Government Operations Committee on Oct. 4th, 2016

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

I mean joint management. If there is a joint management committee in place with other members—not necessarily the postal union, but for other members of the Nova Scotia Federation of Labour? Do you, in general, promote a position where pension plans are jointly managed between the union and management, or not?

[Danny Cavanagh]

I guess that's a technical question, because there are different degrees of how that happens, but as long as both parties have an equal say and equal value in the management of the pension plan, then that's one question. We generally stand to defend defined benefit pension plans for all our members.

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

Okay, thank you.

[Danny Cavanagh]

There are so many different degrees to what you're talking about that it's hard for me to give a direct answer, because sometimes that works well in one place and in other places it doesn't work so well. Clearly, we believe people need to have a decent pension.

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

Okay.

In terms of the process that we've designed, the minister had a task force that examined the financial aspects of the future viability of Canada Post from a financial self-sustainability framework. We have this committee that's going across the country now, taking a broader look at Canada Post and all the possible options in terms of preserving its ability to service Canadians. Has this process been suitable? Have you found this better than the previous process surrounding the five-point plan? Do you have any ideas about how our process could be better?

[Danny Cavanagh]

I think any process can always be looked at, but probably a couple of years ago, we would say most of these processes didn't have any value. I hope this process will be different. I wasn't at other meetings that you had, but I hear that in some places, there were nine vacant openings where people didn't have an opportunity to come and speak who wanted to. Even though they showed up at the hearing, they were told that they couldn't come in.

I think any of these processes need to have real value to them, and people who are doing the presentations need to believe that they're really going to be listened to. I hope that this federal government is going to take that very seriously and listen to what people have to say so that they can find some real value in it. Then it just doesn't end up with a lot of people feeling like they went and did a presentation and it really isn't going to do any good at the end of the day.

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

Thank you, Mr. Cavanagh.

I have a very quick question. In my view, the people who bear the risks should be involved in making the decisions. What is the biggest risk of a collapse of Canada Post, and who do you feel are the people who would be bearing the brunt of the risk in a serious downgrading of Canada Post? This would be to Mr. Callaghan.

[Jeffrey Callaghan]

I think the Canadian public would bear almost the full impact of that. Besides workers losing their jobs, I think the services that we provide to Canadians are invaluable right across the country, and if the corporation ever failed, it would be devastating for all Canadians. Canada Post has been a successful crown corporation, probably one of the most successful crown corporations in Canada. I think it can continue to be better and I think that's what we should be aiming for.

[The Chair, Conservative, Tom Lukiwski]

Thank you.

Mr. Kmiec, you're next, for seven minutes.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Gentlemen, thank you for coming in. I have a whole series of questions that I was just writing down while you were speaking. If you can keep your answers short, I can get through as many of them as possible, because otherwise I'll have to pass them over to my colleague to make sure we get through them.

Mr. Cavanagh and Mr. Keefe, both of you mentioned postal banking. Do you imagine Canada Post starting up a full-on bank, or do you imagine Canada Post using its current locations to allow the chartered banks or credit unions to open up a kiosk in those locations?

[Michael Keefe]

What the union is proposing is that Canada Post and the Liberal government look at the different options that are out there.

There are options whereby Canada Post would be a fully funded bank. There are options whereby Canada Post would partner with one financial institution, something like what President's Choice banking has done by partnering with CIBC and then, I believe, with ScotiaBank, or they could enter into a partnership with multiple banks and essentially act as branches for those banks.

The issue is that Canada Post has done an exhaustive study into postal banking. They have an 800-plus page report that's been released, but over 750 pages of it have been redacted. This is not rocket science. Canada Post has already done the legwork of investigating postal banking. Among the parts that weren't redacted were two sentences: one that said that it would be a win-win scenario for the corporation and one that said it would be a proven money-maker.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Can I just ask, because you know your members locally much better than I do, and maybe nationally as well, how many of your union members have experience in banking and financial services?

[Michael Keefe]

I don't know how many have experience with banking as such. I'm a newly trained retail clerk in Burnside. We already offer a lot of financial services. We have prepaid credit cards. We do money transfers. We offer money orders. We already offer a great deal of financial service options.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Can I just stop you right there?

