Government Operations Committee on Oct. 21st, 2016

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you, Mr. Chair.

Thanks to the witnesses for being here today and making your presentations.

I just want to go back to the question of my colleague, Mr. Clarke, for a moment in regard to the Ernst & Young studies and your views on those studies. Do you have any more to say regarding the financial position of Canada Post, both now and for the future?

It may involve some of the alternate operations that you were talking about. Would you like to expand on that as well and give just a bit of a vision of where you see it going?

[Gord Fisher]

Yes, certainly. I don't disagree that with the decline in Lettermail, profits can be an issue. Canada Post has to find ways, and I think there are two ways that they can increase their profits. We've talked a lot about that, whether it's getting into logistics or whether it's providing other services, such as postal banking. With the retail network they have, they should be looking at every possible opportunity they have to make money to ensure that they can be a viable service.

The other thing we would recommend that Canada Post has to do is make sure that they maintain the service. Where we've seen a decline in service, we think that also.... I think anyone with a business would tell you that when they stop giving the services, there is a general decline of the business over time. We're saying that you shouldn't be doing that. You should be expanding and you should be improving the ability of customers to get items immediately.

We're already seeing signs of that, as a result of the most recent negotiations and the tentative agreements looking at same-day parcel delivery, which I'm sure the committee has heard about, in major centres all across the country, so that you would actually get the evening delivery.

Certainly I could see how some of the presenters from the previous panel would appreciate that in their lines of business and the difficulties that they can encounter getting items to the customer.

I don't know if Glenn wants to follow up with anything.

[Glenn Bennett]

On the existing business, let's not kid ourselves: there is still a lot of mail in the system. I go to the work floor and trucks are leaving, packed and stacked with hundreds of parcels going out on a particular route.

Just the other day, I received an email from Canada Post informing us that they were moving another eight street letter boxes from a northeast corner in Winnipeg. We talk about declining volumes and how it's affecting the operation. Does that not lead to more declining volumes when you remove the furniture that people are putting those letters into?

Thank you.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Just as a comment, one of the committees I'm on is also looking at heritage. We're looking at how to get news into rural and remote areas, and I noticed your comments in regard to other alternative businesses that Canada Post could get involved in and offer at their depots.

You were talking more about the remote areas. Do you think they should offer those services and make sure we offer them there? Do you think they should offer those services in areas where private industry is already offering them? Would they be offered in remote areas that presently don't have those services?

[Gord Fisher]

That's a fundamental question of whether, when Canada Post is already providing a service, Canada Post should compete and maybe offer a service that's even elevated. Where a service isn't offered, especially if it's a profitable service outside of the core undertakings, I don't think there's any doubt that Canada Post should be offering that as a service to the Canadian people, and that makes sense. When you get to the competition, do you offer something that's already being offered?

I would say that if you're going to make Canada Post compete—and it does, except for universal service obligations for first class letter mail—then Canada Post competes with probably 35 carriers in the industry with parcels, packages, and express items. That range includes everything from UPS to Purolator, FedEx, Dynamex, Acme Courier Service, and a couple of hundred courier companies that you see in most major cities. If they're going to be competing in the parcel market, the package market, and the express market, then why don't they have the right, if there are profits available, to go in and compete in other markets where there is a service that's required, even though there is another party in it? I think that applies to postal banking as well, because we know there are banks.

Do you just offer it in remote areas, or do you offer it where you can make a profit? We would say they should offer it where they can make a profit. It has to be both ways. You can't be expected to provide a service and not make any profits from that service, or even lose money on that service, and then it's looked at, and the conclusion is that it's time to get rid of the service. Your competitors are taking money away from you, but you can't compete with them in the open marketplace.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

The final intervention will come from Madam Ratansi for five minutes, please.

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

Thank you all for being here, and we appreciate the service that Canada Post and its workers provide.

I need a clarification from you. You were talking about revenue bleeding, and one of the suggestions you made was that you provide free service to MPs. Canada Post receives $22 million from the government on that, which is equal to about $60,000 for the 338 employees, and I think you're well compensated for that.

There's one other area I'd like to capture. Mr. Barnett, you talked about how since 2010 you've been doing $5 million in business with Canada Post. Is that one of your substantial costs, or is it reasonable?

[Daryl Barnett]

It's certainly a cost that we look at and keep track of. We're aware of the cost increases that have happened with Canada Post over the last number of years, and we've been tracking that.

Once again, Canada Post is part of our business plan, and when Canada Post does an increase, we have to adjust in other areas, which we do.

We do track it. Is it a concern? We watch it, but we continue to do business with Canada Post, and that is what we continue to want to do in the future.

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

Thank you.

You are satisfied with the service that they provide, and you think it's value for money.

[Daryl Barnett]

Absolutely.

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

Thank you.

I heard from your presentation that you do not believe the figures that the Conference Board of Canada gave, or whatever. What about Ernst & Young? That's the reputable audit firm that has justified it. Yes or no—do you agree with their figures and do you think that those figures are not...?

[Glenn Bennett]

I haven't seen enough of the Ernst & Young figures to—

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

The audited statement?

[Gord Fisher]

I haven't reviewed them thoroughly, with the analysis set out.

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

Okay, fine.

You talked about the task force. The task force took the Canada Post audited statement and then went forward with it. Do you think the task force didn't do its due diligence?

[Gord Fisher]

There were a few issues that arose from what the task force did. I mentioned one previously, which was what they seemed to take as the profitability of Canada Post on a go-forward basis. The other one was that they basically took a position that was primarily counter to postal banking, and I—

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

I'll come to postal banking in a minute, so I'll stop you because I have very little time.

In countries across the world where the post office has declining revenues, they have adopted postal banking in different forms, whether it's private or public partnership, etc.

Where would you like to start the pilot project for postal banking, and what other international experience options, other than postal banking, have you ever looked at? Some academics have told us there are tactics from across the globe that you can probably adopt.

[Gord Fisher]

I'll answer the first part and leave the second for Glenn.

In terms of postal banking, what I would like to express is that it is viable. It shows that it would probably, even in the task force report, have about a 30% market share right off the bat. That's in the task force response.

If they do pilot projects, as is common, I would like to see them done in a number of different areas, both rural and remote and maybe inner city, and identify a number of places to do pilot projects. I would encourage that they be offices staffed by Canada Post with CUPW members, not the franchises that people earlier have talked about. That would give the most control and would be the best way to assess how profitable they would be and what services they could offer.

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

Mr. Bennett, what other international experiences do you think Canada Post should adopt as best practices?

[Glenn Bennett]

The best practices from other international areas...?

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

To make more revenue....

[Glenn Bennett]

I have no idea. I haven't studied that, so I'll pass. Maybe Gord has something on that.

[Gord Fisher]

Yes. Other than postal banking, internationally we've seen different post offices offer different services, and I think there needs to be an evaluation.

Part of the problem, of course, in Canada is we can't offer services or it's difficult to offer services that some places do. Some countries have seven-day delivery; some places have twice-a-day delivery. As a representative of the workers, I'd love to see that, but—

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

I'll stop you there. How often have you been on strike?

Please give a very quick answer. My time is up.

[Gord Fisher]

If we go backwards, we see that the last postal strike that actually occurred was in 2011. That was a rotating strike, and ended up being a lockout very quickly thereafter, and then legislation by the government of the day. Prior to that, I think it was 1999. Prior to that, unless I missed one, it was 1987, which was a rotating strike and then legislation.