Government Operations Committee on Sept. 29th, 2016

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

What I'm seeing emerge here is the notion that rural Canadians are really the product, and they don't have access to the fast service standards that are enjoyed in urban centres. Someone in Toronto could sell to your customers quicker than you could, using the mail.

[Andrew Scribilo]

Absolutely.

[David Neegan]

Could I make a quick comment?

One of the things we're looking to do is expand our business, and Canada Post is an essential part of that plan. I should have emphasized that in my briefing notes. We're looking to go outside the region of northwestern Ontario in terms of our products. There are a number of products we've identified that we want to sell. We have to get those to our customer base very quickly. This is something we'll do in the next couple of years, and it is essential for us to have Canada Post around. It is part of our strategic plan overall to deliver that new service. I can't talk too much about the service exactly, but that is the way we're heading.

What that means for the city of Dryden is more jobs for the community. As I mentioned earlier, in communities such as Dryden, Sioux Lookout, and Red Lake, most of which I have lived in, the population has shrunk and there are fewer and fewer services. We're looking to bring some of that money back into northwestern Ontario. Canada Post is part of that plan.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Lady and gentlemen, thank you so much for your appearance here today and the information you've provided us. If you have additional information you think would be of benefit to this committee in our deliberations, please submit it directly to our clerk. That will all form part of our deliberation process. Conversely, if any of our committee members have additional questions they think of after you have left the room and we want to get hold of you, would you allow us to contact you directly with additional answers to questions we may have? I appreciate that very much.

Thank you so much. Your appearance here has been greatly informative.

We will suspend now for a couple of moments before our next panellists come to the table.

[The Chair, Conservative, Tom Lukiwski]

Thank you, gentlemen, for being here with us.

Mayor Wilson, I know you've just arrived. Mr. Middleton, I'm not sure if you have been in the room listening to the first session we had, but on the assumption you both are here as newcomers, I'll go over a brief couple of procedural notes for you.

This is a part of an exhaustive and ongoing consultation process initiated by the Honourable Judy Foote , the minister responsible for Canada Post. Phase one of the consultation process was the establishment of the task force, whose mandate was to examine the financial viability of Canada Post.

That examination has been done. They have produced a report. We have examined the report and questioned the task force members on it, but phase two is why we're here today. It is a cross-Canada consultation with organizations, individuals, municipalities, and others about the future of Canada Post, more specifically the views that people like you may have on what you would like to see in the future for Canada Post.

We're going to ask both of you, when it's your time, to make a brief opening statement, hopefully no more than five minutes. Following that, there will be a series of questions from our committee members, and answers. I always assure people that even if you don't have enough time in five minutes to get all of the information to us, I know that the question-and-answer process will elicit a lot of the information you may have and may want to transfer to our committee.

That said, Mayor Wilson, I have you first on the speakers list if you would care to give an opening statement. Please take five minutes or less.

[Greg Wilson, Mayor, City of Dryden]

Sure, I can do it in less, and being a “W”, I'm not actually used to going first.

I'm just going by script, and the following is my own opinion. Time didn't permit for a formal input by council as a whole. I just wanted to state that.

I want to compliment the task force on its comprehensive working paper, “Canada Post in the Digital Age”. It's really well balanced and reflective of the positions of all stakeholders. I thought it was really well done.

My input is based on the belief that, separate from political interference into the strategic planning efforts of the 2,500 executive and management team members employed at Canada Post, this task force is truly committed to a fair and balanced study on the provision of “quality services to meet the needs of Canadians at a reasonable price in a financially self-sustainable manner”. I'm going on that premise, and your financial situation is not lost on me. That's a tough one.

At a high-level view, Canadians recognize that the volume of mail has been decreasing for some time. To a lesser extent, Canadians understand that Canada Post is facing financial pressures that threaten its long-term survival. This is on page 33 under “Recognition of Systemic Pressures”.

Using your conservative 2026 projections of annual losses amounting to $721 million per year from this year's $63 million annual loss, you are really headed in the same direction as the United States Postal Service, which regularly loses about $5 billion a year.

While the hard work of developing and honing the technology and tactical processes used in streamlining the collection, sorting, distribution, and tracking of mail is largely complete in the industry, one thing that hasn't changed is the fact that the post office has to do just one thing, and that is to deliver the mail each day. It is laborious work, I'm sure.

More and more Canadians recognize that the system is not sustainable in its present form, yet we are loath to make changes because we are creatures of habit. Canadian hockey only changed when it was forced to after 1972, for those of you old enough to remember. Do we have the political will to do what's necessary in 2016 to save and stabilize Canadian mail for the long term?

