Government Operations Committee on Sept. 26th, 2016

[Stéphane Ricoul]

The technological infrastructure in the remote or rural regions does not permit high-speed Internet access, which vastly limits e-business opportunities for people in those regions who do not have Internet access or who only have access to a limited Internet network. However, the Government of Quebec—and, I hope, that of Canada, as well, but I know less about that—is currently working on a digital strategy. The number one priority is to provide the remote regions with the technological infrastructure that would permit data flows of up to 20 megabits per second.

If that is what is coming in, say, two years, Canada Post will have to be ready. A great deal of work must be done in order to get there because there is no inclination in the remote regions to associate Canada Post with parcel delivery. However, one of the figures I am missing, and it may appear in the report, is Canada Post's revenue share in urban as opposed to rural areas. I would like to get that figure.

[Nick Whalen, Liberal, St. John's East, NL]

I do not know the respective amounts, but I believe that 15% of households are in the rural regions compared to 85% in the urban centres.

[Stéphane Ricoul]

I see. That partly answers the question.

The second part of your question concerned what Canada Post could offer citizens in remote regions. Is that correct ?

[Nick Whalen, Liberal, St. John's East, NL]

Yes, especially that.

to businesses; what types of services could they offer to businesses to help businesses access the digital economy?

[Stéphane Ricoul]

All right.

Businesses in the more remote regions of Quebec and Canada are often businesses that operate in business between businesses, what is called business to business, or B to B , and very little in the retail sector,business to consumer , or B to C . The need for those businesses to deliver parcels to consumers is thus less significant. On the other hand, those businesses—and here we are looking at Purolator—generally require a lot of deliveries as well, but deliveries of larger parcels. This is really B to B mode, business to business. In those circumstances, Canada Post or Purolator has to go after the market share that they are currently leaving for the competition. From an economic standpoint, the B to B component is the unseen part of the iceberg. The B to C that everyone talks about is the visible tip of the iceberg, but it is much smaller than B to B. The money is in B to B.

[Nick Whalen, Liberal, St. John's East, NL]

Mr. Tremblay-Pepin, do you have anything to add?

[Simon Tremblay-Pepin]

Since this is Mr. Ricoul's area of specialization, I do not have much to add apart from the fact that, yes, of course, 15% may look like a small part of the Canadian population. However, it is a significant part. Remember, first of all, that Canada Post's mandate is universal, that is to say that it covers all of Canada. Consequently, all citizens are important and must be served. Second, note too that, although e-commerce is on the rise, it currently represents only 10% of purchases. So, from a logical standpoint, if 15% of the population is not a significant percentage, 10% of purchases might not be either. In short, every part of this issue has to be put into perspective.

[Nick Whalen, Liberal, St. John's East, NL]

My final question would be this. You've both been very optimistic about the future of Canada Post, which I think is great, because we're looking for solutions. When we look at the types of new services, be it hubs or digital infrastructure, l'économie numérique, is Canada Post the right entity to deliver them? It seems as if the current workforce within Canada Post wouldn't necessarily be a workforce that is conditioned to provide these services. It seems as if it would be a whole new company if we were to go in this new direction. Is it better to start fresh, or can Canada Post adapt?

[The Chair, Conservative, Tom Lukiwski]

I'd encourage you to please do that quickly, if possible, 30 seconds each.

[Simon Tremblay-Pepin]

It seems obvious to me that Canada Post can adapt to the situation. The workforce is skilled. It is a workforce that has been in place for a long time and that likes its employer. It seems to me something can be done with that workforce.

[Stéphane Ricoul]

That will be very difficult.

Going back to the fact that Canada Post is a traditional business, a leadership issue arises when you switch to digital: individual leadership and organizational leadership. Canada Post must look inward and determine from an individual leadership standpoint whether each of its individuals is prepared to face the digital shift. This will be very complicated. A lot of exercises will have to be conducted, in my view. This is not an issue to be taken lightly, since 70% of digital shift projects fail because people forget about individual leadership. The question is very relevant in that respect.

