Government Operations Committee on Oct. 18th, 2016

[The Chair, Conservative, Tom Lukiwski]

Ladies and gentlemen, colleagues, I think we'll get going now.

Thank you to our panellists for being here. As you know, the minister responsible for Canada Post, the Honourable Judy Foote, has initiated a widespread consultation process dealing with the future of Canada Post. Phase one of the consultation process was to establish a task force whose mandate was to examine the financial viability and sustainability of Canada Post. The task force has completed their work, they've submitted their report, and they have appeared before our committee. The second phase now is why we're here today. We're engaged in a cross-country consultation tour talking to individuals, organizations, and municipalities who have viewpoints on the future of Canada Post and who hopefully have suggestions as to the future of Canada Post. I thank all of you for being here to share your thoughts with us today.

The process is fairly simple. We will start with a five-minute opening statement from each of you. If you tend to go a little long, I will, unfortunately, have to jump in and see if we can rein you in. Then we will follow that with a question and answer period with all of our members of the committee participating. We have found—as I believe I mentioned to you earlier—that's really where a lot of the information comes out and we get your viewpoints, through the question and answer period.

With that brief introduction, I think we'll get going.

Ms. Moffat, we have you up first for five minutes, please. The floor is yours.

[Lynda Moffat, President and Chief Executive Officer, St. Albert and District Chamber of Commerce]

Good Morning.

I'm please to be here. I'm very pleased to welcome you to Edmonton and to thank you for the work you're dong. I think it's very important.

I'm Lynda Moffat. I'm here today speaking as the president and CEO of the St. Albert and District Chamber of Commerce.

For any of you who don't know, St. Albert is a city of approximately 65,000 people, located directly on the northwest boundary of the city of Edmonton.

We have a very vibrant and successful business community. The chamber of commerce represents over 970 members. In March 2016, we were pleased to send a letter to Canada Post concerning the proposed closure of the St. Albert post office. In preparation for writing this letter, we did a survey of our chamber of commerce members to ascertain their views on this potential closure. In the informal survey, we asked if they were located in the downtown, as the post office is, and whether this decision would impact their business. The results of the survey were very surprising to me, and mostly the passion that came with the answers was very surprising to me.

Overall, the businesses who use the post office on a regular basis for shipping and receiving are passionate about keeping the post office open. The very idea of having to drive into Edmonton or visit a post office kiosk in a retail setting is both unacceptable and difficult to understand for them. To quote a comment from just one response, “The post office is their own worst enemy, because closing this location will force us to look to the private sector for the shipment and receipt of goods”.

Another response included an indication that the business would move out of St. Albert if the post office was closed. The business owners genuinely appreciate the employees of Canada Post at this location, and they count on their professionalism and their knowledge to keep things running smoothly and efficiently. They receive very high praise from our business community.

Another group of people, whom we did not poll, are those living both in the downtown and in other areas of the city. We heard from many seniors who depend on the services of the post office, and particularly from those who do not have the freedom of transportation to visit the retail outlets. There are also post office box holders who value the address that they have and the convenience of receiving their mail there.

We first thought that we might hear more about the heritage of the post office and the symbolism of community and stability. Although we did hear some expressions in this direction, most of the input we received dealt with the functionality and great value that Canada Post provides. There was very little nostalgia involved in their views on saving that post office.

As a business where your product is being challenged, we would like to encourage Canada Post to look for new and innovative directions for providing services to Canadians, rather than eliminating the services that are so greatly valued.

I'm confident that your access to the brightest minds combined with your determination to be a great service provider can bring excellent results from your deliberations that will be met with overwhelming support from Canadians. The one thing businesses need to survive is stability. They need to know what's happening tomorrow. They need to know that the tools to prosper and to be profitable are there for them.

I'm willing to answer any questions that you have.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Next up we have Ms. Mackintosh.

Five minutes, please.

[Meghan Mackintosh, Manager, Billing Operations, EPCOR Utilities Inc.]

Thank you.

My name is Meghan Mackintosh. I'm the manager of billing operations at EPCOR Utilities, which is based out of Edmonton. One of my responsibilities is regarding bill delivery, which includes managing our relationship with Canada Post and ensuring that our customers receive their utility statements.

