Government Operations Committee on Oct. 21st, 2016

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

Thank you very much.

[The Chair, Conservative, Tom Lukiwski]

To all of our panels, thank you once again.

Just for the information of Mr. Fisher and Mr. Bennett, our committee has been seized with the contradictory arguments that we've been hearing on the financial viability of Canada Post. Your organization, your union, has stated, I think quite correctly, if you take a look at the audited statements, that Canada Post has made a profit in 19 out of the last 20 years, or something like that. The task force and the Conference Board of Canada have been projecting a deficit in 2026.

We will be bringing Ernst & Young to our committee to further examine that, because I think it really comes down to what assumptions we're given to begin with. We need to clarify, in the committee's mind, as to whether or not there is a serious potential deficit facing Canada Post or whether, on a go-forward basis, it's maintaining its profitability. We will be examining that further. I just wanted to give you those assurances.

Furthermore, should you have any additional information that you wish to provide to our committee that you believe may be beneficial to us in our deliberations, please do so. You can direct that to our clerk. We would ask that if you're going to provide any additional information, you try to do so within 10 days or so, because we will be starting to formulate our report to Parliament shortly thereafter.

Once again, thank you all for being here. We appreciate your testimony.

We will suspend for a few moments until our next witnesses approach the table.

[The Chair, Conservative, Tom Lukiwski]

I think we'll commence now.

My thanks to our panellists for being here.

I'm not sure if some or all of you have been in the room for previous presentations. I suspect one or two of you may have just arrived, so I'll briefly go over how the proceedings work.

We will ask each of you to make a brief opening statement. We've found in our experience that the majority of information that's transferred to us comes through the question-and-answer process. Following your opening statements, there will be opportunities for each committee member to ask you questions and hopefully elicit some good testimony from all of you, which will help us in our deliberations as we move forward.

I will now open up for a brief presentation by Mr. Sauer.

[Dave Sauer, President, Winnipeg & District Labour Council]

Thank you very much for pronouncing my name correctly. I appreciate that.

My name is Dave Sauer. I'm the president of the Winnipeg Labour Council. We're a union federation, a small council. We represent about 45,000 workers here in the City of Winnipeg, from 65 affiliated union locals. We've been around since 1894. We have a very long history in this city. A lot of our movement and our membership stems out of the history of North End, Winnipeg. It's a very historical area of Winnipeg. We had a general strike in 1919, and the bulk of the participants in that strike were residents of Winnipeg's North End. It's historically an immigrant community, and now it is largely an indigenous population that occupies the North End.

One of the reasons we have formed, I guess, if you go back to our history in 1894, has to do with alleviating poverty. One of the biggest things that we've always said is that if you want to alleviate poverty in Canada, you need to get a union card in everyone's pocket, because, on average, everybody makes about $5 an hour more. There needs to be a method, however, for having that money stay in their pockets.

In light of that, we are here to speak forcefully, at least as best we can, about convincing people and members of the committee that Canada Post should get into postal banking.

We have a very large poverty issue here in Winnipeg. We find that in the North End especially there is an extensive amount of poverty coming out of the idea that people don't have a proper way to bank. They have to pay 600% interest to payday lenders—predatory lenders, as I like to call them—pawn shops, and so forth. We want Canada Post to get involved in postal banking because we think this can help alleviate poverty in the North End by putting more money in people's pockets.

There are a lot of different examples we can cite from across the globe. In New Zealand, they have the Kiwibank, which generated 81% profits for New Zealand Post, after tax. PostFinance in Switzerland accounts for 48% of Swiss Post's operating profits. In Italy, BancoPosta profits allowed the Italian post office to make 55 million euros in profits, or $86.1 million Canadian. In spite of the losses incurred by its postal business, in France, La Banque Postale had operating profits of 842 million euros. I won't go into that conversion. It's a little complicated, but it seems like it works.

In a country like Canada, where we have more and more banks exiting a lot of areas of the country where they don't find enough profitability, this is where the payday lenders come in. We think Canada Post can play a pivotal role in this country in helping to keep predatory lenders at bay.

There are over 6,000 postal outlets in Canada. If you take a look at those numbers, we have some options here on the table. It can be a dynamic shift in Canada Post's operations. It's something they already did. We had the Canada Post Savings Bank, which unfortunately stopped operations in 1969. It's something we already have experience with. We can enhance it. We can make sure that we don't have to deal with these predatory lenders any longer.

