Government Operations Committee on May 31st, 2022

[Rindala El-Hage]

Yes. Can I just comment? The solvency discount rate is different from the going concern discount rate, and I don't believe the federal government has the same solvency rules as ours, but—

[Kelly McCauley, Conservative, Edmonton West, AB]

It's a significantly different discount rate. I think it's 5.7%.

[Rindala El-Hage]

Exactly. On the going concern basis, we have been reporting a surplus for the past few years. That means that the plan is to be maintained indefinitely. We've had healthy surpluses.

To answer your question about the positive equity, you're absolutely correct. At the end of December 2020, we reported negative equity of $919 million. In Q1 of 2022, it's a positive equity of $5.4 billion, and that is really a product of two things: our pension benefit asset and our post-employment obligation based on those discount rates. Those are discount rates set for accounting purposes under accounting standards, and those rates changed dramatically in 2021. That improved the asset position of the pension plan and reduced the obligation.

I want to preface that the remeasurement does not impact our earnings before tax, so they do not impact our bottom line, but they are recognized in other comprehensive income and impact equity. To your point, that's the reason we are in a much better positive equity position.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you.

We'll now go to Mr. Jowhari for five minutes.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Mr. Chair, and thank you to our witnesses for your testimonies.

Ms. El-Hage, I'm going to start with you. I'd like to really explore the greening initiative that Canada Post has been doing over the last few years. There are really two pillars. One is focused on your fleet and the other is focused on the assets or the buildings.

Starting with the fleet, I believe previously, when we had an appearance in this committee from Canada Post, the spokesperson talked a little about the modernization of the 14,000 vehicles you have in your fleet. There were points mentioned about integrating EVs.

I also had the opportunity to look at your environmental action plan, which came out in October of last year, in which you indicated some pilots that you are doing with some models of zero-emission delivery vehicles.

Can you give us an update where you are vis-à-vis the fleet and vis-à-vis the upgrade, as well as on the integration of the zero-emission vehicles?

[Rindala El-Hage]

Absolutely. To your point, in 2021 we published an environmental action plan that was done in collaboration with our bargaining agent.

Specifically for our vehicles, in 2021 we rolled out 740 low-emission vehicles. Right now, we have a total of about 1,500 of these vehicles in our fleet, as of the end of 2021. As you mentioned, we have a very large fleet of 14,000 vehicles. As some of these vehicles are retired, we will be gradually replacing them with these low-emission vehicles. Our COO did mention that we have two electric vehicles. I believe that so far one is in Montreal and one is in Vancouver, if I'm not mistaken. We are hoping to add to that, pending market availability, in the next year or so. We are well on track on that.

We did pilot two e-trikes in Montreal. That pilot went really well, but currently I'm not aware of any further pilots being done. We're looking at that and trying to see if we're going to launch it into other locations. It was a very successful pilot that really helped with the downtown congestion and, obviously, lower emissions. It's something that we will be considering further on a go-forward basis.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

Let me transition into the building. Congratulations on the recent announcement on the Albert Jackson processing centre in Scarborough. That was great news, not only in increasing the capacity, but also in making sure that the building is a zero-carbon building.

I understand that this is the first zero-carbon building within the asset portfolio of Canada Post. How do you think this facility, once it's operational, will contribute to a cleaner and greener economy and more sustainable postal services? Tell us how that fits into the overall strategy.

[Rindala El-Hage]

Thank you for the congratulations.

We are very proud of that facility. Like you mentioned, it is really a leading-edge, zero-carbon facility and is scheduled to open in early 2023. It is designed to have efficient HVAC systems, solar panels and sensor-controlled light fixtures, among other energy efficiencies. This is really supposed to be a zero-carbon plan. Again, it goes a long way toward our environmental commitment and our environmental leadership.

The even better news is that this facility will be able to process about a million packages a day. That's 50% more than currently in our Gateway facility. Again, we're doing this with a zero-carbon plant. That is incredible news. We're all very excited for it and looking forward to the launch in early 2023.

[Majid Jowhari, Liberal, Richmond Hill, ON]

I have only about 30 seconds left. Can you tell us what the plan is for the other facilities and being able to add more of them to the green portfolio?

[Rindala El-Hage]

Absolutely, and right now, our intention is that any newbuild will be built towards those zero-carbon goals. As well, we're looking into opportunities within, and we do audits of our current facilities and see how we can improve, perhaps by adding solar panels and improving the HVAC systems.

