Government Operations Committee on April 8th, 2024

[Michael Yee]

Well, 2016 was before my time, but what I can say is that as we've had discussions with the government about our service charter obligations as they stand for our business now, they are stated against a named moratorium basis. In that vein, we are aware of the rural areas and post offices that have been urbanized, but because of our core mandate, it doesn't change how we serve those communities.

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

You're saying that notwithstanding the locations, there are some postal locations that are protected that are outside of rural Canada.

Here's the bottom line: Can you share the findings of that analysis, and then provide the committee with a copy so that we understand how that plays out?

[Michael Yee]

Yes, we can share that. We can commit to that.

[Charles Sousa, Liberal, Mississauga—Lakeshore, ON]

Thank you.

[The Chair, Conservative, Kelly McCauley]

Thank you, Mr. Sousa.

Mr. Brisson and Mr. Yee, thank you for joining us today. We look forward to having President Ettinger here sometime in May.

Colleagues, we're going to suspend for about four minutes so that we can bring in our new witnesses.

Mr. Brisson and Mr. Yee, you are dismissed.

[The Chair, Conservative, Kelly McCauley]

I call the meeting back to order. Good afternoon. We are back in session.

Gentlemen, welcome back to OGGO. I understand you're making an opening statement for five minutes. Please go ahead.

[Lorenzo Ieraci, Assistant Deputy Minister, Policy, Planning and Communications, Department of Public Works and Government Services]

Thank you, Mr. Chair. Good morning.

Before we begin, I would like to acknowledge that we are gathered on the unceded territory of the Algonquin Anishinabe peoples.

Thank you for inviting us here today, as representatives of Public Services and Procurement Canada, to discuss the important topic of postal service in Canada's rural and remote communities.

Joining me today is Mr. Eugene Gourevitch, who is the director of performance and impact analysis on our portfolio team.

Mr. Chair, before we delve into today's topic, allow me to provide the committee with an overview of the relationship between the department, the Minister of Public Services and Procurement and Canada Post.

While it is part of the Minister of Public Services and Procurement's portfolio, Canada Post is a federal Crown corporation and operates at arm's length from the government.

The “Open and Accountable Government” document, published in 2015, provides us with a framework for portfolio management within the Government of Canada, and it identifies the roles and responsibilities of ministers and their departments. This framework clearly sets out the importance of respecting the operational independence of Crown corporations, while ensuring that their overall direction and policies align with those of the government.

In the case of Canada Post, the Canada Post Corporation Act grants its board of directors the responsibility of directing and managing all affairs and duties of the corporation. The board consists of the president and CEO and 10 other members, all of whom are appointed by the Governor in Council.

The board is responsible for overseeing Canada Post, exercising due diligence over strategic initiatives and corporate plans, and managing services and operational performance.

Responsibility for day-to-day operations is vested in Canada Post's CEO, who is accountable to the board for the overall management and performance of the Crown corporation.

The Minister of Public Services and Procurement is accountable for providing guidance and oversight to ensure that the overall direction of Canada Post aligns with the government’s policies and objectives. When it comes to reporting, Canada Post provides details of its operations and performance in its annual reports, which are tabled in Parliament by the minister.

Mr. Chair, Canada Post’s mandate is to serve every Canadian address while maintaining financial self-sustainability. As is the case with other postal carriers around the world, Canada Post is evolving to meet changing customer needs and expectations. We know that Canada Post has been experiencing financial challenges as a result of declining mail volumes for some time. The corporation continues to explore opportunities to improve the financial sustainability of its operations.

As for the study at hand, the moratorium on the closure of rural post offices has been in place since 1994 and has remained unchanged despite shifts in the country’s demographics. The Canadian Postal Service Charter clearly states that ensuring postal services in rural settings remains an integral part of Canada Post’s commitment to universal service, and the charter maintains the 1994 rural moratorium.

Mr. Chair, as stated in the minister's mandate letter, the government expects Canada Post to provide “high-quality service...at a reasonable price and [that] better reaches Canadians in rural and remote areas.” This includes meeting the provisions laid out in its charter. Canada Post reports to the government on its performance against its charter commitments within its annual reports.

Although the moratorium protects rural post offices from closure, it should be noted that there are situations that can arise that affect the ongoing operation of any post office. These situations can include personnel retirement, illness or a fire, for example, and when they happen, Canada Post is responsible for consulting with the community to find solutions so that we can continue to provide quality services.

As I've stated, Canada Post operates at arm's length from the government and is ultimately accountable for the conduct of its affairs.

Nonetheless, Public Services and Procurement Canada, or PSPC, supports the minister to ensure the Crown corporation's direction reflects government policy objectives, and advises the minister on matters under his responsibility and authority.