Are Canada Post's employees indeed ready at the present time? I cannot answer that question. There are exercises that that must be conducted in connection with that.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Gentlemen, thank you very much for your presence here today. You've both been extremely informative, and you've helped us a great deal.

As I mentioned earlier, if you have any additional submissions that you would like to bring to the attention of this committee, you can submit them directly to our clerk, please.

[Nick Whalen, Liberal, St. John's East, NL]

Mr. Chair, I would like to know whether the witnesses would be prepared to accept further written questions from us.

[A voice]

Yes. No problem.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much for that.

We will suspend for two or three minutes while we get the table ready for our next witnesses.

[The Chair, Conservative, Tom Lukiwski]

We will begin now.

We have five witnesses before us, representing four organizations.

Gentlemen, I know you've been briefed in advance, but we would ask that you keep your opening statements to five minutes or less, if possible. We have only an hour for this portion of our consultations this morning, so if you can keep it to five minutes that will give us approximately 40 minutes for Qs and As.

Colleagues on the committee, because of that I think we'll go with the same procedure we had for our first batch of intervenors, where everyone will have an opportunity for one question and answer portion.

Monsieur Perez, from the City of Montreal, I have you first on my list for your five-minute opening statement, please.

[Lionel Perez, City Councillor, Member of the Executive Committee, City of Montreal]

Thank you, Mr. Chair. Thank you, committee members, for welcoming me here this morning.

My name is Lionel Perez. I am an elected city councillor and a member of the executive committee of the City of Montreal, and I am responsible for governmental relations. I am here to represent the city on behalf of Denis Coderre.

First of all, we hail the Government of Canada's initiative in conducting an independent review of Canada Post and hearing what its partners have to say on the corporation's future. The city believes this kind of consultation should have been conducted before every major change made by Canada Post. This process is essential to ensuring that Canadians obtain high-quality postal services consistent with their living environment and to actually meeting their needs.

Since our presentation is very short, please note that you will find more information on the City of Montreal's issues and demands in the brief we are submitting today. Appended to that brief you will also find the full brief that I submitted on behalf of the city to the task force charged with examining Canada Post in Gatineau on June 16 last.

The objective of our testimony before the commission is to highlight the critical issues that are specific to large cities such as Montreal, and to reiterate the importance of home delivery, particularly in highly dense urban areas.

The first point is the total lack of any serious prior consultation or any real collaboration that we've encountered with Canada Post. Prior to and following the Canada Post announcement in December of 2013 about their five-point action plan, Canada Post had repeatedly acted unilaterally without any real consultation with cities.

Accordingly, the city conducted its own public consultation in 2015, where Canada Post was invited and was present, and the conclusions were overwhelming: 95% of all the briefs that were submitted were opposed to the measures in the five-point plan.

In winter 2015, as a result of the lack of consultation on the many problems associated with the measures taken by Canada Post, the city joined the lawsuit brought by the Canadian Union of Postal Workers. Montreal is of the view that, in its proceedings, the parliamentary committee must consider the will of the public and of Canada Post's customers.

To illustrate one of my points, here is a true example of something that happened in Montreal with Canada Post. In the borough of Rosemont—La Petite-Patrie, in the spring of 2016, while there was supposedly this moratorium, Canada Post attempted to install a community box on a portion of 2nd Avenue. For several weeks, with the lack of adequate home delivery service, citizens had to pick up their mail more than five kilometres from their home. Hours of service were limited, and this distance of travel created much frustration to the city.

This is just one example that is indicative of the cavalier attitude of Canada Post that Montreal has had to deal with.

The second issue we would like to highlight is the numerous difficulties in attempting to install community boxes in highly dense urban areas in many parts of Montreal. Montreal has a population of more than 1.8 million, and 50% of the population lives in greater urban areas. This is a trend that will continue to increase for the next 25 to 40 years, when 70% of the Canadian population will live in urban areas.

