[Recorded by Electronic Apparatus]
Wednesday, May 29, 1996
.1537 
[Translation]
The Chair: I call this meeting to order. We will continue our study of the estimates.
Today it is with pleasure that we welcome Mr. Clermont, president and chief executive officer of Canada Post Corporation. Mr. Clermont.
[English]
manages a $4.7 billion business with 63,000 employees, and he's here to tell us how Canada Postis responding to new technological challenges to its traditional business. He is accompanied byMr. Ian Bourne, the senior vice-president and chief financial officer, and Mr. Hank Klassen, the vice-president of administration.
Welcome. Please begin.
Mr. Georges Clermont (President and Chief Executive Officer, Canada Post Corporation): Thank you, Madam Chair.
[Translation]
I am pleased to speak to you today about the progress of our corporation and to convey to you how it is evolving into a flexible and dynamic company, committed to serving all Canadians.
[English]
Parliament gave Canada Post a mandate to provide efficient and affordable postal service to all Canadians, wherever they live. In fulfilling this mandate we believe the corporation has played a significant role in weaving the fabric of this nation. Canada Post is not only one of our country's most important institutions, it is also one of its largest businesses, with annual sales of close to $5 billion. The latest Financial Post survey rates Canada Post as the country's fourth largest employer and the thirty-first largest in terms of revenues.
[Translation]
We provide direct employment to more than 63,000 Canadians and, indirectly, in our opinion, to at least twice that many. We are, for example, the largest user of transportation services. We have 3,000 private sector partners in the retail business.
In a survey taken a few months ago by the Angus Reid Group, 90% of respondents view the system of universal postal service at a universal price as one of the "great things about Canada". Universal service doesn't mean lettermail service. Parcel delivery, and distribution of community and political notices, of advertising material are but a few examples of services that only Canada Post has historically offered in all communities, whatever their size and location.
[English]
Canada Post is an integral part of Canadian society. It is the railroad, highway and city centre to our rural communities. In the age of faxes and electronic mail, the postal service remains one of the fundamentals on which 800,000 small and medium-sized businesses depend. No one reaches and serves every corner of this vast country except Canada Post, and let there be no doubt that no one else will if Canada Post falls prey to the arguments of some of our multinational competition.
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Safeguarding Canadians' access to the national postal system requires that we meet important challenges. In order to compete in the global world of distribution and information transfer, Canada Post must measure up to giant foreign companies whose worldwide operations allow them to achieve economies of scale that are not available to our corporation. We may be large by Canadian standards, but we are small by international standards. We must also achieve levels of profitability that will allow us to reinvest in the national postal infrastructure, improve retail access and develop new service offerings across the whole of Canada.
How do we get there?
Since 1988 Canada Post has operated without the assistance of taxpayers' money. We have operated on a break-even basis, earning a profit from operations before special charges, in four of the last six years.
[Translation]
The Corporation's annual report will be submitted to Parliament within the next few weeks. The precise figures will be made public at that time. But I am pleased to say that in the fiscal year ended March 31st, Canada Post again made a profit. In fact we achieved a turnaround of close to$100 million compared to the previous year.
But this performance is not good enough to meet our medium and long-term challenges and to profit from investments that we are considering.
[English]
The size and scale of the investments needed to sustain the network for delivering mail to every household in Canada means that we must earn a consistent and adequate return on capital. We will not do this simply by raising stamp prices. Our future will depend in great part on our progress in two areas: first, by using our network to offer services that are compatible and complementary with our core services; and secondly, by bringing our cost structure in line with today's competitive realities. These two factors will be key to sustaining and enhancing current service levels at affordable rates.
Let me address the subject of making full use of the national postal system. Universal service requires a sophisticated distribution network for collection, processing, transportation and delivery of mail.
[Translation]
As competition with lettermail intensifies, Canada Post must, in the words of the Canada Post Corporation Act, "improve and extend its products and services".
This applies, among other things, to parcel and courier mail, advertising distribution, and hybrid electronic services.
