Government Operations Committee on Sept. 27th, 2016

[Art Sinclair]

Yes, that's a good point.

I would refer back to a former board member of ours at the chamber of commerce, somebody who was in the manufacturing sector for years. He always put it this way, particularly with municipal property taxes, because property taxes tend to go up every year. He said, “If I'm paying more, I should get more.” That, I think, is the approach of a lot of businesses. If they pay more, they want more. The idea of paying more for status quo is difficult for a lot of businesses to comprehend.

Following up on the previous question, people will pay good money for good services or if there's tangible evidence that there's an improvement in service. You know, what are some of the metrics that businesses are measured by? How fast can they get my product to the customer? What's the cost relative to the competitors'? How fast are they getting stuff back to me? It's all of those metrics.

If Canada Post at the end of the day can prove to the business community, and taxpayers in general, that there are improvements in service delivery, I think people will support the corporation. It goes back to the point I made earlier about the realignment of government services back in the 1990s. I was with the provincial government at the time, the Ontario government, and we started doing something called business planning. Up until that point in time, nobody did that. Now, every ministry in the Ontario government, municipal governments, everybody, has a business plan.

What's the key element of a business plan now? It's performance metrics. How are you improving this year over last year? I think one of the key considerations moving forward is the performance metrics for Canada Post, and demonstrating to the business community, whether it's small businesses here in Ontario, Northwest Territories, the Yukon, or British Columbia.... If you're performing better, we'll support you.

I think another point is that the task force talked about the sentimentality of Canada Post. On the personal side, do you still want to send Christmas cards, do you still want to send gifts? I think that's an interesting thing. I think there's an indication out there that this is different; this is a different public service.

[Kelly McCauley, Conservative, Edmonton West, AB]

Well what we've seen with the survey that they've done, and it was a huge survey, is that people want to continue to send mail. They do not want to pay more for stamps. They do not want to pay higher taxes to support Canada Post. No one is willing to give on the other side, and you can't push and pull at the same time.

Unfortunately, a lot of the feedback we are getting is give us more, give us more, but, by the way, someone else should pay. In the end, it's one payer: the taxpayers, businesses, and general people.

[Art Sinclair]

Yes, in Canada, there are three levels of government, one taxpayer.

[Kelly McCauley, Conservative, Edmonton West, AB]

Yes.

I appreciate your point of view, and it's great to be in Kitchener, the home of BlackBerry.

When we talk about disruption and what we're going through now with Canada Post, we've seen BlackBerry go from zero to huge mountaintops and back down to zero again. Things can't stay the same. A perfect lesson is trying to keep things staying the same without ever adjusting, whether it's the workforce or business plans or anything else.

[Art Sinclair]

I think that is another important lesson for Canada Post.

We constantly hear from the BlackBerrys, Tom Jenkins at OpenText. The larger technology companies say that once you quit innovation, you might as well shut your doors. You are constantly innovating, particularly, for example, in the market that BlackBerry is in. You come out with a new product, and two months later your competitors have something they say is better, and a lot of customers say they like it better too. That's the environment that a lot of businesses are in, not just the IT sectors, but everybody. You constantly have to innovate, because if you don't, you fall by.

I think that's an important lesson for Canada Post, or any other government agency as well. You have to be innovative or you're left behind. In this case, if Purolator and all their competitors are innovative and out there saying “here's what we're offering our customers”, if Canada Post is maintaining the status quo, they're left behind.

[The Chair, Conservative, Tom Lukiwski]

Thank you.

Mr. Weir, for seven minutes.

[Erin Weir, NDP, Regina—Lewvan, SK]

Mr. Chair, I'm struck by the fact that we've got one panellist up at the front now and four waiting for the next hour. I'm wondering if it might be possible or advisable to have another town member contribute during this segment.

[The Chair, Conservative, Tom Lukiwski]

I think, Mr. Weir, since we've started with this section, my plan was to go around the table so every committee member has one chance to ask questions of Mr. Sinclair, then we'll bring the next panel up. And now you have no more time... No.

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay, I don't mind sacrificing some of my time for that. I only wanted to get that straightened out.

Mr. Sinclair, you mentioned the importance of improved service in response to the increased cost of stamps. It would seem to me that one part of good service could be door-to-door delivery. I'm wondering if you have any thoughts on the whole debate about home delivery versus community mailboxes.

[Art Sinclair]

Not really. From the business community's perspective, I think generally that would be more in the line of a residential issue. There may be a lot of businesses where their residences might lose it. From my perspective in terms of Canada Post issues, that hasn't been one....

[Erin Weir, NDP, Regina—Lewvan, SK]

You're more or less agnostic on that one.

Another issue I wanted to get into is because you quoted from the task force report that is quite seized with the idea that Canada Post has a huge unfunded pension liability and that this requires all sorts of cuts and restructuring. Of course, that calculation is based on a solvency valuation, which is a fairly extreme assumption of winding up a pension plan and having to pay out all of the benefits at once. The point was made by another witness this morning that if we looked at it on a growing concern basis, Canada Post's pension is actually in surplus. Provincially, in Ontario, the government has allowed pensions that are jointly sponsored to not have to make solvency payments. Do you think that might be a reasonable approach for the federal government to take with Canada Post as well?

[Art Sinclair]

That's kind of difficult for me, not being an actuary and not having a lot of familiarity with the mechanisms of pension funds.

