Government Operations Committee on Sept. 26th, 2016

[Kelly McCauley, Conservative, Edmonton West, AB]

Going forward, say that we do reset the relationship. Do you see a way forward that you can get back to negotiating in good faith with Canada Post, and working with them in good faith to perhaps address some of these issues?

[Lionel Perez]

We've always indicated as Montreal that we're ready to discuss and we're ready to look at the different options. This is something that we had suggested.

In July 2014 the mayor of Montreal met with the CEO of Canada Post. I was with him, and there was a clear commitment to continue with consultations. We said we were ready to discuss. It doesn't mean that it's a blank cheque. Obviously we have to respect our regulations, we have to respect our jurisdiction. We understand that Canada Post also has a very clear mandate. To the extent that we can in fact have an agreement on how to proceed, then everybody will be the wiser and the happier. The question is, when there is that conflict and when there is that disagreement, then what?

I find some of the proposals by the working group very interesting in terms of governance and in terms of a public regulator to oversee some of those aspects. That's something that for us, in a certain sense, is a disavowal as to how Canada Post has in fact acted in the past, and it's to really set the matter straight.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks, gentlemen.

Mr. Lapointe, your numbers were different from Canada Post's for financials by about half a billion dollars. Did I hear that correctly?

[Sylvain Lapointe]

I'd just like to say that they are not my numbers.

[Kelly McCauley, Conservative, Edmonton West, AB]

No, sorry; they're the ones you commented on.

[Sylvain Lapointe]

They are the actual results from the 2014 financial report of Canada Post. In what they estimated would be the deficit for 2014 versus what they actually accomplished, there is a difference of $550 million, yes.

[Kelly McCauley, Conservative, Edmonton West, AB]

You looked at the numbers of the task force going forward to 2026?

[Sylvain Lapointe]

Yes, and it starts on the premise that this year we'll have a deficit of about $63 million. If you look at the real numbers this year for the first two quarters, Canada Post has made $45 million, the two best quarters since they started reporting quarterly reports in 2010. This year promises to be a very profitable year for Canada Post seeing as the biggest season is ahead. It's in the Christmas season, with the parcel rates, that they make their big profits of the year. So you could expect—

[Kelly McCauley, Conservative, Edmonton West, AB]

I was just trying to wrap my head around where the $500 million came from, but you've answered that.

[Sylvain Lapointe]

Yes. Look at the Conference Board report and the actual results of Canada Post, look at the predictions, and match those numbers throughout the years. Over five years it's a difference of $1.3 billion that they underestimated in their finances to justify the CMBs, the community mailboxes.

[Kelly McCauley, Conservative, Edmonton West, AB]

You answered my question. Thanks.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Ms. Trudel, you have seven minutes.

[Karine Trudel, NDP, Jonquière, QC]

Thank you, Mr. Chair.

Mr. Lapointe, thank you for your very interesting presentation.

The facts suggest that there has been a lack of communication, that service to the public is important, and that the municipalities must be recognized. I believe it is really important to take all that into consideration.

You focused mainly on the financial aspect of Canada Post. That is of great interest to me, and we see it in the task force's report. Earlier you noted that the union had agreed to morning and evening delivery during the latest negotiations, following which you came to an agreement.

I would like to hear more of your explanation of the new delivery measures and their economic impact, if you have quantified it. How will increased revenue help you, taking service of the public into consideration?

[Sylvain Lapointe]

One of the major objectives put forward by Canada Post was to beat the competition. Delivery would therefore be spread over six days, potentially over seven, but using a part-time workforce since there was not yet enough work.

That is why the corporation considered the possibility of starting off with a temporary structure in order to earn revenue during weekends. We know that people are mainly at home on weekends, on Sundays, at least more often than during the week. We were therefore asked to build that structure, but also to include evening delivery. We know that same day delivery is good for contractors and that morning delivery of food products—which some countries do around the world—is as well. We agreed to open up the market and to go after a share of it. That is what we offered Canada Post.

Currently, if we compare operations over the first six months of the current year with those of the first six months of last year, there has been an 11% increase in parcel deliveries. That market will explode in the coming years. As you know, more and more people buy on the Internet.

We believe that this new structure will be extremely profitable for Canada Post, in addition to its admail service. We know that Canada Post has a very small market share in that sector. Newspapers and magazines make up a major share. However, the dimensions and weights that we negotiated will enable Canada Post to increase its share of that extremely lucrative market. We therefore expect these changes to be beneficial. The 2016 year will be profitable, and once these measures have been put in place, we know 2017 will be extremely profitable too.

