume 158, Number 10
Registration
SOR/2024-67 April 19, 2024
CANADA POST CORPORATION ACT
P.C. 2024-382 April 19, 2024
Whereas, under subsection 20(1) of the Canada Post Corporation Act footnote a, a copy of the proposed Regulations Amending Certain Regulations Made Under the Canada Post Corporation Act, in the annexed form, was published in the Canada Gazette, Part I, on February 10, 2024 and a reasonable opportunity was afforded to interested persons to make representations to the Minister of Public Works and Government Services with respect to the proposed Regulations;
Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Public Works and Government Services, under subsection 19(1)footnote b of the Canada Post Corporation Act footnote a, approves the annexed Regulations Amending Certain Regulations Made Under the Canada Post Corporation Act made on March 14, 2024 by the Canada Post Corporation.
Regulations Amending Certain Regulations Made Under the Canada Post Corporation Act
Special Services and Fees Regulations
| Item | Column II Rate |
|---|---|
| 1(1)(a) | $10.50 |
International Letter-post Items Regulations
| Item | Column II Rate per item ($) |
|---|---|
| 1 (a)(i) |
|
| (ii) |
|
| (b)(i) |
|
| (ii) |
|
Letter Mail Regulations
| Item | Column 2 Rate |
|---|---|
| 1(1)(a) | $1.15 |
| (b) | $0.99 |
| Item | Column 2 Rate |
|---|---|
| 1(2) | $1.40 |
| Item | Column 2 Rate |
|---|---|
| 2(1) | $2.09 |
| (2) | $3.43 |
| (3) | $4.78 |
| (4) | $5.48 |
| (5) | $5.89 |
Coming into Force
5 These Regulations come into force on May 6, 2024.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues
The Canada Post Corporation Act (the Act) requires Canada Post to provide quality postal services to all Canadians — rural and urban, individuals and businesses — in a secure and financially self-sustaining manner. Rates of postage must be fair, reasonable and, together with other revenues, sufficient to pay for Canada Post’s costs of operation. Under the Act, Canada Post has an exclusive privilege on the collection, transmission, and delivery of letters within Canada to meet its service obligations. This universal service obligation is set out in the Canadian Postal Service Charter.
Canada Post’s domestic and international rates for letters are an important source of revenue for the Corporation and are reviewed on a regular basis. The last series of increases took effect on January 13, 2020. Since then, annual growth of inflation has been the highest in over four decades. From 2020 to 2023, the consumer price index increased by 14.8%. In 2022 alone, Canada Post’s core business costs increased by almost $140 million compared to 2021.
While the Corporation has kept letter mail rate increases to a minimum for much of the past decade, the cost of providing postal service to all Canadians has been steadily impacted by inflation. This fact, combined with the fact that each year there are fewer letters to deliver to more addresses, has put considerable financial pressure on Canada Post.
Objective
The objective of the amendments to the Letter Mail Regulations, the International Letter-post Items Regulations and the Special Services and Fees Regulations is to help Canada Post respond to the impacts of inflation while ensuring rates are fair and reasonable.
Description
The price of an individual stamp for a domestic letter weighing 30 g or less will increase to $1.15 (up from $1.07). The rate for a stamp purchased in a booklet, coil or pane will increase to $0.99 (up from $0.92). Rate increases will also occur for other domestic weight steps, and United States and international letter-post items. The fee for domestic registered mail will also increase to $10.50 (up from $9.75).
| Domestic letter mail | Weight | Current rate | May 6, 2024, rate |
|---|---|---|---|
| 1. Single stamp | Up to 30 g | $1.07 | $1.15 |
| In booklets, coils or panes | Up to 30 g | $0.92 | $0.99 |
| 2. Standard letter mail | Over 30 g, up to 50 g | $1.30 | $1.40 |
| 3. Other letter mail |
|
|
|
| Letter-post to the United States |
Weight | Current rate | May 6, 2024, rate |
|---|---|---|---|
| 1. Standard mail |
|
|
|
| 2. Other | Up to 100 g | $3.19 | $3.43 |
| 3. Letter-post |
|
|
|
| International letter-post | Weight | Current rate | May 6, 2024, rate |
|---|---|---|---|
| 1. Standard mail |
|
|
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| 2. Other | Up to 100 g | $6.39 | $6.88 |
| 3. Letter-post |
|
|
|
Regulatory development
Consultation
The Act requires a consultation period through publication of each regulatory proposal in the Canada Gazette. All representations must be sent to the Minister of Public Services and Procurement within 30 days after the prepublication of the proposed Regulations in Part I.
