Good afternoon.
My name is Donald Lafleur. I'm the vice-president of the Canadian Labour Congress. I'm also a member of the Canadian Union of Postal Workers. I'm a postal worker going back to 1977 and a member of the national executive board going back to 1989.
On behalf of the 3.3 million members of the Canadian Labour Congress, we thank you for the opportunity to provide our input into this review.
We believe there are two choices.
The first is to invest and take bold steps to leverage Canada Post's infrastructure to offer improved and new services. This choice strengthens our world-class postal system now and into the future.
The second is to cut services, charge more, and ditch the principle of universality. This choice means lower-quality services at higher costs. It threatens the viability of Canada Post and paves the way for more privatization.
The task force supports the second choice. Look at their options: eliminate home delivery, reduce delivery days, sell 800 outlets, close processing plants, charge user fees for home delivery, and scrap the uniform rate of postage.
Now you have a choice to make.
We urge you to reject all of these options. They're self-defeating. Fewer people will use Canada Post if services are less convenient and more expensive. It's a downward spiral that leads to privatization. That would be disaster.
Let's look at the facts.
Canada Post has made profits in 19 out of the past 21 years, for a total of over $1 billion in net profits. In the first two quarters of 2016, Canada Post made $45 million in profits.
The parcel delivery service is flourishing. From 2011 to 2015, the number of parcels delivered by Canada Post increased by 27%. The service is a growing source of revenue, and Canada Post could increase its market share in the future.
Since the Canada Post Corporation is making considerable profits and its parcel delivery sector is growing, it cannot justify a service reduction. We encourage you to recommend that door-to-door service be restored to the 830,000 households that were denied the service during the conservative government era.
Don't misunderstand me. We aren't arguing that Canada Post should spin its wheels. On the contrary, we believe there are excellent opportunities to invest in Canada Post, diversify its services and increase its revenue. We're encouraging you to make that choice.
Our written submission has lots of suggestions. I want to highlight two.
The first suggestion is postal banking. Postal banks exist in 60 countries, including ones with well-established banking markets. They're contributing to the profits of postal systems. Canadians are not served well by the big five banks, who are raising fees and reducing services. A postal bank can improve access and offer lower fees. It would be useful in the rural and aboriginal communities that the chartered banks aren't serving. It would be an alternative to payday lenders who charge rip-off interest rates that should be illegal.
Over 600 municipalities endorse postal banking. Research commissioned by the task force suggests that 7% of Canadians would certainly use postal banking, and 22% would probably use it. That's a large customer base to start with. Canada Post's own research says they could profitably launch the largest banking network in the country. It's time to think big. We urge you to recommend postal banking as a viable option for the future for Canada Post.
A second opportunity is the government's commitment to transition Canada to a low-carbon economy. Canada Post infrastructure can play a role in this transition and generate new revenue. For example, charging stations for electric vehicles can be added to every post office. In this area Canada is way behind other countries, including smaller countries like Norway. We need to catch up. Canada Post can help the transition to greener transport while raising new revenues. We urge you to make recommendations that will maximize the enormous capacity and potential of Canada Post to diversify its services.
Lastly, I want to address the pension issue.
The financial condition of the pension plan is improving considerably. In 2015, the going-concern surplus was $1.2 billion. This represents an improvement from 2014, when the surplus was $500 million. In the meantime, the solvency deficit dropped from $6.8 billion in 2014 to $6.2 billion in 2015. These two trends are encouraging.
However, the most accurate measure of the pension plan's sustainability is the going-concern surplus of $1.2 billion. This represents the current costs for Canada Post. Based on this measure, the plan is healthy.
Problems are being caused by the solvency funding rules. The rules are unnecessary and counterproductive. They were established in the 1980s to protect employees and their pensions from the insolvencies of employers and of the private sector. It's not wise to apply these rules to Canada Post. There's very little risk of our public postal operator going bankrupt in the near future.
In addition, the rules in question divert a large amount of revenue away from business priorities for investment. There's no reason to apply very costly solvency rules to a public sector entity whose pension plan has a considerable going-concern surplus.