Overview of Certain Federal Government Services in Rural and Urban Areas

Background

The Standing Committee on Government Operations and Estimates (OGGO) has requested the Parliamentary Budget Officer (PBO) to conduct an analysis comparing the level of federal government service in rural and urban areas, as well as the cost of providing these services.

Given the complex and wide-ranging nature of this topic and the consideration for timelines to provide a report to the committee, this report does not attempt to provide a comprehensive analysis on the full range of government services. Instead, the PBO focuses on certain specific federal government services that have the most direct interactions with Canadians, namely Service Canada and Canada Post, as illustrative of service levels and cost of service.

Service Canada

Service Canada provides many services directly to Canadians. The most used service is the passport program: 5.4 million passports were issued in the 2024-2025 fiscal year.[^1] Other popular services include Employment Insurance (EI), Social Insurance Numbers (SIN), and Canada Pension Plan (CPP) related services. While many of these services can be obtained remotely (for example, mail-in passport applications), the presence of physical Service Canada locations still remains a crucial component of government service delivery.[^2]

There are five types of Service Canada sites:

1. Service Canada centres: the standard Service Canada locations provide a wide range of services, usually located in a population centre. There are 276 such sites in Canada.
2. Service Canada centres with 10-Day passport service: in addition to providing regular services, these sites offer express 10-day passport processing. These sites are usually located in mid-sized cities. There are 22 such sites in Canada.
3. Consolidated sites: these sites offer the combined services of regular Service Canada Centres and Passport Service locations. They are usually located in large cities. There are 16 such sites in Canada.
4. Passport service sites: these sites specialize in offering passport services. They are usually located in large cities. There are 18 such sites in Canada.
5. Scheduled outreach sites: these are smaller sites that provide services on an occasional schedule, in areas without a regular Service Canada location. There are 254 such sites in Canada.

An information request (IR 0914)[^3] was sent to Service Canada on the operating cost of its in-person service network in urban and rural areas. However, due to data availability and time constraints, data on operating cost was only provided on regional levels without urban and rural breakdown.

Canada Post

Canada Post Corporation is the Crown corporation responsible for providing mail and parcel delivery services across Canada. It has a mandate to serve rural and remote populations, and it aims to be financially self-sustaining. In addition to the direct services it provides, Canada Post also plays a role in the delivery of other government services, such as delivering government-related mail/notices and enabling services such as mail-in passport applications.

An information request (IR 0912)[^4] was sent to Canada Post regarding service levels and costs in rural and urban areas. While Canada Post provided the requested information on service levels, it declined to disclose information on service costs beyond what was available in its public reports.

Service Canada

Service Coverage by Census Division

To analyze the differences in service levels in rural and urban areas, the PBO obtained a list of all Service Canada sites and their service volumes. The PBO tallied the number of different Service Canada sites as well as their service volumes across each census division (CD) and categorized CDs as “urban” (at least half of its population living in population centres) or “rural” (less than half of its population living in population centres).[^5]

As seen in Table 1, 141 out of 293 CDs are classified as “urban”, with a total population of 32.6 million (88.2 per cent of Canada’s population). 152 CDs are classified as “rural”, with a total population of 4.4 million (11.8 per cent of Canada’s population).

There are a total of 584 Service Canada sites, 328 of which are in urban CDs (56.2 per cent) and 256 are in rural CDs (43.8 per cent). While rural CDs have more sites per capita, these sites must serve a more dispersed population, which means that some rural residents may still need to travel long distances to visit a site.

Another difference between sites in urban and rural CDs is that urban CDs contain more larger sites with comprehensive services (for example, all 17 consolidated sites and all 19 passport centres are in urban CDs). On the other hand, rural CDs tend to contain smaller sites or scheduled outreach sites, which provide occasional and intermittent service in locations without regular service centres.

Table 2 provides an overview of the minimum service coverage in different census divisions. 132 out of 141 urban CDs contain at least one site (93.6 per cent), compared to 116 out of 152 for rural CDs (76.3 per cent). Similar to Table 1, urban CDs are more likely to contain at least one site, particularly larger sites with more comprehensive services. On the other hand, just under half of rural CDs are either without sites or only have scheduled outreach sites.

In FY 2024-25, about 11.8 million in-person service requests were received at Service Canada sites. About 10.7 million (90.8 per cent) were in mostly urban CDs, and 1.1 million (9.2 per cent) were in rural CDs. These proportions were similar to their population shares.

