Government Operations Committee on Sept. 27th, 2016

[Daniel Kelly]

Postal banking has come up before. We talked to CUPW about that years ago. We weren't philosophically opposed to it, but we surveyed our members, and they didn't think it was a particularly great idea. If there are services that fit and can be operated out of a rural mail centre, I don't think anybody would be opposed to that, but I think it would have to be economically justified.

[The Chair, Conservative, Tom Lukiwski]

A 30-second answer, please, if possible.

[Patrick Bartlett]

We'll try.

NAMMU's perspective on this is that Canada Post has not had a strong record of introducing new products, and the farther it's gone afield, the more unsuccessful it has become. New products that build on their current capabilities work. Things that go into new areas, such as postal banking, don't work and we don't believe will work.

[The Chair, Conservative, Tom Lukiwski]

Thank you so much.

We will go to Mr. McCauley, please, for seven minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Good morning and welcome. Thank you for your input.

We've heard a lot the last couple of days about an independent regulator, and I think someone brought it up today. There is currently an ombudsman. Keeping in mind that I have one other follow-up question, I wouldn't mind getting some feedback from you on how it's working, not working, and what the experience is. Does anyone wants to jump in?

[John Hinds]

We had hoped that the last postal review, the last mandate review, with the ombudsman would be.... We advocated for a regulator/ombudsman at the time. We went to the ombudsman, who said they can't deal with pricing and they can't deal with service. So what do they deal with? The ombudsman is an employee of Canada Post. For my members, I think the feeling would be that the ombudsman has been frankly useless.

We need a regulator who sets service standards and sets pricing and who is independent. I think that if you look around the world you will see that it is the trend and it's worked well. I think that if we look to the U.S. and the U.K. and other places, we see that the regulator works, because I think people feel they have a voice.

The challenge we have right now, particularly as small mailers—we are big mailers in small post offices but are actually small mailers—is that we don't feel we have a choice. We are told in July that this is what's going to happen to us in January and we're asked to comment on it. The comments go forward, but they never actually change. I think we need a regulator with teeth.

[Kelly McCauley, Conservative, Edmonton West, AB]

I have a quick question if you want to follow up. You said they were “frankly useless”, and that's an issue with their mandate; it's not the quality of the people there. Have there been any examples of successes in using them or it is just because it's pricing and service?

[John Hinds]

They can't deal with the issues that we're concerned about. They fundamentally don't have any mandate to talk about the.... They can't talk about price, and Canada Post sets its own service standards, and they can't afford service standards.... I'm not sure what they do.

[Patrick Bartlett]

Our mailers look upon the ombudsman as more of a consumer-facing capability. Canada Post has significant market dominance and wields a lot of power in the industry, to the point that in some cases it fines our members when they do something wrong, and there is no point of appeal. Recently, a member was fined over $20,000. It would have put that company out of business. We had to call and ask Canada Post to please not do that. There needs to be a regulator to control them and offset their sometimes anti-competitive practices.

[Kristi Kanitz]

I'd like to make a point. The fines are considered surcharges. Canada Post has been going through updating their invoices and their financial system, and they do not have a process for reversing surcharges. If there is a mistake—and generally these are often mistakes on the Canada Post end so there's an issue at induction—and the employee believes that something has been done wrong, they automatically fine the mailer. There is no process at Canada Post for reversing those fines. They do not have an accounting process to do that.

[Matthew Holmes]

I can provide a specific example. In the magazine sector, up until about a year ago, Canada Post, for returning an undeliverable item, even though the address and the name of the person living at that address were absolutely accurate, would still have charged the magazine, even though that magazine was sending a legitimate piece of mail to a legitimate address.

[Kelly McCauley, Conservative, Edmonton West, AB]

We've all experienced odd things, but I imagine that happens when you're dealing with billions of pieces.

Mr. Kelly, do you want to chime in? You're representing a much larger group—no offence intended to anyone—and are you getting the same feedback from your members?

[Daniel Kelly]

I think so. We've not had any direct experience, to my knowledge, with the Canada Post ombudsman, but we have with other public utilities. Regulatory bodies to look at rates are not uncommon, and we use them regularly. One of the our key recommendations in our submission is that letter mail rate hikes and package delivery rate hikes have been pretty significant and are pinching hard, thus reducing small business use of Canada Post, and they need to be reconsidered. I think the suggestion of some degree of supervision of the rates would be a helpful step in getting us there.

[Kelly McCauley, Conservative, Edmonton West, AB]

Getting back to you, Mr. Hinds, you commented about sacrificing service for fiscal stability. Obviously things have to be paid for somehow, and you're either paying more for the service or freezing the costs. Do you believe there should be a larger or a direct government subsidy to keep things going and keep costs down?

[John Hinds]

In terms of rural and remote Canada, I think if you want to ensure delivery in rural and remote Canada, and that communities have—

[Kelly McCauley, Conservative, Edmonton West, AB]

I'm talking about Canada Post in general.

[John Hinds]

Yes, but my specific point was that where our members are using Canada Post in rural and remote Canada, there's an issue we're concerned about, which is that if rural and remote Canada's postal transformation continues, it simply makes it not viable for our members to continue to use Canada Post, and they really have no option. What we've found is that if a community loses its community newspaper, it loses its trading area, and there's a whole host of things that happen through that. I think there is a public service mandate there. As to whether that's a subsidy on the part of government to support rural communities, that might be another discussion.

On the broader issue, I think it's also that, again, we don't want to see Canada Post as our competitor in the flyer business. They have what we consider to be an unfair advantage with access to the locked boxes. The reality is that I don't think it's the role of government to pick winners and losers in a competitive market, and essentially that's what's happening now.

[The Chair, Conservative, Tom Lukiwski]

Thank you.

Mr. Weir, please, for seven minutes.

[Erin Weir, NDP, Regina—Lewvan, SK]

Mr. Hinds, I wanted to ask you a bit about the competition you mentioned between flyers and newspapers. Is your main point is that Canada Post should do a better job of delivering community newspapers or that they shouldn't deliver flyers or...? What would you like to see changed?

[John Hinds]

What we see is that every newspaper delivers flyers. Canadians love flyers, as you probably know. It's very true. It's a real challenge for a newspaper when someone says, “I didn't get my newspaper” when it has been sent and the customer says, “But you didn't have the flyers inside it.”

All newspapers deliver flyers. What we've seen is that the competitive flyer market is really in urban and suburban Canada. Look around. In any one of these towers, Canada Post has an unfair advantage, in that in urban Canada it can deliver to every single address. As newspapers, we cannot get through the door in terms of multi-family units.

They're using their statutory locked-box access, if you want, and that's an unfair advantage. In the case of rural Canada, most of the small papers are delivering flyers and they're using Canada Post, so there is a competitive thing there.

[Erin Weir, NDP, Regina—Lewvan, SK]

My question is, what's the solution? Should Canada Post not be delivering those flyers? Should newspapers have access to multi-unit buildings? What's the remedy?

[John Hinds]

I would say that I think the research we've done shows that people don't want anybody to deliver flyers to locked boxes. That may be a solution.

[Erin Weir, NDP, Regina—Lewvan, SK]

It's just that you mentioned that people really love getting flyers, so should people in multi-unit buildings be deprived of that?

[John Hinds]

Well, only through Canada Post....

[Voices]

Oh, oh!