Government Operations Committee on Oct. 20th, 2016

[Alupa Clarke, Conservative, Beauport—Limoilou, QC]

According to Canada Post, within 10 years, its deficit will be $750 million.

[Donald Lafleur]

Based on my experience, Canada Post greatly exaggerates future deficits. If you look back, you'll see that it's true.

The Conference Board of Canada made similar predictions not so long ago, when the conservative government and Canada Post decided to move forward with budgets cuts and the elimination of door-to-door service. It predicted that Canada Post would lose money in the current year. Neither that prediction nor the prediction for the next year proved to be true.

How can it make predictions for future years when it has trouble making them for the current year? That's our experience.

[Alupa Clarke, Conservative, Beauport—Limoilou, QC]

I understand. However, I'm surprised, Mr. Lafleur, that the task force appointed by the current liberal government, and not by the previous conservative government, reached the same conclusions as Canada Post.

Why do you think the members of the Canadian Union of Postal Workers are questioning the numbers from two independent groups?

[Donald Lafleur]

Historically, the predictions have turned out to be false. Over a 21-year period, Canada Post has made annual profits 19 times. That's why the union members see things the way they do.

[Alupa Clarke, Conservative, Beauport—Limoilou, QC]

If we accept the idea of a deficit, and if we decide to be in this paradigm, do you think the employees need to do their part?

The collective agreement of February 1, 2015, imposes salary and annual leave reductions. Let's set aside the salary reduction issue. In terms of annual leave, do you think the workers need to do their part to support the corporation's solvency? If so, what means are available to them? If they've already made efforts, I want to hear about them.

[Donald Lafleur]

Their part, as I said, is to improve services and seek a larger market share to increase revenue. That's better than making cuts until Canada Post is no longer viable, which would result in the corporation being privatized.

[Alupa Clarke, Conservative, Beauport—Limoilou, QC]

What about the workers?

[Donald Lafleur]

For decades, the workers have been suggesting ways to improve the services. They have also accepted setbacks and a major increase in their productivity.

[The Chair, Conservative, Tom Lukiwski]

Thank you.

Our final intervenor will be Mrs. Shanahan, for five minutes, please.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Thank you, Mr. Chair.

I'll take advantage of the fact that a witness speaks French to practise my French.

Mr. Lafleur, the point of view you mentioned earlier is very interesting. A bilingual service is very important across the country. We don't always realize it. As an anglophone from Montreal, I know anglophones like to be served in English when they go to a Canada Post outlet.

We were told that, at one point, Canada Post employees were invited to submit their opinion and ideas, but apparently that's no longer happening. Are you aware of this?

[Donald Lafleur]

Are you referring to something that was done contractually?

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

No.

We heard that employees used to be able to suggest ideas for improving services, for example, or saving money. However, there's no longer any way of communicating with the managers.

[Donald Lafleur]

I'm aware that such a program existed, but I left almost three years ago. It might have been cancelled. I don't know. Such a program existed, at one point, and a financial reward was provided when Canada Post's management implemented an idea.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

So the program existed.

Thank you.

Just to get back to the municipalities, I'm very interested in the importance of consultations. I can see there were cases in which it worked well between Canada Post and municipalities, and other cases in which it worked less well.

As my colleague mentioned, it's not one size fits all, but communication seems to be the key. If you had your druthers, what is your preferred method if you have to deal with Canada Post? What would you like to see from Canada Post in terms of communication?

[Debra Button]

If this process started again in Weyburn, certainly we're quite confident that we would get the same respect that we had last time. I wouldn't change anything. They were at our beck and call when we needed them. The whole system, the whole learning curve, that we went through was quite well done.

As I said, as the president of the Saskatchewan UMA, I know that's not been the case throughout. Maybe there was a different approach from our municipalities' end as well, because communication isn't a one-way street.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

So there is some improvement that could be done.

[Carmen Sterling]

Very few of our members would have Canada Post facilities, so we wouldn't have received any feedback. The majority of our interest in this is the service that's going to be provided on a go-forward basis. We wouldn't have had any comments from any municipalities because very few of them, if any, would have actual facilities as a part of the consultation.

We do have a very wide network when we contact our municipalities, and we're glad to in the future if Canada Post wants to share information with us or if the committee wants to share information with us. When we can solicit feedback from our members, we're more than happy to do so.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

Excellent.

Do I have more time?

[The Chair, Conservative, Tom Lukiwski]

You have about a minute left.

[Brenda Shanahan, Liberal, Châteauguay—Lacolle, QC]

On that note, you do have communities that have physical Canada Post offices, real estate assets. One of the ideas that the task force put out was the idea of using that as a community hub, with the ability to provide services other than strictly Canada Post, or indeed going into wider retail Canada Post services.

Is that of interest to your group?

[Carmen Sterling]

As I indicated, we would have very few that I'm aware of. More of our members and residents would be accessing those types of services in the smaller urban areas that they surround, but I do believe it would be supported, particularly given that industries or businesses have been pulling back over the years due to the cost of providing service in a similar type of area.

That's why we had suggested banks originally, but certainly there are many other examples, as Mayor Button alluded to in her presentation, of businesses already in place in those communities that would gladly offer a corner to Canada Post to continue the service so that we knew that we had it.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Thank you all once again for appearing. Your testimony has been extremely helpful. I would add, however, that should you have additional information that you think would be of benefit to our committee during our deliberations, I would invite you to submit that information directly to our clerk. You can get the coordinates from our clerk before you leave.

Since we will be tabling our report in Parliament probably during the last part of November or early December, should you have additional information you wish to provide to us, I would ask that you do that probably within the next 10 days to two weeks, at the outside, and if you do that, it would be very helpful and it would form part of our final report.