I keep harping on that over and over again because it's something we're very familiar with at the Labour Council. We work very closely with the United Way of Winnipeg, which does a lot of inner city work here. It's unfortunate that you see this happening, that we don't have any kind of system in place to make sure people have a better option than dealing with big banks that don't live or work in their area.

For us, it's all about alleviating poverty. I want to hammer that message home over and over as much as I possibly can to everybody here. Postal banking works in other countries.

There are some options we could do. I heard some of the previous presenters talking about where they'd like to run a few test cases. I have three really good options. As diverse as Canada is, you could do an urban setting, a rural setting, and a northern setting. These are three very good test markets.

In closing, I want to emphasize that postal banking is the future of Canada Post.

Thank you.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much. I appreciate your economy of words.

Mr. Rebeck, you have five minutes, please.

[Kevin Rebeck, President, Manitoba Federation of Labour]

Thank you.

I'm Kevin Rebeck, and on behalf of the Manitoba Federation of Labour, Manitoba's central labour body representing over 100,000 unionized workers here in Manitoba, I'm pleased to offer the following remarks to the House of Commons Standing Committee on Government Operations and Estimates in relation to the study on Canada Post.

Protecting the future of our public postal service is vitally important to the way of life of everyday Canadians, for the maintenance of good jobs in our communities, and for a prosperous economy. We urge your committee to listen to public stakeholder feedback, to assess opportunities and challenges, and to make your recommendations with the clear goal of sustaining and expanding our valued national postal service.

Canada Post has generated profit in 19 of the last 21 years. The Harper government's approach of raising fees and cutting services has not served Canadians well, especially the disastrous effort to eliminate home delivery, which has been particularly challenging for seniors and Canadians with mobility challenges. There are many opportunities for Canada Post to innovate, diversify, and grow. We submit it's imperative that home delivery be restored to those who have lost it. It's imperative for fairness, for reliability, for convenience, and for safety. Quite simply, it's the right thing to do, the Canadian thing to do.

Moreover, it's critical that full daily service be maintained for all Canadians. Many families and businesses rely on daily delivery of time-sensitive materials coupled with Canada Post's top-of-the-line service guarantees to carry on their activities and support growing businesses. The Canadian Union of Postal Workers has advanced a series of innovative ideas to green our post offices, and we urge you to consider them. As our national post office is the largest retail chain and logistics company in the country, greening efforts could have huge impacts on climate change and the environment more broadly.

Finally, we're pleased to add our voice to the many calling for the establishment of postal banking, a unique opportunity for Canada to take advantage of the pre-existing nationwide Canada Post infrastructure that's present in so many communities across the country and to enhance the provision of needed financial services, which are currently lacking for far too many Canadians.

We recognize that Canadians are generally sending fewer letters through the mail, but rather than continuing with the tried and failed approach of hiking prices and slashing services that Canadians depend on, we believe Canada Post should work to take advantage of its nationwide presence, including its giant retail network, to expand its services to generate alternative sources of revenue.

Bank branches have been closed in many communities across the country, including many inner-city neighbourhoods in rural and northern communities. Despite Canada's population increasing, the number of bank branches has been declining for more than two decades. A study by Canada Post expert John Anderson has estimated that in some 45% of the 3,326 communities in small-town and rural Canada that have a post office, there is no bank or credit union branch. Bank and credit union branches are especially sparse in first nations communities, but many have existing post office branches. In communities that are chronically underserved by banks, there's a great opportunity and need to establish postal banking to offer affordable and reliable alternative products to predatory, high-cost payday loans.

Establishing a nationwide system of postal banking would make use of the labour and hard infrastructure of more than 6,000 outlets across the country and help fill the need for reliable and affordable financial services.

Postal banking has a proven track record of profitability and good service in countries all over the world from Switzerland to India to Brazil.

Profits from such services as savings and chequing accounts, ATMs, lines of credit, mortgages, and money transfers could all be reinvested in our communities.

Relatedly, there may be opportunities to expand document services beyond passport applications to include identity cards, which when lacking provide additional hurdles to accessing needed financial services.

Thanks for considering our input.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Next up will be Mr. Sosa, for five minutes, please.

[Carlos Sosa, Manitoba League of Persons with Disabilities]

Members of the government operations and estimates committee, I thank you for the opportunity for allowing me to speak today.

My name is Carlos Sosa. I am the former co-chair and current provincial council member of the Manitoba League of Persons with Disabilities. MLPD welcomes the opportunity to speak to this critical public policy issue, which has an impact on persons with disabilities.