In addition to that, we also have an aging population—more than 300,000 persons, 16% of the population of Montreal. In addition to that, there are persons with disabilities aged 15 years of age and over. According to Quebec's survey on activity limitations, there are 594,000 such individuals in the Montreal area.

Collectively, these most vulnerable are directly affected by the reform of postal service. They need accessible service and home delivery.

We know that the presence of community mailboxes is sometimes impossible due to lack of space, or is likely to have a significant impact on the traffic, on the parking, or even on the sense of safety of our citizens.

The situation of le Sud-Ouest in 2015 was widely circulated in the media. A series of community boxes—we're talking about a wall of community boxes—was installed, and without any prior consultation. Immediately there were problems with graffiti, with maintenance, and with universal accessibility.

We call upon the members of the commission to be vigilant and to ensure that the mistakes of the not-too-distant past are not repeated. It should also be noted that the working group itself reported the importance of carrying out more in-depth studies, further analysis, and consultation in order to determine the viability of proposals specifically.

I will refer you to our five recommendations in our memo. I'd like to highlight one of the elements, the fact that there is a necessity for Canada Post to work in strict collaboration with municipalities to respect our urban regulations and to ensure that essential services are afforded to citizens.

To conclude, the independent review of Canada Post Corporation is a unique opportunity to turn the tide and correct the problems caused by the lack of consultation and implementation of Canada Post's five-point plan. The work of the committee must produce tangible results.

It is essential that the municipalities be recognized as near governments and essential partners that must be consulted in advance of any intervention that may have an impact on their territory. The City of Montreal wishes to work together with the members of this committee to promote the implementation of these recommendations.

Thank you for your attention.

[The Chair, Conservative, Tom Lukiwski]

Thank you.

I would again encourage all intervenors to try to keep the comments to five minutes or less to allow our committee members a chance to engage in a dialogue with you.

Mr. Demers, you have five minutes.

[Marc Demers, Mayor, City of Laval]

I want to thank the committee for allowing us to express the opinion of the citizens of Laval.

I am accompanied by Martin Gratton, who works in the urban development department and who negotiated with Canada Post as part of this new program.

We have been faced with an unacceptable unilateral decision by Canada Post to abandon home mail delivery. I note in passing that some 600 jobs have been lost in Laval.

Furthermore, from the moment the administrative decision to abandon home mail delivery was implemented, municipal councillors and the administration of the City of Laval encountered a failure to listen and cooperate on the part of Canada Post, even though the municipal council passed a resolution in October 2014 expressing our willingness to cooperate with the corporation based on informed, reciprocal exchanges. That resolution remained a dead letter and the exchange has remained a one-way affair.

In view of the general outcry from our citizens, we had virtually no choice but to turn to the courts. A negotiated solution would have allowed us to consider friendlier arrangements that would have both met Canada Post's cost-effectiveness objectives and helped to provide the delivery services that all Canadian citizens are entitled to expect.

In addition to that aspect, it would also have helped to avoid safety problems and to reduce the anxiety actually experienced by our elderly and disabled citizens residing in the old neighbourhoods of Laval. Canada Post's decision resulted in an anarchic installation of mailboxes, and location selection absolutely failed to reflect certain existing urban realities. We would have liked the corporation to be more conciliatory, more humane in the way it achieves its objectives.

What do we want, in addition to a radical change in philosophy and approach to its clientele?

To put it plainly, we want a return to home delivery in the old, more densely populated neighbourhoods of Laval. We believe this service should be maintained because it more directly concerns seniors and persons with reduced mobility. We therefore ask that all community mailboxes be removed from those old neighbourhoods.

In the newer neighbourhoods, we want Canada Post to conduct a systematic review of each of the mailbox installations in close cooperation with our officials to ensure they meet safety and traffic flow criteria. In cases where a situation poses a problem, those boxes should be reinstalled elsewhere with the consent of the city's services. Canada Post must also restore the venues where the mailboxes thus moved were located.

Fourth, for all new developments in Laval, future installations of community mailboxes will have to be validated by means of a clear and rigorous process in which our municipal services are consulted to ensure that the mailboxes are consistent with the municipal regulatory framework. We want Canada Post to address this matter as a good, environmentally concerned citizen by including paper recycling boxes in these mailbox installations.