We rely heavily on Canada Post to send the majority of our bills to our customers. To give you an idea of the volume, in 2015, we mailed out approximately 6.5 million paper statements to our customers. We sent an additional 840,000 statements using Canada Post's epost service.

From our standpoint, Canada Post's mail delivery service is mostly reliable. Considering the volume of physical mail that we send, we rarely incur issues or hear of lost mail.

However, having said that, we do experience some pain points with Canada Post. The first is regarding business continuity. It seems like every few years, when the postal worker collective agreement expires, we can expect to spend significant time and money preparing for a labour disruption. The uncertainty that this creates causes EPCOR a lot of work and takes us away from our core business functions.

The second pain point that we experience is regarding customer support. As an example, in March of this year, we experienced a technical issue with epost, which was customer-impacting, as customers were not receiving their EPCOR bills. There were EPCOR customers who had called Canada Post to report the issue, but the Canada Post agent redirected the customer back to EPCOR, assuming the issue was on our end. It took several calls to Canada Post's support centre by EPCOR management to escalate the issue and to find someone who would take ownership, investigate the problem, and work toward resolution. After investigating, the issue was deemed to be on Canada Post's end.

As our customer demographics shift, we are seeing customers move away from traditional mail service and opt for electronic mail. If we are not able to rely on Canada Post's technical support services, it makes it difficult to promote epost as a dependable option for our customers.

Our third pain point relates to the cost of postage. In December 2013, EPCOR was notified of the 2014 postage rate increase via media. We did not receive notification from Canada Post, and instead heard the news from the media itself. As a regulated business, we need to forecast our costs. Unforeseen cost increases such as this make it difficult to manage our business. Every year we ask Canada Post for a pricing update, and the response is usually vague, if we get a response at all. While EPCOR understands that postal prices will increase—it makes sense—changes in price like those that occurred in 2014 are significant and they're challenging to manage.

After reading the discussion paper, we think the seven opportunities that are outlined seem appropriate and we don't have significant concerns over them. However, we do expect postal delivery to be reliable, and if issues occur, we expect that we will be able to receive assistance in a timely manner.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Our final panellist will be Ms. Schinke, please, for five minutes.

[Kristina Schinke, Former Vice-President, Cash Money Inc.]

Thank you, Mr. Chair.

I am here just to offer some insight and education regarding the payday loans industry, which Canada Post has put forward as consideration for additional revenue. Just through a Q and A format.... The payday loan customer is your average Canadian who lives paycheque to paycheque. There are more of those than most of us probably realize. They have extended their credit, or they don't have any credit, so they haven't planned for unexpected expenses.

The demographics are half male, half female, and the age range is 35 to 45. They usually rent. Very few are homeowners, so they don't have additional lines of credit or home equity. The segment that's growing, in particular, is seniors on a fixed income. Living month to month, they don't have the resources for those unexpected expenses. It's something they don't expect: replacing a car, medical or dental bills they can't afford, or household expenses. The average income of the payday loan customer, nationally, is about $35,000 a year. Until about a year ago, it was much higher in Alberta, as we might understand.

Why does one use a payday loan? Well, they are poor planners. They don't think of the future. Credit is easy to get, so they often abuse credit early on, and then they can't acquire additional credit. They live right to their means, sometimes slightly above their means, so at some point in time they need that extra money for unexpected expenses. They can't go to a bank and get a short-term loan, and clearly they don't have any savings.

The average customer uses a payday loan five times a year, and only half come back a second time. Many try it on, cover their expenses, pay it back, and then move on. There are really no alternatives besides pawn loans or family and friends.

As I said earlier, you simply can't go to the bank, ask for $500, and promise to pay it back in two weeks, so there really aren't many options.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Now we'll start with our seven-minute round of questions and answers.

Madam Ratansi, go ahead.

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

Thank you all for being here, and thank you for your input.

Ms. Moffat, I'll start with you.

You've given a very good insight into what we've been hearing. The Canada Post workers are reliable, people like them, and they are efficient, but we are faced with some challenges: innovation, technology, less letter mail but maybe more parcels, etc. Would your businesses be willing to take alternate day delivery, which has been suggested, or maybe a delivery three times a week?

[Lynda Moffat]

The majority of the businesses that spoke in support of retaining our post office actually used the post office, rather than delivery to their business. It's because they are shipping and receiving goods for their business, and that's how they are doing it.

