Government Operations Committee on Sept. 17th, 2024

[John Anderson]

In the final analysis, once it has been operating for a while, postal banking would offer all the major services that the traditional banks or credit unions offer. That doesn't mean that, from day one, they have to offer all of those services. Those services can be built up over time to offer those products.

Also, given the fact that we have the possibility of using the Internet, we can offer some services in a postal bank location via the Internet—for those who can get on the Internet but also for those who can go to a post office. I think it's something that.... Obviously, we've seen that in countries all over the world postal banking has been a large success. It's offered in slightly different mechanisms and certainly—

[The Chair, Conservative, Kelly McCauley]

I'm sorry, Mr. Anderson, but I'm going to have cut you off again because we're past our time. We have only a certain amount of time.

Colleagues, I ask that everyone leave a bit of extra time for Mr. Anderson to answer.

We go over to Mr. Lemire.

Welcome to OGGO, sir. Go ahead, Mr. Lemire.

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

Thank you, Mr. Chair.

I'd first like to thank you for your passion for postal services, Mr. Anderson. I think it's a subject that does indeed deserve the committee's attention and that also deserves more attention from the government.

I found the previous exchange particularly interesting, namely how to define rurality today.

As you know, I'm the Member of Parliament for Abitibi-Témiscamingue. It's a so-called rural region in northern Quebec. It's a six-hour drive from here. One of our challenges is to build a swimming pool in Rouyn-Noranda. It's the same in Ville-Marie, Témiscamingue. There are no federal funds for that.

Yet in Gatineau, just a few kilometres from here, right in the midst of an urban area of 1.6 million inhabitants, I noticed a sign in front of a building stating that it was built in 2010 thanks to the Municipal Rural Infrastructure Fund. This, I thought, was money that could have been invested in the Rouyn-Noranda swimming pool in my own region. The pool was too old, so it remained closed all summer, and my son couldn't train there. We're experiencing a problem stemming from the fact that the current definition of rurality includes cities like Gatineau. This bedroom community right next door to a major Canadian city is recognized as rural. I think that poses a significant problem.

That brings me to my first question. How can we currently highlight the importance of land occupancy, especially for the federal government? If land occupancy is a priority and it's important that the people who occupy that land obtain the services they need, I think the post office is a basic service.

[John Anderson]

I think it's really important for us to deliver equal services across the country to both our big, developed urban areas and rural or small-town Canada areas. I think that's extremely important. We have to make sure that everybody is getting equal treatment. In the example you gave, obviously, it seems that there's some confusion in terms of how funds are delivered. If Gatineau gets money out of some rural fund, that doesn't seem to me to be the proper way of using that money.

I think we have to do that. That's why I come back to postal banking and why I'm interested in that topic. As I mentioned, Canada is becoming a country where we have huge numbers of people living in these major cities and not enough people living in small-town Canada. I think this is an issue that other countries, for example European countries, don't have, but we have this issue in Canada. Australia has it even worse than we do, apparently. That's something we want to correct.

If we want to correct it, postal banking is important because we already have those institutions in every town. We already have, according to the last report, around 5,800 postal outlets across Canada, so we have an infrastructure that is already there and we can begin to add the delivery of financial services and allow people to get those kinds of issues.

I would single out small-town Canada, and I would also add to that indigenous Canada. In indigenous Canada, there are many post offices. In the over 600 communities there are hardly any bank branches, but they have post offices, so again, this is something that could help indigenous communities also.

Certainly, people need to have a bank branch. It's all very well to say you can do everything on the Internet, but if you want to get a mortgage, if you want to get a loan for your business, if you want to put cash you have through some business that you're operating into your account and if you don't have one in your community, that is a big difficulty.

I think this is something we should be doing and can do. We can encourage Canada Post to do much more than it is doing now as far as financial services are concerned.

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

I let you continue because I found it particularly interesting, but I would have liked to comment on several points. Let me just briefly mention them.

