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Madam Marleau, to you as chairman of the government operations committee, and to members of the committee, I would start by saying how delighted I am to be back before you.
It was this committee, an all-party committee, that confirmed my appointment. It was my pleasure then, and it is an even greater pleasure today because I've now been in my post for over a year. I can certainly offer more on the operations of the post today than I could the last time.
Thank you for the opportunity to appear.
I know that for members of this committee, and in fact everywhere in the House today, matters of transparency and accountability are perhaps the most important ones for all public office holders of any kind to be really aware of.
It's my pleasure to tell you that in that spirit, Canada Post had its first ever annual meeting last week in Winnipeg. I believe we are probably the first crown corporation, certainly the first commercial crown corporation, to have had such a meeting. It was a great pleasure to introduce the issues and operations of the post office to a wide variety of stakeholders, customers, suppliers, and Canadians who are obviously very interested in receiving their mail.
[Translation]
Before answering your questions, I would like to talk a little bit about Canada Post operations, and about our aspirations and achievements. Many things have changed since I came before you seven months ago, including the government, of course, and the composition of the Committee. Everything goes exceedingly quickly these days, and people at Canada Post are aware of that, probably more so than anyone else.
[English]
The scope of this company, Canada Post, is enormous. As we sit here right now on Parliament Hill, letter carriers all across the country are delivering on foot 40 million pieces of mail to 14 million mailboxes in every reach, in every town, village, and city of the country.
We provide service through perhaps the largest network of retail offices of any company. There are about 7,000 postal offices and dealerships across the country. We employ 71,000 people in the Canada Post group of companies. That makes us the sixth largest employer in Canada. And every year we add about a quarter of a million new addresses we have to serve--we're pleased to serve. In addition, we spend about $2.8 billion every year as a big buyer of services and goods all across the country, and that $2.8 billion employs an additional 30,000 Canadians.
What we do, and equally importantly what we do not do, are things I want to talk to you about today. For example, we do not rely on the taxpayers of this country to pay for or subsidize the operations of Canada Post. In fact, I'm so pleased to tell you this company has been profitable for 11 straight years. The profitability this year, at $199 million, is a modest level of profitability given that our revenues are almost $7 billion. Many of you come to this honourable committee having run businesses of your own, and you will recognize that while that is a modest level of return, I'm very pleased that at least it's on the right side of the ledger.
That wasn't always the case. Madame Marleau has great expertise in postal matters, having at one point been the minister responsible for Canada Post. So Madame Marleau will remember what I call the bad old days when Canada Post was reliant on the taxpayers of this country for more than half a billion dollars of subsidy in a single year. Half a billion dollars in those days would be worth a great deal more today.
This achievement of continuous profitability for 11 straight years is one I wish to continue during my time as the CEO and president of Canada Post. Members of this committee, we do this with some of the lowest letter mail rates of all G-7 countries. I think that is a considerable achievement.
[Translation]
Our whole reason for existing is to serve Canadians. The methods we employ to that end have changed dramatically in our 150 years of serving Canada, in all our different incarnations. For example, there is a general belief, which is not accurate, that the letters we deliver from one person to another are the mainstay of our corporation. Canadians clearly value that a great deal, but the reality is that personal correspondence only represents 2 per cent of our revenues.
[English]
That doesn't mean we don't take very seriously every letter, every personal letter, every letter of any kind that is given to this company to deliver in the country. In fact, I'd be remiss now, today, if I didn't speak a little bit about the disruptions in service that we have had in some parts of the country.
I would like to apologize to members of this committee who, in their ridings, have experienced some disruption of service. We have been working very hard with some of you--Mr. Temelkovski, for example, and Monsieur Bonin as well--where you've had disruptions in service in rural mail delivery. I want you to know that I'm very sorry for Canadians who've had to be inconvenienced, and we are doing our absolute utmost to make sure that convenient alternatives are getting put in place as quickly as possible.
Rural mail carriers are required to repeatedly stop their vehicles on the sides of roads, and many of these roads are not the same as they were when we started rural route delivery 40 or 50 years ago.
Newmarket, for example, in Mr. Temelkovski's riding, 50 years ago was a small town and it really was quite a rural area. It is no longer that. It is now really a suburb of the city.