[English]
The internationally respected firm of Coopers & Lybrand undertook a study of Canada Post's future and examined the financial impact of several models. One model contemplated our withdrawal from competitive services such as parcels and couriers. This would force the corporation into an untenable position of chronic deficits in the range of $200 million to $500 million annually - deficits that would be borne by taxpayers.
CPC is present in most communities in Canada, and in many communities it represents the sole federal presence. Through its far-reaching national network, Canada Post is uniquely suited to offer a shared service delivery network for all levels and departments of government, thereby creating an efficient, single window in most Canadian communities.
The range of government services that can be delivered is wide, including, for example, payments, application forms, provision of government information. By using this network the government would be taking maximum advantage of its investment in the existing Canada-wide infrastructure that Canada Post represents.
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Madam Chair, it is essential that Canada Post be a profitable corporation that can fund the development and investment costs of universal, affordable service, and give taxpayers a return on their investment in this enterprise. If we look at the positive evolution of Canada Post since 1981, I believe there is good reason to be optimistic about our achieving this objective. Given the freedom to compete and the continued goodwill and commitment of our 60,000 employees, I firmly believe that Canada Post, a Canadian company, will meet the 21st century head on, serving all Canadians, managed by Canadians and contributing to the economic and social well-being of our great nation.
Thank you, Madam Chairman.
[Translation]
The Chair: Thank you, Mr. Clermont.
[English]
You must realize that members of this committee feel a certain proprietorship because they feel they're godparents to Canada Post.
[Translation]
We will begin our first round of questions with Mr. Fillion.
Mr. Fillion (Chicoutimi): The Corporation's long-term debt is somewhere between $280 and $300 million, isn't it?
Mr. Clermont: On a consolidated basis, it was $255 million.
Mr. Fillion: I'm referring to page 3, I believe, of the French version of your text. In your annual report, that will be tabled in the next few weeks, you are pleased to say that in the fiscal year ended March 31st, the Corporation once again made a profit.
When I look at the past five or six years, I notice that you recorded a deficit three times out of five. Today, you say that you have once again made a profit. What do you mean by "again"? You had a deficit of $270 million in 1994 and of $128 million in 1992.
Mr. Clermont: I was talking about income from operations. If you refer to the annual report, you will notice that there is income from operations. Unfortunately, I don't have the figures here.
Mr. Fillion: This is a question that could be clarified at some specific time. When I talk about profit made, I was talking about net profit.
Mr. Clermont: Income from operations.
Mr. Fillion: Net income of $100 million, whereas...
Mr. Clermont: This is not what I said. I said that, this year, we would have a net profit, which would represent a turnaround as compared to the previous year where we had a loss of $69 million. There's therefore a turnaround of close to $100 million. If you add up the $69 million loss and the $26 to $28 million profit, you get $100 million.
Mr. Fillion: You are therefore talking about a $30 million profit, since you have eliminated the $69 million deficit from the previous year.
Mr. Clermont: Excuse me?
Mr. Fillion: You've absorbed the deficit from the previous year, which was $69 million of these $100 million. Therefore, $100 million minus $69 million gives...
Mr. Clermont: We will have a profit of roughly $26 to $28 million. Last year, we effectively had a loss from operations of some $69 million. The previous year, we recorded a profit from operations - and this is what I was talking about - of $28 million. Like many Canadian corporations, we incurred special restructuring expenses of $270 million that resulted in a net loss. But this is pre-established accounting.
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Last year income from operations was $82 million. We had some special expenses that reduced net income, after these special expenses, to $26 million.
Mr. Fillion: Do your restructuring costs include personnel and infrastructure? What do your restructuring costs include?
Mr. Clermont: I will ask Mr. Bourne to provide you with the details of the restructuring costs.
[English]
Mr. Ian Bourne (Senior Vice-President and Chief Financial Officer, Canada Post Corporation): It was for the reduction of some employees. It was for the potential write-down of certain physical assets as we restructured the network.
[Translation]
Mr. Fillion: So, this includes personnel and equipment. Can you give us a percentage for personnel and equipment?
[English]
Mr. Bourne: It was about two-thirds for employee reductions and one-third for equipment write-down.
