Government Operations Committee on Sept. 27th, 2016

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

Not all regions of the country get these based around a world-class research institution like yours, but there are farming communities in what you call the greater Kitchener-Waterloo area. Are there any gaps in service delivery out there? Do you see, as we've seen in other parts of Ontario, that banks are retracting their local service offerings and people have to travel farther and farther to get the day-to-day services they need, or is service availability still pretty widespread throughout the area?

[Art Sinclair]

We're pretty well serviced in this area. As I said before, we have three cities: Kitchener, Waterloo, and Cambridge, and four townships: Wellesley, Wilmot, Woolwich, the three Ws, and North Dumfries: three cities, four rural townships.

Generally the service delivery here...and I think this is generally applicable across rural Canada and rural Ontario, if you're in a rural area the closer you are to an urban area there's a good chance you have better service delivery. That includes everything from education to health care. I think it's well known in Canada the closer you are to an urban centre, the better the quality of health care you're going to have.

Particularly with us, it's not a big issue. West of here, for example, Huron County, which is right on the shores of Lake Huron, has a serious issue because there's no major urban centre. So the service delivery in that municipality is significantly less and we're talking pretty well across the entire federal-provincial-municipal portfolios.

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

If we look back at the history of Canada Post, it provided direct mail and brought the world to rural towns all across Canada for the first couple of hundred years of its existence before it branched out and became a private corporation mandated to be self-sufficient. Is there a nation-building role for Canada Post to bring e-commerce, logistics, and telecommunication services to those rural areas so they can participate in the global economy the way Kitchener-Waterloo can?

[Art Sinclair]

Sure, could be, under one condition. You're innovative. You're out front of the competition rather than being behind. We talk about the culture of innovation all the time in Waterloo region. As I said in answering the earlier question, you have to have that culture that we are always looking at innovation, that what we're doing today is not sufficient. We have to move forward.

I think it's like the business community, you say the customer is always right. You always have to be looking at the innovation portfolio. So if Canada Post is an innovator, we're all for it.

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

Mr. Sinclair, I'm not sure if you're aware, but Canada Post has three subsidiaries that offer slightly different business models in the core of Canada Post. It has a logistics company. It has Innovapost; I think it does some direct mail. It also has Purolator, which competes on the parcel line. Do you think this internal, intercorporate competition is a good thing or do you think it raises ethical concerns about self-healing?

[Art Sinclair]

Are there ethical concerns about the government being in an area where the private sector is? As long as it's competitive, because traditionally—and I know we had serious issues with this in the provincial government—sometimes the province will go in and sometimes the federal government will go in and undercut the competition. Purolator is doing it for $10 and then all of a sudden Canada Post comes in at $5. That is where you get into the ethical debate.

If it's $1, 50¢, yes, okay you have a competitive playing field, but when you have a government organization like Canada Post that cuts in at half the cost of the private sector competitors, that's where you're going to have your issues and pushback from the private sector.

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

Thank you very much, Mr. Sinclair.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Mr. Brassard, you have five minutes, please.

[John Brassard, Conservative, Barrie—Innisfil, ON]

Thank you, Mr. Chair.

Mr. Sinclair, I really enjoyed your presentation today and the way you answered the questions. One of his expressions—and I heard this from the president of IBM when he spoke in Barrie—was you either innovate or you die. You mentioned something similar to that.

Part of what we're studying with this cross-country tour is potential areas where Canada Post can innovate. We are arguably in the centre of the most innovative place in Canada. Given your experience here, how or where are some of the areas, and what are some of the things that Canada Post can do to innovate and make it itself more competitive going forward?

[Art Sinclair]

I know some of the areas. I'm just looking at a list here of things they've identified. One of the things they're talking about is going to franchising outlets. Generally speaking, I know some people who have a similar arrangement with the provincial government in terms of driver's licences and health cards, and I've been told it's not a pure franchise agreement; it's a quasi-franchise agreement.

That's been identified here, where it lists converting 800 of the highest-volume corporate post offices to franchise outlets. I would say it would be converting to quasi-franchise outlets, because the relationship a business has with government is not the same as the one it has with a franchiser. I've been told that McDonald's, for example, has pretty specific rules under all the relevant franchise legislation, both provincially and federally, as to how it deals with its franchisees.

Again, in my experience dealing with some people who have gotten into the private delivery of government services, for driver's licences for example, they have said it's a pretty good model. These are business people who are working under, essentially, a public-private arrangement with the government. They say it's a pretty good model.

They're open longer than the offices used to be when the Ministry of Transportation just handed out licences and they were government-run offices. These are open on Saturdays. You never had that back in the day when the Ontario Ministry of Transportation ran them. So that would be one area, I think. As it says here, Canada Post has identified that as being an area in which there could be some savings.

Going back here, its says “further streamlining processing operations (savings of $66 million).” I think there are millions of organizational experts out there. We have a great synergy here in the city of Waterloo. We have the University of Waterloo, which has the technical people, and then down the street is Wilfrid Laurier University, and it has the business people. We have some amazing synergies. Laurier has a program now that focuses on training people to go into the IT field.

How can we use that business model for Canada Post to combine good management skills, as was mentioned earlier, with the latest in technology? That's what we do here in the Waterloo region, in our academic institutions. We have the IT at the University of Waterloo and we have the management skills and the management people at Laurier, and they assist a lot of our companies in the communities in those two areas, management and innovation. If you apply that to Canada Post, there should be some considerable savings.

[John Brassard, Conservative, Barrie—Innisfil, ON]

My son is a recent graduate of Laurier.