I know many of you will appreciate that patterns of urbanization have changed pretty starkly in the past 10, 15, or 20 years and that traffic patterns on what were once country roads now have way more traffic than they did even five years ago. So the hazard of frequent stopping is far greater today than it would have been 10 or 15 years ago. With municipal expansion--and in some provinces, municipal amalgamation is in fact the policy of the province to enable the province to better deliver services--I expect that these traffic levels are only going to get worse in certain parts of the country.
Like any employer in this country, safeguarding the health and safety of our workers is not only a moral responsibility, but now a legal responsibility, and it is a legal responsibility with far greater ramifications in terms of liability as a result of changes in the law in recent years for any company that is governed by those particular laws.
We are very committed to finding a solution anytime there is a disruption in service as a result of an employee refusing work on safety grounds. We work very hard, literally 24/7, to put alternatives in place as quickly as we possibly can. This is an absolute priority for us as a company and for me personally.
I gave Prime Minister Harper and Minister Cannon my personal undertaking that in the face of inconvenience to Canadians that results when there is a refusal to work on safety grounds, I would do everything I could to put alternatives in place quickly and for these alternatives to be as convenient as possible under the circumstances. This is only one of the challenges we face.
Another is, of course, as you know, the necessity, the requirement according to our act, to provide our service to all Canadians and to the businesses that rely upon Canada Post as an economic enabler in this country, to provide those services on a cost-efficient and profitable basis. Some of you--Madame Thibault, for example--have spoken to me personally, and actually in this committee, on rationalization of the network that we have been doing as a matter of course over the past 15 years.
Most recently, that has involved the closure of the plant in Quebec City, but I am so pleased to tell you that not one single employee--not a part-time employee, not a full-time employee--will lose their job as a result of that closure. In fact, our service to the residents of Quebec City is better today than it was before we made this operational change, as a result of having put on three additional transport routes in that area. So we are now at 13 movements a day between Montreal and Quebec City, as opposed to 10 previously.
It's a big logistics exercise to deliver 40 million pieces of mail to 14 million addresses, and thankfully we have new opportunities--new transportation and logistics opportunities arise--so that we do not have to do things today the way we did them 40, 50, or 60 years ago.
To deliver the best possible service to all of our customers, we have to function in a businesslike manner. That is more important today than it was even 10 years or 20 years ago when we were first established. Madame Marleau, you have been in this House since, I believe, 1988, so you will remember the early days when Canada Post was established as a commercial crown corporation. It is more true today than it was then. We must operate in as businesslike a fashion as we possibly can.
We must keep in mind that 90% of our revenue is coming from Canadian businesses. They still rely on Canada Post as an enabler, an economic enabler, for them. We deliver their statements, bills, and invoices. That's critically important, for Canadian businesses to get paid for the services they have provided. We help Canadian businesses through our direct marketing mail to deepen their relationships with their customers and in fact to acquire new customers at a cost that is more effective than any other way to acquire new customers. These are intensely more competitive lines of business today than they were 20 years ago, and I'm very pleased to tell you that Canada Post is committed to keeping up.
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Well, I think that depends on whether the crown corporation is a fully commercial crown corporation, first, because I think there are differences between commercial crown corporations and non-commercial ones. In our case, let me start with the commercial crown corporation, because that's the one I'm most familiar with.
The differences between a private sector company and a crown corporation have to do with the dual mandate of the crown corporation. The crown corporation must be commercial and business-like, but it also must keep in mind that there may be some policy reasons for its existence, and there may be things that the crown corporation has to do as a matter of public service and not, strictly speaking, as a matter of business. I don't think that dual mandate is as much a consideration for a strictly private sector company.
I would say, though, in a crown corporation that is fully commercial like this one, that it's perhaps a surprise to some members of the committee to know that I believe that the governance arrangements now in place for commercial crown corporations mean there are virtually no differences. The shareholder, in the case of the commercial crown corporation, is, of course, the Government of Canada, as represented by the government of the day, unlike the shareholder of the private sector company.