[Karine Trudel, NDP, Jonquière, QC]

So the task force should have taken those changes into consideration.

[Sylvain Lapointe]

Absolutely.

It is unfortunate because you will be receiving the 2016 financial report from Canada Post in March or April, when you have in fact completed your proceedings. As I say, that is unfortunate.

[Karine Trudel, NDP, Jonquière, QC]

Earlier one speaker mentioned that, as a result of the new technological changes, employees did not have the skills to enter this new digital era. Do you think your workers, in Canada Post's various offices and facilities, are able to adapt to the new services offered in the new digital era, beyond traditional postal service, that is to say stamp sales and parcel shipping, for example?

[Sylvain Lapointe]

Our members have already entered the digital era. They are already conducting financial transactions in post offices, whether it be cash transfers, sales of products, and so on.

True, additional training will be needed in certain fields. I personally have been at Canada Post for 38 years, and I have confidence in the abilities of the corporation's employees. Training will be given, but we are already an integral part of the community and of the digital era at Canada Post. I do not view that as a stumbling block, quite the contrary. This is a chance to upgrade our workforce and to do more for the public by making Canada Post's network much more profitable.

[Karine Trudel, NDP, Jonquière, QC]

Mr. Perez, I come from Saguenay-Lac-Saint-Jean, and I know the rural world much better, perhaps as you do, Mr. Demers.

I wanted to know how you view the future at Canada Post. You raised the topic. I have monitored this file closely. It is definitely impossible to install community mailboxes on Montreal Island. Are you considering encouraging Canada Post instead to continue direct home delivery to apartments on Montreal Island, for example?

[Lionel Perez]

Thank you for your question.

Our position is clear on that subject. Home delivery service must be maintained, for various reasons. First, there is the urban reality of the city of Montreal, particularly in its central neighbourhoods where the population is very dense, there is a lack of public space, and it is really impossible to find locations. There are also universal access issues. There really is a limit on access to a number of community mailboxes. That is clear, in particular, from the challenges raised by snow removal in winter. This is all part of a whole in this area. We believe that the way Canada Post has reacted—not in the distant past, but more recently, in 2015 and 2016—clearly reveals the problems and issues surrounding the possibility of imposing this kind of delivery, which is not feasible in Montreal.

I will close by saying it a good idea that the Government of Canada wants to proceed with consultation on universal access next year. I believe that is part of an issue that must be considered.

[Karine Trudel, NDP, Jonquière, QC]

Mr. Demers, I would like to know the impact that an end to home mail delivery will actually have. You raised the point earlier. What negative impact will that decision have on your communities? I would like you to indicate the contentious aspects.

[Marc Demers]

All right. We are prepared to cooperate, and we have done that, but first I will say that Canada Post's decisions have financial consequences for the municipalities. I am not sure that citizens will ultimately come out on the winning end.

Second, we believe service should be maintained in the old neighbourhoods where seniors with reduced mobility live. We are prepared to cooperate with regard to new neighbourhoods.

There are also safety issues. At certain locations where boxes have been placed, they violate traffic control standards established by the provincial government and, obviously, by the City of Laval. So there are traffic flow problems that also constitute a danger. That is more or less it.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Madam Ratansi, seven minutes, please.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Thank you all for being here. I don't even know where to begin, because you've given us so much information.

For the record, the reason we are here is that during the election, we heard overwhelmingly that Canada Post had not consulted, and that is where the biggest problem comes in. They say they consulted; who they consulted, I don't know. When they came before us, and the task force came before us....

The first thing about change management, if they want to bring any change, is to consult the stakeholders. Therefore, if they come up with a solution, Mr. Perez, like you say, of putting community mailboxes in a very densely populated area, we are here to ensure that this type of mistake doesn't happen.

My question is going to be for everyone: financial stability or sustainability of Canada Post? They claim they are not going to be sustainable.

Mr. Lapointe, you have said they changed to a different accounting system. I am an accountant, so I'll tell you there's an international system that everybody has to follow, because then there is the right way to project your statements. If that change had taken place, and you claimed that there is $400 million they had not shown—again, you talked about the report of the Conference Board—how did Ernst & Young miss it when it was doing its review, because the task force relied on Ernst & Young? If you could answer that question, I'll go to the next.

[Sylvain Lapointe]

It's amazing.