We heard from a couple about volumes—nowhere near the volumes that Meghan spoke of, of course. They take their invoicing and things like that down to the post office and have them processed that way. I am not sure whether the delivery aspect is actually relevant to them.

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

Okay, no problem.

In terms of consultation with Canada Post, were you advised that they were going to close down the post office, or did it come as a surprise?

[Lynda Moffat]

It came as a surprise. We heard about it from one of our city councillors. It was totally out of the blue for me. I had heard nothing. I thought, “Well, before I jump in with my own views, I'd better find out what our business community thinks of it.” As I said earlier, I expected a lot of “motherhood and apple pie” type of feelings about having a post office in our downtown. There were a few statements about how important it was as a heritage thing, how important it was, years and years ago, for a community to actually have a post office and what it meant to the growth and stability of the community. It was that important.

Today, although there is some heritage connection, it is primarily that they are using it and depending on it. They were almost panic-stricken at the thought that someone would take it away.

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

You have especially the fear that people might move out. We're trying to ensure that small communities stay stable and they have good-paying jobs, but we also need to find some creative solutions.

Ms. Mackintosh, you talked about its reliability, but the concern you have occurs when there is collective bargaining and there are negotiations. You also talked about customer service and the increase to the postal rate. How would you like Canada Post to engage with businesses? It appears that there is sometimes an edict, and sometimes you don't have a clue what's going on. How would you like to be engaged with them?

[Meghan Mackintosh]

I think from our standpoint it's really about opening up the lines of communication. As an example, on the customer support issue I spoke about, it's really having one point of contact and having a dialogue versus finger pointing in either direction. I think discussion is important.

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

Have you ever made that suggestion to them? Has there been a dialogue, facilitated sessions, between your businesses and Canada Post?

[Meghan Mackintosh]

We have had debriefs. On the issue in March, after the dust settled we did go back. We involved a couple of technical members from Canada Post to discuss, decide, and come up with a plan on what we could do going forward. We do now have the names of some more senior technical staff who probably would be able to help us out a little bit faster.

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

Thank you.

I have a brief question for you, Ms. Schinke. You talk about Cash Money Inc. We have a lot of people in the low-income arena. How much interest does your company charge to anybody borrowing money?

[Kristina Schinke]

It's regulated by each province. As of August 1 in Alberta, for example, it's $15 on each $100.

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

Okay, so it is 15%. Now, that's a very high rate. I'm an accountant, so I understand that people don't have financial literacy and then they can get in debt, but to charge somebody 15%....

I know you're trying to protect your investment, but would there not be some way of negotiating whereby they probably would not go into that spiral deficit? That's what Canada Post is saying. The employees are coming up with that idea, that maybe they could give better bang for the dollar. What are your thoughts on that?

[Kristina Schinke]

What one has to keep in mind is that it's meant to be a short-term loan. The average loan is 10 days. You have to be cautious not to annualize it, because it's like saying that a hotel room, for example, at $200 a night would cost you x dollars over a month. It's not intended for a long-term stay. It's a short-term stay.

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

How many of your clients come back and back again? Do you have any idea? I've seen people go back to payday loans. It's really problematic.

[Kristina Schinke]

Well, it's the minority. As I mentioned, the average has dropped. Ten years ago the average payday loan consumer came in seven times a year. Most recently it's been five times a year. There are people, in the minority, who do get back-to-back loans, but the service was never intended for that.

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

Thank you.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Next up we have Mr. McCauley.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thank you, Chair.

It's nice to be back in Edmonton.

Ms. Moffat, speaking as a former member of your chamber, it's nice to have you here. Just very quickly, I understand the comments you're making. How would it be different for your members if that post office were just replaced at a location at a Shoppers Drug Mart just down the road from downtown St. Albert, where services are identical? Is it a lack of knowledge that the retail ones offer identical services, or is it emotional attachment, do you think?

[Lynda Moffat]

From what I understand—I don't know this personally, but this is what I hear from the business people—they don't offer identical services when it comes to the shipping and receiving of goods. I may be misled on that, but this is my understanding.

Another thing they don't like is to have to be in a retail outlet where they often have to stand in line. They're busy. They're just trying to run their business, and for them, in their mind, the quickest and most efficient way is to go to the post office.