Government Operations Committee on Sept. 27th, 2016

[Matthew Green, Councillor, City of Hamilton]

Thank you very much, Mr. Chair.

I certainly appreciate the opportunity to be here today on the public record. For the record, my name is Matthew Green. I'm a ward 3 city councillor for the City of Hamilton in what is essentially Hamilton Centre.

I appreciated the opportunity to be here to hear Mr. Sinclair, who presented some very compelling points on this particular topic. I'm confident that as you cross the country you will hear many respected voices, subject-matter experts in their field, on the labour issues, on the actuarial penson issues, on the business case analysis of Canada Post. I am by no means an expert in any of those fields, but what I am an expert in is ward 3. I'm an expert in the people of my community as a ward 3 city councillor.

I'm here particularly to talk today about postal banking as a compelling alternative to payday loans.

We heard today from Mr. Sinclair, chair or executive director of the chamber of commerce, of the need for innovation. We have read in the task force report that market disrupters have interrupted the Canada Post mail delivery system, and by extension their business case. I come from a small business background, am newly elected, and so I really appreciated those comments related to innovation and competition being a disrupter.

I would like to submit before you that Canada Post's postal banking option is indeed a market disrupter. However, it's a reverse market disrupter into what is, I consider to be, pretty much a cartel in our banking.

We have before us, in a recent report, that of the 15 most profitable companies in Canada, the top five are all of our banks. There is a huge market opportunity, an entrepreneurial opportunity, for the crown corporation of Canada Post to enter into this in a way that would provide both a social conscience, as we heard today from the member, and services to some of our most marginal people. In the task force report, I do have some concerns with the language and the citations that were used to put forward the report. “According to” the banking association...“According to the...Payday Loan Association”, that's a little troublesome when we have these lobbyist groups self-reporting on the interests of Canadians.

Hamilton has the unique distinction of being home to the Payday Loan Association. In fact, it was Mr. Stan Keyes who was the president at the time when I brought forward a motion to the City of Hamilton, when we took the historic step to be the first municipality in Ontario to license payday loans.

The task force presented that there are more banks than ever, when we know there is massive bank flight out of our inner city urban centres. As you've identified, we know that Canada Post, through its infrastructure, offers an opportunity to have existing infrastructure service this need. In fact, Hamilton is also the very proud home of Canada's very first Tim Hortons—in our ward.

We know the only thing more Canadian and more expansive than Tim Hortons is in fact Canada Post. They have more outlets and more doors than we do Tim Hortons' locations across the city. That's an important fact.

We've had 489 bank locations close down in Ontario. We have precarious employment. We have stagnant Ontario Works and ODSP rates that have created a situation where at the end of the month our most vulnerable people do not have a place to go, which forces them into the payday loans sector.

I would submit before you today that the payday loan sector is a legislated predatory industry. They are targeting under-serviced, inner city communities where the most vulnerable people are present. They will state in their self-reported task force that you need to have a bank account, a job, and an income to receive this. That is absolutely not the case. In fact, what we found in Hamilton was that our highest users were people who were already on ODSP and Ontario Works.

They say that the rate they're offering our Canadians is 23% over the course of their short-term loans, but the reality is, Mr. Chair and committee members, that it's actually closer to 546% annualized interest. This is extortion. This is usury. Here's a great opportunity for Canada Post to enter in, to provide, with a conscience, as a crown corporation, a compelling alternative to what I consider to be a predatory industry.

You have the infrastructure, you have the technology, and you also have the know-how with the various sectors inside the Canadian government, as it relates to your development banks and others, to provide the expertise to roll this out.

Thank you for providing me the five minutes. I look forward to any questions that might come.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Next we have Ms. Lunau.

[Cindy Lunau, Councillor, Town of Milton]

Thank you.

Good afternoon, Mr. Chair and committee members. It is indeed an honour and a pleasure to appear before you this afternoon. Frankly, I was surprised by your kind invitation. I'm not part of a lobby group or a citizen with a particular concern. Personally, I've had only good experiences with Canada Post.

My best guess is that my nearly two decades of representing rural residents, and my experience as a municipal councillor in the Town of Milton—which is Canada's fastest growing community—may have offered me a unique perspective on some of the challenges that are facing residents and Canada Post today.

Speaking first as a rural councillor and a resident, end-of-driveway delivery is essential for most rural residents. It's convenient, yes, but it's also the safest location for picking up mail. Where mailboxes at the end of driveways did not meet the standards, or were not safe for Canada Post drivers, I worked closely with Canada Post to locate safe sites for community mailboxes. These, however, present some challenges, especially with snow clearing and access. There are not enough sites in rural areas to accommodate large-scale community boxes. Therefore, driveway delivery remains essential.