[Art Sinclair]

It's an excellent school. I'm not a recent graduate, but I'm a graduate.

[John Brassard, Conservative, Barrie—Innisfil, ON]

That was just a couple of years ago, Mr. Sinclair.

You talked about performance metrics. One of the tenets of business models and business development is to ensure that there are proper people in place running businesses and constantly looking at those metrics, finding ways in which they can continually improve. Based on your experience here in Kitchener-Waterloo, have you seen a level of improvement with Canada Post over the years? Have the businesses seen that, or are they not in a position to say that they're happy with Canada Post?

[The Chair, Conservative, Tom Lukiwski]

Please give a brief answer.

[Art Sinclair]

I'd say they're neutral. I can't say I've heard a lot of complaints one way or the other. I would say it's neutral, but we have to be better than okay. I think that's the key consideration there.

[John Brassard, Conservative, Barrie—Innisfil, ON]

I would agree with you on that. Thank you, sir.

[The Chair, Conservative, Tom Lukiwski]

Mr. Ayoub, you may go ahead for five minutes.

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

Thank you, Mr. Chair.

Mr. Sinclair, thank you for being with us today.

As I listen to you, I have mixed feelings. It's refreshing to hear a business person speak so passionately about efficiency. As you no doubt know, we are talking about a corporation that is not strictly commercially minded. It's a government corporation committed to being a good corporate citizen while serving the entire country.

Do you see the business side as separate from the mail delivery side? Should Canada Post be managed differently, so that the more traditional component of residential mail delivery is treated separately? Do you want to see a separation between those two service lines?

[Art Sinclair]

Merci.

I would say that would be a business model we might want to look at, separating residential from business. I would say so because, again, I would go back to the reference, and I mentioned this earlier, in the task force report to the idea that this is a sentimental business or corporation or maybe just a sentimental idea. It's different from BlackBerry or it's different from Maple Leaf Food Manufacturers. This is a service like transportation in Canada. As you mentioned as well, this has to service all of Canada. It just can't be for us here in Kitchener-Waterloo or Ontario. We have to have a model that services all of Canada. I would agree that this would be something we'd look at, maybe looking at Canada Post in terms of residential delivery and looking at it in terms of business delivery.

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

When a company moves away from its core business, the successful business supports the less successful business. In a public service corporation such as Canada Post, it's a bit difficult to imagine splitting up the two service lines and moving towards an already competitive market with an existing monopoly.

I have trouble envisioning the commercial side of a government-owned public service provider. You talked about the importance of a business taking risks, but that's an altogether different conversation when you're dealing with a government corporation. A private company is looking to turn a profit. The more risks it takes, the more profitable it can be. The more risks a business takes, the better its chances of making more money, but those risks could also lead to a nasty surprise. That will never work for Canada Post.

This committee's job is to hear from people who have solutions that are viable in practice, not just theory. We want people to give us solutions that could be implemented tomorrow. Unfortunately, the suggestions we have heard today are not viable solutions for the immediate term but, instead, ideas that would require a government-owned public service provider like Canada Post to do a philosophical about-face.

What is your take on that?

[Art Sinclair]

There are a couple of points. In terms of one branch of an organization making a profit and another one not and trying to balance them out, I think the business community would accept that. In fact, I can see that probably in a lot of public services we accept slight losses, and businesses lose unfortunately. I think your points are valid and, in fact, it is different from a private organization as a public utility, a public service. I think generally the Canadian population wants some type of a delivery service. I think one of the things that may have been mentioned here in the report, and I might have missed it, is that there are generational issues here. There are people, seniors, who haven't grown up with the technology that the other people have, who tend to still like using Canada Post . So that's I think why we get into the longer term and the shorter term, but you're right, in the shorter term, there are some serious challenges here.

[The Chair, Conservative, Tom Lukiwski]

Thank you.

Mr. Sinclair, that will conclude this session. I want to thank you very much for flying solo here and coming before us today.

[Art Sinclair]

I won't be filing an expense report.

[The Chair, Conservative, Tom Lukiwski]

All right.

Mr. Sinclair, we always make the same offer to all of our panellists who appear before this committee that should you at any time in the future have other information on behalf of your member organization that you think would be of benefit to our committee as we continue with our deliberations, please feel free to submit anything you may have directly to our clerk. Conversely, should any of our committee members have subsequent questions for you, I hope you would allow us to contact you directly and see if we can get some questions answered as well.

Thank you very much for your appearance here.

We will suspend for about two minutes. I would ask the next set of panellists to please come forward and we'll try to get going as quickly as possible.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much. I think we'll begin, colleagues and panellists. Panellists, you were probably in the room listening to the first presentation by Mr. Sinclair.

To recap, we have been asked by the minister to hold cross-country consultations with Canadians, including municipalities, organizations, and others affected by Canada Post and its services. This is to ask them what they see as the future of Canada Post, what they want from Canada Post, and how they see Canada Post evolving in the future.

A task force report has already been submitted to this panel based on the financial viability and sustainability of Canada Post. We will be incorporating that report with commentary and answers to questions as we cross Canada. The final report will then be drafted and submitted in Parliament before the end of this year.

Your observations and comments will be very much appreciated and will form a great deal of the final report that we submit to Parliament.

Having said that, I know you're familiar with the process. We're asking all panellists to please have opening statements of no longer than five minutes, after which we'll go directly to questions from our committee members. If we could could all get together on that page, I'd appreciate it greatly.

I have Mr. Green on my list for our first opening remarks.