Government Operations committee  From our perspective, Canada Post has indicated that it is seeking expansion into the parcel delivery market. It's taking a look at new revenue streams. If that is completed in a fair way in terms of cost allocation and competitiveness, we welcome new competitors to the market. We deal with other competitors as well, but this has to be completed in a fair and equitable way in terms of the way Canada Post allocates its cost.

Government Operations committee  Yes, I would say that this is one of the reasons that we do advocate for a third party regulator. It's to ensure there's oversight in terms of the price structures for Canada Post services and to ensure they're done in a competitive way. That reinforces the direct recommendation in the task force report: to assure competitors that Canada Post is not cross-subsidizing its competitive business lines.

Government Operations committee  There are a couple of the examples that I've provided in terms of the regulator, the Ofcom in the U.K., the PRC in the U.S. In terms of the annual report that is put out from the crown corporations, there's a review from these these third party regulators to ensure that the cost allocation has been done correctly, that the costing is appropriate.

Government Operations committee  On the first question, we don't have that relationship yet with the USPS in terms of access to mailboxes. These discussions—considering what should happen—are ongoing right now, so I can't give you revenue or a price on that. On what UPS is doing in the suburban areas, again, we're facing the same challenges.

Government Operations committee  In general?

Government Operations committee  Sorry?

Government Operations committee  Within the UPS Store locations, or what specifically...?

Government Operations committee  I would say from UPS's experience, we are a global carrier; we move shipments around the world into over 220 countries. When we move a shipment across a border, there's a higher fee for that shipment than when we're moving it within a domestic area, typically. What we're seeing is that Canada Post, as it accepts import shipments from other international postal entities, the rate that it's charging is not matching its cost to serve.

Government Operations committee  They're presenting this through the Universal Postal Union as well. We're tracking to see how that follows, but essentially Canada would go through the same process that the U.S. does. They're taking a look at what it's costing them to accept these packages. The U.S. is recommending an increase to create a better representation of what it costs them to that final delivery.

Government Operations committee  I can't speak to that right now. I can try to find out what the rationale was behind it. I'm assuming this hasn't been looked at for some time and, in fact, is maybe not even lining up to the trade patterns and where they've come along. I think you're probably along the right lines in what the answer back would be, but I can confirm.

Government Operations committee  I would not say that they should not be able to access the infrastructure for parcels. If they are, the appropriate way to manage that cost would be to allocate to the parcel line of business the cost for use of the real estate in that infrastructure.

Government Operations committee  I think the bigger question is that we don't know. Because there is not this independent oversight to see how costs are being allocated and how the business is being managed, it's a big question mark right now. The task force saw the same issue and they raised in their recommendation paper that the only way we are really to know that the business is being managed effectively is by putting in a regulatory body to ensure that overhead costs are broken down by business line.

Government Operations committee  I would confirm again that the main opportunity we see is in the infrastructure that was originally meant to support letter mail delivery. We feel that there is an opportunity to open that up to industry to innovate and allow some cost sharing for Canada Post and also create a more sustainable model that would benefit Canadians who are picking up these e-commerce parcels in their neighbourhoods.

Government Operations committee  There should be appropriate accounting by product line. If it's infrastructure built for letter mail, for example, if there's a parcel that's going to have access to that infrastructure, then the cost should be allocated to that parcel, just as any business would allocate costs by the product line, so that when shareholders or Canadian taxpayers are looking at the annual report, they can be confident that costs are being managed appropriately and they understand where the revenue and costs are being allocated for the postal services versus the competitive courier services.

Government Operations committee  I think we're moving positively in that direction. I think Canada Post is very open to that. What we see as an opportunity that still lags is this innovation on the final-mile infrastructure, including the community mailboxes and other infrastructure that was built to support letter mail, which is a declining product.