Banks offer mortgages. They offer personal lines of credit, home equity lines of credit, which require an underwriter to do all of that. That's why I'm asking. I'm trying to figure out what the training dollars involved are. The reason is that when ATB Financial, the Alberta Treasury Branches in Alberta, rolled out a new piece of software to update itself to be able to compete with the chartered banks, it cost them $355 million, and there were 76,000 hours of training for their staff of 5,000 employees at hundreds of main branches. It was well over 100% over budget when completed. It hurt the brand, the image of ATB, because it was such a poor rollout. Management suffered because of it.

When we look at past transcripts from this committee, persons who have come in told us 77% of Canadians would consider using banking services through Canada Post and 11% of businesses said they would use it, but it requires a lot of investment into Canada Post to get it started. Then we have to close the $700 million shortfall by 2026. We're talking about cheque and cash reconciliation, compliance, training, and licencing. We need to have controls for money-laundering operations that you can stop, on-site security, and SAP software. Then you also need call centres, online banking, and telephone banking components that are all working seamlessly together, because customers expect that seamless service wherever they are.

I'm just worried about this huge investment in resources that could maybe be better used in something else. The core business of Canada Post, what you're all really good at, is moving things around the country, so is this a wise investment, considering all of these new things that would need to be done? There are the training hours required to bring your members up to speed on what chartered banks and credit unions do.

[Michael Keefe]

I believe it would be a smart investment in the long run. When you look at the record profits that the banking industry is currently making—and they're doing that by consolidating branches, taking branches out of rural areas, and taking branches out of, shall we say, lower-income areas—I believe it would be a very smart idea.

Regarding some of the training that you're referring to about money laundering and FINTRAC, we already do that training. We already have some training with regard to money laundering.

I can't speak to the costs that you're referring to, but I think it would be money well spent.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

How much time do I have, Mr. Chair?

[The Chair, Conservative, Tom Lukiwski]

You have about two minutes.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

I have two minutes? All right.

Do you know how many potential bank closures there would be? There are retail outlets that would potentially move into a Canada Post location. On one side, you could say we are gaining jobs, but I'm sure the banks are pretty diligent about pinching their pennies.

My brother works in banking. He has worked in three different chartered banks, so I'm just telling you what I've heard from him and his colleagues. If a location is not making any money or there are too many losses or there is too much theft or whatever it is, they will close the location.

Do you know how many of those would be affected? We gain jobs on one side with CUPW; in Canada Post we might lose many in the chartered banking sector, credit unions. I'm thinking of credit unions back home in Alberta. You would be in direct competition with them in many small towns.

[Jeffrey Callaghan]

Even without postal banking, you'll see banks that have folded up and closed branches right across the country.

Many of these communities do not have a bank. Look at the Canadian Centre for Policy Alternatives study on postal banking in the province of Newfoundland and Labrador. There are communities that have absolutely no credit union or credited bank, but they do have a post office. There are lots of those communities across the country where we're already in place to operate a postal bank. We're filling a void in a lot of communities where there is no bank. Banks have already decided that there is no money to be made in those places, and they have already left.

I think the investment that Canada Post would have to make in banking, as Mike has said, is a very prudent investment. When you look at countries around the world like Switzerland, France, and the U.K. that all have postal banks—

[Tom Kmiec, Conservative, Calgary Shepard, AB]

They're all private.

[Jeffrey Callaghan]

Sorry?

[Tom Kmiec, Conservative, Calgary Shepard, AB]

They're private.

[Jeffrey Callaghan]

Some of them are private, but they're all run by the postal administrations in those countries and they're all making money. They all have successful banks as well, so there's room there.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Next, for seven minutes, we have Mr. Duvall.

Welcome to our committee.

[Scott Duvall, NDP, Hamilton Mountain, ON]

Thank you very much.

Thank you, gentlemen, for coming today and explaining your views, what you'd like to see happen, and some of the problems.

Sticking with the banking, Mr. Cavanagh, it was mentioned that Canada Post used to have it. Do you know the reason we got out of it in 1958 or 1959, whenever it was?