Many of our fellow citizens in new neighbourhoods are adjusting very well to the mailboxes. The configuration of these new installations obviously assists in that respect. That is not the case in the old, more densely populated neighbourhoods, and that fact must be taken into account.

In closing, I repeat that we entirely understand that postal service must meet cost-effectiveness and efficiency criteria.

Mr. Chair and ladies and gentlemen, thank you for listening to us. We are prepared to answer your questions.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

I thank you for your economy of words, sir.

Mr. Lapointe, you have the floor for five minutes.

[Sylvain Lapointe, National Director, Metro-Montréal, Canadian Union of Postal Workers]

Good morning.

My name is Sylvain Lapointe, and I am a member of the national executive committee of the Canadian Union of Postal Workers. I was also chief negotiator in the last bargaining round that has just been completed. We are now preparing to go and see our members in order to ratify the two collective agreements, for the urban unit and the rural unit.

I would like to take a closer look at various topics but will limit myself to the question of Canada Post's finances. I believe there are important things that you should know about in connection with what was negotiated in the last bargaining round.

Canada Post offers various product lines, the three main ones of which are: Lettermail, parcels and Admail, which is unaddressed mail.

To be clear, letter mail volumes are declining at a steady rate of 4% to 5%. We do not know whether they will stabilize—they probably will—but we know they will not increase.

With regard to growth, that therefore leaves the main sectors: parcels, admail, and other services, including financial and banking services.

I will focus on parcels and admail since they were the focus of major discussions during the last bargaining round. It is unfortunate that the review committee did not have these data in hand before submitting the report to you. The report would probably have been much more optimistic than it currently is.

We have two main demands with respect to parcels. The first is that we address parcels and plan measures for delivering them in the mornings, in the evenings, and on weekends. Our second demand concerns admail—its weight and dimensions—so that we can increase market share.

In the case of parcels, Canada Post wanted to be able to use a temporary part-time workforce to deliver on weekends, in the evenings, and in the mornings. The union said yes. The union said that, if Canada Post wanted growth, it would be there and part of that effort. It should be noted that the parcels Canada Post currently delivers contain two-thirds of the products ordered online across the country. The measure we negotiated will enable it to grow more.

As for admail, this is a market in which Canada Post holds a very small share. Our demand was that the corporation go after larger and heavier mailings in addition to reviewing the compensation method for that type of mailing. We accepted this second growth model for Canada Post.

We are satisfied that these changes will enable Canada Post to enjoy significant growth in parcels and admail.

Unfortunately, the task force report is based on Canada Post's data and on a study by the Conference Board of Canada that was commissioned and paid for, we would note, by Canada Post. The important thing is to compare the data that were reported at the time concerning Canada Post's future with its actual financial position.

In 2014, Canada Post anticipated an operating loss of $256 million. In fact, it made a profit of $299 million. The corporation made an error of more than $550 million, which is not a small amount. It was a major error. However, the Conference Board and Canada Post data were incorrectly used as a basis for making cuts to postal services and the decision to install the community mailboxes. No reason was given to justify moving in that direction. Growth is the key for Canada Post.

This year, the task force anticipates an operating loss of $63 million. The reality is that it will probably be an even more profitable year for Canada Post. The first two quarters of the year were the best since 2010, when Canada Post began publishing its quarterly reports.

On behalf of the men and women who work at Canada Post, we ask that you carefully examine the statistics on the budget estimates and consider the corporation's actual financial position. Bear in mind one thing: service cuts do not result in revenue, do not create jobs, and do not keep decent jobs in Canada, that is to say jobs for the middle class. However, new services can afford you that opportunity.

Thank you.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Mr. Duguay, you have the floor for five minutes.

[Alain Duguay, Former President, Canadian Union of Postal Workers, Metro-Montréal, As an Individual]

Good morning. Thank you for inviting us to take part in the proceedings of your parliamentary committee.