Prepublication in the Canada Gazette, Part I
The amended postal rates were published in the Canada Gazette, Part I, on February 10, 2024, followed by a public consultation period of 30 days. A total of 22 comments were received during the consultation period. No formal comments were received by any businesses, associations, or organizations.
The comments received by private citizens were generally unfavourable to the proposal. Several were concerned about the impact the regulatory amendments will have on certain segments of the population, specifically those in rural and Indigenous communities, seniors, and low-income populations who may rely more on letters as a form of communication.
There were a few comments with questions regarding the numbers included in the regulatory analysis, specifically regarding the average impact on individual Canadian households and small businesses. These calculations are based on the estimated revenue impacts by Canada Post market segments (i.e. domestic lettermail, United States and international lettermail, and domestic registered mail). A detailed calculation methodology has been added to the cost-benefit analysis report, which is available upon request to the contact below.
Finally, other comments received during the consultation period were not directly related to the regulatory amendments, including the quality of service provided by Canada Post and recommendations for products the Corporation should offer.
Following the media release of the proposed rate increases on February 9, 2024, Canada Post actively monitored reactions. While a few media outlets published the story, and with several mentions of the news release (at least 145) on social media, reaction from the public was generally neutral.
While Canada Post recognizes that the rate increases may have a differential cost impact on certain segments of the population, including those living in rural, remote and Indigenous communities, as well as on seniors (individuals aged 65 and over), Canada Post concluded that the increases are necessary to help offset rising costs for services and to help keep pace with inflation. Nevertheless, Canada Post took all reasonable care to minimize the impact on Canada Post users by introducing only modest increases.
Canada Post reviewed the data and methodology used in the cost-benefit analysis and confirmed that the numbers are accurate. Therefore, no changes were made to the analysis in response to the comments.
Modern treaty obligations and Indigenous engagement and consultation
To the best of Canada Post’s knowledge and belief, the Regulations do not identify any potential modern treaty implications.
Instrument choice
Canada Post continuously explores opportunities to generate revenue while ensuring its rates remain fair and reasonable. However, the cost of providing a postal service to all Canadians — including letter mail delivery — has been steadily impacted by inflation. At the same time, the Corporation has kept letter mail rate increases to a minimum for much of the past decade. This, combined with the fact that each year there are fewer letters to deliver to more addresses, has put considerable financial pressure on Canada Post. As a result, letter mail, letter-post to the United States and other international destinations, and domestic registered mail require updating to offset increasing costs. As the rates are established in regulations, any changes to the rates must be made through regulatory amendments. No non-regulatory options were considered.
Regulatory analysis
Benefits and costs
Detailed information is included in a cost-benefit analysis report, which is available upon request to the contact below.
To determine the impact of the rate change, the difference between rates is multiplied by predicted letter volumes. Canada Post uses historical data and a third-party model called the price elasticity econometric model to predict erosion rates for different regulated products. This model provides projections for letter mail based on recent historical Canada Post volumes and proposed rate changes. It is assumed that the price elasticity impact on letter mail volumes is negligible. Therefore, the volumes are the same for both the baseline and regulatory scenarios.
The increased prices are considered a cost for Canadians, while the revenue generated from the new rates is considered a benefit to Canada Post. The net impact of the rate change is zero. However, the revenue collected by Canada Post will help offset rising costs that are a result of inflation and will contribute toward the provision of postal services to all Canadians.
In May 2024, the price of a single stamp for letter mail weighing 30 g or less will increase to $1.15 (up from $1.07), representing an increase of 7.5%, while the price for a stamp purchased in a booklet, coil or pane will increase to $0.99 (up from $0.92), representing an increase of 7.6%. The fee for domestic registered mail will also increase from the current price of $9.75 to $10.50 in May 2024. All other regulated prices will increase by approximately 7.6%.
The impact of these rate increases across all products for the average Canadian household is estimated at $0.65 per year, based on an average annual expenditure on postage of $9.22. These regulated rate increases will generate approximately $23.8 million of additional gross revenue for Canada Post from May 2024 to April 2025.
Cost-benefit statement
As stated above, the benefit of this rate adjustment is increased revenue for Canada Post, while the cost is increased prices paid by Canadians for postage.
