Mr. Speaker, I thank you for the opportunity to speak to the motion moved by the member for Trinity—Spadina.
I fully appreciate that the postal network is essential to the national economy, businesses and communities that rely on the mail, but it is equally important to the increasing number of retailers across Canada who need a reliable and affordable delivery network to ship their products to the growing ranks of online shoppers.
There is no question that as the postal system evolves, we do need to protect vulnerable individuals, small businesses and rural communities.
Canada Post Corporation operates at arm's length from the government. I remind the House that since 1981 Canada Post has had a mandate to operate on a self-sustaining financial basis. It is responsible for meeting that mandate and managing its own operations, including day-to-day business and financial decisions.
These decisions are growing more difficult because we are shifting to a digital society that sees more of us communicating online. Not only do we send fewer, if any, cards and letters, but bills, statements and payments are also being sent and paid digitally more and more often. Most companies and governments, indeed, are actively encouraging Canadians to switch to electronic alternatives to save money and time, and to increase security.
Polling does confirm that Canadians' habits are changing. Almost half of households say they now send two pieces of mail or less per month, and that is reflected in far less business for Canada Post. In the first nine months of 2013, mail volumes declined by 184 million pieces. That is a 5% decline compared to the same period the previous year.
Not only has the volume of letters dropped, but also the volume of business mail by more than 17% per address in the last four years. Moreover, revenue from direct marketing mail dropped by 2.7% in 2012 because companies, too, are switching to Internet alternatives.
The bottom line is that Canada Post delivered one billion fewer letters in 2012 than it did in 2006. Domestic mail volumes have dropped by almost 25% since 2008, and will continue to decline in the future. The direction of change is clear and irreversible.
However, there is a silver lining. There is an upside to trends for Canada Post. Canadians are shopping online, and that has helped parcel volumes grow by about two million pieces in the first nine months of 2013 compared to a year earlier. As a result, Canada Post's parcel revenue was up $32 million or 11.2% from the third quarter of 2012.
E-commerce is driving demand for delivery of packages from online retailers and distributors to homes and businesses. Many of us can actually attest to that, because I am sure that many members have actually started ordering Christmas and birthday gifts online instead of going into shops.
Delivery of these purchases is one area that Canada Post is keen to capitalize on, and it has a good product to offer. It is a leader in the business-to-consumer parcel delivery market in Canada.
However, these efforts do not make Canada Post self-sufficient. The growth in parcel business is simply not enough. It does not make up for the larger declines in the personal mail and the direct marketing mail volumes.
The corporation is addressing the negative impacts of this information revolution on their business. It has undertaken a major revitalization effort. It is updating its technology, its equipment and networks. This includes installing state-of-the-art optical readers, sorting equipment and restructuring carrier routes.
It has also launched its own digital products to meet Canadians' changing needs and expectations, such as e-post and its vault service. These measures are expected to generate $250 million in savings by 2017. Even with these improvements, Canada Post is losing money, some $129 million before tax in the third quarter of 2013 despite seeing solid growth in parcel delivery at the same time.
Canada Post has operated profitably for 16 consecutive years. That is as recently as 2011. However, a recent report prepared by the Conference Board of Canada projects annual operating deficits of nearly $1 billion by 2020. Parcel volume is forecast to increase by 26% over the same period, but it remains a small share of total mail traffic.
The situation is not sustainable. Not only parliamentarians but all Canadians should be very concerned that the corporation is posting significant losses. Given that the financial well-being of Canada Post operations has direct implications for Canadian taxpayers, it is important that every effort be made to mitigate risks to the public purse.
Canadians expect us to be sound stewards of the government's finances, and they do not want to be on the hook for significant losses that have been forecast based on the current business model. To this end, I want to emphasize that the Conference Board study pointed out that direct household delivery is the most expensive delivery method. It costs twice as much a year as service to community mailboxes, and it is only provided to one-third of Canadian households as we speak.
