Government Operations Committee on Sept. 17th, 2024

[The Chair, Conservative, Kelly McCauley]

I call this meeting to order.

Welcome to meeting number 138 of the House of Commons Standing Committee on Government Operations and Estimates, also known, of course, as the mighty OGGO or the only committee that matters.

Before we start, as always, I have a nagging reminder for you to keep your headphones away from your microphones at all times so that we can protect the hearing of our very valued interpreters.

We are back with Mr. Anderson. Welcome back to OGGO, Mr. Anderson. We'll start you off with a five-minute opening. Hopefully, we'll get you for the whole hour today.

Go ahead, sir.

[John Anderson, As an Individual]

Thank you very much, and thank you very much for inviting me to appear here.

Good morning, everybody. My name is John Anderson. I'm a trade union researcher with PIPSC, which is one of the major federal unions. I'm here on my own behalf. I'm not here on behalf of PIPSC at all.

I'm a former policy and government affairs director—

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Excuse me, Mr. Chair. Before the valiant witness goes any further, I'd like to inform you that there is no French interpretation.

[The Chair, Conservative, Kelly McCauley]

Bear with us one moment, Mr. Anderson.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

The interpreter's microphone is on, but there may be a system-wide problem.

[The Chair, Conservative, Kelly McCauley]

Do you mind testing it, interpreters? It's working for me.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

There's no background noise. It's as if the system is inactive on the French side.

[The Chair, Conservative, Kelly McCauley]

Mr. Lemire, we're going to try again. Can you let us know if it is working?

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Very well, but that is still not the case.

[The Chair, Conservative, Kelly McCauley]

Okay.

I'm going to suspend for a moment.

[The Chair, Conservative, Kelly McCauley]

I call the meeting back to order.

I apologize, everyone. We are back.

Mr. Anderson, go ahead, please.

[John Anderson]

Thank you.

I am a former policy and government affairs director for the Canadian Co-operative Association, which is now called CMC. I was the vice-president of research for the Canadian Council on Social Development and also the former policy director for the federal NDP.

I've written extensively on the post office. In a study I did some 10 years ago for the Canadian Postmasters and Assistants Association, I found that Canada Post had shut down over 1,700 rural post offices since the 1980s. In spite of a 1994 moratorium on rural closures, the shutdowns continued.

I did a survey of 1,635 mayors, reeves and band chiefs where a post office has been closed that documented the effects on communities. While some communities saw their federally run post offices replaced with a franchise outlet, 53% of communities had no postal outlet of any kind. The closure of post offices was singled out by many respondents as another nail in the coffin of rural Canada. At the time, some 24% of communities expressed very high levels of dissatisfaction with the present postal service.

This survey, along with more than 10 years of work on postal issues, is contained in my recent, December 2023 book, Why Canada Needs Postal Banking, which is published by FriesenPress. One of the major studies that I did, which was included in this book, was for the Canadian Centre for Policy Alternatives in 2013. It was funded by the Canadian Union of Postal Workers.

The most recent annual report of Canada Post demonstrated that Canada Post has been losing money in recent years. Any quick fixes that involve cutting services will particularly affect rural Canada.

Ian Lee, a Carleton professor, recently had his proposal to fix the financial difficulties of Canada Post published in The Globe and Mail on May 28, 2024. His proposal contains a series of ideas linked to cutting delivery days, creating more community mailboxes, and privatizing and selling off government-owned post office outlets.

What's wrong with this proposal?

First, there are no parts of the proposal here to increase the revenue of existing services except by privatization and selling off the facilities or by worsening the delivery situation for millions of citizens and reducing the number of good-quality, unionized postal jobs.

Instead of these measures, we should start by ensuring that more parcel delivery is handled by Canada Post, which has the only Canada-wide delivery system, and less by big, foreign-owned private carriers. This would require agreements with major parcel producers and perhaps legislation, including extending delivery days and times.

Second, there are no proposals here to ensure that Canada Post has more revenue through new services. The Canadian Union of Postal Workers has proposed a whole series of measures from postal outlets and offices such as elder check-ins, community Internet services, food delivery, electric vehicle charging stations, and other community services such as government licences, passports and postal banking.

I want to expand on this last proposal of postal banking because of its importance to rural and remote post offices. Worldwide, over 84% of postal services already offer financial services, as a 2023 Universal Postal Union study indicates. There were 2.38 billion postal banking accounts worldwide in 2023, which is up from 1.96 billion in 2016.

