Government Operations Committee on Sept. 28th, 2016

[The Chair, Conservative, Tom Lukiwski]

Panellists, welcome.

As you know, the minister responsible for Canada Post has engaged in a series of very extensive consultations that takes basically two parts. The first part was the establishment of a task force to examine the financial viability and sustainability of Canada Post. The task force has completed its work. It has submitted a report that this committee has examined.

The second part, however, is a cross-country consultation with Canadians as individuals, organizations, and municipalities, asking them their views on the future of Canada Post, and trying to solicit their recommendations for the future of Canada Post. We're here today for the second phase of our consultations.

The process that we'll follow is fairly simple. We will ask each of you to offer a five-minute or less opening statement, and that will be followed by questions from all of our committee members. We have approximately one hour or so.

Time is fairly tight, and that's why I'm asking you to try and keep your opening comments to no more than five minutes. It has been our experience that even if you have more things that you think you want to say in an opening statement, that usually comes out in questions during the Q and A process.

I have a list of all of the panellists and we'll begin with Susan Sitlington.

[Susan Sitlington, President, Canadian Union of Postal Workers]

Thank you.

Canada Post delivers letters and parcels to homes and business every year. Many Canadians consider it a trusted and valuable service.

Home mail delivery is the most environmentally friendly way of moving parcels and letters from sender to receiver. Moving the delivery to five days a week is greener. Moving the delivery to three days a week would make a Canada Post parcel more expensive, which would result in the corporation losing market share to less environmentally friendly companies. More courier companies would step in to fill the gap, driving the same streets.

Fluctuation in volume is already built into the delivery system, so having carriers deliver fewer days makes it harder to reduce carbon footprint. From an environment perspective, Canada Post is the best delivery option. According to a 2011 report, getting a parcel delivered by Canada Post can cause up to six times less CO2 emissions than an overnight carrier, and three times less than having a customer make a five-kilometre trip to pick it up in a store.

Our national president Mike Palecek says we have more outlets than Tim Hortons. We've got the biggest retail network in Canada. We deliver everywhere in this country. Imagine what we could do with these assets.

Postal banking would be a powerful, low-cost alternative. With profits earned, it could help keep post offices thriving as a public service and bring returns to communities. Canada Post ceased postal banking in 1968. As of July 31, 2016, Canada's six biggest banks reported a combined profit of $10.4 billion, up 12.6% from last year's quarterly profit. Banking is the most profitable industry in Canada. Canadians pay some of the highest bank fees in the world. The average is $185 per user per year.

Banks have also pulled out of rural communities to bigger metropolitan cities where customers are more likely to make higher purchases, generating more wealth. China's postal bank serves over 400 million customers. Japan post is the largest deposit holder in the world. New Zealand and Italy post have successfully offset mail volumes with banking, They are able to keep letter carrier and retail services while still showing profits. Revenues for U.K. postal banks have shown a 40% profit, while France has shown a 65% profit from banking services. France's postal bank also offers services for low-income customers to social service agencies.

John Anderson, an author at the Canadian Centre for Policy Alternatives, studied the postal banking of several countries. He believes adopting a similar service for Canada Post is a no-brainer.

Canada's vast geography leaves cities, towns, and villages with a lot of kilometres betwixt them. Big banks have moved out of many rural communities, and this is much more pronounced in the northern regions.

Altering the moratorium on retail post offices would do nothing but make these small villages into ghost towns, leaving residents with a feeling of loneliness. Canada Post is the only federal entity these small communities have connecting them with the federal government. Pulling out would give them a feeling of not belonging.

Canadians have told the government they want their service restored to how it should be, through door-to-door delivery and retail counters. Community mailboxes were and are a big failure for Canada Post. Many cities, towns, and municipalities from coast to coast to coast fought against these monstrosities. We're able to stop them with the promise of door-to-door delivery being restored.

Letter carriers become the eyes and ears on the street. Letter carriers can sense if something is out of whack because they are there every day. There are many stories of letter carriers saving lives and homes, averting danger, providing smiles, love, and laughter. For some, the only human contact is the letter carrier.

We must look at the real story of Canada Post finances, and not absurd losses portrayed to Canadians who are accepting less service for higher postage. It's funny, Deepak Chopra worked for Pitney Bowes before Canada Post. After his five-point action plan, you can send metered mail with Pitney Bowes for 85¢, but at a Canada Post retail outlet it's $1.