The Manitoba League of Persons with Disabilities is the province's cross-disability advocacy voice and has existed since 1974. We are also a member group of the Council of Canadians with Disabilities, for which I serve as the second vice-chair.

In December of 2013, when the original decision was announced to eliminate door-to-door mail delivery and to introduce community mailboxes, the MLPD had very serious concerns over accessibility due to adverse weather conditions in the winter months for persons with disabilities and seniors. We also had concerns over issues of independence, vulnerability, and the potential privatization of the postal service.

One of the suggestions coming out of the 2013 decision was that people affected by this change could simply use the Internet for their daily needs. Unfortunately, this is not the case for persons with disabilities, as a significant proportion of our community lives in poverty and is unable to afford to buy a computer or even to afford access to the Internet.

Persons living in poverty, which includes persons with disabilities, often rely on public services for their day-to-day survival, including access to the postal service. Persons with disabilities rely on the postal service to receive their bills, personal letters, medical information, and monthly benefit cheques. The letter carrier serves as the unofficial eyes and ears to the outside world for some members of our community who lack connection to the supports in the broader community.

A trek to the community mailbox has a lot of barriers, especially for those with physical disabilities. One of the barriers is snow clearing, especially during the cold winter months here in Winnipeg. In winter, snow clearing can be inadequate, and in some cases those who use wheelchairs have to use the street to get around.

When I brought this issue up in front of Susan Margles, I asked her specifically to clarify Canada Post's policy in terms of the inches and centimetres that the corporation is responsible to clear when snow collects around the mailbox. Her response to me was that Canada Post is simply responsible for clearing snow around the box. This is simply not clear enough. In my interpretation, that could mean a very small path would be adequate, when wheelchairs take a lot more room than a very small path to get to the box.

One of the ways in which Canada Post could bring in new revenues is by the introduction of postal banking. Postal banking could provide critical services to underserved and marginalized communities, and the area in which I live could be one of them. I have seen the effects of bank closures in my area, so we would definitely benefit from postal banking there.

Another service Canada Post could provide is transporting food to northern and rural communities at a reasonable price in comparison to the Northern stores, which sell food at outrageous prices in many northern communities. In many northern and rural communities, persons with disabilities are unable to afford the expensive trip to go to an urban centre to buy groceries, so this would be a very welcome move.

A move toward privatization would have a detrimental impact on persons with disabilities, especially since a significant portion of our community lives disproportionately in poverty and relies on accessible good-quality public services for their day-to-day survival.

I'm done.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much. I didn't want to cut you off, and I thank you for that.

Our final panellist will be Professor Camfield. You have five minutes, sir.

[Professor David Camfield, Professor, Labour Studies and Sociology, University of Manitoba, As an Individual]

Thank you for the opportunity to appear today. I'm here as a social scientist with expertise on the public sector.

I put my name forward as a witness because I believe the discussion paper of the task force for the Canada Post Corporation review is fundamentally flawed. Parliament and residents of Canada more broadly are ill served by this discussion paper. The task force missed the opportunity to offer an innovative strategic vision for Canada Post that takes advantage of its existing unique strengths as a crown corporation to orient it for a future in which it would respond creatively to trends in postal service use and make a meaningful contribution to society's necessary transition from relying on fossil fuels to generating energy in ways that do not make the climate change crisis worse.

The Delivering Community Power plan, developed by a number of organizations, offers such a vision. Unfortunately, the task force did not treat its proposals with the seriousness they deserve. Instead, it produced a report that is blatantly slanted in favour of an all-too-predictable approach for Canada Post, one that would see it increasingly operate like a conventional private firm in a way that would facilitate at least its partial privatization in the future.

It appears to me that the reason for this is the composition of the task force. None of its members have expertise in fields relevant to the future of the public sector in an era of worsening climate change. Three of its four members are business figures. As a result, the report is a missed opportunity, and it should not serve as the basis for changes to Canada Post.

I'd like to focus on specifically three of the many specific ways in which the discussion paper is flawed.

First, as part of its rejection of the reintroduction of postal banking, it makes the claim that “most Canadians now prefer to bank online”. What is its support for this claim? It cites “research conducted by Yahoo Canada”, which claims that 68% of Canadians now bank online on a weekly basis. Checking the source cited in the relevant footnote, one finds an infographic reporting on a so-called consumer finance study conducted by Yahoo. It appears that the study was done by surveying the readers of Yahoo Finance.