- Number of years: 10 (2024 to 2033)
- Base year for costing: May 2024–April 2025
- Present value base year: 2024
- Discount rate: 7%
| Impacted stakeholder | Description of impacts | Base year (May 2024–April 2025) | Mid year (2028) |
Final year (2033) | Total (present value) |
Annualized value |
|---|---|---|---|---|---|---|
| Canadians | Higher price for product | $23.8 | $17.9 | $10.9 | $121.9 | $17.3 |
| Canada Post | Increased revenue | $23.8 | $17.9 | $10.9 | $121.9 | $17.3 |
| NET IMPACT (all stakeholders) |
n/a | $0 | $0 | $0 | $0 | $0 |
| Type of impact | Stakeholder | Description |
|---|---|---|
| Positive impacts | Canada Post | Contribute toward the provision of postal services to all Canadians; enable ongoing innovation and the long-term financial sustainability of Canada Post. |
| Negative impacts | Canadians | Annual impact of $0.65 for consumers and $12.07 for small businesses. |
Distributional impacts analysis
The distributional analysis demonstrates how impacts are shared by region and demographics. While more Canadians are accessing services online, Indigenous communities and those living in rural and remote areas may still be more reliant on Canada Post’s regulated postal products than those living in urban centres, as rural and remote areas have a lower percentage of households with Internet access at home. Similarly, seniors (individuals aged 65 and over) — whose Internet intensity use is lower — may have more reliance on these regulated products. Consequently, this could be contributing to the slightly greater impact seen on these groups.
Distribution by regionfootnote 4
Canada Post leveraged retail sales data by Forward Sortation Area (FSA), which is a specific area in a major geographic region or province. Using the FSA information, Canada Post was able to determine the location of the post office where sales were made and distribute the impact by urban, rural, and Indigenous communities.footnote 5
Note that the data used to estimate the distributional analysis by region and demographics was only available for domestic letter mail.
Of a total of 1 669 Forward Sortation Areas (FSAs), 183 were identified to be rural regions with an average spend of $7.73 per person per year, which is 44% higher than urban areas. The difference in the impacts of the rate increase amounts to $0.18 per year between the two cohorts, as shown in Table 6.
| FSA count | Total population [in millions (M)] |
Retail transaction revenue [in millions (M)] |
$/head | Estimated impact at 7.6% |
|
|---|---|---|---|---|---|
| Rural | 183 | 6.2 M | $47.7 M | $7.73 | $0.59 |
| Urban | 1 486 | 32.2 M | $172.7 M | $5.37 | $0.41 |
| Total/average | 1 669 | 38.3 M | $220.4 M | $5.75 | $0.44 |
Indigenous population
The Indigenous penetration rate is calculated as Indigenous population divided by total population in an FSA. Of the total of 1 669 FSAs, 229 have an Indigenous penetration rate of higher than 10%, a blended penetration rate of 21%, and an average spend on retail stamps of $7.14 per person per year, which is 28% higher than FSAs with a penetration rate lower than 10%. The difference in the impacts of the proposed rate increase amounts to $0.12 per year between the two cohorts.
| FSA count | Total population [in millions (M)] | Indigenous population [in millions (M)] | Retail TM revenue [in millions (M)] | Penetration rate for Indigenous communities | $/head | Estimated impact at 7.6% | |
|---|---|---|---|---|---|---|---|
| >=10% | 229 | 4.7 M | 1.0 M | $33.5 M | 21% | $7.14 | $0.54 |
| <10% | 1 440 | 33.6 M | 0.9 M | $186.9 M | 3% | $5.56 | $0.42 |
| Total/average | 1 669 | 38.3 M | 1.9 M | $220.4 M | 5% | $5.75 | $0.44 |
Senior population
The senior penetration rate is calculated as senior population divided by total population in an FSA. Of the total 1 669 FSAs, 774 have a senior penetration rate of higher than 20%, a blended penetration rate of 25%, and an average spend on retail stamps of $7.29 per person per year, which is 53% higher than FSAs with a senior penetration rate lower than 20%. The difference in the impacts of the proposed rate increase amounts to $0.19 per year between the two cohorts.
| FSA count | Total population [in millions (M)] | Senior population [in millions (M)] | Retail transaction mail revenue [in millions (M)] | Penetration rate for senior communities | $/head | Estimated impact at 7.6% | |
|---|---|---|---|---|---|---|---|
| >=20% | 774 | 14.9 M | 3.8 M | $108.8 M | 25% | $7.29 | $0.55 |
| <20% | 892 | 23.3 M | 3.6 M | $111.5 M | 15% | $4.77 | $0.36 |
| Total/Average | 1 669 | 38.3 M | 7.4 M | $220.2 M | 19% | $5.75 | $0.44 |
Sensitivity analysis
A sensitivity analysis was conducted on the erosion rate and discount rate. In the central scenario of the cost-benefit analysis, the erosion rate was assumed to be 7.5%, based on historical data. The low scenario represents a case where the erosion rate is 1% lower than the current scenario, and the high scenario represents a case where erosion is 1% higher than the current scenario. The results of this sensitivity analysis are presented in Table 9.