In terms of how a commercial crown corporation now operates under the new guidelines and accountability regime for crown corporations, it is very similar. We have a very good business-like board. My appointment probably marks a very important departure. I was recruited under a professional recruitment exercise that was led by the board, as you know. Of course, the appointment was still formally made as a Governor-in-Council appointment, but it was not a Governor-in-Council appointment that was made in the manner that they had previously been made. So I would say, from the governance point of view, we're seeing far more similarity in the cases of commercial crown corporations and private sector corporations.
Matters of operations and matters of business are left to the board and to the management of the crown corporation to run. I think that's a difference that has developed over the years for companies like Canada Post, which are fully commercial.
I think the third difference, though, is this. When the government is the shareholder, you do have to be mindful of the public service dimensions of the mandate. When the government is the shareholder, even if the government has made a decision, as they have in this case to treat that shareholding as a business, there's always a greater danger, I suspect, that matters become politicized very quickly in the case of crown corporations. It's easy for things that are in the nature of operations and the business of the company to wind up on your desk.
So those would be some of the differences and some of the similarities that I would see.
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I can. Many of you, including Mr. Temelkovski and Mr. Albrecht, will know that I've been living with this issue for several months now, pretty well day and night. Let me tell you about the range of options we're looking at, because we're looking at every option right now.
When someone refuses to work, we have an immediate situation on our hands. We have to decide how we're going to get the mail to people. If I have no notice that someone is going to refuse--they show up at 8:30 in the morning and say, “We're not delivering the mail to this group of addresses today”--I can at that point choose to suspend mail delivery. Or I can choose to get the mail to some other place so that at least people can pick up their mail. It's not convenient, but I need to take a stopgap measure. Those are the only two choices I have at that instant.
I and all of the colleagues working with me on the issue then immediately go into high gear. We notify the leadership in the community, we notify the households that are affected, and we notify you as the elected representatives of the people in the area. We immediately go into high gear to try to get views from the individuals affected--i.e., “We've had to put your mail here, right now, due to a safety issue with respect to that group of stops. Can you, as Canadians, tell us what would be a reasonable alternative, a convenient but safe reasonable alternative?”
It takes us several weeks to get that information, and we do it in several ways. Sometimes we do it one on one with individual Canadians. In other cases, as some of you will know, we have had town halls--in Fredericton I had four town halls in the space of a week--to gather together Canadians' views on what is reasonable.
In addition, we look at the alleged safety hazard. Sometimes it is a road safety hazard, but in three-quarters of the cases it is an ergonomic issue.
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Absolutely. These numbers are very worrisome indeed. In fact, when I saw that we had 8,000 accidents in 2005, I have to tell you I was shocked. Thankfully, only 4,000 of them required any time off work. Still, 10,000 people requesting light duties in any given year, and 8,000 people having accidents....
We have to remember that this is a big country. It's cold in the winter and it's icy underfoot in lots of places and our letter carriers are out there delivering the mail in all kinds of weather, and lots of times there are slips and falls. Thankfully, the injuries that happen at Canada Post are usually not life-threatening, but there's no question that the number is very high--worrisomely high.
Here's what we have done. Under Mary Traversy, the new senior vice-president of employee engagement, we have made employee engagement our number one priority. Under that rubric, we have employed 16 new occupational health and safety experts who have been deployed in the field in regions across the country to help bring to Canada Post, on a day-by-day basis, much greater awareness than we have had and a culture of safety in our company.
In other companies in which I have worked, the safety discussion that takes place at the top of every shift needs to be embedded as part of the operation of Canada Post, and that's what these occupational health and safety experts will be doing. They are creating plans; we have targets in place for every plant and for every depot to bring the rate of accidents down with the help of occupational health and safety experts, and to help our supervisors work with employees so that the environment in which they work is a safer environment for them than it was in the past.