To start with, postal banking existed before in Canada, for a hundred years after Confederation. It was actually started by the Conservative government of John A. Macdonald in 1868. It existed until 1968, when Canada and the U.S., which also had postal banking, both terminated postal banking services in that year.

Today, we're in a time when more and more local banking and credit union branches are being closed—many in rural and small-town Canada. We have gone from 7,964—almost 8,000—bank branches in 1990 to 6,300 in 2014, and only 5,600 in 2022. Those are the last figures that are available from the Canadian Bankers Association. It's probably gone down since then. We don't know, because they haven't published the 2023 figures yet.

Credit unions, except for Desjardins, also saw locations decline from 1,890 in 2015 to 1,643 in 2023. Desjardins went from 1,122 in 2015 to only 661 today, so there's been a major decline.

Many can do banking on the Internet, but it's hard to develop a relationship with banking employees to negotiate a mortgage or a business loan over the Internet or deposit your daily business earnings if the branch is many kilometres away.

In another report that I did, “Why Post Offices—

[The Chair, Conservative, Kelly McCauley]

Mr. Anderson, I have to get you to wrap up.

[John Anderson]

Okay.

I'll just terminate here on this thing. I found that, in 2,620 small towns and rural communities with post offices, 45% did not have a bank branch.

I will stop here. The rest is contained in the notes that I sent out, and I'd be very happy to answer any questions on this issue. I think it's something that we should be doing in Canada. We should be getting back to it, and I think it's good all around. I don't think it's a partisan issue. I think it's something that is outside of partisan politics.

[The Chair, Conservative, Kelly McCauley]

Thanks, Mr. Anderson.

We'll start with Mrs. Block for six minutes, please.

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

Thank you very much, Mr. Chair.

I welcome you, Mr. Anderson, to our meeting.

We, too, have noted the continuous closure of rural post offices, despite the moratorium that you referenced in your opening remarks, which, I think, underpins one of the compelling reasons for undertaking this study. I represent a very large rural riding in Saskatchewan, and this is an issue that I'm well aware of. I have many constituents as well as many community leaders who are deeply concerned about the loss of their post office.

Not that I haven't heard about postal banking and the potential of it before, but I am intrigued by your presentation. If Canada Post were to take on the responsibility of postal banking, would every post office that exists in rural Canada and maybe even in urban Canada need the facilities to operate a bank and to operate as a bank? Is that one of your suggestions?

I guess, knowing the infrastructure deficit we have in rural Canada when it comes to post offices and now even retail outlets, it would seem that constructing the infrastructure needed to operate as a bank, such as vaults or teller desks, might be untenable for many communities. Could you address that issue as well?

[John Anderson]

I think it's important to note that if you're going to offer postal banking services, they could be introduced region by region, or they could be introduced all at once.

Certainly postal banking as it exists in, say, the United Kingdom or France, which are two of the big examples, is profitable for the postal services offering these financial services. The French postal bank, the Banque Postale, is one of the 50 largest banks in the world.

Certainly post offices right now already have computer hookup. There may be one or two that don't, but the vast majority of them have access to the Internet, and this is really what is needed to offer banking services. That's the prime attribute. Obviously, in the past, before that existed, it would have been more difficult, but now, with that, it is not difficult. In the past, they already offered various services. You could buy financial services. You can still buy a postal money order at a post office, for example. They already have mechanisms to deal with money, with funds, etc. Of course, those mechanisms would have to be enhanced, but I don't think that is a particularly difficult thing to do.

Plus, it's important to note that banking is a very prosperous industry. The big six banks in Canada last year made $60 billion in profit, so there's money in banking. There's money in offering services in banking. I think that postal banking would be able to offer services at reasonable rates, and it would be able to do this.

I think this is something that can be delivered. Of course, there would have to be upgrading and training, but it's also possible nowadays to have online specialists to answer questions, etc.

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

Thank you very much.

You didn't get to the end of your opening remarks. I read them and I'm interested in hearing your opinion on the cancellation of the MyMoney Loan program that Canada Post undertook. I want to give you an opportunity to speak about that.