As social science, this is laughable. In fact, if one of my students handed in something like this, I would fail them. The readers of Yahoo Finance are in no way representative of the population of Canada. The source cited does not in fact provide reliable information about what proportion of Canadians bank online, and it certainly does not tell us what proportion prefer to bank online. Some people may bank online not because they prefer to do so but because they are obliged to, either because they don't have time to get to a branch of their financial institution or because there's no branch near them. This looks to me like using so-called research to bolster a preconception—namely, that postal banking should be rejected.

More broadly, the report's discussion of postal banking reads like a brief from the bank lobby, not an objective assessment of postal banking as an option. The report makes no reference to Canada Post's internal report entitled “Banking: A Proven Diversification Strategy”. Although Canada Post's research on postal banking was stopped under the previous Conservative government and the public was denied access to most of this multi-year study, which was released following an access to information request in a mostly redacted form, we do know that the study states that postal banking would be a “win-win” money-maker. We have to ask why the study, whose existence was made known in 2014, was not consulted.

Third and finally, the report favours the creation of a new regulatory body for Canada Post—or, in its words, the addition of postal regulatory bodies “to an existing regulator”—with a wide range of powers. The tasks suggested for such a body, including changing the universal service obligation and updating the rural moratorium, make it clear that it would be an instrument for changing Canada Post in ways that reduce service to the public and make Canada Post operate even more like a private firm.

The balance between the public interest and competitive market forces, clearly implied by the report, would be tilted heavily in favour of the latter at the expense of services to residents of Canada and the workers who deliver those services. In other words, the proposed regulatory body would be a Trojan Horse for the agenda of remaking Canada Post in a way that would benefit private firms that operate or would like to operate in its sector.

Empowering a regulatory body to make major changes would reduce parliamentary oversight of Canada Post, further weakening the influence of the public interest in how Canada Post operates. The report proposes allowing the regulatory body to amend the Canadian Postal Service Charter instead of requiring the government to do so. This would allow the government to avoid responsibility and accountability for changes to the public postal service. Although that might be convenient for the federal government of the day, it would be anti-democratic to do so.

For these reasons, I believe the task force's proposal for a new regulatory body for Canada Post should be rejected.

Thank you.

[The Chair, Conservative, Tom Lukiwski]

Thank you to all for your co-operation and for maintaining the tight timelines on your opening statements.

We'll now go to our questions.

We'll start with a seven-minute intervention from Ms. Shanahan.

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

Thank you very much, Chair.

Thank you all for being here this morning. We've had a wide range of testimony here this morning in Winnipeg, and it's much appreciated.

I'd like to ask each of you a question concerning the mandate of Canada Post to get some clarification on your views. We know that Canada Post has a universal service obligation for letter mail and not necessarily for parcel, although that is the part of the business that is growing substantially.

My question to each of you is this: do you see Canada Post as a public service first, or a business first?

[Carlos Sosa]

Canada Post is a public service.

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

Excellent.

[Dave Sauer]

I agree. I think it's a public service.

I mean, in a country this big, you need to have some kind of service that can deliver parcels, that can deliver mail and so forth. I would first and foremost see it as a public service in a country of this size.

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

Okay.

[Prof. David Camfield]

I would echo the comments of the previous panellists.

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

Okay.

My follow-up question is this: who should pay for it and how shall it be sustained?

[Kevin Rebeck]

Absolutely, it's a service for Canadians, and there are opportunities to grow those services.

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

Okay.

Do you see that it can be sustainable or profitable? Where do you see the profits going, if it is profitable?

[Kevin Rebeck]

It should be a sustainable system, and it can be, and profits should be reinvested back in the community. Government is in a position to do so, to reinvest in the infrastructure of the organization itself, and any excess can go to help provide other public services for people.

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

Okay. Very good.

Does anyone else want to add?

[Prof. David Camfield]

I agree.

Of course, as I'm sure you've heard many witnesses discuss previously, there's been the decline in letter mail. The remarkable expansion of parcels I think is quite significant. Given what we know about trends with online shopping and so on, I see that as likely to continue.

I think it's really important to see it not just as an important public service but also as a public asset. Also, it has a strategic potential for innovation beyond this existing phase.

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

Interesting.

Mr. Sauer, would you comment?

[Dave Sauer]

I guess if you're looking for ways to make more money and have more revenue for this service, get into postal banking. I mean, we're leaving money on the table when we're not looking at other jurisdictions and seeing what they're doing. They might be laughing at us.

If we're looking for ways to pay for it, start expanding your business model into a service model.