The status quo is not an option, and that is why Canada Post has no choice but to find more effective ways to provide its mandatory services while reducing its costs. It has consulted with Canadians. It has explored all of its options, and it has developed a five-point action plan to secure its future. What its plan is intended to do is align the corporation's services with the choices Canadians are making, and it will put it back on track to achieve financial viability over the long term. One of the most cost-effective ways to do this is by increasing the use of community mailboxes.
As members may be aware, and as I have already said, two-thirds of the population already receives mail and parcels through community mailboxes, grouped boxes, lobby mailboxes, or curbside rural mailboxes. An entire generation has grown up knowing only this form of delivery, and quite frankly, it offers numerous advantages to Canadians. For example, individually locked mail and small packet compartments, as well as larger locked compartments, are available for the secure delivery of parcels.That really is useful for people who work outside the home during the day and cannot be home to receive deliveries. People can also let mail accumulate while away on vacation knowing that it is safely stored in their private box. Mail is locked at all times, and it is secure until the customer receives it.
Under Canada Post's five-point plan, the remaining one-third of Canadian households, which is about five million people, that still receive their mail at the door will be gradually converted to community mailbox delivery over the next five years.
While this motion focuses on community mailboxes, it is important to understand that this is just one of the ways Canada Post is taking action to improve its financial performance. To give an example, the corporation is introducing a new tiered pricing structure for letter mail that will better reflect the cost of serving customers this way. Those who buy stamps in booklets or in coils will pay 85¢ per stamp, with discounts for customers who use the mail most, something that will be welcomed by small businesses.
In addition to this change, it will strengthen its retail network by opening more franchise postal outlets and stores across Canada. These businesses are conveniently located in communities, and oftentimes they are in shopping centres. That adds benefits: longer hours and better parking. As well, they enable busy Canadians to do their shopping in one place.
To further increase its competitiveness, Canada Post is also making changes to its internal operations to increase the efficient flow of parcels and mail through the network to its customers. To give an example, it is adopting faster computerized sorting equipment and is consolidating its operations by processing mail and parcels in a central location. It is also providing more delivery employees with fuel-efficient vehicles so that the same employees can deliver both mail and parcels.
These improvements will result in not only cost savings to the corporation but in more reliable delivery to Canadians, along with better parcel tracking capabilities.
Greater use of technology to keep pace with the digital revolution will mean that fewer workers are needed, and that is the fifth part of Canada Post's plan. It will reduce its workforce through attrition, and it will work with labour groups to address the sustainability of its pension plan.
As the House knows, the corporation's labour costs are much higher than its competitors'. A leaner, more flexible, competitive workforce will enable Canada Post to respond quickly to the changing marketplace. Reducing costs will benefit its customers, too, as lower costs will allow the corporation to maintain a high level of service at reasonable prices. Collectively, these measures will help Canada Post satisfy the fast-changing needs of Canadians while fulfilling its mandate to remain financially self-sufficient so that it avoids becoming a burden on taxpayers.
Canada Post, as has been noted already in this debate, is not alone in reinventing itself in the face of challenges posed by the information age. The business models of mail services in countries all over the world are being challenged by the reality that people are using traditional mail on a less frequent basis, other than to send and receive parcels.
Different countries have adopted different approaches. For example, the United Kingdom has privatized Royal Mail. Denmark and Sweden decided to merge their postal services. The Netherlands opted for massive layoffs of postal workers in favour of part-time contractors. Both Italy and Australia have diversified their financial services, their logistics, and telecommunications. The key is that a one-size-fits-all approach does not work for a complex issue.
What Canada Post has come up with is a made-in-Canada approach to declining mail volumes. It says that it will enable it to remain self-sufficient and sustainable over the long-term. Canada Post's actions are in line with the global transformation of postal services that are changing to meet modern-day demands. The strategies laid out in its five-point action plan will help to ensure that the corporation is on solid financial footing and that it truly reflects Canadians' choices and their needs.
The Government of Canada supports Canada Post in its efforts to fulfill its mandate of operating on a self-sustaining financial basis in order to protect taxpayers. We recognize that it must modernize its business and better align its postal services with the choices of Canadians in today's digital age.