It's an ongoing process. Obviously, we have an extremely large property base, so the newbuilds are probably going to be built with the new zero-carbon kind of qualification, if I may say. Then, we're constantly looking at how we can retrofit our current existing buildings. It's a process, but we're committed to it.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you.

We'll go now to Mrs. Vignola for two and a half minutes.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

I appreciate the tremendous efforts Canada Post is making, because tackling a deficit means modernizing. The corporation also faces fierce competition from the U.S. I realize all that.

I want to follow up on the answer you gave me to my last question about charging stations. You do indeed have to install a huge number of them to equip your many buildings, but I think this represents a potential revenue stream that Canada Post should not overlook. You need the charging stations for the hybrid or electric vehicles you will be acquiring, but when those vehicles are on the road during the day, you could generate revenue by making the charging stations available to the public. That's just an aside. I think it's a promising idea, one that could help you make progress.

Speaking of ideas that can bring about progress, I want to discuss another pilot project, community hub post offices.

I'd like to know what the cost of those community postal service hubs has been to date. What impact have they had on communities? Do you plan to open more of them?

[Rindala El-Hage]

Absolutely.

Thank you for the suggestion regarding charging stations. I will certainly bring it to the team's attention so they can look into it. They may even be doing that already, I'm not sure.

The community postal service hub is a new model we are piloting. The idea is to provide better access to services in communities, and help small and medium-sized local businesses. I don't know the exact cost for each community, but we really don't take a cut-and-paste approach. Each hub is tailored to the needs of the community. We work with our unions and—

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

You don't have to tell us what the cost was for each community, but can you tell us the cost of the pilot project as a whole to date? I'd also like to know what the impact on communities has been.

[Rindala El-Hage]

As for the costs of the community hubs, I don't have the figures on hand, but I would be pleased to get back to you with the information.

The response from communities has been very positive. They really appreciate the services available through the community hubs. Given that the hubs bring services to underserved communities, they mean a great deal to the communities. It's a project we are very proud of, and yes, we plan to open two more later this year; the sites are yet to be determined.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you.

We'll now go to Mr. Johns for two and a half minutes.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Thank you for taking so many great questions.

CUPW and other bargaining units have negotiated language to protect workers from the adverse affects of technical change—automation, basically—and to oblige employers to be proactive about eliminating adverse affects before implementation.

How do you expect planned automation to change the working conditions of postal workers?

[Rindala El-Hage]

My comment around automation is that it is really to enhance efficiencies and processes and to make us more efficient and provide a better service and increased capacity for our Canadian needs. At this point in time I don't have anything more to share specifically. We're looking at it from a global point of view, that we absolutely need to provide the services Canadians expect from us and that it is really important to enhance our operations.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Thank you. Hopefully we can get some further information on that.

The environmental action plan you have covers the following four areas: climate action, zero waste, sustainable delivery and employee engagement.

Can you speak about single-use plastic and how much the corporation used in 2021? What percentage of that was estimated to be unnecessary? The House of Commons passed a unanimous motion in 2018, my motion to combat plastic pollution. I'd like to see how your progress is going.

[Rindala El-Hage]

Absolutely. I know that we have a plan to reduce single-use plastic wastage. We have embarked on that plan. I don't have specific numbers. We can come back with those.

[Gord Johns, NDP, Courtenay—Alberni, BC]

That would be great.

Canada Post works to reduce non-mailable matters, such as alcohol and illicit drugs, before they reach communities. For 2021, Canada Post reported that it inspected more than 2,200 items destined for indigenous and northern communities, resulting in the removal of non-mailable matter with an estimated street value of $2.8 million.

Does Canada Post target vulnerable communities across Canada to reduce non-mailable matter?

[Rindala El-Hage]

Absolutely it does not. This is just my personal opinion.

I think we have an obligation to ensure that non-mailable matters are—

[Gord Johns, NDP, Courtenay—Alberni, BC]

Okay, but it's just that the optics aren't great, and it would be good to hear a better explanation from the government on this, and from Canada Post.

[The Chair, Conservative, Robert Gordon Kitchen]

Thank you.

We'll now go to Mr. McCauley for five minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thanks. I appreciate the questions. Does Canada Post provide forward-looking forecasts for revenues and losses?