Government Operations Committee on Oct. 17th, 2016

[The Chair, Conservative, Tom Lukiwski]

Ladies and gentlemen, let's get going.

Thank you to our panellists for being here.

As you know, the minister responsible for Canada Post, the Honourable Judy Foote, engaged in a widespread consultation process to talk about the future of Canada Post. The consultation took two forms. The first part of the consultation process was to establish a task force whose mandate was to examine the financial viability of Canada Post and the sustainability of Canada Post. That task force report was completed. The task force filed their report and they appeared before the committee.

Phase two of the consultation process is to engage Canadians from coast to coast to coast, asking their opinions on what they see as the future of Canada Post and how they see Canada Post operating, both now and in the future. That's why we are here today. Thank you for being here.

As I believe our clerk has told you, we have a pretty simple process here. We'll ask each of you, when it's your turn, to make a brief five-minute opening statement. Once all panellists have given their statements, we will engage in a question and answer period with all of our committee members. It has been our experience that most of the information you wish to transfer to our committee comes forward in that Q and A period, so if you're a little long on the five minutes, I'll interject to try to keep you on time. I'm sure all of the points you wish to make will come out during the Qs and As.

With that brief introduction, I think we'll commence.

Madam Huberman, we have you up first. You have five minutes or less, please. The floor is yours.

[Anita Huberman, Chief Executive Officer, Surrey Board of Trade]

Thank you so much for allowing me to present today.

The Surrey Board of Trade is a business organization in the city of Surrey. We attract business and support business in the city. We've been in Surrey since 1918.

The Surrey Board of Trade welcomes the opportunity to participate in the independent review of Canada Post, launched to consider viable options for postal service in Canada. We recognize that Canada Post must make changes to ensure that it remains a viable business and can fulfill its mandate of mail service to all Canadians. While the future of Canada Post will move from a greater proportion of letter mail to feature parcels, the Canadian postal service charter obligates it to deliver. To fulfill its mandate of financial self-sustainability, Canada Post, a crown corporation, faces necessary realignment. We want to let you know that we certainly recognize that.

Within our membership, we have 6,000 business member contacts representing just over 2,200 businesses that are members. We have around 80 not-for-profit charities that rely on Canada Post as an important vehicle to get their message out.

We did a survey in advance of this presentation. One specific charity sends their flyers to over 3,500 businesses in the city. They really do rely, still, on mail from Canada Post. They use the snail mail postal system to deliver their brochures, their donor forms, and return envelopes. This has been really effective for our charities.

There's another piece I want to let you know about that has been very important, not only for our board of trade and for our members but from a Canadian Chamber of Commerce perspective. That is the promotion of the VentureOne program, especially for the small business community. This is the package program that really enables our small businesses to save bottom-line costs. There are opportunities to work with businesses and to promote programs like that.

We also would like to work with Canada Post to promote business flyers and ad mail deliveries, and to really focus on parcel delivery as a cost-saving option for businesses. Canada Post must reduce operating costs. We know that future community mailbox security mechanisms need to be focused on.

The other piece I want to mention is with regard to the five-point action plan that Canada Post put forward. When the installation of the community mailboxes does take place—I know that's being integrated into new residential developments—we would ask that they do take a look at how much is being afforded in terms of the $200 fee per address. There are development costs, especially for residential developments, that could be compromised. There are ways to work with developers, especially in a growing city like Surrey. We estimate that it will be the largest city in British Columbia in less than 12 years.

The final point I would like to make is that just over 50% of our population has a mother tongue other than English. There are opportunities to work with our immigrant communities and with our refugee communities. We are the highest refugee population recipient within British Columbia. There are opportunities for Canada Post to really work with our refugee and immigrant communities.

Thank you.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Next up, we have Ms. Stern, please, for five minutes.

[Pamela Stern, Assistant Professor, Department of Sociology and Anthropology, Simon Fraser University]

Thank you for the invitation to be here today. My name is Pamela Stern, and I'm a professor of anthropology at Simon Fraser University.

My research concerns the way that Canadians feel and act as citizens as we interact with each other and with all levels of government. Please be aware that I have not made a study of Canada Post and therefore cannot speak to the specific relationships of Canadians to the institution. I can speak in general terms about the way that institutions like Canada Post work to foster a shared sense of identification as Canadians, and I can speak specifically about one Canada Post contract service: international money transfers.

I read the consultants' report, “Canada Post in the Digital Age”, and found it very interesting, though I would like to draw your attention to an area of inherent contradiction in the mandate of Canada Post. That contradiction has to do with Parliament's requirement that the corporation, first, provide universal service to all Canadians; second, compete with private for-profit corporations; and third, do both of these without taxpayer subsidies.

As the report points out, Canadians have a positive view of Canada Post. I would argue that this is at least in part because of Canada Post's universal service obligation, yet we all know that no private corporation would be required to serve every city and small town in Canada without subsidies.