Of the last 22 years, 20 years of that were profitable for Canada Post. In 2011, they did not have a profit because of the court case they lost with PSAC over pay equity.

Canada Post has returned over $280 million to federal coffers through dividends and taxes. Even with its five-point plan, where it was portrayed that Canada Post was supposed to lose money, it has remained sustainable and profitable. Canada Post can be sustainable and can provide universal services for all Canadians from coast to coast to coast.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Mr. Sutherland, you have five minutes, please.

[Norm Sutherland, Business Owner, Petrolia, Ontario, As an Individual]

Thank you.

Mr. Chair and committee members, my name is Norman Sutherland. I'm an Ontario land surveyor, a Canada land surveyor, professional engineer, and a small-business person residing in Petrolia, Ontario, near Sarnia. I'm presently a consultant to a small land surveying and engineering firm.

In my earlier career, I was employed by Polysar, a large crown corporation producing synthetic rubber in Sarnia and overseas. I have worked in England and Switzerland. I have reviewed the 94-page discussion paper entitled “Canada Post in the digital age”. This is a well-documented and well-written paper and generally very clear, except for a few items of a technical nature.

My town of Petrolia, population 5,500, was just converted a few months ago from a post office box number system to a municipal address system. Although representing small business, I may make reference from time to time to items that are also of interest to individual small-town customers. Since the transition in Petrolia is very recent, I would like to make some observations.

Your discussion paper makes several references to the importance of transparency and good communications. Hopefully, Petrolia was a learning experience on how to make it better. More notice before the change and a better explanation on what was being done, and why, would have been helpful. The Petrolia post office bore the brunt of a considerable amount of criticism, and the lines between local staff and Canada Post were not always clear.

The discussion paper also makes reference to the importance of a post office being a community centre. This is particularly important in a small rural centre. With the Petrolia transition, the community bulletin board and the sorting table for mail in the lobby have been removed. We hope that they can be returned. There is no need for further discussion here, but it does demonstrate those principles of importance that your task force has correctly identified.

I was pleased to learn that Canada Post realizes the importance of parcel delivery. From the beginning of this new development, Canada Post has had the infrastructure and network to have the inside track and be leaders in this area. I also believe that Canada Post already delivers more packages than FedEx or UPS and many people are not aware that Canada Post owns 93% of Purolator.

In our small operation of 20 employees, it's interesting. I had a survey done and our ratio of Canada Post usage to courier is 95% to 5%. I would also note that the usage of courier services increased greatly during the weeks when the Canada Post delivery was threatened by a possible strike.

Word is getting out. The London Free Press, on the opinion page last Saturday, had a point of view entitled “Status quo not option for Canada Post”. Hopefully, such articles will have a positive spin to them.

We recognize the two main stumbling blocks to implementing meaningful change to our postal system. One is what I refer to as the political aspect. For example, with the recent change to our federal government, the plan to phase out door-to-door service across the country and install community mailboxes was put on hold. The other main resistance is the mindset that change is bad. Transparency, good communication, and marketing, will be of key importance here.

The current economic model that places profit over the common good of all human beings, so much in vogue today, must change in order to confront the challenges the world is facing today. I was heartened to see the statement on page 35 of the discussion paper, “Canadians clearly favour certain options. In fact, the majority of Canadians did not agree with changes to Canada Post if they resulted in mass layoff of postal employees or cutting Canada Post employees’ pay and benefits.” On the other hand, the research indicates that the majority of businesses are in favour of the realignment of Canada Post’s labour costs. I will not repeat, but I will refer to the views and opinions on businesses, page 36 of the discussion paper.

Front and centre to this discussion is the statement made on page 57 of the paper, “The current business model of the Corporation does not generate sufficient income and cash to finance the realignment needed to continue its journey from a letter-centric to a parcel-centric business....”

In my previous experience with a large crown corporation, we found, to our dismay, it was not profitable to go into business with product lines with which we had little or no experience, or where we were competing with some of our main customers.

The delivery of flyers, also known as junk mail, which is increasing in volume and contributes very little to profit, could be reduced. In our small town, many of these are delivered door-to-door by news carriers.

I would finally suggest that in distributing the discussion paper, it would be helpful to have annex A entitled “Task Force Terms of Reference, pages 89 to 91” at the beginning because it clarifies at the outset the purpose of the exercise.

In conclusion, I would like to commend the task force and all others involved in this major study. Hopefully, it will not lose momentum.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much, Mr. Sutherland.