There is also the corporate team incentive. The corporate team incentive is the incentive given to the management cadre of the company, usually for the financial performance of the company. For the first time in the history of Canada Post, 25% of that team incentive this year will be granted on the basis of how well we're doing on what I call the employee engagement matrix. One part of that matrix is a reduction in the rate of accidents across the country, so it is--
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I had suggested to Monsieur Ouellette at a similar meeting that instead of delivering mail to most of the homes, with new construction not getting home delivery or door-to-door delivery as a result, he consider delivering mail three days a week: Monday, Wednesday, Friday in my area, and Tuesday, Thursday, Saturday in his area. I don't need mail everyday any more. Before there was a stack of mail everyday, but as you've mentioned in your presentation, there is less and less mail, and there's going to be even less yet. I think it's unfair that I should receive mail at the door and a person who is building their $3 million home very close by does not get home delivery. I'm not asking for an answer, but I'm hoping that senior management is discussing this, because I think it's a good way to serve all Canadians.
The major point I have is that in your presentation, you use “I” an awful lot. I sense in my contact with Canada Post that it's very centralized, very top controlled—almost like the Prime Minister's Office.
Some hon. members: Oh, oh!
Mr. Raymond Bonin: You even said that decisions made at senior management have to be embedded, which is why you hired 16 people to embed those decisions. I want you to know there are some very intelligent people working for Canada Post in our communities.
I did have a problem, as you know and as you mentioned. I did not get forewarning, but I found out from constituents, when we got the calls. I had to carry all of the blame for it, because I was the first contact that people made. I called a town hall meeting and your representatives came. They did as good a job as they could; I sensed they weren't free to speak their minds. When I do ask specific questions locally, they cannot make a decision; they have to check with somebody outside of northern Ontario.
A perfect example of this was a dead-end street, where there was a totally handicapped lady in an electric wheelchair in the last house. They forced her to use her electric chair to go up a hill to the neighbour's mailbox, because they said it was unsafe to drive down that hill—which had been ploughed by the town. Locally, everybody sympathized with this lady using her wheelchair. I went back three times and asked them to go to higher-level management, which was always outside of northern Ontario; a local decision was never made on it, because they would have said we're going to find a way to get you your mail. Finally, on the third time they said no, I said, watch the local news this evening, as I'm going to the media with this and the lady and I are going to go and pick up her mail. Instantaneously the problem was solved.
I sense that your operation is too centralized. We've had problems with that in northern Ontario with FedNor and Human Resources. In northern Ontario, we don't want to call Peterborough or Ottawa, or anywhere else, for our decisions. We're intelligent people and can run our operations, and the post office there doesn't belong to Ottawa; it belongs to the people in my riding.
I say this because I had a problem with delivery. I have 52 communities, and I'm going to have a lot more problems. You say you spend seven days a week, 24 hours a day preventing problems. What solutions have you found that will make it different for me the next time somebody calls and says, I'm not getting mail delivered? I have 52 communities.
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On right-hand-drive vehicles, first I would like to say yes, we are investigating every single option, and we are trying to better understand the ergonomic issues involved. I agree with you, there are definitely some ergonomic issues involved.
Right-hand-drive vehicles do not exist. They are not manufactured. We have gone to several manufacturers to test out if they might even be interested, and because it would be a single purchase, not very many of them are. They are considerably more than $50,000. We have 15-year-old right-hand-drive vehicles. We have about 1,000 of them that are quite old. They're used for some of the urban system. Our urban network is enormous, so if we were to change all of our vehicles to right-hand-drive.... You can't just say, well, if we have to have a right-hand-drive vehicle in rural Canada, we don't need a right-hand-drive vehicle anywhere else. I ask the committee to share the understanding that this is a huge network. There are thousands and thousands of routes. It's a very big logistical exercise.
I am being told that if right-hand-drive vehicles could be procured, if you could find a manufacturer and you were going full bore, the first ones could not come off any assembly line in less than three years, with all of the regulatory issues you'd have to get through. But as a very preliminary, what I would call class Z estimate, just for the rural areas we know about--and I think Mr. Temelkovski is correct that we will certainly, over the course of time, find out about others--you would be talking about a couple of hundred million dollars of capital cost.
But there's another point I need to mention. Right now a significant portion, about 20%, of rural route salaries is attached to the use of a private vehicle. The amount of money rural route people are paid is on the basis of how long it takes for them to do the stops, so if we were going to provide right-hand-drive vehicles, let's say three or four years down the road--
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Let me try to succinctly put in some background. There was a court decision on February 17. Canada Post had asked for a permanent injunction on the particular business doing these particular cross-country mailings, not only in the United States but in all the European countries and so on, as you well know.