While the department does not have direct authority over Crown corporations, we do play a role in policy coordination and coherence in the activities and reporting of the corporations.

I would be pleased to answer questions this committee may have on the role of Public Services and Procurement Canada in relation to Canada Post.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Mr. Genuis, go ahead, please.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you, Chair.

I'm going to turn things over to my colleague in a moment, but I have a notice of motion that I want to share with the committee prior to doing that.

Canadians have been shocked by the arrive scam scandal. Reports by The Globe and Mail over the weekend dug further into another shocking aspect of this scandal, and that is the apparent rampant abuse of the indigenous procurement set-aside in ways that do not benefit indigenous peoples or communities. The Globe and Mail highlighted how various indigenous leaders have raised significant concerns about these abuses, and yet there has been a lack of action.

Recognizing the need to get to the bottom of how dollars that should have benefited indigenous communities across Canada were actually flowing to a small number of well-connected insiders, I would like to put on notice the following motion, which we will discuss at a later date. The motion is as follows:

That, pursuant to Standing Orders 108(1), (2) and (3)(c), a Subcommittee on Government Operations and Indigenous Reconciliation be established to inquire into matters relating to Indigenous procurement policies as well as other aspects of the committee's mandate, which the Committee may refer from time to time, relating to Indigenous reconciliation, provided that

(a) the subcommittee be composed of seven members of which three shall be from the government party, two shall be from the official opposition, one from the Bloc Québécois and one from the New Democratic Party, to be named by the whips informing the clerk of the committee, with the first members named within one week of the adoption of this motion;

(b) the subcommittee be chaired by a member representing the official opposition, to be chosen by the subcommittee;

(c) the subcommittee shall have the same powers of the committee, except (i) the power to report directly to the House, (ii) the power to sit during a time when the Committee is sitting in Ottawa, and (iii) the power to sit on days when the House is sitting;

(d) when the subcommittee adopts any report, (i) it shall be deemed to have been adopted by the committee, (ii) dissenting or supplementary opinions shall be filed within seven days of the adoption of the report, unless the subcommittee provides for a longer amount of time, and (iii) the Chair of the committee shall be instructed to present it to the House on behalf of the committee; and

(e) the Chair of the subcommittee may, if not already a member, attend meetings of the Subcommittee on Agenda and Procedure in a non-voting capacity.

Thank you, Chair. I will turn my time over to Ms. Block.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you very much, Mr. Chair.

In the 2021 mandate letter for the Minister of Public Services and Procurement, the Prime Minister tasked the minister with ensuring that Canada Post provides high-quality service at a reasonable price for rural Canadians. You made note of that in your opening comments.

He also stated that the Minister of Rural Economic Development would assist PSPC in this matter.

Are you aware of any discussions, conversations or assistance from the Minister of Rural Economic Development or of assistance the department made available to PSPC for improving Canada Post's service to rural Canada?

[Lorenzo Ieraci]

While I can't speak to the ministerial level, at the officials level we have been having conversations with a number of other departments and agencies, including colleagues from the rural area, to be able to explore options that may be available or to generate ideas that might be considered by Canada Post in moving forward and dealing with some of the challenges that have been discussed during today's appearance.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Thank you.

You also mentioned the act under which Canada Post operates and the mandate to provide postal services to all Canadians in a secure and financially self-sustaining manner. One of the representatives from Canada Post made the observation that oftentimes the need to provide a secure and quality postal service is hard to do when they have to remain within their means. Therefore, Canada Post is running at a deficit.

Can you provide me with any indication as to what plans have been put in place to ensure that an effective postal service continues or will resume in rural Canada while maintaining a viable postal service to Canadians?

[Lorenzo Ieraci]

Thank you for the question.

There are two things I would say in this regard.

First, Canada Post, as an independent Crown corporation, is one of the largest organizations within Canada, with nearly 70,000 employees from coast to coast to coast. They maintain operations and obviously are the specialists in managing their own operations. As was indicated by the Canada Post reps this morning, they have a number of activities that they undertake, including the day-to-day operations. Obviously, as was noted, there are nonetheless challenges associated with that. My conversations with Canada Post have noted that when you're dealing with that many employees in nearly 5,600 locations, there are bound to be some challenges that accrue.

The second thing is with regard to activities. Canada Post is obviously always looking to find ways to maintain its financial self-sustainability. They are a Crown corporation with one small exception—well, with one exception—of $22.6 million. I don't want to make it sound like that's not a lot of money, but they finance their activities only through revenues that they generate.

[The Chair, Conservative, Kelly McCauley]

Thank you very much.

Ms. Atwin, go ahead, please. You have six minutes.

[Jenica Atwin, Liberal, Fredericton, NB]

Thank you, Mr. Chair.