Mr. Frank Schiller, five minutes, please.

[Frank Schiller, As an Individual]

Mr. Chairman, Vice-Chair, and members of the committee, thank you for this opportunity to be heard as part of your important work on the future of Canada Post. Thank you, also, for visiting Windsor-Essex in your consultations. I hope more federal institutions will follow your example and visit and consult locally here.

The Government of Canada has important decisions to make on the future of Canada Post. I'm appearing today to urge you to recommend that Windsor—Tecumseh be fully accommodated as part of the government's plan for Canada Post moving forward, including, first, the full restoration of door-to-door mail delivery for all Windsor—Tecumseh households that abruptly lost their service over the 2015 federal election. Second, I urge that Canada Post be directed to co-operate with local governments on an immediate plan for the removal of the community mailboxes that were installed; and that compensation be paid, where appropriate, for the downloaded costs on local municipal governments because of Canada Post's poor local implementation of the community mailbox program. Third, I urge that Canada Post be directed to examine the feasibility of establishing a secure, pre-clearance hub facility in Windsor-Essex for incoming and outgoing Canada-U.S. mail and packages.

Windsor—Tecumseh is unique. I had the privilege to serve as the Liberal candidate in Windsor—Tecumseh over the last election. It was in the middle of that campaign, in August 2015, that Canada Post ended door-to-door delivery for many local households, mainly in the town of Tecumseh and in a small area in east Windsor. This was an intense local issue of concern. Canada Post so poorly managed the ending of door-to-door delivery and the switch to community mailboxes in Windsor—Tecumseh that it cannot be allowed to stand. The local decisions on door-to-door must be reversed; good governance moving forward demands nothing less.

Local decisions were driven by political imperatives—beating the election deadline—and not about service or even business. The proof of this is in the complete disregard demonstrated by Canada Post for public health and safety with the installation of the community mailboxes. Safety concerns, something that should be paramount at all times for customers, employees, and the local community, were but secondary considerations. The imperative was to get the community mailboxes in the ground, by whatever means necessary, and not about safety and delivering a quality service for the local residents. This was bad faith. Local residents deserve better from Canada Post as a federal crown corporation that enjoys the privilege of the legislative monopoly. The political comparative, combined with poor local consultations and limited public information, led to the imperfect storm of poorly installed local community mailboxes.

The Liberal position on Canada Post improved over the election campaign, from supporting a moratorium on community mailbox conversions to a commitment to restore door-to-door mail delivery. That's critically important. The focus has to remain on services towards this end. Delivering the mail is a vital service for Canadians, and this is at the heart of Canada Post's mandate. Canada Post is not a private business, but a government agency providing a vital public service. No matter where you are in Canada, be it at the top in Alert, Nunavut, or down here at the bottom tip in Windsor-Essex, you should enjoy similar levels of service. Locally, in Windsor—Tecumseh, that means the restoration of door-to-door mail delivery to those households that lost it in August 2015, and the halting of further conversions from door-to-door to community mailboxes in the future.

Better consultations with the public and local governments are essential. Canada Post has to do a better job releasing information and consulting directly with the public and local governments. As part of the process of restoring local door-to-door service, Canada Post must be directed to work co-operatively with local governments on a plan for the removal of the community mailboxes, including those along Riverside Drive here locally, that were installed in the run-up to the 2015 August decisions.

There is a precedent for the restoration of door-to-door service in Windsor—Tecumseh. Past erroneous operational decisions have been overturned by Canada Post; this is not uncommon in government or business generally. Consider the recent federal government decision to reopen the veterans' office in Windsor. This was the right decision. Similarly, it's now the right decision to restore door-to-door delivery in Windsor—Tecumseh and to treat local municipalities fairly in the process.

Sustainability must form part of Canada Post's decisions moving forward. Canada Post should be directed to examine the feasibility of opening a new local mail hub in Windsor-Essex, a secure operation with custom pre-clearance for all Canada-U.S. letter and package deliveries.

Right now mail delivered in Windsor-Essex gets trucked up the 401, processed, and then trucked back down for local delivery. There has to be a better way, a more sustainable way. Canada Post should be in a position to better capitalize on the local benefits of the Windsor-Detroit gateway and our vital Canada-U.S. trade corridor. Equipped with the right technology, operated by the highly trained and experienced local postal workers, a secure Windsor-Essex mail hub would complement other government priorities in international trade, transportation corridors, sustainability, and innovation.

