Government Operations Committee on June 12th, 2020

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Thank you very much, Mr. Chair.

Thank you very much for your testimony. We really appreciate the excellent insights you've provided from Canada Post.

I do have a question. I've heard that Canada Post is taking some steps to help those at risk, including seniors. I wonder if you can provide a bit of detail in terms of some of the additional services that are being provided by the folks at Canada Post.

[Manon Fortin]

Absolutely. We have a mandate to serve all Canadians across the country. We understand that our service is essential, particularly to seniors. We're working hard to safely serve them.

There are a couple of things. We've reserved the first hour of our post office total schedule of service for those who are most vulnerable, including our senior citizens.

We've worked right from the start with the long-term care homes to ensure that mail is delivered to their patients and the people who are in those homes. That has been different for each one, depending on where they are and what has been happening in the long-term care home, but we've been extremely flexible in order to meet their requirements.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Thank you very much.

We've heard of some banks closing branches in rural areas and northern communities, such as in B.C., and whatnot. I understand there was a pilot project or an agreement in place with Canada Post potentially looking at postal banking as an option. I wonder whether that has been explored any further and whether you have any update on that.

[Manon Fortin]

I'm from operations and logistics, so I don't have information on that pilot. I'd be happy to provide it for the committee and follow up with the committee on that. I'm not familiar with it.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

Okay, great. That isn't a problem.

Lastly, we know that small and medium-sized businesses are facing a huge crunch and major challenges during the COVID crisis. What steps has Canada Post taken to support small and medium-sized businesses in any way?

[Manon Fortin]

Small retailers are certainly ramping up their online operations, and we are so proud to support them. They're a large part of our customer base. At the end of April, we started providing small businesses with additional discounts for shipping to support them during this difficult time. We provided further discounting on local shipping to support their shipping packages to customers in their local communities. After six weeks, we're happy to report that more than 80,000 small businesses across Canada have taken advantage of the discounts we're offering.

We've also introduced some marketing offers to help small businesses connect with customers in their local community, and we've been communicating this program broadly through all media, some of which you might have seen on television with our “Think Small” ads.

[Irek Kusmierczyk, Liberal, Windsor—Tecumseh, ON]

That's great.

Thank you very much.

[The Chair, Conservative, Tom Lukiwski]

Thank you.

Mr. Barsalou-Duval, you have the floor for two minutes.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you very much, Mr. Chair.

The last question that was asked concerned small and medium-sized enterprises, which is timely. I've been following what's been said in the media lately. On May 20, an article in La Tribune talked about a local entrepreneur who wanted to sell his goods. He noted that he had to pay between $7, $11 and $12, whereas, for the same package, a Chinese man had to pay less than $1 to send it here.

I'd like to know how that can be explained. There's distance, an ocean to cross and customs to clear. In addition, as you said, you offer assistance to SMEs.

[Manon Fortin]

That's a good question. Thank you. However, I couldn't tell you what the costs are for parcels from China compared to the costs of parcels from our small businesses that are delivered here.

I'll be happy to forward this information to you.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Do you know if there are special deals with China that allow them to get discounts that people here don't get?

[Manon Fortin]

We have agreements under the aegis of the Universal Postal Union with most countries, but I am not aware of the specific agreement with China. I'll be sure to send you that information.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

All right.

You're overwhelmed because you have a huge volume of packages these days. At Purolator, they're as overwhelmed as you are, but their delivery delays are shorter than yours. How do you explain that?

[Manon Fortin]

I can't speak for Purolator...

[The Chair, Conservative, Tom Lukiwski]

Unfortunately, we're completely out of time, but I will ask that you please complete your answer in writing as soon as possible and deliver it to our clerk.

Our final two-minute intervention will be from Mr. Green.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you, Mr. Chair.

I will pick up where I left off. Could the witness expand on any negotiations that are happening, understanding that we're certainly going to need logistic supports in COVID through the summer and into the fall?

[Manon Fortin]

I'm sorry. I missed the first part of your question.

[Matthew Green, NDP, Hamilton Centre, ON]

The first part of the question is exactly where I ended. I'm asking if you can elaborate on what negotiations you have currently with the government to extend your contract beyond July, knowing that we're going to have to deal with this COVID situation into the fall.

[Manon Fortin]

Currently, there is no negotiation. As regards our role in the distribution of personal protective equipment for Canada Post, we now say that it is complete. Of course, if we're asked to come back and work with the government or any other companies to distribute the equipment, we will be there to support that, but our role is definitely.... There is no negotiation going on for a continued role.

[Matthew Green, NDP, Hamilton Centre, ON]

That is startling.

