Government Operations Committee on Sept. 20th, 2016

[Françoise Bertrand]

Absolutely.

That is an avenue that will have to be examined with a view to a future realignment. If the government wants that, it is certainly one of the options to consider. That is why we talked about a change in governance and the possibility of regulations. In other sectors, in Canada and elsewhere, when regulations are done in a smart way, that is, by setting out the broad principles without getting into too much detail, it gives all stakeholders the opportunity to share their views and expertise. It also allows for an independent and impartial party to implement the government's policies.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

I represent a rural region. It would be helpful if I could prove to my rural constituents that it would cost less to offer improved service, for example, by offering postal service at a corner store that would be open more often, thereby reducing service delivery costs and improving service. As a politician, I am willing to tell the people in the 30 municipalities in my riding of Bellechasse—Les Etchemins—Lévis that, even if there is no longer a small building with a Canadian flag, the service level will be better. I think we will have to have that conversation.

I would like to get back to how we conduct our consultations. You have provided some information, and I appreciate that. We have to inform people. We have to raise awareness among Canadians, together with Canada Post workers and the government. I think that is an important part of your mission. Without a doubt, I would tell you to be bold in your recommendations.

[Françoise Bertrand]

At this stage, however, our role is to provide information so you can conduct a consultation with as much information as possible. We are not making any recommendations right now. We are presenting options.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

I see.

Maybe I will address the question to Ms. Hoeg, who seems to like numbers, especially red numbers.

[Krystyna Hoeg]

Oh, she loves numbers.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Well, it seems that Canada Post.... Page 63 of the report is the most scary for me. I have the French version, but basically it says that if we don't make a change, we will hit a wall. It is the last paragraph of section 6.5, the section on the long-term viability of Canada Post.

Although you are not making recommendations tonight, can you tell us how you think we can solve this? We say Canada Post is profitable, but we know the government has kind of given them a holiday on the pension, so it is not a real profit—it is just that we are less in the hole than we thought we were. How can it be shared with Canadians so that they understand what the reality is, because they are the ones who have to pay in the end?

[The Chair, Conservative, Tom Lukiwski]

Ms. Hoeg, I am very sorry to do this, but in the interest of time, perhaps you can hold your remarks and your answers to Mr. Blaney's intervention until the next round.

Thank you very much.

We will now go to Mr. Weir for seven minutes, please.

[Erin Weir, NDP, Regina—Lewvan, SK]

Thanks very much.

I would like to return briefly to the solvency evaluation issue and say that there is a big difference between considering that as a real thing that Canada Post needs to deal with and considering it as a kind of handicap that is applied to Canada Post to satisfy its private sector competitors.

Moving on to another issue, I want to return to the point about Canada Post having imposed a loss on itself in 2011 by locking out its employees. The response I heard was that it is part of an average, but I see 2011 as having really dragged down that five-year average that your task force considered.

The other response you presented was that perhaps some of the profit in 2014 was one-time revenue from increasing stamp prices. You note that point very clearly in your report. I am struck by the fact that your report doesn't mention the lockout at all in presenting the 2011 figure. I wonder if you might address that.

[Françoise Bertrand]

What happened in 2011.... It has moved on since then. We looked at the five years. We say it is on average a period of no profit. The 2014-15 period is healthier, but it is healthier because of an increase that brought $200 million to the table. Our consideration is that we cannot go on regularly increasing the stamp prices.

[Erin Weir, NDP, Regina—Lewvan, SK]

You could have looked at four years, or you could have looked at ten years, so I think it is worth noting that there was an exceptional reason for the loss in 2011 that weighs pretty heavily on the average. I guess that is the point I am looking for some acknowledgement of.

[Krystyna Hoeg]

I won't dispute that it will skew the five-year average, but in reality we looked at each of those years individually. The results were that three of the years basically ran deficits. Not until the exceptional price increase kicked in did that change. Although you are mathematically correct, we looked at each year on its own merits and did not dwell on that one-off.

[Erin Weir, NDP, Regina—Lewvan, SK]

Sure.

Your task force is relatively pessimistic about the prospects for postal banking, but it seems to me that you have presented a critique of what we might call full postal banking and you acknowledge that there might be potential for Canada Post to collaborate in quite effective ways with banks or credit unions. I wonder if you could speak a little on that. Do you consider that to be a positive option now for the corporation?

[Krystyna Hoeg]

Certainly we heard from the credit unions that service the more rural areas, and they were not looking for more competition, especially from Canada Post.

[Erin Weir, NDP, Regina—Lewvan, SK]

No, I am talking about the possibility of Canada Post having a partnership with credit unions in those remote areas.

[Krystyna Hoeg]

That's part of the option.

What we concluded was that banking today is really risk management and it is not the forte of Canada Post. When we examined the hub concept, it was from a hosting perspective to meet a certain need—not only to maintain a postal presence, but to utilize that presence in the most effective way. One of the ways of doing that would be to host a conglomerate of banks, should they wish to do that.

[Erin Weir, NDP, Regina—Lewvan, SK]

In terms of the potential market for postal banking, I believe you suggested it's quite limited because there are very few Canadians who currently don't have a bank account.

The table on page 38 of your report suggests that if Canada Post were to open a full service bank, 7% of Canadians would certainly use it and 22% would probably use it. If half of the probables actually did use it, you're looking at maybe 20% of Canadians using the postal bank.

Wouldn't that be a fairly big customer base, and comparable to the big banks that are already established?

[Krystyna Hoeg]

Our mandate was basically to look at financial self-sustainability. The benefits would be greatly outweighed by the costs of doing that, and we just didn't see it as a viable solution.

[Erin Weir, NDP, Regina—Lewvan, SK]

What's your sense of Canada Post's success, or perhaps lack of success, in selling financial services right now? I'm thinking about things like money orders. There already are some financial services available through post offices.

[Krystyna Hoeg]

To the best of my knowledge, they do a decent job, but it's a very small portion of their profits and most Canadians look for those solutions elsewhere.

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay.

[Françoise Bertrand]

It's not risk management as much.

On the 7%, it's important to understand with this table that the percentage is of people who thought it was a good idea. We pushed to a subsequent question: would you use it? It's not 7% of all Canadians per se—

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay. Still, I think it's a big chunk of the population.

[Françoise Bertrand]

In the focus group, as you'll see when you do the consultation, people mentioned that it might be interesting, although they felt there would have to be higher interest rates for.... There were elements that they felt Canada Post, helped by the government, would bring to them, which would make it more interesting than what is offered by the banks or the credit unions or Desjardins.

[Erin Weir, NDP, Regina—Lewvan, SK]

Sure—

[Françoise Bertrand]

Then it's more money; it's not as profitable.