Sites in our rural area would have benefited from being set back a few more feet—if you're considering standards that you might look to for your sites—but village post offices are absolutely essential. There must be a local facility to mail, to receive parcels, to purchase stamps, and to access the other special mail services that are often offered.

One of the most common complaints that I receive as a rural councillor is address confusion. Addresses simply do not match municipal boundaries. My rural ward is served by five post office locations. Those would be Campbellville, Acton, Milton, Rockwood...actually, there are six locations if you include a few that are served from Guelph. This is often confusing, especially for those migrating from urban areas and for the providers of services. Personally, I have a Rockwood address but Milton taxes. This confuses even Elections Canada on election day.

On the bright side, my car insurance is calculated at a lower rate because I'm considered to be outside of the GTA.

From an urban perspective, in my role on council, the suspension of home delivery and the replacement with community mailboxes created many unfortunate circumstances in established neighbourhoods. In addition to losing the convenience of home delivery, many sites are simply not convenient and often not suitable for walking or car access.

Municipal staff can be very helpful in finding the best possible locations allowing for public access, sidewalks, and parking. This was not always done as these community boxes were located. Generally in the cases of new subdivisions, these sites are located with some considerations, but these are often overlooked in the refits.

Litter is often a complaint. I think that with the co-operation of municipalities perhaps you could arrange for covered recycling containers adjacent to some of the community mailbox locations.

For some, home mail service is much more than a convenience. It is essential that some accommodation be found for this group, perhaps utilizing a courier service, even if only twice a week, to deliver cheques, personal mail, to those who need this service. It could be considered.

I'd be very happy to answer any questions, and would welcome an opportunity to share Milton hospitality if you care to visit.

If I could deviate for just a moment, as an elected representative on a much smaller scale than you folks, I really do appreciate the work and the effort that you are putting in, not only to represent your ridings on these issues, but also to represent all of Canada. I applaud you for the time that you are taking away from your other duties and from your families to serve on this committee.

We look forward to many improvements as Canada Post faces its challenges.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much Ms. Lunau. On behalf of the committee, I thank you for your kind words about the services that we provide. Whether it is on a small scale or a large scale, public service is still one of the noblest endeavours I think any woman or man can perform in Canada, so we thank you for that.

Welcome Mr. Faruzel.

We are going to Madame Bilodeau first.

I've asked all panellists, please, no longer than a five-minute opening statement. I'll try to give a one-minute reminder if you're getting close to the end, and then we'll have questions from our committee members.

First, we'll go to Madame Bilodeau, please, for five minutes.

[Ann Bilodeau, Executive Director, KW Habilitation]

I too want to thank the group for allowing not just myself but all of us the opportunity to speak about Canada Post. I too very much appreciate the work and the service that Canada Post has provided to our community. I am looking forward to hearing about new changes, and what everyone is doing right now. It's great to see that words like innovation are being used.

I come to the table during this session because I work in the field of disabilities. I am the executive director of KW Habilitation, which is a large service provider for adults and children in our community who have disabilities. I am also very involved at the provincial level in the developmental services sector. I think I can bring some perspective from my own community, but I also know that it is very consistent with that across the province of Ontario.

When it comes to people with an intellectual disability and Canada Post—I asked the question to some of the people we support—right away, they automatically think of Christmas cards and birthday cards, because they are probably the most important thing in many of their lives. What is interesting, though, is that technology has also come to our world. Skyping and using the computer has also been pretty major, so it's not as relevant, it seems, today.

The other part that is very important is, of course, the ODSP, but now, cheques are being deposited right into their bank accounts, so there is not a worry in terms of timing. The idea of every other day delivery was not something that people felt was a huge concern.

Community mailboxes can be a concern, particularly in inclement weather. Many people cannot manoeuvre the key. It can also be a problem if the area has not been cleared in the wintertime. It is an accessibility issue.

We are in favour of the community hub idea, whether it be through a franchisee or Canada Post. It becomes a part of the community when people can come in and talk to each other. We look at that as a community socializing piece too, for people just to talk to people instead of always being on a computer. That human touch is of course very welcoming in our field.

Many of the citizens we support also have physical disabilities and so, again, the accessibility issue becomes relevant.

We still find it is important for people to get out of their houses. Whether it be delivery to their door or somewhere they can go, as long as it is easily accessible, that definitely is a top priority.

I echo some of the comments that have already been made by my two colleagues who were here, in particular around the banking piece. Even as a private citizen I have concerns. If you're going to get into the business, please make it so that it is more affordable for every Canadian. We do know what is happening out there, and for people with disabilities it is even harder. As a private citizen I feel it too.