Understanding the financial disruptions that COVID would place, and understanding the 2016 report from Ernst & Young, what impact has the pandemic had on Canada Post's financial sustainability?

[Manon Fortin]

As I said, our mandate is to serve all Canadians and to be self-sustainable and self-sufficient. Our immediate focus is clearly on operating through the current challenges. I spoke a bit to the volumes and how the business has changed through the pandemic.

On the revenue side, as I said, the parcel volumes are up significantly, by 50%. There are days when we deliver two million packages, a volume we normally see only during Christmas. Our letter mail is down 13%, and our direct marketing is down 60%—

[The Chair, Conservative, Tom Lukiwski]

Unfortunately, Madame Fortin, we will have to terminate the rest of your answer now because I will briefly suspend this meeting, but not before I thank you and Monsieur Persad for your presentations today. They've been informative and very, very helpful.

You are excused.

Colleagues, we will suspend for just a moment or two while we prepare for our next panel of witnesses.

We are suspended.

[The Chair, Conservative, Tom Lukiwski]

I will reconvene the meeting now.

Colleagues, just a reminder that I need 10 minutes at the end of this meeting to go over some business, so I do not think we'll be able to get a complete round of questions in, but we'll go as far as we can.

We'll start with five-minute opening comments by our witnesses.

Mr. Gentès, you've got five minutes, please.

Unfortunately, Mr. Gentès, we cannot hear you. There is no audio coming through.

[Jean-Philippe Gentès, President, Galenova Inc.]

Oh, sorry. I did mute myself.

Hello, everyone.

My name is Jean-Philippe Gentès. I'm a pharmacist by trade. I am also a pharmaceutical entrepreneur. Since 2006, I've been the owner and operator of three businesses that employ 210 people. All businesses are located in Saint-Hyacinthe, Quebec, Canada.

I am in the field of pharmaceutical chemical distribution and importation of materials and medical devices, and I also now manufacture hand sanitizers. I also own a compounding pharmacy from which we service pharmacies throughout the province of Quebec and hospitals throughout Canada. We prepare ready-to-use drugs for them that the pharmaceutical industry cannot manufacture, for various reasons. I am also in the field of injectable drugs and biological injectable drug manufacturing.

I would say that COVID-19 put a lot of pressure on the supply chain and the manufacturers of medical supplies and drugs. When it comes to medical devices, glove deliveries from regular manufacturers have been constantly delayed and pushed back. Also, we've seen important price increases in most of the personal protective equipment in the past few months. I would say it's something ranging from 25% to 200%.

Although we've seen good intentions and a nice opportunity given by the Canadian government to allow more manufacturing of hand sanitizers, I would say that a lot of those companies out there are not from the pharmaceutical world. Thus, today they are not respecting the basic regulations on natural product manufacturing. I think this could lead to poor quality and substandard product being available on the market that could cause certain risks to Canadians.

I'd also like to take some time to raise a concern about the technical-grade alcohol that is being used today in the manufacture of certain hand sanitizers available on the market. As the committee might know, technical-grade alcohol contains a lot of impurities, higher than the normal acceptable grade of alcohol that is being used for the manufacturing of hand sanitizers. Sometimes we're talking about 100 times over the regular grade. I'm thinking mainly about acetaldehyde. This has been evaluated by a task force from Health Canada. Despite the fact they're looking at the worst-case scenario, they say the concentration of acetaldehyde that is present in the product can increase the cancer risk from both dermal and inhalation exposure when applying hand sanitizers, and this should not be considered negligible.

Basically, they consider that the risk for the short term is okay under the COVID-19 circumstances, but today I would say that with the pandemic coming more and more under control, there should be a reconsideration of this policy. Although price-wise I think there's an incentive for manufacturing to use technical-grade alcohol—because it sells for one-third to one-half of the price of the acceptable pharmaceutical grade ethanol—I think the low price of technical-grade alcohol should not be a justification to continue using such a product.

Also, I'd like to take some time to discuss manufacturing sustainability.

I think that COVID-19 was a big eye-opener for all of us. During the past years, we lost a considerable number of manufacturing sites in Canada in the health care environment. Long-term lowest-bidder policies have had several important side effects on the health of our manufacturing system. Low prices encourage the use of product manufactured outside of Canada, where labour is cheaper and where quality could not always be at the same level as Canadian standards. Is it normal to pay more for a bottle of water than an injectable dose of a vital product? Is it normal that we pay more for Smarties than pills?

I think the lowest-bidder strategy led to decreasing product quality, lower investment in plant equipment and quality, and plant closures. This had important side effects—

[The Chair, Conservative, Tom Lukiwski]

Unfortunately, M. Gentès, we're completely out of time. We are tight for time.