Magazines Canada asks feds to support PAP and rein in Canada Post

Magazines Canada has asked the federal government to make Canada Post Corporation meeting its cultural responsibilities before authorizing substantial changes to its mandate and role or in its pricing structure. In its annual pre-budget submission to the Standing Committee on Finance, the national magazine association said that the publications assistance program (PAP -- postal subsidy) is critical.

Canada Post has indicated it will not continue to support the PAP financially. Yet the company receives approximately $275 million in revenue from the Publications Mail category of its business (including PAP-subsidized mail), and continues to secure higher revenue levels each year. If CPC does withdraw its support while the Government of Canada concludes that contributions to the PAP will continue or increase to meet growing demand, the budget shortfall would have to be sourced from the Consolidated Revenue Fund. Given that the Government of Canada is the sole shareholder of Canada Post, there appears to be little rationale in shifting this investment from one federal government budget to another–especially considering the ongoing role of CPC in magazine delivery.

It wants the government either to instruct Canada Post to continue contributing its current $15 million to the PAP or else ensure that the Department of Canadian Heritage replaces it. (The government forced the CP contribution to continue through to April 2009; the current request is, in essence, asking that this be made permanent.)

MC also wants to head off the possible loss of a "national delivery model" in favour of price based on distance:

"...a pricing framework which moves away from a ‘national delivery model’where distribution to each region is at a relatively equal cost, to a more distance-related pricing scheme could significantly undermine the capacity of the industry to provideCanadian-content to all regions of the country. Undoubtedly, more distance dependent pricing will favour certain regions and more populated areas at the expense of other Canadians."

Postal costs are without doubt the fastest growing cost in the industry, said the organization.

"Concurrently, Canada Post has increased its revenue from each piece of Publications Mail by about 43% over the last 6 years. These increases not only add to publisher costs, they also undermine the value of the PAP program. The Government of Canada, through the Department of Canadian Heritage’s PAP program, helps defray the costs of magazine postage for eligible magazines by paying a percentage of postal costs. As postal costs rise, the value of each dollar invested declines."

The magazine programs of Heritage are under review right now and Magazines Canada's appearance before the committee is intended, at least in part, to convince the government to adopt programs and policies that assist the industry (currently at 41% of sales of magazines in this country) to achieve 50% of all magazine sales.