Not that long ago, Canada had a number of institutions created and funded by taxpayers with the specific goal of unifying our geographically dispersed and ethnically diverse population. These included the CBC, the National Film Board, national parks, CanCon, and airports. As government support for these institutions has been scaled back, Canadians have become less knowledgeable about our country. This is one reason that Canada Post and its universal service obligations are critical.

As the report points out, Canada Post maintains the last remaining comprehensive national public service network in Canada. Canada Post clerks and mail carriers are the representatives of the federal government that Canadians encounter most frequently. As such, Canada Post is the positive face of the nation and the government.

Canada Post is a symbolic representation of Canada, and symbols matter in ways that cannot be monetized. A few years ago, I headed a research project looking at citizen engagement in a small town in northern Ontario, a place that was once economically important but now is held together by the sheer determination of its residents. In talking to those residents about their civic participation and their sense of themselves as citizens, I was struck by how many times people spontaneously spoke about Canada Post's designation of the town as a postal address, a place to which the residents of smaller places nearby had to come to pick up their mail. The physical presence of the post office bolstered these residents' faith in future of their town.

With my remaining time, I would like to address Canada Post's involvement with international money transfers through its contract with MoneyGram. My knowledge of this comes from research done by some of my students as part of a class I taught in 2013.

Substantial numbers of Canadian citizens regularly send money—remittances—to relatives living in other countries. Most of the academic and popular literature about remittances considers them a kind of foreign aid, but what my students found instead is that Canadians send money to relatives abroad for exactly the same reasons that Canadians send money to relatives within Canada: to pay for a child's tuition, for nursing care for an aging parent, or for a small business loan. Many of the Canadians sending remittances earn quite modest incomes, and yet Canadians pay some of the highest fees in percentage terms to send money.

International money transfer is an important service that Canada Post should continue, but perhaps through a non-profit model, such as that available through the Universal Postal Union. In fact, I would like to see Canada Post take on some other financial services for Canadians, such as payroll cheque cashing, and to do so at fair and modest fees. This, I believe, would advance Canada Post's position as a public institution that is accessible, equitable, and universal.

I want to urge this committee that any changes you recommend for Canada Post should remind Canadians of their common interests and strengthen Canadians' identification with the nation, rather than further weaken those ties.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Our final panellist will be Mr. Armstrong.

The floor is yours.

[Tim Armstrong, National Director, Pacific Region, Canadian Union of Postal Workers]

On behalf of the Canadian Union of Postal Workers, I'm grateful for the opportunity to appear before the Standing Committee on Government Operations and Estimates.

I'd like to use my time today to address a key component of our public postal service, which is universal service at a uniform price. I've taken the liberty of handing out that part of our extensive brief for your reference so that you have it in front of you.

As a crown corporation, Canada Post engages in both public and private activities, but is ultimately designed to serve the public interest, not simply to maximize profit. Universal service at a uniform price is one of the ways the corporation does this. Canada's geography is vast and its density is sparse outside of major urban centres. The post office has played a key role in the development of our vast land. It has linked communities and united regions and territories. It has ensured that all people, regardless of geographic location, have enough access to an affordable means of communication. That is why the core principle of the public post office is that a basic letter can go anywhere from coast to coast for the same price.

An address is an address no matter where in Canada. Despite changes in mail use over the years, support for that principle remains very high today. Although it did not appear to make the list of 37 options, we're very concerned that the task force mentioned the possibility of distance-based pricing for letter mail. A pricing scheme like that undermines the very idea of universality. It's hard to see how it would be in the interest of Canadians or Canada Post as a public service.

Some mail users could be forced to pay a higher price merely because of where they live or do business. We're very concerned that this would discourage the use of the mail system and in turn suppress volumes and revenue. It could also have a disproportionate impact on seniors, low-income and middle-income rural residents, and people in northern and indigenous communities. This situation would be compounded where there's a lack of online connectivity, further marginalizing those who rely on the mail as a vital form of communication to access government and other services not available in their area.

As noted in our submission, and I'll refer you to page 12, distance pricing also conflicts with the findings and recommendations of previous post office reviews. We also included polling data spanning the last 20 years, which shows virtually unwavering support for uniform pricing. As far back as 1996, Angus Reid reported that 91% of respondents were in favour of universal service at uniform rates. Polling by Ipsos Reid in 2008, and Stratcom in 2013, examined the loss of uniform pricing in the event of deregulation. In both cases, opposition to deregulation was very strong at seven out of 10 people. However, many proponents of deregulation—44% in 2008 and 58% in 2013—would change their minds about allowing private companies to deliver the mail if it meant that uniform pricing could be jeopardized.

Given the necessity and popularity of the uniform rate, how should basic letter prices be determined? As required by subsection 19(2) of the Canada Post Corporation Act, postage rates must be fair and reasonable, and when combined with other revenues, be sufficient to defray the costs incurred by the corporation in the conduct of its operations under the act.

On postage pricing, we recommend the committee consider the creation of a comprehensive postage-rate-cap model that accommodates for inflation plus Canada Post's other input costs. I'll refer you to page 10 of the brief.