The four most common request types were passports, SIN, EI, and CPP requests. They together account for 5.3 million or 44.8 per cent of all requests. In urban CDs, passports were the most common request category, but in mostly rural CDs, the most common category was EI requests. This may be because most sites with additional passport processing capacity (e.g. 10-day service or dedicated passport centres) are located in urban areas.

Cost of Service Canada Locations

In the 2025-26 fiscal year, the total operating cost for the Service Canada in-person network is projected to be $370 million. This is about 6.6 per cent higher than planned spending under the 2025-26 budget, with the difference attributed to higher salary costs. Service Canada also provided a regional breakdown using its internal regional classification (Atlantic, Ontario, Quebec, and West Canada/Territories). Table 4 summarizes the operating cost of the Service Canada in-person network (obtained from Information Request IR0914).

Canada Post

Rural vs. Urban Service Levels

Canada Post does not currently have a common internal definition for “rural” and “urban” post office addresses. The definitions used (such as for post office locations and delivery standards/performance) depend on the context.

Post Office Location Coverage

For post office locations, Canada Post has indicated two definitions used internally depending on the context:

1. “Rural” referring to the list of post office locations prevented from closing under the 1994 Rural Moratorium[^6]. However, due to increasing urbanization over time, some locations covered under the moratorium are no longer considered rural by Statistics Canada’s demographic definitions.
2. “Rural” referring to post offices outside of Census Metropolitan Areas (CMAs) or Census Agglomerations (CAs) defined by Statistics Canada. “Urban” refers to locations within CMAs and CAs.

In this report, the second definition is used when discussing data on post office coverage in rural and urban areas. Table 1 lists the number of post office locations in urban and rural areas compared to their populations. About 57 per cent of post offices are located in rural areas, corresponding to 16.1 per cent of Canada’s population.

Canada Post’s Service Charter[^7] sets the following requirements for post office coverage across Canada:

• 98 per cent of consumers have a postal outlet within 15 kilometers of their home
• 88 per cent of consumers have a postal outlet within 5 kilometers of their home
• 78 per cent of consumers have a postal outlet within 2.5 kilometers of their home

Table 6 displays the percentage of urban versus rural Canadians living within these three distances of a post office as of January 2026. For the overall Canadian population, post office coverage meets all three standards set out by the Service Charter. However, there are divergences between urban and rural coverage. For example, 95 per cent of urban Canadians live within five kilometres to the nearest post office, compared to 63 per cent of rural Canadians.

Delivery Standards and Performance

Canada Post’s delivery standards are based on distance to processing facilities and are not explicitly defined by the same urban/rural classification in the previous section. Here is a brief overview of delivery standards for parcels[^8]:

• Major Urban Centres: these are locations with a processing facility for mail and parcels. They have the fastest delivery standards: for example, a regular parcel can be delivered locally within 1 – 3 days and nationally within 4 – 10 days.
• Non-Major Urban Centres: these are locations without a processing facility. Delivery standards are somewhat longer: for example, a regular parcel can be delivered locally in 2 – 3 days and nationally within 4 – 13 days.
• Northern Regions and Remote Centres: these are locations far from processing facilities or that receive infrequent service. They have the longest delivery times: a regular parcel can be delivered in 6 – 9 days locally and 7 – 14 days nationally.

For lettermail, the delivery standards are uniform across Canada:

• Within a community: 2 business days or less
• Within a province: 3 business days or less
• Between provinces: 4 business days or less

While these geographic classifications differ from the rural/urban split in the previous section, Canada Post was able to classify urban and rural delivery for parcels by tracking the final delivery facility. However, lettermail could not be tracked by urban and rural split. Table 7 displays the volume of parcels by urban and rural split, and the total volume of lettermail in 2025.

Table 8 displays the actual on-time delivery performance relative to the standards set out by the Service Charter. Similar to Table 7, only parcel delivery performance is available by urban/rural split. In general, the on-time performance for parcels is similar for urban and rural deliveries.

Service Cost

The Canada Post 2024 Annual Report[^9] contained some information on the cost of operating services in urban and rural areas. However, Canada Post was unable to provide more detailed cost data beyond what was published in the Annual Report when requested under IR 0912. Table 9 reproduces the table on page 60 of the 2024 Annual Report summarizing annual average cost per address for different delivery methods, with an additional column displaying total annual cost of each delivery method. Rural addresses predominantly fall under significantly more expensive delivery methods such as rural mailboxes or door to door[^10].

Table 10 shows the breakdown of operating cost for Canada Post according to the 2024 Annual Report (page 107), based on major categories. Labour and employee benefits represent the largest source of expenses.