First, I met with the people from the postal union a few years ago to put forward another idea that would help diversify revenues and, above all, expand services in rural areas. Canada Post's truck fleet is probably the largest commercial fleet in Canada. If we were to electrify this truck fleet, not only would it be of great environmental benefit, but we'd also have charging stations in villages all over Quebec and Canada, making them accessible to tourists and other road users. As the user of an electric vehicle myself in Abitibi-Témiscamingue, I can tell you that this would be a considerable advantage.

As I'm almost out of time, I will ask a follow-up question about something I raised earlier.

You know how parliamentary committees work. Should we ask the government to consider a new definition of rurality and land occupancy in Canada to ensure better services? Would you make a formal recommendation?

[John Anderson]

I'm sure you have a recommendation around those issues, but certainly we have to have clear definitions of what is rural and what is urban.

As I said, in Canada it's not that difficult because we have these large CMAs, which you can name on the fingers of your hands, where most people, the vast majority of people, are living. They're not living in the small towns, and yet we're not growing small-town Canada and we're not providing it with the services that it needs. One of those services is postal banking, but that's also the case in some of the big urban areas, because in some of the big urban areas we have closed down the bank branches too.

[The Chair, Conservative, Kelly McCauley]

Thanks very much.

Mr. Bachrach, it's over to you for six minutes, please.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you, Mr. Chair, and thank you, Mr. Anderson, for being with us for this study and bringing your experience.

I want to set aside the concept of postal banking for a second. It's a fascinating one, and I agree with your suggestion that it would be a great benefit to small communities, including indigenous communities, across the country. However, I'm interested in the trend when it comes to the closure of rural and remote post offices. What I've seen over the past couple of years in northwest B.C. is this trend from full-service post offices with Canada Post staff to franchises, to community mailboxes. That is the way Canada Post has essentially managed its budget, or cut its budget, on the backs of rural communities.

Is that a fair assessment of the trend that we're seeing? Canada Post claims to be respecting this moratorium, and yet we see hundreds of rural post offices closing. How is that possible?

[John Anderson]

You bring up an excellent point of the direction that Canada Post has been going in. It has not been reinforcing its Canada Post-owned post offices. One of the greatest examples is right here in Ottawa's Glebe neighbourhood, where you have a major post office, and then literally right across the street you have a post office in a pharmacy. The pharmacy's hours for the post office are very substantial. The post office hours for the Canada Post-owned post office are very small. Their hours are not extensive. You can't get service in the evenings, that kind of thing.

We have to go back on those issues, and we have to look at providing more and better services. We have to ensure that we don't close down post offices and we don't reduce the services that they're offering. What I'm proposing is that we offer more services in the post office in all kinds of outlets, whether they're owned by Canada Post directly or not. Obviously, the ones owned directly by Canada Post are important because usually they're substantial buildings, stand-alone buildings. They can easily have the place to increase the infrastructure and to offer banking services.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Canada Post has a revenue-neutral mandate. They essentially are given the mandate by the government to cover their costs through their operations. I think it's fair to say that in remote communities and very small rural communities, it's very difficult to imagine how the service could possibly pay for itself just on the basis of population and the volume of parcels. There are some fixed costs in operating a post office that probably can't be justified based on the volume.

Is one of the solutions to think about rural and remote communities differently from the rest of Canada Post's services? Should there be a different mandate for rural delivery in Canada where we think about it more as an essential service and less as something that has to recover 100% of its costs?

[John Anderson]

Well, I think that Canada Post has to look at itself as one entity, and it has to pay particular attention to rural and remote post office locations. Certainly, that's why I'm proposing postal banking, because postal banking is a very profitable business. For example, in 2023, La Banque Postale in France made $1.4 billion Canadian in profit. I think that this would help. Offering postal banking services would help to have the money to fund services right across the board in communities where just delivering the services might not pay for all the operations. We have to look at the whole structure and see how we can look at new revenue-earning systems and functions that can help us deliver good-quality postal services in large cities and in small towns and rural areas.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Is that the only hope for rural postal service, that Canada Post has to find ways to generate more revenue? I'm thinking about rural transportation as the other analogous service where, instead of thinking about rural transportation as an essential service that's required in order for rural Canada to be part of the fabric of our country, the government keeps trying to find private sector partners that are somehow going to deliver money-losing services to sparsely populated regions.

