Transport Committee on Dec. 18th, 2013

[Deepak Chopra]

If I may, Mr. McGuinty, when we shared with Canadians the options laid out in the Conference Board report back in April 2013, every single aspect of them was covered by the media and publicly debated in 46 community meetings. I personally hosted several in many, many communities, and nothing that has been presented in the five-point plan is a surprise to the many Canadians who have been participating in the process, who have been reading the newspapers and looking at the media.

It is not just unique to Canada; much of the postal world is struggling with similar challenges.

[David McGuinty, Liberal, Ottawa South, ON]

There's no doubt about it, Mr. Chopra.

[Deepak Chopra]

There is no surprise in the options that we were considering.

[David McGuinty, Liberal, Ottawa South, ON]

I'm sure, but I would take exception. I think it's wishful thinking to suggest that Canadians aren't reacting to your five-point plan proposal. I think it's actually resonating very strongly.

Let me just pick up on a theme that I know you are aware of, which is the question of Canada's aging population and, for that matter, the increase in disability throughout Canadian society.

In my own riding of Ottawa South approximately 10% of my population faces one form of disability or another. That number is growing very quickly. We know that the number of Canadian seniors increased by almost 15% between 2006 and 2011 and that there are now just under five million. I know you know they are going to be profoundly affected by these changes. I just want to give you an opportunity to also react to the fact that there are now 4.5 million Canadians with disabilities, and that number is increasing rapidly, as I mentioned.

Why did the Conference Board not take this more fully into account in suggesting that door-to-door mail be eliminated completely?

[Deepak Chopra]

As far as the difficult choices we have put forward go, I totally understand that there are going to be areas where we are going to have to be more thoughtful and more careful in our deployment and implementation. These are difficult choices. We have a corporation that is facing an inflection point with the technology that's wiping out the very foundation it was built on. Between 1969 and 1975 mail volumes grew by a billion mail pieces. Between 2007 and 2012 mail volumes declined. There was an epic rise and an epic fall.

Canadians are saying, “We understand you have to make tough choices, but be mindful when you implement them that you provide the type of flexibility you have been able to provide to two-thirds of Canadians over three decades of dealing with seniors”.

I have one other comment, Mr. McGuinty. When I hosted those sessions, the seniors told me they wanted to be healthy and active in their life. I attended a City of Brampton session a couple of years ago totally unrelated to this topic, at which the city planning department was hosting a community consultation on how to get Canadians walking. The citizens and the seniors I spoke to want to be active. They want to be living fuller lives. So there is indeed a requirement for us to be mindful of the disability and mobility challenges to seniors, and we have robust processes in place, and we will accommodate as we learn about new challenges, just as we have done, but these were difficult choices.

[David McGuinty, Liberal, Ottawa South, ON]

I agree. I think there is an element of fitness involved in this. We could call it “mail ParticipAction”. We could call it many things. What I'm hearing from seniors is that they're getting cross-purpose messages. We're actually trying to encourage Canadians to live at home for as long as possible, to live independently, to live with dignity, to live in their own comfortable environments. At the same time, we're sending a message through Canada Post that if you do live at home, you are not necessarily going to get your mail delivered to the door. But let's hold that in abeyance.

[The Chair, Conservative, Larry Miller]

Mr. McGuinty, your time has expired.

[David McGuinty, Liberal, Ottawa South, ON]

Can I slip in one last question, Mr. Chair? It might be of benefit to everybody.

[The Chair, Conservative, Larry Miller]

Well, you're over the time, and we are limited, and I want to be fair to all members.

Mr. Watson, you have seven minutes.

[Jeff Watson, Conservative, Essex, ON]

Thank you, Mr. Chair.

Thank you, of course, to our witnesses, Mr. Chopra and colleagues, at the table.

At one time people communicated on a stone tablet with a chisel, or by smoke signal, or by quill and ink, or on parchment. Mail was carried in the U.S. by the pony express at one time. At one time the telegraph was important. I don't know how many people send a telegram anymore. The last one I got was in 1997, when I won my nomination back then. Media has converged. Print media is struggling to put out circulation. They're moving to the Internet, and to subscriptions on the Internet.

Computers used to fill rooms and were comprised of vacuum tubes. I'm from generation X, and I remember the first desktop computers in school. They were the VIC-20 by Commodore. They had less computing power than a wristwatch does today. My mom used to be in a business where she would use courier services. I remember bills of lading, in triplicate carbon copy, that you had to write out by hand. I remember manual typewriters, then electric typewriters, then computers.

I remember when people carried cash in their pocket. Now even gift cards are giving way to technology on smart phones. I had a friend buy a Starbucks for me the other day and he scanned his phone. I was pulling out my gift card. I already feel I'm behind the times and I'm only 42.

