Government Operations Committee on Oct. 20th, 2016

[The Chair, Conservative, Tom Lukiwski]

Ladies and gentlemen, colleagues and witnesses, I think we'll get the meeting started. First, let me say it's great to be back in Moose Jaw. It's been a long three weeks, but it's always nice to be home.

Witnesses on the panel, I think you understand the process, but let me just go over a few opening comments so you completely understand how we're going to work things today.

As you undoubtedly are aware, the minister responsible for Canada Post, the Honourable Judy Foote has initiated a fairly widespread consultation process. Phase one of that process was to establish a task force, the mandate of which was to examine the financial viability and sustainability of Canada Post. They have completed their report, they have presented it to our committee, and we've had a chance to discuss that report with them. Phase two, however, is the reason we are here today. It is a cross-country tour in which we will go to every province and the Northwest Territories to speak with individuals, organizations, people representing seniors, people with mobility issues, and municipalities about their view of the future of Canada Post, and more specifically, whether they have any suggestions for the future of Canada Post, particularly when we're looking at the long-term sustainability of Canada Post. That's why you're here today.

We would like to hear your comments, your observations, and more importantly, some of your recommendations and suggestions.

Following your five-minute opening statements, we will have a round of questions from all of our committee members. We have found that most of the information that is useful for our committee comes out during the question-and-answer process in any event.

With those brief words, I think we'll get going. First up, representing the City of Moose Jaw, is Mr. Gulka-Tiechko.

Please, go ahead for five minutes, sir. The floor is yours.

[Myron Gulka-Tiechko, City Clerk and Solicitor, City of Moose Jaw]

Thank you, Chair.

Welcome to Moose Jaw.

I want to mention that I'm not bilingual.

Unfortunately, that's the extent of my French.

Thank you for this opportunity to present to the committee. My name is Myron Gulka-Tiechko. I'm the city clerk, city solicitor, with the City of Moose Jaw. With me is Michelle Sanson, who is our director of planning and development, also with the city. In usual circumstances our mayor, Her Worship Deb Higgins, would be making this presentation. As you know, municipal elections are pending on October 26, and our rules of conduct preclude elected officials from making formal appearances on behalf of the city during the election period.

On behalf of the City of Moose Jaw, we extend the welcome of our city to this committee. We hope you've had an opportunity to explore, especially our historic downtown. We are, I think, understandably proud of the efforts that have been made by our citizens and businesses to preserve our historic uniqueness. Much in the same vein, we are also proud of the generations of Moose Javians who have contributed to building our city and our province.

According to the 2011 census, 31.4% of Moose Jaw's population was aged 64 and older. Many of our older citizens continue to reside in their own homes, particularly in older neighbourhoods. These are the citizens and the neighbourhoods that were most adversely affected by the withdrawal of door-to-door mail deliveries in August 2015. This withdrawal of service has been most difficult for our seniors and others with mobility restrictions. They are dependent on the mail service for delivery of bills and other communications, which are their link to the outside world. Many in this demographic are not computer-literate and don't have the means to interact with the electronic world. Many are dependent on others to collect their mail. They therefore have more erratic and less frequent access to inbound mail and communication.

This move by Canada Post was counter to the thrust of other levels of government to do everything possible to assist seniors in particular to remain in their homes and enhance their quality of life as long as possible. The recommendation of our city is that door-to-door service should be re-established. We recognize that this will involve policy and financial decisions by Canada Post and the federal government, which may take many months to resolve, leaving in limbo any immediate resolution for our citizens.

In the meantime, our seniors in particular will enjoy a lesser degree of service than that enjoyed by their counterparts in the neighbourhoods of most other cities across the country. We pay the same postal rates but get a reduced level of service.

In addition to the central policy objection of the city, we are also concerned with the arbitrary manner in which Canada Post has essentially commandeered the use of city rights-of-way to erect 332 community mailboxes across the city without compensation. We acknowledge that over the past year we have received what we believe to be a highly inadequate offer of a one-time payment of $16,600 to forever relinquish any claim for the cost and inconvenience of these boxes across the city. Hopefully, in the question-and-answer period, we can get into some of the specifics of that inconvenience.

The city believes that a much more appropriate form and level of compensation would be an annual lease payment equivalent to current actual lease rates. Most of the community mailbox sites occupy a space of between 50 to 100 square feet. Current appraised lease rates for bare land in Moose Jaw would suggest that a collective lease rate for these sites would range from $3,300 to $6,600 on an annual basis. We would suggest that an inflation escalator of CPI would also be appropriate so that the payment did not devalue with the passage of time.

Canada Post enjoys a statutory exemption from taxation. In contrast, although other crown entities also are exempt from taxation, they pay what is called grants in lieu of taxes, or GILT, to municipalities where they operate. This is an attempt to at least provide partial compensation to the municipalities in which they operate. GILT payments provide some relationship to taxes that would be paid on assessable property values.