| Sensitivity on erosion rate (in millions) | Base year (May 2024–April 2025) | Mid year (2028) | Final year (2033) | Total (present value) |
Annualized value |
|---|---|---|---|---|---|
| (+1% erosion rate) | $23.6 | $17.7 | $10.8 | $120.4 | $17.1 |
| Current scenario (7.5% — 2024) |
$23.8 | $17.9 | $10.9 | $121.9 | $17.3 |
| (−1% erosion rate) | $24.1 | $18.1 | $11.0 | $123.1 | $17.5 |
The central analysis used a 7% discount rate, as recommended by the Treasury Board of Canada Secretariat. For the purposes of the sensitivity analysis, Table 10 presents the results should a 3% discount rate have been used.
| Discount rate | Monetized benefits (in $ millions) |
Monetized costs (in $ millions) |
Net benefits (in $ millions) |
|---|---|---|---|
| 3% | $145.0 | $145.0 | $0.00 |
| 7% | $121.9 | $121.9 | $0.00 |
Small business lens
The regulated rate increases are expected to have a modest impact on small businesses that purchase these products to support their business activities. In accordance with privacy laws, Canada Post does not track the letter mail volumes used by small businesses. As such, the Corporation relies on the total number of small business data provided by Statistics Canada to estimate this impact. The total increase in mailing costs for small businesses that use stamps to pay postage is estimated at $12.07 per year, based on an average annual expenditure of $170.16. This is an average amount and could affect some businesses more than others.
Small business lens summary
- Number of small businesses impacted: 1.2 million
- Number of years: 10 (2024–2033)
- Base year for costing: May 2024–April 2025
- Present value base year: 2024
- Discount rate: 7%
| Totals | Annualized value | Present value |
|---|---|---|
| Total cost (all impacted small businesses) | $14,484,000 | $101,730,000 |
| Cost per impacted small business | $12.07 | $84.77 |
One-for-one rule
The amendments will not result in additional administrative burden costs for business and, therefore, the one-for-one rule does not apply.
Regulatory cooperation and alignment
The amendments are not related to a work plan or commitment under a formal regulatory cooperation forum. Once the new rates come into effect, Canada Post’s domestic letter mail rates will still be lower than the comparable rates of many of its global peers, including those of Australia, the United Kingdom, Germany, France, and Italy.
Strategic environmental assessment
In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan was conducted; it concluded that a strategic environmental assessment is not required.
Gender-based analysis plus
The regulatory amendments include modest increases to Canada Post’s regulated rates. When gender-based analysis plus (GBA+) considerations are taken into account, analysis of buying patterns suggests that there may be a slightly greater impact on those living in rural, remote and Indigenous communities, as well as on seniors (individuals aged 65 and over).
While more Canadians are accessing services online, Indigenous communities and those living in rural and remote areas may be more reliant on Canada Post’s regulated postal products than those living in urban centres, as rural and remote areas have a lower percentage of households with Internet access at home. Seniors — whose intensity of Internet use is lower — may also be more reliant on these regulated products. Canada Post anticipates that the rate increase could have a greater impact on these groups; however, on an individual or per household basis, these impacts are expected to be minimal.
Implementation, compliance and enforcement, and service standards
Implementation
The new rates will take effect on May 6, 2024, and will be available for purchase at all Canada Post locations and online on this day. Current definitive stamps, except “P” stamps, will be recalled from Post Offices and taken off the online store. Those who still have stamps at the old rate can purchase “Top Up” single stamps, which are available in Post Offices as well as online and will remain available until inventories are depleted.
Items posted before May 6, 2024, that remain within the carriage of Canada Post after this date are deemed paid and will be processed accordingly. Letters posted on or after May 6, 2024, at the previous rates, are deemed short-paid and subject to Post Canada’s normal short-paid procedures (e.g. return to sender).
Regulations are enforced by Canada Post under the Act. No change in the cost of enforcement is expected as a result of these amendments.
Service standards
The Canadian Postal Service Charter includes service standards for domestic lettermail delivery, which outlines that Canada Post will deliver letter mail: within a community within two business days; within a province within three business days; and between provinces within four business days. Canada Post reports on its performance against these service standards each year in its annual report.
Contact
Lisa Hoskins
Director
Regulatory Affairs
Canada Post Corporation
2701 Riverside Drive, Suite N1150D
Ottawa, Ontario
K1A 0B1