What I will say is there is a concern from the perspective of the business community. This is one area where I think a lot of businesses are going to look at this and say, “Yeah, there are some serious issues here” because, as you know, we've had a serious debate in Canada over the last number of years, and in Ontario there's been quite a deficit because the Ontario government wanted to do a provincial plan. We've heard from a lot of our members, and particularly David Chilton, who some of you may know as he used to be on Dragons' Den and is fairly knowledgeable in the pension field. He spoke at our chamber of commerce about three or four months ago, and said the number one issue in the pension debate that's been ignored and shouldn't have been is the gap between public sector and private sector pensions.

I would think some of our employers would look at the situation with Canada Post and say that's something you have to address because, generally, private sector pensions lag behind public sector pensions, and we've ignored that debate over the last two or three years. We've been talking about, in the province of Ontario, who pays into the Ontario pension plan and who doesn't, but we just kind of missed the debate on the gap between public and private sector pensions.

[Erin Weir, NDP, Regina—Lewvan, SK]

Generally, private employers don't have pension plans, so it becomes a question of whether you take away public sector pensions so that no one has them or try to expand them to everyone. I suppose that's a broader debate than the Canada Post situation.

[Art Sinclair]

That would be the response, I think, from the business community, the issue is the gap between public and private pensions.

[Erin Weir, NDP, Regina—Lewvan, SK]

Certainly.

Another topic that our committee is considering is the possibility of trying to use Canada Post's infrastructure, its network of offices across the country, to move into different lines of business. I wonder if you had any thoughts about the possibility of offering financial services through post offices.

[Art Sinclair]

Yes, I found that quite interesting. My initial response is—and I think you would hear this from the banking community—does the banking community need more competition, particularly from the government? I think there was reference to doing some type of partnership with Purolator. In the business community, we support P3s, public-private partnerships, for infrastructure; they're a great idea. They may be appropriate for service delivery.

But then again, the other side is this: I know one of our local MPs has held pre-budget meetings on a number of occasions, and frequently he has people from the banking community in rural areas of the Waterloo region. We have three cities and four rural townships, so we have a very diversified economy here. The point that's often brought up with the banking community in rural Ontario is, why is the Government of Canada loaning money to farmers through the Farm Credit corporation? I think the explanation is, number one, the federal government is probably making some money doing this. The traditional response from the banking community is, “Gosh, there's available credit out there for farmers through the banks; why does the Government of Canada need to be in the line of business of loaning money to farmers?” Some farmers will come back and say, “Well, yeah, I went to the Royal Bank and they wouldn't give money, so I went to the Farm Credit corporation and they did.” So I can see some arguments there.

Does Canada Post need to be competing where the private sector doesn't need competition? In terms of this idea of Canada Post getting into banking, I read the report and I wasn't exactly sure. There are a lot more questions there than answers. Of course, this is just a preliminary discussion paper, but I would warn, moving forward, that we exercise some caution in terms of who does Canada Post want to compete against? I think that's a key consideration.

Going back to what I said earlier, by identifying the priority areas for Canada Post or any other government agency, it comes to issue of, does the Government of Canada, or the Government of Ontario, or the Regional Municipality of Waterloo need to be in that area when somebody else is already doing it? I think that's really a key consideration moving forward.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Mr. Whalen, seven minutes, please.

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

Thank you, Mr. Chair.

Thank you for coming, Mr. Sinclair. It's a beautiful time of year here in Kitchener-Waterloo and I hope you all have a wonderful Oktoberfest next weekend.

[Art Sinclair]

Oh, we will.

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

I'm sorry I will be missing it. It's always a good time.

Thinking about the future, we look at the task force report and it paints a pretty gloomy picture. Even if it's wrong by a few percentage points, there are very slim margins for a very high-revenue business, so there's a lot of risk baked in. If we're thinking about potential future opportunities, I look at some of the things we've talked about in previous editions of the committee, possibilities for expanded service offerings. People have talked about evening and weekend delivery for Canada Post, taking it in the other direction to offer more interesting e-commerce solutions. Maybe there's an opportunity for logistics fulfillment and delivery.

Do you feel that your members would take advantage of those types of services, back-end logistics services or delivery? Are there e-commerce companies here in the Kitchener-Waterloo area that would like to see an expanded service offering from Canada Post?

[Art Sinclair]

Yes, I think so, just generally if it was cost-competitive and convenient, if Canada Post was offering a service that Purolator wasn't, or at different times than Purolator. I probably shouldn't use Purolator as an example all the time; there are other—

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

Well, Purolator is 92%-owned by Canada Post, so it's an interesting situation there.

[Art Sinclair]

Yes, if it's filling a need in the marketplace that's not being filled, then certainly I think our members would use it.

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

What if it's an area that's fulfilled in foreign markets already but just not fulfilled domestically? What type of risk tolerance do you think we should have, or that your members would allow Canada Post to have, to compete in logistics delivery, that maybe is not delivered in Canada but is delivered south of the border already?

[Art Sinclair]

From our perspective, we have a lot of start-up companies in the IT sector here. They have a high level of risk tolerance, probably the highest in Canada. So, sure, risk is part of doing business. If government agencies want to start taking risks, then I think a lot of people in the business community would accept that; it's part of doing business.

In this community, we have a high tolerance for risk, so if Canada Post wants to go out there....

We have discussions quite regularly with the universities, and the universities are far more risk-tolerant now than they were 30 or 40 years ago. They go into a lot of ventures and they take a lot of risks. Again, I don't know, our community might be a bit different from some other communities across Canada, but if Canada Post wants to start taking those risks.... I think you made a good point, if other countries are offering it, well, what are they doing right and what are they doing wrong? And whatever they're doing right, that's what we'd do here in Canada.