Is something like postal banking the only hope for rural postal service?

[The Chair, Conservative, Kelly McCauley]

In 30 seconds, Mr. Anderson, please solve all of our problems.

[John Anderson]

It's not the only hope, but it's an important hope. Certainly, the government has to guarantee postal services to everybody. That has to be a guarantee whether Canada Post makes a profit or not.

[The Chair, Conservative, Kelly McCauley]

Thanks, Mr. Bachrach.

Thank you, Mr. Anderson.

We're now going to our five-minute rounds.

Mrs. Kusie, please go ahead.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you very much, Mr. Chair.

Thank you very much, Mr. Anderson, for being here with us today.

My questions today will be around the security of postal banking. Canada has some of the strongest regulations when it comes to ensuring that its banking system remains secure. In your opinion, how could Canada's post offices be able to meet those regulations and ensure the continued safety of Canada's financial institutions?

[John Anderson]

I would give you the example of the United Kingdom, where it has only been a very short time—less than a couple of decades—since postal banking services were introduced in the United Kingdom and through all their post offices. I think they have managed to do that. As I said in the brief, when I was talking to one of the heads of the money services for the post office, he said, “I'd be very happy to come over here and show you how to do it.” That's what he told me in an interview I did with him. I don't think we need to ask somebody from the United Kingdom to come over and show us how to do that in the post office, but we can look at how they've done it.

Certainly, what is also important to note is that the federal government has a number of banking services. The federal government has many banking institutions already, such as BDC, EDC, Farm Credit Canada, etc. It has many banking services and many highly trained and specialized people in banking services and security services, etc., so it's not that we can't find them; they're employed by the federal government through these institutions. Certainly, in setting up those services, the postal bank could use some of that expertise to ensure that we have a secure banking system.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

In your opinion, do post offices currently have the supplies, expertise and security to properly complete transactions and secure the money of Canadians?

[John Anderson]

I think they are already doing that. As I said, it obviously depends on the postal office location, but they do postal money orders and secure cash. In that situation, they're doing that already. For us to move to a more advanced system offering more services, it is possible. We were going to do that with the loans-based program, which was cancelled, so obviously they had thought about how they were going to deliver that, and they still have not explained why that program was cancelled.

It's possible to introduce those programs in a secure fashion. I believe we have the expertise. Sure, we are going to have to train people and upgrade people's training, but we already have employees we can do that with and we can introduce the services gradually so that we are able to handle those services. As I said, it has been done in other countries. These aren't the only places. New Zealand recently introduced a postal banking system, and many countries have had them for a longer period of time.

I believe we can do that. It's not something different. The federal government has huge financial services and has expertise in financial services, and certainly those services can be used to help structure postal banking services as well.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you for that.

You mentioned these services. For example, Canada Post is currently partnered with TD Bank, but going back to the security aspect, TD Bank in the United States was fined $9 million for fraudulent transactions, with the potential of $4 billion being involved in these fraudulent transactions. You point to bringing in the United Kingdom, but as I understand it, the United Kingdom is currently 90% privatized. Both Royal Mail and, if we look at France, La Poste are privatized.

In building on this idea of incorporating other countries where the banking is largely privatized, and considering the current security threats that exist, as indicated in the TD example that I gave, would you expect Canada Post to create more partnerships with Canada's banks or work independently?

[John Anderson]

Well, my personal—

[The Chair, Conservative, Kelly McCauley]

Mr. Anderson, I apologize, but there is not enough time left for a response, so perhaps you can get to it—

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

There are seven seconds remaining.

[The Chair, Conservative, Kelly McCauley]

Mrs. Atwin, go ahead.

[Jenica Atwin, Liberal, Fredericton, NB]

Thank you, Mr. Chair.

Please feel free to answer Mrs. Kusie's question, if you can.