Band-aid solutions solutions have not worked here or in the rest of the world over the past few decades. I'm hoping that you will opt for both/and solutions instead of either/or solutions. For example, one, don't do as the American government does. They provide bailout funds every so often, which only serves to prolong the agony. I did note that Canada Post has deferred $1.4 billion in solvency payments related to pension funding in 2015.

Two, don't be tempted to try adding new public services with such an expensive and non-competitive workforce, as illustrated in your working paper.

Three, move to a community mailbox and a franchise model at high-volume corporate post offices over the next few years.

Four, implement alternate-day delivery and add a day or two to the time it takes for a letter to get to destination as the de facto standard across the country, placing a premium on faster service for those who want it.

Five, adopt other marketing and advertising strategies as laid out in your paper. I'm sure you're not waiting for someone to give you the green light to do what makes sense. Also, promote the strategic advantages of Canada Post over customs brokers for cross-border and international shippers.

Now for small-town Dryden, my primary obligation is to the citizens of Dryden, of course, specifically those who would be negatively impacted by any form of reduced services from the current model. What follows is a suggestion on how to meet the postal needs of all Canadian towns and cities in a financially self-sustainable manner, and it's just two bullets and three subs, so it's really short.

Create a model around the 80% or 90%—I don't know the numbers; you can do a survey or a proper study—of Canadians who can walk or drive to a community mailbox. Those with mobility problems should receive door-to-door mail either for free or at a premium price, depending on the political will of Parliament. If at a premium, pensioners and low-income earners would receive a credit on their income tax. Door-to-door delivery would be on alternate days.

I just want to note that I pick up my mail at a community mailbox. It's an opportunity to socialize if I feel inclined, and my mail is also more secure this way when I'm away for a few days. People can break into anything, if they want to, but it's a lot harder when it's in a locked box.

Fixed costs will stay high for years due to inflexible contracts, meaning that you need to tackle these issues immediately. My suggestions likely won't get you to the break-even point, but will go a long way in making deficits and total debt more manageable.

Thank you.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Chief Bull, welcome.

[Chief Clifford Bull, Chief, Lac Seul First Nation]

Thank you.

[The Chair, Conservative, Tom Lukiwski]

I know you just missed, by a couple of minutes, my opening remarks. We're asking all of the three panellists to please make opening comments of five minutes or less, which will be followed by a series of questions and answers by all of our committee members.

Next up on my list, for five minutes or less, is Mr. Middleton.

[Sandy Middleton, Deputy Mayor, Municipality of Red Lake]

Thank you for having me here. Chief Bull, welcome, and Andrew.

One of the problems, of course, with following another politician, is that he usually says what you want to say.

[Some hon. members]

Oh, oh!

[Sandy Middleton]

I come from Red Lake, Ontario. It's made up of five small townsites: Red Lake, Balmertown, Madsen, Cochenour, and McKenzie Island. Each is distinctly different from the others.

Madsen has a small post office right in town. It's approximately eight or 10 kilometres from Red Lake. Red Lake is the largest of the five townsites and has a post office on its main street. Balmertown is about 11 kilometres from Red Lake in the opposite direction from Madsen, and it also has a smaller post office on its main street. It serves Cochenour and McKenzie Island with the group mailboxes. They sort the mail in Balmertown and it gets trucked to the mailboxes in Cochenour. Folks from McKenzie Island come across either by private boats or by a a little passenger ferry, which we run, and then walk up to the mailbox and get their mail if they don't have a vehicle on the mainland. In winter, they can drive across an ice road. They have no service, of course, during freeze-up or breakup, which can usually be a couple of weeks in the spring and a couple of weeks in the fall.

We also serve the unincorporated areas around our municipality, which can be up to 30 or 40 kilometres away from the main town. There are a lot of people living out on little lakes and in tourist camps or what have you, who stay there all year. We serve a fairly large area.

I know it's kind of an overused term, but Canada Post is part of the fabric of Canada. I don't think too many people would want to see Canada Post disappear out of the landscape.

I was thinking on the way down here that they are also very close to municipalities in some ways, in that every year you have a budget. Those budgets, of course, are fun times. As a municipality, we're usually left with two or three options: raise taxes, cut service, or a combination of both. I'm pretty sure that we're not going to have 1,000 people come in and build houses in Red Lake anytime soon.

I'm guessing that you folks face the same problems. The problem, of course, is that nobody wants you raising their taxes and cutting their services, so somebody has to be the bad guy. Once you're the bad guy, you're going to be the bad guy for the rest of your life, so you just have to get used to it, bite the bullet, and do what has to be done.

It's obvious that Canada Post, or any large corporation, can't continue as they're going and hope to make money. Changes do have to be made. I'm sure in their heart of hearts most Canadians know that, and most Canadians want to keep Canada Post.