There are also, however, other models of compensation that have evolved to provide compensation to municipalities. Another prime example is that of a franchise fee. SaskPower, for example, levies a 10% fee on all electrical bills issued in Moose Jaw and other cities across the province, which are paid to that respective city. This yields a significant payment to the city that compensates for the fact that SaskPower uses city land to hold large tracts of infrastructure.

Without belabouring the point, the city's second key proposal is that, if community mailboxes are to continue to occupy 332 tracts of municipal right-of-way, they ought, in fairness, to provide some fair level of ongoing compensation to the municipality for the use of its land.

With that, we again thank the committee for an opportunity to present our concerns with respect to the withdrawal of door-to-door service and the need for ongoing compensation to the city if mailboxes are to remain the mode of service delivery.

We, of course, would welcome any questions from the committee.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Mr. Watson, you're up next, sir.

[Harry Watson, President, Triple 4 Advertising Ltd.]

Thank you.

My name is Harry Watson. I own and operate a grocery store advertising company called Triple 4 Advertising Ltd. It's located here in the city of Moose Jaw. I thank you for inviting me to speak today.

My company creates flyers as well as creating and printing various other signs material for independently owned grocery stores across four provinces.

The objective of my presentation is threefold: highlight the increased cost of distributing and mail via Canada Post, highlight the increased cost of postal mail versus courier service, and explain the issues encountered by having a postal code at the main post office instead of at our physical address.

Triple 4 Advertising Ltd. commenced operations in 1992. In the beginning, we circulated our flyers and sent all ad mail using Canada Post. Because of the cost, we have begun using alternate methods such as a website; a courier service; insertion into newspapers, which costs about 5¢ per copy; via transportation through our wholesale suppliers; hand delivery in small towns; and customer pickup at store locations.

In 2003, we sent out about 2,096,000 at a cost of 8.6¢ per flyer. In 2004, we sent out 7,000 less, but the cost was 8.9¢ per flyer. In 2015, the cost of a flyer was 14.28¢. This year in 2016, our cost per flyer is 17¢. That's a 97% increase in the cost of the flyers in that time. I'm in a very competitive position, I guess, because I'm in the grocery business.

In 1992, we sold a one-kilogram jar of Kraft Cheez Whiz for $5.88, and in 2016, we still sell a 900-gram jar of Kraft Cheez Whiz for $5.88. That's exactly 24 years later. In 1992, we sold cases of 24 355-millilitre Coca Colas for $8.99. In 2016, we sell cases of 24 355-millilitre Coca Colas for $6.99. That's 24 years later, but $2.00 cheaper. In 1992, we sold one litre of Heinz ketchup for $2.99, and in 2016, 24 years later, we still sell one litre of Heinz ketchup for $2.99. That is what competition will do in the marketplace.

In business we work very hard to take costs out of our business to stay competitive. In the case of Canada Post, with no competition, they continue to apply all cost increases to the customer as their costs continue to increase and their volume continues to decrease. That's not a winning formula in my world.

We have found that Canada Post shipping costs are dependent on the envelope, the package size and weight, and even the thickness of the envelope. With a courier, shipping costs are dependent on weight and type of packaging. Also, with a courier service, a business can negotiate based on volume. I would like to reiterate that there are lots of competitors in the courier business, and that is why in Saskatchewan it went from 423 in 2015 to 425 in 2016. Competition is a great marketing tool.

Another issue our mailing department is facing is that the various courier services require a postal code that coincides with the street address for address-finder validation. In my case, as in other businesses in our neighbourhood and around the country, our postal mail is not delivered to our building.

Instead, we have postal boxes that have the postal code set for the post office street address. For certain types of shipping, as well as receiving products, this has caused us some issues. For example, when preparing bills of lading or waybills from the Purolator courier system, it does not accept a postal box for either shipping from or to an address. It must be a street address. I did attach a copy of that.

There are other problems posed by not having a postal code to our building. As you may know, a postal code is more than just for shipping and receiving. With the nature of our business, we have a great number of vendor-suppliers who travel here from across Canada for meetings.

[The Chair, Conservative, Tom Lukiwski]

Mr. Watson, I'm going to have to get you to wrap it up, if I can. We're quite a bit over time.

[Harry Watson]

Okay. For visitors to our city who have never been here before, they use GPS. The GPS does not come to our building. It ends them up at the post office, and that is the biggest crime that we find. That's why I want to get a post office or a postal box in our part of the city.

Thank you.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

I'm not sure if it will be Ms. Perkins next or Ms. Marshall-Colenutt. Which one will be making the presentation?

Ms. Perkins, for five minutes, please. The floor is yours.

