Government Operations Committee on Sept. 20th, 2016

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

You're saying 70% of the workforce will be leaving—

[Marena McLaughlin]

That's over age 49 from today, 2016. There are 16,200-plus who are eligible in 2020.

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

That's huge.

[Marena McLaughlin]

It's huge, but it's huge in the right approach. Really, if everybody wants to work together, there is no reason to have work lost. It may be reductions of positions or it may be realignment, but it's actually a perfect opportunity to streamline and to protect the jobs of the employees who will be there.

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

I'm not an expert in work relations. Does Canada Post have the capability to reduce its workforce, or does it have to go through some negotiation with workers?

[Marena McLaughlin]

You know collective agreements; there are always some stipulations and some restrictions. Canada Post has a no-layoff clause in its collective agreement.

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

What?

[Marena McLaughlin]

The clause says no layoff after five years of work.

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

What about replacement? You say 70% could leave. Is there any obligation for Canada Post to fill some or all of those positions?

[Marena McLaughlin]

In some ways, yes, because you cannot move workers beyond 40 kilometres of their work location.

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

It seems to me that it's viable, workable. Thank you for the answer.

[The Chair, Conservative, Tom Lukiwski]

Perhaps you can continue that stream of questioning at the next round.

We'll go to Madam Shanahan, please, for five minutes.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Thank you very much, Chair.

Thank you very much to the panel for a very exhaustive report. I'm struck by the mandate you had from the minister. You were tasked with looking at how Canada Post Corporation can provide quality services to Canadians at a reasonable price. I think you looked at all the possible options in a very quantitative and robust way, but therein lies the rub because, of course, what is the mandate of Canada Post? It is a mandate to provide a universal service, so there are built-in constraints that no private business would have. I'm sure that was striking you as you were going through that study.

In brief, Canada Post started as a service department of the government. It was fully paid for because it was recognized as being a service that all Canadians needed, and it was a nation-building service that could contact every citizen and provide facility of communication and trade. It was changed to a crown corporation in 1981, but even then it was lopsided, with the pension still being part of the public service.

I can just imagine how awkward it was to manage that during that time, but we had a huge lettermail volume, so it masked the problem. However, any real business has to be nimble in reacting to a changing business environment. What we've had with email and so on is basically an Uberization of Canada Post. I really want to put that out there.

Knowing that is really the current mandate of Canada Post, even if you were to apply all the seven cost-cutting measures, is that enough to save Canada Post?

[Françoise Bertrand]

No. That's why we've said there are short- and mid-term options that can bring savings and some revenues. From our perspective and from the facts we've gathered, mid- and long-term a realignment has to be prepared because it went from mail to parcels, so the universal service obligation and the rural moratorium cannot be defined exactly as they used to be. The operations ought to be reconsidered altogether.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

If we are to say the crown corporation idea has to be sustainable, with the mandate you had—

[Françoise Bertrand]

Of course, it's our mandate. Yours might be another way of looking at it.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

There you have it, because really it all comes down to the mandate.

Thank you for doing that extensive polling. I was struck by the satisfaction that Canadians expressed, and the value they place on the reliability. That's what my colleague was talking about: the importance of security and knowing that you're going to get your mail, and how much they appreciate Canada Post.

You alluded before to the in-depth realignment of the services, and so on. How much are Canadians prepared to pay? I'm asking because of course this comes at a cost for Canada Post. Did you get that...?

[Françoise Bertrand]

They're not ready to pay; that was clear in the polls.

When you come with a price, when we looked at different alternatives, half of Canadians knew about the financial situation, but when we brought everybody to the same level and we asked if they were prepared for this or that, they were quite strong in saying they were not prepared to pay for it.

Price sensitivity is important. There is the sensitivity of paying for somebody else, given that they're already paying a higher price for a stamp and they pay for their parcels as well, so already....

Then when we talked about a subsidy, because we presented it as an alternative, some people didn't always realize that “subsidy” may mean taxpayers' money, and they were not favourable to that idea.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

There's a price sensitivity at the counter.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

We'll go to our last three-minute intervention of the first round. We should have enough time for another complete round.

Go ahead, Mr. Weir, for three minutes.

[Erin Weir, NDP, Regina—Lewvan, SK]

Thank you, Mr. Chair.

An issue that's come up and that I think your task force has been seized with is this solvency deficit in Canada Post's pension plan. Of course, that's based on some fairly extreme assumptions of winding up the pension and having to pay out all the benefit obligations at once. It seems to me that Canada Post is part of the federal government, and it's going to have employees in the future contributing to the pension plan, so I wonder if solvency valuation is an inappropriate metric and if it might make more sense to look at things on a going concern basis.

[Françoise Bertrand]

Canada Post is a crown corporation, and being a crown corporation it has the same obligations as any other crown corporation. VIA Rail and CBC have the same kind of framework. The solvency issue is the responsibility of all crown corporations.

What makes it so huge, I'd say, is the number. It's a huge institution, and we all know we live longer than we used to, so it really adds up.

The second thing is that the interest rate has brought the solvency to a higher level.

[Erin Weir, NDP, Regina—Lewvan, SK]

No, I understand that, and I understand, as you say, that the current legislation would require Canada Post to meet that solvency test. However, we're talking about the future of Canada Post and possible changes to the legislative regime governance.

What I'm asking is from more of a policy perspective. Does it make sense to hold Canada Post to a solvency valuation, or might it be more appropriate to focus on the going concern basis?

[Françoise Bertrand]

My friend here can take the question. We've offered a few options to address the solvency issue, but it requires change, such as a regulatory one.

[Krystyna Hoeg]

I believe your question is about whether the solvency test is an appropriate measure. Certainly one could argue the pros and the cons of that.

One of the things we were struck with is that Canada Post Corporation, besides being a crown corporation, competes in the private sector. The private sector looks carefully to ensure that it's a level playing field that Canada Post plays on. They certainly did tell us in our stakeholder engagements that they would take a dim view if Canada Post was let off the hook with regard to solvency measures, when that's the standard all other corporations are held to.