We've had problems in our community getting an individual to deliver the mail from Balmertown to the community mailboxes year round. It's solved now, but I'm sure it will pop up again in the future. As I said, it's fixed now, but when it's not, then the folks on the island and in Cochenour have to drive another eight kilometres into Balmertown to pick up their mail. Sometimes folks in our community aren't really happy with Canada Post, but you know what? They get over it, as they always do. Small-town Canada has very resilient people. They take what you give them and are happy to have it.

I believe at some point in Canada—and Drew or one of the other previous speakers may have alluded to it—we created a two-tier mail system. That will be a problem in the future, because people in Toronto are used to a whole different level of service from what we are. We're happy with what we have. There's certainly room for improvement, but nothing that's going to make anyone jump into the lake, let's say.

Thank you for having us here.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

I know, Mr. Middleton, you had many other comments in your opening submission. They are part of our record here. We'll certainly incorporate those when we're conducting our deliberations.

Chief Bull, could we hear your comments for five minutes or less, please?

[Chief Clifford Bull]

Thank you.

I'll talk a little bit about the community itself. There are 3,400 people on the band registry, of which, I would say, a thousand live on reserve and two-thirds are off reserve and sort of scattered throughout the region.

We get only once-a-week mail service, so that's four times a month that we get mail brought in, usually through a contractor air service. We're semi-remote. Prior to that, HBC ran our post office. Then when we got access to the community back in the eighties, I guess, we had access, and subsequently people would move and get services in town. They would go shopping in town. HBC had the monopoly on grocery shopping and all that prior to that, but a lot of people with road access were able to go to town. They even got mailboxes in town. Hudson is our closest town.

Frenchman's Head is across the lake from Hudson, which has the POV 1X0 box number, and a lot of my business mail comes to Hudson and we pick it up. It's 10 minutes away by vehicle. There are three northern communities—Canoe River, Whitefish Bay, where I live, and Kejick Bay—that get their mail brought in once a week through this contractor.

Now that we have road access, they drive the mail in and it's put into this little office where they put the mail in each little...and you go and pick it up. It's open four times a week. It's open for three hours on Monday, Tuesday, and Thursday; on mail day, it's open for six hours. We get $24,000 annually from Canada Post to manage and run the facility.

There is no cash on the premises. There are no money orders and those kinds of things. We don't do that. We used to, but there was an issue with irregularities and fraud and theft back in the seventies, so that particular convenience was taken away from us. Now a lot of people get CODs and pay them outright, and there's no money kept there.

I did talk to our post office person there this morning, and she would like to see an increase in her wages. She gets $15 an hour multiplied by roughly 15 hours a week times two weeks, so she gets paid for 30 hours every two weeks, which is very minimal. She would like an increase and would like the mail to come in maybe two or three times a week. I think she's kind of opposed to mailboxes also. People would be tampering with them and perhaps people would be losing keys and there would be damage. There is no third party pickup at the post office. If you get a cheque or a pension cheque, you have to pick it up yourself.

I'll leave it at that and stop there for now.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much, Chief.

Thank you all for being here.

We'll start with a seven-minute round of questions and answers. Our first intervenor will be Mr. Whalen.

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

Thank you, Mr. Chair.

Thank you all for coming. It's interesting to hear different perspectives.

The first table had perspectives different from yours, and it's great to have someone come down from a first nation to let us know what the service levels are like up there. It sounds as though they're quite minimal, but for obvious reasons.

As far as using Canada Post as a way to provide high-quality, middle-class jobs in communities across the country goes, it sounds as though on the reserve that's not a middle-class job at all; it's a very low-paying $225-a-week job. It sounds as though the operating budget for that is very small, perhaps small even compared to other small rural post offices across the country.

[Chief Clifford Bull]

Well, what I wanted to do was perhaps look at the contracting itself and at bidding on that contract. This particular contractor has had the contract for decades and decades. If we were successful in getting the contract, that could augment.... Perhaps the postmaster could pick up the mail in Hudson and take it to Lac Seul, and then we could do everything in one shot rather than piecemeal.

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

That's excellent.

Mr. Middleton, you talk about biting the bullet, in that we might have to make some hard decisions, such as reducing the level of mail delivery and going to alternate days, for instance. Is that something that you would be in favour of?

[Sandy Middleton]

I certainly would. Just so you know, I'm saying this while my brother-in-law and my nephew are both mail carriers. We've had some pretty severe discussions about that.

[Voices]

Oh, oh!

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

I can imagine.

How many people, do you expect, work in mail in your municipalities?

[Sandy Middleton]

In our municipalities, I believe there are eight. We don't have door-to-door delivery. It's all picked up at the post office.

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

In total, how many people live in your municipalities?

[Sandy Middleton]

There are just under 5,000 in total.

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

There are just under 5,000, so that's a pretty small amount of the workforce—2% or something—but not insignificant.