Thank you to our officials for being with us today.

According to the Minister of Public Services and Procurement's 2023 transition binder, the minister provides Canada Post with “guidance and oversight to ensure that the overall direction and performance of the corporation aligns with the government’s policies and objectives. This is normally communicated via an annual letter of expectation.”

What were the major issues communicated in the minister's latest letter of expectation to Canada Post? What, if anything, did this letter of expectation convey on the subject of service to rural and remote areas?

[Lorenzo Ieraci]

The letter of expectation is provided on an annual basis by any minister who has heads of Crown corporations within their portfolio. With regard to Canada Post, the letter of expectation identified a number of expectations. I would say that expectations fall within a couple of different categories, if you'll permit.

First, for all Crown corporations, there are expectations of certain things that are usually issued by the Privy Council Office or the government writ large. Then, with regard to Canada Post, obviously there was a focus on a number of activities, including those mentioned in the minister's mandate letter, such as making sure that they are financially self-sustainable, provide universal services and so on.

[Jenica Atwin, Liberal, Fredericton, NB]

Can you highlight anything specific around rural and remote areas?

[Eugene Gourevitch, Director, Performance and Impact Analysis, Portfolio Affaires, Department of Public Works and Government Services]

The letter specifically indicated that Canada Post was expected to continue to meet the expectations of its service charter and that it was the role of the board of directors to hold management to account to that effect.

[Jenica Atwin, Liberal, Fredericton, NB]

Okay.

I'm a rural New Brunswicker, so this is certainly an issue that is important to me.

According to the transition binder of the Minister of Public Services and Procurement, again, the department is working closely with Canada Post “to examine opportunities to improve the financial sustainability of its important operations.” What actions is the department considering to improve Canada Post's financial sustainability?

[Lorenzo Ieraci]

Again, the department has undertaken a number of activities, including—as I mentioned before—speaking with other departments and agencies in terms of whether there may be opportunities for synergies of activities between Canada Post and other federal organizations, as well as encouraging Canada Post to look at alternative activities when it comes to maintaining financial viability.

As was noted by Canada Post representatives when they appeared, their primary raison d'être is to be able to deliver letter mail. Letter mail has been in decline since 2006, with fairly important and significant reductions in letter mail as Canadians send increasingly fewer letters. As was noted, they are putting more of a focus on the parcel delivery side, for obvious reasons, because that is seen as a bit of a growing market.

We've been working with Canada Post to try to provide some ideas or suggestions and work with them in terms of a potential way forward.

[Jenica Atwin, Liberal, Fredericton, NB]

Thank you.

Are you familiar with the community hubs model for Canada Post? I notice that there is a newer one in Membertou, Nova Scotia. It was particularly interesting for me, because it's with an indigenous community. There are things like parcel lockers, EV charging, financial services with an ATM on site and cheque cashing.

Do you know of any plans to expand the community hubs throughout Canada? Perhaps this could actually address some of the concerns we have for rural communities.

[Lorenzo Ieraci]

Canada Post undertook a number of community hubs on a pilot basis in order to be able to see, one, whether they bring benefits to the local communities, including indigenous communities, and two, to be able to test out their business model in terms of the costs of operating these hubs and whether their level of revenue or return on investment is different from what a traditional post office would provide. I know that this analysis is ongoing, so I don't know whether there's been a decision in terms of going forward. However, it is something Canada Post has been exploring.

[Jenica Atwin, Liberal, Fredericton, NB]

Great.

I'm also interested in a question that was asked in the previous panel with regard to property portfolios and the potential for maybe addressing housing concerns or other issues in the community.

What is Canada Post doing to optimize its real property portfolio, and how is PSPC supporting them in this work?

[Lorenzo Ieraci]

Obviously the issue of housing has generated a lot of attention. Within that context, all federal departments and agencies are looking to see what they can do to help advance housing.

In that context, we have been having conversations with Canada Post to see whether there may be opportunities in some of their portfolio and whether that could be leveraged for housing, recognizing, of course, that Canada Post is an operational organization in nature. They will continue to need a lot of the facilities they have going forward for sorting facilities and so on, and a lot of locations are for actual postal offices.

While there's a question of how much of that could be leveraged for housing, I think it's probably a good exercise to be able to review, from a Canada Post perspective, whether there are opportunities to do so without having a significant impact on the number of locations or the spread of the locations. Of course, that could also potentially reduce their footprint, which may have cost implications.

[Jenica Atwin, Liberal, Fredericton, NB]

Thank you.

I think I have enough time for one more question.

When discussing the future of Canada Post, are there international comparisons we can look to when it comes to revitalizing a national postal service or improving rural postal service in particular?