Allow me to return to a point I heard made today. It was noted that only 32% of the population receive their mail at home. That figure does not include people who live in apartment buildings. People who receive their mail at the end of their driveway are considered as not receiving home delivery. I personally live in a 14-apartment building and feel I receive my mail at home because I only have to go down to the building entrance to get it.

I am a Canada Post retiree and assisted in the preparation of the brief that was submitted by the Montreal local of the Canadian Union of Postal Workers. I did not print it because I took it for granted that all committee members have access to all information submitted to the subcommittee. However, if you do not have access to it, I will be pleased to send it to you.

The consultation process to date has left me confused. No one had access to all the briefs submitted, unlike in the 2008 process, in which we had access to all filed documents. The City of Montreal conducted a public consultation and we had access to the filed documents. I think it is important that the public be able to read all documents, and I hope committee members had access to them.

I also deplore the fact that the banking services study commissioned by Canada Post has yet to be made public, with the exception of some 100 out of 800 pages, all the rest of which have been redacted.

One also gets the impression that the document that was made public last week was virtually written by Canada Post. If Canada Post had written a report, it would be virtually the same.

The union had discussions with the committee, but, as may be seen from page 39, a number of meetings were held with Canada Post. It is therefore clear that it is Canada Post's vision that has been put forward. In addition, the survey questions are directed. The disaster scenario is presented and people are urged to find solutions in a context of service cuts.

In 2005, the Library of Parliament published a study from which the following paragraph is taken:

According to two consultants, today’s postal administrations can either sink, while continuing to complain about declining mail volumes and electronic alternatives in this world of rapid technological change, or swim, by harnessing new technology, forming new business partnerships, and adopting new ways of doing business to create new products and services that will help them boost their performance and their earnings. From this perspective, the financial services option would seem to be the logical way to ensure the Canadian postal system’s viability.

In 2005, the Parliament of Canada was already discussing banking services for the future. This is 2016, and we are still headed in that direction. The Americans are also considering the possibility.

The report also states that the public may want these services but that very few people are considering using them. If services are offered at a lower cost, more people will likely be interested in them. ATM charges and banking fees in Canada are among the highest in the world. There is room for a lower-cost market that would help the postal service ensure its continued existence.

One million people in Canada do not have a bank account. It is false to say that everything is going well at Canada Post; its charges are astronomical.

Last week and this week too, several caisses populaires in the region closed their doors. The populations of those regions will therefore have nowhere to go to access banking services.

Several thousands of jobs have already been lost at Canada Post. If no new services are offered and cuts are made to existing services, we will lose between 6,000 and 10,000 jobs.

In addition, certain individuals are proposing alternate day delivery, that is to say delivery on every other day. Canada Post has invested approximately $2 billion to enable letter carriers to deliver letter mail, parcels, and all special products. If they are delivered only every other day, it will jeopardize that investment. Delivery service for parcels and all special admail products, such as priority post, cannot work in a delivery system spread over several days. Furthermore, if letter mail is delivered on alternate days, the number of doors will be reduced. This will not necessarily improve cost-effectiveness since, given the volume of mail for delivery, Canada Post will have to make deliveries virtually everywhere every other day.

During the election campaign, and even in its mandate letter, the government asked that people in the middle class be considered and allowed to hold decent jobs. There was also the idea of getting closer to the public. I believe postal service is a major issue in this regard.

What we honestly want you to do is consider all possible options. It is important that Canadians have a financially self-sufficient postal service. Past experience confirms that it has been just that. Lastly, by providing new services, we will ensure the continued existence of our postal service.

[The Chair, Conservative, Tom Lukiwski]

Mr. Ayoub, you have seven minutes.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

Mr. Chair, a common message is clearly emerging from the testimony, and that is that there is a lack of communication on the part of Canada Post, at various levels, in the areas of implementation, changes to vision and services, negotiations, and even internal information.

Am I mistaken? I would like to go around the table to hear about the communication situation that witnesses have experienced.

Mr. Perez, you may begin.