Once again, thank you for your testimony. It has been well received.

We will suspend for a few moments while we wait for our next group of witnesses to approach the table.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much to our witnesses, our panellists. Thank you very much for taking time out of your busy day to be with us this afternoon.

Hopefully all of you have been watching the first session. If you have, you know how things work around here. I'll just very quickly go over some of the procedures.

We're going to ask all of our organizations and speakers to limit their comments to five minutes or less. After your opening statements, we will go into a round of questions and answers with all of our committee members. It's been our experience that even if you don't get through all of your opening statements in the five minutes allotted to you, most of the information that we are able to gather comes out through the question-and-answer period. If I have to cut you off, I'll do so respectfully and gently, if I can, but don't worry, because I know that all of the points you wish to make will come out during the questions and answers.

With that brief introduction, we'll get going.

Mr. Nixon, we have you up first on our list. You have five minutes, sir. The floor is yours.

[Keith Nixon, Chief Executive Officer, Credit Union Central of Saskatchewan]

Thank you and good afternoon. Thank you to the committee for inviting us to appear this afternoon. It also happens to be International Credit Union Day across Canada.

My name is Keith Nixon. I'm the chief executive officer of Credit Union Central of Saskatchewan, also known as SaskCentral. I'm also a board member on the Canadian Credit Union Association. I'm joined here by Leslie Trobak, who is our manager of government relations for SaskCentral.

SaskCentral is a financial services co-operative providing research support, consulting services, and financial liquidity management for Saskatchewan's 46 credit unions. Our system manages combined total assets of over $21 billion in Saskatchewan. SaskCentral functions as a trade association on behalf of the province's credit unions and acts as a voice for credit unions on matters of common interest.

Here are a few quick credit union facts. In Saskatchewan, over 472,000 people are members of credit unions, and Saskatchewan credit unions employ nearly 3,500 employees across the province. Saskatchewan credit unions are important engines of economic growth in the province, and in 2015 we had nearly $15.9 billion in loans in consumer, agriculture, and commercial lending. In fact, Saskatchewan credit unions maintain 50% market share of the small and medium-sized enterprise market.

SaskCentral is affiliated with the Canadian Credit Union Association, also known as CCUA, which is the national trade association for 315 credit unions and caisses populaires operating in financial services to their owners and members across the country. Across Canada, 5.6 million Canadians trust a local credit union for their day-to-day banking needs. Collectively, credit unions employ more than 27,000 people and manage over $188 billion in assets, and they contribute over $6.5 billion directly and indirectly to Canada's GDP.

As financial co-operatives, credit unions are a very different kind of financial institution. Unlike chartered banks, co-operative credit unions are not motivated by profit maximization but focus on the benefit of their members and their local community. In fact, concern for community is one of the seven internationally agreed co-operative principles that credit unions adhere to. This involves a commitment to the sustainable development of communities through policies approved by their members. Saskatchewan credit unions are continually demonstrating that they are helping communities prosper.

As an example, 10 Saskatchewan credit unions have been partners with the Government of Saskatchewan and Westcap Management Limited in the construction of 1,500 affordable housing units in the province. Credit unions work with community-based groups to offer financial literacy programming. Some credit unions have long-term capital commitments in Saskatchewan communities, such as rinks, recreation centres, and parks. Other credit unions have special loans programs for low-income persons, people with disabilities, and people with little or no credit history.

Across Canada, our co-operative commitments translate into a variety of different practices, such as providing preferential rates, no-fee and low-fee account services, and providing branches and service outlets in underserved areas in rural and remote Canada. In fact, credit unions are the only banking service providers in 380 communities across Canada, and in Saskatchewan, credit unions are the only financial institution in 132 communities.

With regard to the Canada Post review, while credit unions are regular users of the mail and parcel services offered by Canada Post, the main reason we're here making this presentation is to address the ongoing public debate concerning Canada Post's potential entry into the financial services industry.

At a time when online banking and financial technology are rapidly expanding the availability of financial services, credit unions in Saskatchewan and across Canada are working to compete on a variety of platforms.

We are aware that the Canadian Union of Postal Workers is promoting the entry of Canada Post into postal banking as a means to increase revenues, offset losses in core business areas, and presumably maintain jobs at Canada Post. Other advocates of postal banking are focusing on delivery of financial services to under-banked rural and remote regions and aboriginal and low-income communities, while at the same time providing alternatives to payday loan providers.

However, given the rapidly evolving financial services sector, we believe a postal bank would face a challenging time competing for business in a crowded, well-served, and innovative banking market.

That said, we are concerned there could be a number of negative, unintended consequences accompanying the entrance of a postal bank into the market. The funding advantage for a crown financial institution could tilt the playing field in the crown's favour by granting it pricing advantages over private sector institutions such as banks and credit unions. Unfair competition with another crown corporation could force banks and credit unions to pull back service delivery in markets where pricing is already highly competitive or where margins are very thin.

Finally, if the experience of current crown financial institutions is any guide, it is also likely that a postal bank will face fewer legislative and regulatory pressures in comparison to those faced by banks and credit unions. For example, Farm Credit Canada, the Business Development Bank of Canada, and Export Development Canada are not answerable to a prudential regulator. Furthermore, there are also very few statutory restrictions on the business powers and activities of these crown financial institutions. This is in contrast to credit unions and banks, which face significant restrictions on their business practices and are subject to ongoing prudential oversight and guidance.

[The Chair, Conservative, Tom Lukiwski]

Sir, I'm going to have to get you to wrap it up very quickly, please.