The 2008 strategic review recommended similar measures. Such a simple and clear measure creates a transparent policy that upholds the requirement of fair and reasonable pricing. It would create some independence from political pressures on postage pricing, and it could also provide the public, non-profits, small businesses, and commercial mailers with the ability to plan for incremental increases.

Finally, it would help avoid the sticker shock of drastic rate hikes that seem to be of general concern to the public and businesses, as we've seen with the 35% to 59% increase that's part of Canada Post's five-point plan.

We would also like to see a narrowing of the gap between commercial and individual pricing, with one exception. We would like the committee to recommend the creation of a special rate for qualified non-profit organizations, similar to that of the United States Postal Service.

I would like to thank you for the time today to present to you. I would also be happy to answer any questions you might have.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much, Mr. Armstrong.

Thank you all.

We will start with our seven-minute round.

Madam Ratansi.

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

Ms. Huberman, you talked about your 3,500 businesses that would like to ensure that ad mail or parcels are delivered. Would you like to see daily delivery or according to the task force, alternative-day delivery? What should it do?

[Anita Huberman]

I think it is a luxury to have daily mail service. I think the committee can look at, and we would be amenable to, having three-day delivery during the week.

The reality is that we live in a new economic paradigm, a new social paradigm, and I think even our charity members, our not-for-profit members, would be amenable to reduced service.

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

The other businesses said no, that if they want to deliver a parcel, they want their parcel delivered on time. With regard to the different dates for delivery of parcels or letters, they said, “We're going the same route, so we'd have to work through efficiencies.”

It's good to hear a different perspective from your bushiness. We're here to get new ideas.

You talked about VentureOne. What other avenues do you think that Canada Post could pursue to increase its revenue?

I would ask all three of you to answer that question.

[Anita Huberman]

Again, I think there is opportunity to dialogue, especially with our small to medium-sized business community. Surrey is certainly an SME-type of community. We're a city of innovators and entrepreneurs. We're willing to dialogue on new ways for Canada Post to consider financial revenue mechanisms.

I think packaged services, whether it's stamps, whether it's courier, whether it's opportunities for.... There's a partnership program that Canada Post has in place, marketing opportunities, marketing training for small to medium-sized business. These are avenues for Canada Post.

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

Thank you.

Ms. Stern, do you have any thoughts on that?

[Pamela Stern]

Yes. As I alluded to in my statement, I would like to see Canada Post move back into postal banking, perhaps slowly at first. There are maybe a million Canadians who are unbanked or under-banked and are victimized by cheque cashing services with outrageous fees. There are small, remote, rural communities that have no banks but they have post offices.

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

Did you take a look at any of the other countries that....

You know, postal services across the globe have faced challenges. With the advent of technology, we have reduction in mail. People are not mailing letters.

Our population is very sparse. If you compare our population to England, Ireland, Scotland, Switzerland, etc., those are competitive to the current banking. Would you suggest a private-public partnership?

[Pamela Stern]

My personal opinion is that it should be public and not private. Canada Post needs to break even; it doesn't need to make a profit. It's a public service, and it should be treated like a public service rather than as a corporation.

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

Mr. Armstrong, have you heard of The UPS Store? Is it a good way to engage with them to enhance your revenue? That's The UPS Store, not UPS.

[Tim Armstrong]

I've heard of The UPS Store. I'm not 100% familiar with how that would work with us.

I completely agree with Ms. Stern about postal banking. With regard to the many countries across the globe, if they haven't had existing and successful postal banks, they've actually implemented postal banking as a way to deal with the changes they're facing.

To your earlier question about services, Canada Post is a service in the communications industry. It's been profitable for over two decades, and that's with postal prices being kept below 1983 rates when you put it into 2015 dollars. That was until that big hike we saw in 2014.

Because we're in the communications business, we think Canada Post could also get into broadband servicing. We saw the reports recently about the digital divide in Canada. Along with communications, we are in the communications business. We deliver messages, so it could be phone services as well.

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

Okay. I'll just stop you there, because I have a last question to ask.

You talked about immigrant communities. I think all of you are dealing with that. How can Canada Post synergize to capitalize on the immigrant market? I need a quick answer. If you have additional information, you could always pass it on to us through the chair.

[Anita Huberman]

I think it's making sure that your staff and your online services offer alternative language service and that the service is inclusive of our immigrant and refugee populations. That second language opportunity could also enhance revenue opportunities and usage for Canada Post services.

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

Madam Stern.

[Pamela Stern]

With respect to money transfers, immigrants make up the largest group of people sending money transfers. They often make decisions based on price. It's very difficult to understand what the price is when you figure in the exchange rate. Making that clear, making that available, and cutting the rate down to what is a reasonable fee would actually attract more business.

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

Mr. Armstrong.

[The Chair, Conservative, Tom Lukiwski]

Please make it a very brief answer, Mr. Armstrong.

[Tim Armstrong]

I'll just agree with Ms. Stern about the money transfers and remittances for immigrant Canadians. A lot of people come here to make money and send it home to their families. Instead of paying large fees, they could get reasonable rates from Canada Post.

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

Thank you.