Thank you very much for allowing me the opportunity to be here today. If there are any specific questions I can answer, I'll be glad to do so.

[The Chair, Conservative, Tom Lukiwski]

Thank you so much. I'm sure there will be questions.

Mr. Faruzel, you have five minutes.

[Edward Faruzel, Executive Director, Kitchener Waterloo Access Ability]

Thank you very much for having me here this afternoon.

My name is Edward Faruzel. I'm the executive director of a non-profit agency called KW Access Ability. Our agency serves adults with physical disabilities, so we're serving similar situations to Ms. Bilodeau, but not quite the same.

People with physical disabilities make up approximately 15% of the population. We feel this number is probably a little on the low side, because that is with people who have self-disclosed that they have a physical disability. With the aging population, that number is only going to increase, so it's important these people's needs are being met. I want to thank you for allowing me to be here to voice their concerns.

The biggest concerns that our members are facing are with the community boxes and the difficulty in accessing them. Many people using wheelchairs or walkers have difficulty getting out of their house sometimes, especially in the wintertime. Accessing these community boxes can be quite hazardous, so they felt it was important for the door-to-door service to continue. The need of five days a week is probably not quite as important to them, but just having it come right to their door was definitely high on their priority list.

Many people with physical disabilities rely on somebody else to help them, such as personal support workers, and having mail delivered to their doors makes it much easier for them. They can have their support workers help them with it, and they don't have to send somebody to go out and receive it for them. It's a safety concern and also a privacy issue, sending somebody to go and retrieve their mail for them. Who knows what could happen to it on the way back.

I don't want to take up too much more of your time, but I am also available if anyone has any questions.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much, Mr. Faruzel. I'm sure there will be questions from my colleagues.

We'll go now into seven-minute rounds. We'll start with Mr. Whalen.

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

Thank you, Mr. Chair.

Thank you all for coming. As we move across the country and have our meetings in Ottawa, we hear from similar categories of witnesses. Everyone brings their own perspectives. There's no one-size-fits-all for the needs of Canada Post users or the needs of different communities, so thank you very much.

One thing I will mention for Mr. Faruzel's benefit is that there is a service offered by Canada Post—perhaps it's not publicized broadly enough—where you can have door-to-door delivery if you meet certain medical, or age, or ability conditions. Anyone who is in need of door-to-door delivery can get it. We have heard complaints on the basis for which you can apply for that, and what role Canada Post should have in maintaining medical records and whatnot, but there is a service available. If your members are having difficulty with Canada Post, there's a way they can get it delivered to their doors once a week.

I'm concerned about the future of Canada Post. The task force report hasn't painted a glowing picture of the future of Canada Post. Even if all their recommendations are met, according to their financial projections, Canada Post still would not be self-sufficient 10 years out. I'm interested in this new idea. We have heard from Mr. Green today about postal banking from the perspective of payday loans. You're the second witness we've heard from today on this topic, but I want to try to challenge you a bit on the nature of the delivery model, and what changes might be needed, to see if you're still in favour of it.

Your particular community of Hamilton is an urban area. I'm just doing a quick Internet search and there are about 20 Canada Post offices. I don't see any corporate stores. They're all either in pharmacies, at gas stations, or at the university.

How do you envision banking services being offered by Canada Post where they don't own the building and they're only taking a small amount of rental space from their franchise partner?

[Matthew Green]

I think there are still opportunities to offer low-cost products, and I heard earlier the idea of needing to confer with the bankers and perhaps do some price fixing to make sure you're not too competitive. I would submit that you can't have it both ways. Around the globe internationally, in the U.K. it's 25% of sales for the post, 36% of revenues in France, 67% in Italy, and 71% with the Swiss.

I know there are going to be some challenges when you enter into a new business and you are a disrupter, but certainly the payday loan companies have found low-cost ways. In Hamilton they have an over-saturation. So when you talk about market disrupters, what's the market? We know this is a multi-billion dollar market to enter into and the pie is massive. There are overhead costs. If there's a compelling case for expansion, whether it's in small retail markets, where you have your shoppers and some of your franchisees, which are ubiquitous across urban centres, or in your rural neighbourhoods, where you already have the infrastructure....

I was at a conference this past year where I heard an indigenous community talking about the need for banking in some of our territories having that infrastructure present, and also having some challenges around addresses. Where we were fighting community boxes in our neighbourhoods, they were saying they would love to have them.

There's a real international case for this, and I feel the task force dismissed it almost wholesale. I would say, in the task force's defence, that they were presented with looking at solutions for which there were business plans. In their tight timeline they were not asked to develop new business plans. I think there are notes on this topic where if you're going to explore any of these options, business plans would need to be developed. It seems we can look to other countries for those plans.

