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A Canada Post mailbox is shown in Montreal, on July 8, 2016.

Ryan Remiorz/The Globe and Mail

In a move bound to frustrate reform advocates of both the left and the right, the Liberal government announced on Wednesday that it has decided not to proceed with major changes to Canada Post.

Community mailboxes currently in place will not be dismantled, but home delivery will be maintained for those still receiving it, according to government officials who were not authorized to speak publicly about the decision.

Analysts predict that such an arrangement will lead to a funding shortfall and escalating losses for the postal service. To prevent that, the government will install a new management team at the Crown corporation, charged with finding new methods to cut costs and increase revenues.

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Whether the new crew will succeed is a question that won't be clearly answered for several years. In the meantime, according to the government officials, the Crown corporation should be able to continue operating on a break-even basis.

In 2013, Canada Post announced plans, supported by Stephen Harper's Conservative government, to end home delivery of the mail, converting the roughly five million addresses that were still receiving the service to community mailboxes.

The conversion was expected to save the postal service $400-million dollars annually. Faced with declining revenue from conventional mail services, management insisted the savings were needed to keep Canada Post solvent.

But, because community mailboxes are less convenient, and can be difficult for older citizens and the disabled to reach, many homeowners opposed the conversions. The Canadian Union of Postal Workers has also lobbied hard to preserve the jobs of letter carriers that would be lost by ending home delivery.

As part of the 2015 Liberal election platform, Prime Minister Justin Trudeau promised his government would "stop Stephen Harper's plan to end door-to-door mail delivery in Canada and undertake a new review of Canada Post to make sure that it provides high-quality service at a reasonable price to Canadians, no matter where they live."

Once in office, the new government ordered a moratorium on conversions and launched the promised review of the entire operation, which was to have been completed by last spring. Wednesday's announcement arrives almost a year behind schedule.

Those who hoped the government would dismantle existing community mailboxes and restore home delivery will be disappointed by the decision to allow existing conversions to remain in place. However, government officials said there will be assisted mail delivery for those unable to reach the mailboxes because of mobility issues.

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Those who want to implement the previous Conservative approach – to end home delivery completely as a cost-saving measure – will be dissatisfied with the decision to retain home delivery at the more than four million addresses where it still exists.

The Liberals' decision to preserve the status quo will challenge the financial viability of Canada Post, which must service 170,000 new addresses each year, even as conventional mail revenues swoon because of the growing prevalence of electronic billing and internet-provided services.

Parcel delivery revenues are up, thanks to Amazon and other e-commerce operations, but not enough to offset revenue losses elsewhere. Labour costs are 40-per-cent higher than the Crown corporation's private-sector equivalents, an Ernst & Young study estimated. That study concluded that, unless Canada Post reduces costs or increases revenues, it will be losing $700-million a year by 2026. As well, there is a $6-billion hole in the pension plan.

To square this circle, the government plans to install a new management team, with a mandate to modernize the postal service. There will be new appointments to the board of directors, including representation from labour. The government wants improving labour-management relations at Canada Post to be a major priority.

Chief executive Deepak Chopra has already announced he will step down at the end of March. The new board and CEO will have full authorization to explore potential revenue sources and cost savings. There have been proposals to make Canada Post a rural internet service provider, or to allow it to offer banking services. Ending home delivery, however, is off the table.

People who believe that Canada Post should put sound finances ahead of customer service will be as disappointed as those who want to see Canada Post expand operations and improve service. The government will, however, be able to say that it has fulfilled its election promise. ​

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