From 1993 to 1995, I had the privilege to serve as the legislative assistant to the federal minister for Canada Post. At the time, the government of the day passed a motion in the parliamentary process imposing on Canada Post a moratorium on rural post office closures. Although not a perfect mechanism, it was highly effective at significantly curtailing rural post office closures. The Government of Canada can now take a similar approach, imposing the restoration of door-to-door mail delivery, including in Windsor—Tecumseh, and a moratorium on future conversions. This could be subject to five- to 10-year reviews.

Thank you, and I welcome any questions.

[The Chair, Conservative, Tom Lukiwski]

Thank you all for your presentations.

We'll now go into a seven-minute round of questions and answers.

Ms. Ratansi.

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

Thank you all for coming. This is our third day of consultation across the country.

We have met with the task force, we have met with the corporation.

Mr. Sutherland, you have read the task force report very well. If I were to go back to the corporation, what question do you think I should ask them? We're hearing about their arrogance and their edicts and their top-down approach. Is it possible that they were told by the then-government to do it? What question do you want me to ask the corporation?

[Norm Sutherland]

That question is a difficult question to put it in one. This is a question you're suggesting to ask the task force?

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

No, the corporation.

[Norm Sutherland]

The big thing is not so much a question, but a direction—it came out today—on better communication, better transparency, and more notice. As I mentioned, people don't like change, but it certainly helps a lot if there's good groundwork with due notice. It has to happen.

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

Canada Post is stating, from a profit perspective, from a business perspective, it's not sustainable. But they have not looked at the service side of it. According to certain witnesses, they are not innovative in their thinking. The strategic direction they have is cut, cut, cut.

I come from a receivership environment, so, trust me, that's what I do. But this is not something that Canada Post, as a crown corporation, understands. If we were to go back to that management, do you think management has the goodwill to negotiate with labour, to negotiate with the municipalities, to be able to communicate effectively?

I'll give each one of you probably 30 seconds.

[Susan Sitlington]

Canada Post took all retail products out of retail counters in...I can't remember when. This was before the delivery of door-to-door. There went their revenue. The only thing that's left are the stamps, of course, and envelopes.

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

What sorts of products were these?

[Susan Sitlington]

They took out the passport service, the fish and wildlife licences.

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

So if I were to go back to them and ask them, would you reinstate retail service—

[Susan Sitlington]

Yes, retail service the way that it was. Now all that kind of stuff has gone to Shoppers Drug Mart.

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

Especially with remote communities, that would be probably better.

[Susan Sitlington]

Yes.

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

Mr. Sutherland.

[Norm Sutherland]

We all have wants and needs. To answer the first part of the question, yes, they're going to have to be more flexible, and certainly more attuned to dealing with employees and the public. When you set out the guidelines that there's not enough money, then maybe subsidies might be required to fill in some of the gaps—not tax dollars, subsidies—and there are going to have to be some adjustments. Somebody has to lay down the law.

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

I'll come back to that question.

Mr. Schiller.

[Frank Schiller]

I think the government should be commended for implementing the independent review of Canada Post right away in the first part of its mandate. I think it's essential that Canada Post bow to the will of Parliament. I think as parliamentarians you all have such influence over the future direction. They have to be reminded from the top down that the focus and core mandate of the corporation is to provide a service to the people.

They approach their current projected revenues based on a mindset that is not focused on service. I think the most important clear direction that the committee can give is the restoration of door-to-door delivery through a motion in Parliament. That will provide a clear signal to the corporation that this government is interested in putting the focus on service.

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

Canada Post corporation has done its review or it was given a mandate by the previous government to streamline operations and to make it more sustainable and to be profitable. Change is important. You can't stay in the 19th century. We're moving towards the 21st century. Canada Post has to reinvent itself.

The question I was asking is does management have the capacity to think outside the box? We were told no. But from a labour perspective, we've been told that its inflexibility, that the labour cost, or work, is basically dragging down the profitability.

Do you have any thoughts?

[Susan Sitlington]

Deepak Chopra, has one mindset and that was from the previous government. I don't think he's gotten the picture that it's the government of the day, the party of the day...and he needs to understand. I don't really think it's the labour cost. I think it's his mindset. It's, like you say, the business. He's not into service. Canada Post is for the people. It should be just sustainable. It's not a cash cow. It should not be over-profitable. It's there as a service to Canadians.