The injunction was granted. I don't know how many of these businesses there are in Canada; there are perhaps 50 or 60, and they employ almost 4,000 people. Part of the injunction--the draconian part, I think, of the court ruling--was that they gave these companies six months to cease operations.
We don't think that's policy of Canada Post, inasmuch as you've mentioned the chairperson's length of stay here in Ottawa; I thought you were going to give a rage, but you just stopped short of that.
We spend an inordinate amount of time in Canada, as you well know, trying to create jobs, spending huge amounts of money on retraining people for jobs and so on and so forth. This decision seems to be counterproductive to what we're really trying to accomplish in a policy network within our country.
You don't have to answer this, but I suspect very much that this is one of the areas you inherited when you took over, and it's gone down to the legal decision. As we all know, common sense doesn't always prevail in a legal decision, and I think this is one of those instances. I know this would be of concern to you when you start thinking about all these businesses and these people who will be displaced.
Have you considered any alternatives to that decision? More importantly, the decision was on February 17. They were given six months. We're talking now; we won't meet again until we come back in the fall. It will be active, and we're causing a lot of unrest. Do you have any options you would like to talk about this morning?
Thank you.
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Mr. Comuzzi, it's a very interesting question and issue you raise, as usual.
I welcome all competition in our business. I think it's healthy. It's good for us. It drives innovation to see what others are doing in the market, so I really welcome it.
The law as it stands now, though, puts an enormous responsibility on Canada Post that no other competitor has, and that responsibility is to deliver the mail at a reasonable cost to everyone. That's the obligation we have. That's an expensive obligation, and it gets more so every year, with a quarter of a million new addresses being added.
In this case, this is illegal activity. It is clearly illegal. We have six decisions; these companies are really in partnership with foreign posts in the world that have come into the Canadian market and picked up some of our most profitable mail, that being business mail destined for other countries.
We need the profit from that mail. That's the reason we were given the shrinking, shrinking, so-called exclusive privilege. There's not much exclusivity left to the exclusive privilege. That's the reason we were given the exclusive privilege: so that the portion of the market available only for Canada Post would help defray the huge costs of our service obligation.
I understand, and in some ways I feel exactly as you do. It is not good that a behemoth--the sixth largest employer, with a $1 billion-a-year pension responsibility--should be asking that others exit the market, but that's the arrangement the Government of Canada has put in place. Along with other aspects of our business, that is how we pay for the universal obligation we have.
Until we change that, new entrants into some aspects of our market are going to be watched by Canada Post pretty carefully; otherwise, we will have entrants illegally moving into the most profitable segments of the market without having any of the service obligations we have.
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I will check my information in anticipation of next fall. Thank you, Ms. Greene.
We are very stubborn over here, so I'd like to come back to the question raised by my colleague with respect to the closing. We talked about Quebec City, but we have exactly the same concern in relation to every other major mail processing centre in Quebec.
In reply to one of my questions earlier, you stated that five centres in Toronto have now been consolidated into two, I believe. I don't remember the exact numbers, but in Quebec City, this phenomenon is known as “montréalisation”. Operations are being transferred to Montreal. Of course, we all love that great and beautiful city, but every time operations are cut back in major centres in Quebec and Canada, something is taken away, and that will eventually have an impact. That is what I believe, so this isn't really a question.
You talked about Toronto, Calgary, Western Canada, Eastern Canada and the Maritimes. You were appointed a year ago and you have financial targets. In fact, you tend to talk about the company, whereas I would prefer that you talk about the Crown corporation. So, you have to meet your financial targets. You told us that you ask nothing of Canadian taxpayers. On the other hand, you most certainly have a strategic plan. At some point, you and your management teams sit down and take a look at your operations. I know that studies are carried out at the local and regional levels, but the final decision is made by the person who is the equivalent of the deputy minister. And very often as well, the decision is made at the political level.
Somewhere there must be planning that allows you to justify cutbacks. You will say there is no reduction in service, but I'm sure there must be some document somewhere on which you relied to make such important decisions as merging three or four sortation centres or shutting down one in Quebec City and moving the work to Montreal.