[John Anderson]

I was very disappointed by the rapid cancellation of that program, which only existed for a couple of months, really, as fully operational. Then it was cancelled. There was never a full explanation of why it was cancelled. I don't know whether you've had one here. Certainly, that was a step forward. I would welcome any steps forward by Canada Post in moving in the direction of financial services. I think they're all very important ones, and they're all ones that are going to help rural post offices in particular.

I think it's very important to note that there are so many communities now that do not have a bank branch of any kind anymore. I've interviewed mayors of communities who've said, “Oh, we had a plan to set ourselves up as a retirement community and now that's in danger because we don't have any bank branches anymore. The senior citizen residents we wanted to attract don't want to come here because we don't have a bank branch.”

Therefore, I think it was a mistake to cancel that. If there was a problem, it should have been corrected. Canada Post still says it's going to offer more financial services. That's still the plan. We haven't seen those financial services yet, but I hope it moves forward in that direction.

Of course, I think the main thing to do is offer postal banking services. They can be offered in a number of different ways. In the U.K., postal banking services were introduced in a different way—

[The Chair, Conservative, Kelly McCauley]

Mr. Anderson, I'm sorry, but we're past our time. I'm sure that you can continue in another round.

Mr. Kusmierczyk, please go ahead, sir.

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

Thank you, Mr. Chair.

Thank you, Mr. Anderson, for being with us here today. Thank you so much for your testimony on postal banking and rural postal service, which is so incredibly vital and important to communities across Canada.

I had a chance to walk in the Labour Day parade this summer. I had a chance to walk with postal workers. I want to reiterate how incredibly hard-working, dedicated, committed and compassionate our postal workers are. The work they do is absolutely outstanding. I want to begin by sharing my gratitude for their hard work and commitment to delivering the mail and looking after our communities and neighbours.

I also want to add a bit of a high note today. The Bank of Canada and Stats Canada indicated today that the inflation rate has dropped down to 2%. That's eight consecutive months of low inflation within the Bank of Canada's target rate. That is good news for working families and residents across Canada.

Mr. Anderson, I want to ask you about the definition of “rural”. We actually don't have a definition of “rural” in the 1994 moratorium. I want to begin by asking you, in your opinion, how we define “rural” when it comes to rural postal service.

Let's start off with some basics.

[John Anderson]

Well, I don't have a clear example of that.

It's important to always remember that Canada and Australia are the two countries that have the highest percentage of their citizens living in major urban areas rather than small towns or rural communities. We have a big tendency in Canada, because of that, to forget about the needs of rural citizens—small-town Canada and farm Canada. All of those areas are often forgotten.

That's why postal banking, to me, is a crucial element, particularly in a time when the major banks and credit unions—I worked for the Canadian Cooperative Association in the past, so I was close to credit unions—have both shut down many branches. This is not helpful. Those branches are shut down. Shutting them down is done primarily in small towns and rural communities. That's where the effect of this is the most severe. We have to reverse that. With post offices, we have the locations, the staff and the opportunity to develop postal banking without the kind of massive investment where we have to find a bunch of locations. We have locations. We have staff. We can move forward in that degree much faster than in a lot of other new government policies.

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

The reason I ask is that we heard at committee that previous jurisdictions, previous areas—like Milton, for example—were described or defined as rural. I think you'd be hard pressed to find someone defining Milton as a rural community these days, with its growing population.

Is it important, in your opinion, for us to maximize resource allocation to rural communities, and that we first begin with a proper definition of what a rural community is so that we can differentiate communities, like Milton, that were once rural but, I would argue, are now urban and suburban, versus communities, let's say, in other parts of the country that are truly rural? Is it important to have that definition, and can you help us maybe define that?

[John Anderson]

I think it's important. In Canada, as I mentioned before, we have to start by looking at the areas of Canada outside of the major CMAs, the major census metropolitan areas, as defined by Statistics Canada. Those are not rural and they take in, as per your example of Milton, that kind of community, but outside of that there is a whole area of Canada that is basically small-town and rural Canada. I think “rural”, of course, has to be defined. We're not talking about purely non-town areas. We're talking about small-town Canada. We're talking about Canada outside and away from these census metropolitan areas.

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

Okay.

I'll turn my attention to postal banking. I find the concept interesting, but I want to understand it a little bit better. Can you help me understand? What is postal banking? Are we talking about a full-shop, full-stop bank, like an RBC or Scotiabank that you see around the cities? Can you tell us what postal banking is and what types of services could be offered there?