[Bernice Perkins, Vice-Chair, Wakamow Aboriginal Community Organization]

My name is Bernice Perkins. I'm the vice-chair of the Wakamow Aboriginal Community Organization. I welcome you to Treaty 4.

I'm here to disagree with the door-to-door service. We have a mailbox and, like the gentleman was saying, we can't get parcels delivered there. If we order materials for our organization, we have to use one of our home addresses in order to receive those goods.

I disagree with the boxes because of the access. My husband is disabled, and in the winter for him to go half a block, if it's slippery and there's snow in the way, he needs to drive. Moose Jaw is not the greatest for clearing our streets, so we're probably going to have snowbanks that make them inaccessible.

As to the security of the mailboxes, when they were first put up I had a number of different people tell me that the keys for their specific box would open other boxes. I haven't checked my key. I always forget about it, but that was a pretty big concern for me, whether someone was able to access my box. Then there is the vandalism of them. If someone could get into them, they would have access to everybody's stuff in that one mailbox, or maybe if they do all three or whatever.

Those are my concerns with the mailbox system that we have now. I much prefer door-to-door service.

Thank you.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

We'll now start our round of questioning. It will be a seven-minute round for questions and answers. We'll start with Mr. Whalen for seven minutes, please.

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

Thank you very much, Mr. Chair.

Thank you all for coming today. We look forward to hearing perspectives from municipalities, businesses, and indigenous groups. It's nice to have the wide variety.

We did have a great chance last night to walk around and see some of the historic sites. What has been done with some of the restoration in your city is quite nice.

In terms of this notion about Canada Post having externalized its costs by expropriating land for the community mailboxes without compensation to the cities and towns, what has happened in similar circumstances with other providers, other government agencies, and how do these GILTs work? What would you expect in general, over time, for Canada Post to pay, if they were to have to pay?

[Myron Gulka-Tiechko]

I think we've projected that the equivalent lease value would be between $3,300 and $6,600 a year. I'm not sure what sort of particular formula would apply. Certainly, there is raw land that has been involved, and there are some real implications both for maintenance and capital costs that the city believes it should legitimately be compensated for.

The particular model of how that compensation would work, I guess we'd be interested in hearing what that could be. But the end result of what the compensation would be, whatever the delivery mechanism, is really our concern.

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

We've been advised by Canada Post that they're responsible for doing the snow clearing, the ice clearing around the community mailboxes. Have you found that they've done that adequately, or is the city receiving a lot of complaints about the manner in which the boxes have been cleared?

[Myron Gulka-Tiechko]

We have received a number of complaints.

Our initial concern was that we had no consultation in terms of where those would be located. We have some boxes that are located in no-stopping zones on busy streets, for example. That seems somewhat illogical. We do have a lot of winter storms. When we do a major plow of major streets, the snow is pushed up on the sidewalks, essentially. We foresee issues with the contractors pushing snow back onto the streets and creating safety issues, etc. There are other maintenance and capital concerns that we have. It has only been one winter. Last winter was probably the best winter of my life, so it probably wasn't a good test run for what it will be like. In a more average winter, we certainly foresee more maintenance concerns.

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

In terms of discussions with Canada Post and resolving the different opinions about where community mailboxes should go, do you feel it would be appropriate to have a regulator that Canada Post, cities, towns, and municipalities could go to in order to have these types of issues worked out and arbitrated?

[Myron Gulka-Tiechko]

We'd certainly be open to that.

In our case, a year ago we had 332 boxes put on our rights of way. It's, frankly, too late now. I guess you could individually sort out relocation of some of them, but the cost and that whole initial effort is history.

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

Did Moose Jaw have some neighbourhoods that already had community mailboxes?

[Myron Gulka-Tiechko]

Certainly there were some in our new subdivisions, I think, since probably the early nineties.

[Michelle Sanson, Director of Planning and Development Services, City of Moose Jaw]

Yes, in the early nineties they probably did.

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

What would you say? Was half your city was already on community mailboxes?

[Michelle Sanson]

No, I wouldn't say half.

[Myron Gulka-Tiechko]

A quarter, perhaps.

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

In terms of the existing community mailboxes, is the town's expectation, the city's expectation that Canada Post should pay for GILTs in respect of those subdivision already-existing community mailboxes, or just the new ones?

[Michelle Sanson]

I believe just the new ones. We were consulted on many of the previous ones in our newer subdivisions.

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

Fair enough.

Mr. Watson, on this notion of appropriate delivery to appropriate places, having addresses associated with post office boxes so that courier companies can deliver to the appropriate spot, do you think that's an appropriate role that a postal regulator could play?

[Harry Watson]

I think so. I couldn't tell you how, but....

I'm fully in favour of post office boxes, because I think it's an opportunity to take costs out of Canada Post's business. I'm a businessman, and that's the way I think.