Kids can't write cursive anymore because they don't write letters. My kids text each other when they're in the same room. I remember black and white TV. I remember when we got our first colour TV. I remember rabbit ears, and antennas beside the house, before we ever had satellite or cable and a 500-channel universe.

I remember Beta and VHS. VHS went out. Where's VHS? Hardly anyone has a VHS player anymore. I remember the days when you had to get up and change the channel on TV by hand. The first remote controls only moved the channels up and down and the volume up and down. Try finding a place that does photo enlargement in a lab. It's hard to find, isn't it?

The world is changing, and it's changing very rapidly.

It's not just Canada that's changing; it's the whole world, isn't it, Mr. Chopra? Younger generations particularly are demanding faster, more instant, cheaper.

Now, in that context, there's a significant problem that Canada Post is facing. Talk about e-substitution; high infrastructure and labour costs from old delivery networks; competition with the communications sector, whether it's broadcasters, Internet companies, or telecoms.

Can you talk about that a little bit, just briefly?

[Deepak Chopra]

We built our infrastructure to move these things. As I mentioned earlier, between 1969 and 1975 these types of envelopes grew by a billion pieces. We implemented postal codes in the same period. If we had not implemented technology at that time....

There was opposition to postal code implementation. There were full-page ads; you can search the archives. The ads were there to promote, “Do not use postal codes”. That's the era when we were growing our business, and this is what we built our entire infrastructure for, whether it be mail processing, mail delivery, or transportation.

What are Canadians using today? This is just one example: apparel. Apparel is the fastest-growing category for online shoppers. The second-fastest growing category that's chasing right behind it is diapers, believe it or not.

[Jeff Watson, Conservative, Essex, ON]

I've got six kids; I can believe it.

[Deepak Chopra]

Young kids are busy. They are taking the picture of a QR code on a smart phone and they are placing orders to online stores on the way home from their busy lives. The package is arriving, but they are not home to receive this package.

If the mail is changing its shape and size, don't we think that the mailbox should change its shape and size too? So what we're trying to do is to adapt to the changing needs of Canadians. We believe Canada Post will remain a relevant, meaningful participant in the lives of Canadians. Over the years, the mail has changed shape and size and so are we.

[Jeff Watson, Conservative, Essex, ON]

So letter mail, which was and continues to be highly profitable per piece, has declined significantly. Not just in Canada. It has declined in other jurisdictions around the world, is that correct? In Canada it has declined by a billion pieces since 2006, is that correct?

[Deepak Chopra]

That is correct.

[Jeff Watson, Conservative, Essex, ON]

Mail volumes in quarter three are down—

[Deepak Chopra]

Over 7%.

[Jeff Watson, Conservative, Essex, ON]

—compared to quarter three last year. So this is an accelerating process.

On year-to-date losses, the fourth quarter is not in but what are the losses at Canada Post in the first nine months of this year? What are the net losses? I understand there was the sale of a property in Vancouver that changes the net loss but what are the gross losses and then the net loss?

[Deepak Chopra]

We are still forecasting between $200 million and $300 million in losses for 2013. If we don't act immediately, this trend will simply continue.

[Jeff Watson, Conservative, Essex, ON]

Some say to delay your actions for a year. What is the cost of delaying? Is it tenable?

[Deepak Chopra]

In fact, every delay, not only on the business but on our ability to implement and reinvent the business, starts to marginalize us. If we have to compete in a fast-growing, highly competitive e-commerce market we have to build the infrastructure and invest in the technology. We also have to transform the way we process our emerging shapes and sizes. So every day of delay is going to cost us millions. We have no time to waste and we must act now and act with a sense of urgency.

[The Chair, Conservative, Larry Miller]

Mr. Watson, your seven minutes is done. I understand you are taking the next seven minutes and it starts now.

[Jeff Watson, Conservative, Essex, ON]

So your cost is missed opportunity for one. Second, deficits continue to pile up, is that correct? Okay. So there are two very important costs there.

You embarked upon a process of consultation in advance of the five-point action plan that you announced. Can you tell me what Canada Post did in terms of consultation? Let's start with that.

[Deepak Chopra]

We wanted to make sure that we first had a set of options that we could present to Canadians which they could opine on. The first step was to study what was going on around the globe, what other options we could look at that were appropriate for Canada. Every country's geography, culture, and communities are very different. They have evolved as part of their history and part of their evolution. We needed to present those options. The first thing was to come up with a set of options that could form the basis of a broader discussion. The Conference Board did an independent study to review what the potential losses could look like if nothing is done and what potential options—

[Jeff Watson, Conservative, Essex, ON]

And what loss did they forecast by 2020?