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

As a young person yourself—I guess you'd call yourself a millennial—do you use a physical bank? Do you go into a physical bank?

[Matthew Green]

I do. In fact, as do most Canadians, I pay the highest rates for banking anywhere—

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

Do you do your banking at a location?

[Matthew Green]

I do. I'm a small business owner. At the end of the day you still have to cash cheques. You actually have to deposit cash. That still has to happen, and when you put it in an ATM they hold it. I always wondered why they hold it. I think it's the three-day interest they like to collect on it before they pay you back your money.

Another interesting thing is they actually charge small businesses a cash-deposit fee. Our banking system is completely out of control, and I referenced it as a cartel, because it is fixed. The private sector can't have it both ways. If we want to have an open banking system, then let's open it up.

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

There are different options, but I want to delve into this; you seem very well-informed on it.

In terms of different options for providing the service, because as you said, you'd go the route of leveraging existing government knowledge, there's also the model of just going with the white label banking service the way President's Choice Financial offers their banking to their clients. Which do you think is the preferred model for Canada Post to explore?

[Matthew Green]

I think there's a hybrid model. Innovation accounts for all opportunity, and this market opportunity is massive. The Canadian Centre for Policy Alternatives came out with a very well articulated case for this. I'm sure it was submitted with academic research and vigour, but—

Oh, I'm sorry.

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

It's okay.

[Matthew Green]

—with regard to that alternative, I can only tell you what I experience in my community. When you see people enter into a cycle of economic violence.... I've been hard on banks, but predatory lending in payday loans is far worse.

Thank you.

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

Very quickly, Ms. Lunau.

In terms of the transition you've already experienced in your community from home delivery to community mailboxes, do you feel your community was properly consulted?

[Cindy Lunau]

When you're under a timeline, sometimes shortcuts are taken and I think there were some shortcuts taken. When it came to the rural delivery changes, I believe we were very well consulted. We were literally driving up and down the roads deciding what met the time and distance requirements for drivers. I love my driver and I want her to stay safe so she can continue to deliver.

There was a great consultation on that aspect. Where it came to placing the community boxes in the mature neighbourhoods, I think there was less consultation. I can't speak to that specifically, because it's not my ward and some of the urban.... Just anecdotally, it could have been better. Often, they just appeared. When I spoke with our director of engineering, sometimes they just appeared. The town had no idea they were coming, and you know who gets the first call.

[The Chair, Conservative, Tom Lukiwski]

We've heard that before. Thank you very much. I think you've answered Mr. Whalen's question quite adequately. Thank you.

Mr. McCauley, seven minutes please.

[Kelly McCauley, Conservative, Edmonton West, AB]

Like Batman, they just appear.

First of all, thank you very much, all four of you. It's been delightful listening to each of you. I appreciate that.

Cindy, thanks for your comments. It was very sweet of you. But to return the favour you're working a lot closer to the people. I congratulate you, and all of you, for your service.

I was glad to hear that. We've been hearing about how there needs to be more consultation with the municipalities for the community mailboxes. I've been receiving some information from Canada Post that they had done a fair amount of consultation. It sounds like there needs to be more, but I'm glad that to hear that they were doing it with you.

Do you believe that if there is a bit better communication with the.... We've heard it before about the mature neighbourhoods. My riding is half World War II houses and half brand new builds. It's very easy in a brand new neighbourhood. Here's the park. Here's the school. And, boom, here's the mailbox. It's more difficult in the older neighbourhoods. Do you think—I don't want to say if there's a will there's a way—that with a bit better consultation and better planning in your area they could do mailboxes better in the mature neighbourhoods?

[Cindy Lunau]

There's always some room for improvement. But I would say at least our engineering and our planning department is absolutely wide open to a phone call and a meeting. Will it make all the residents happy? Unlikely. It's like everybody wants the convenience of it, but they don't want it there.

The fear factor, the change of whatever, is often a problem, but I think there still is room for consultation. There is always room for more but at some point you have to go ahead and do it. I understand that.

I think that the biggest problem with some of these mature neighbourhoods is they always paid a good deal of attention to their property and when the litter starts, they really resent it.

[Kelly McCauley, Conservative, Edmonton West, AB]

It sounds like Milton has a solution where they're offering to put up the recycling bins.

[Cindy Lunau]

Yes. I remember some years ago I was on a group; it must have been 20 years ago I met with a focus group about what community mailboxes should look like. I remember talking about the possibility of having a drop box of some sort. It never happened, of course, but there still is that opportunity for recycling. Most communities have blue box pickup now.