[Translation]
Mr. Fillion: Two-thirds for personnel and one-third for equipment.
I have noticed that at present, many post offices in remote regions are being closed, yet, in your policy statement, you say that the post office is almost the only office that can be found in those regions. Today, this doesn't seem to be the case.
Mr. Clermont: There have been no post office closures since 1993.
Mr. Fillion: Since 1993?
Mr. Clermont: Yes.
Mr. Fillion: So, there has been a sort of moratorium since then.
Mr. Clermont: A moratorium that the government...
Mr. Fillion: This means that there are nonetheless plans being made and that at some time, closures will occur. This moratorium was imposed by objections raised in many small villages.
I want to know if you are still considering closing post offices, especially in villages with few inhabitants.
Mr. Clermont: At present, we are not planning to close any post offices. This was the government policy in 1993 and, to my knowledge, it has not changed.
Mr. Fillion: You also say that the post office could become a type of single window. When I hear the words single window, I'm not satisfied with having only Canada Post services offered there; the services of other departments should also be available at this single window. Is that the case?
Mr. Clermont: Yes.
Mr. Fillion: I believe that you have sort of missed the boat, especially because we have just carried out the unemployment insurance reform. Some Canada Unemployment Insurance centres have just been closed, others have been consolidated, and there's talk of setting up single windows throughout the country, but not necessarily in Canada Post offices.
Have you considered the possibility that post offices could also provide the services of other government departments? What do you intend to do with regard to that?
Mr. Clermont: We are considering it. We have offered both federal and provincial governments to become this single window, because it's a way of making the post office profitable. It's not be selling a few stamps every day that the post office will become very profitable. This is a formula that was adopted a long time ago by almost all European countries.
Mr. Fillion: What steps are you taking at present to make sure that departments hear you out on this single window that would allow you to offer more services and, at the same time, to earn more income?
Mr. Clermont: Yes.
Mr. Fillion: Are you making representations, for example, to the Department of Human Resources Development...
Mr. Clermont: Yes.
Mr. Fillion: ...or companies?
Mr. Clermont: Yes, at both the federal and provincial level.
Mr. Fillion: Do you think that this will materialize quite soon or will we have to wait for more reforms in order to then have to undo what has been done in order to get where we want to go?
Mr. Clermont: Listen, we are ready to do it.
Mr. Fillion: Where are the negotiations at? How are they going?
Mr. Clermont: I think that the negotiations are progressing nicely.
Mr. Fillion: Are people listening to you]
.1555
Mr. Clermont: Yes. The negotiations are progressing.
Mr. Fillion: Don't forget that the Canada Post Corporation is not self-financing. You say that at present, you are turning a profit, but when one looks closely, one sees that Canadians are paying quite a lot for their services.
Mr. Clermont: I am sorry. The Corporation is self-financing in the sense that, first of all, since 1988 it has not borrowed a penny from the Consolidated Revenue Fund and, secondly the postal service is the cheapest in the world.
Mr. Fillion: Nonetheless, we have an accumulated debt.
Mr. Clermont: Yes, but the debt...
Mr. Fillion: You still have to fund this debt.
Mr. Clermont: Yes, but we are funding it ourselves. Taxpayers are not funding it. We have not borrowed from the government. We have taken nothing from the Consolidated Revenue Fund since 1988.
The Chair: Thank you, Mr. Clermont.
[English]
Mr. Epp, you have the floor.
Mr. Epp (Elk Island): Thank you, Mr. Clermont and your colleagues, for coming here. I remember fondly my day visiting the head office about a year ago.
Unfortunately I was shuttled out of this committee and into other duties, so I'm only substituting here today.
I'd like to follow up a bit on some of the things we discussed at that time. You'll remember there were quite a few questions with respect to the development of the headquarters building.
At that time the Auditor General was asked about this. He declared that there was no impropriety, or so he was quoted as saying.
When we checked later we found that in fact the Auditor General's office had not looked directly at the development of the new headquarters building. It had looked in general at the procurement and contract questions.
I'd like to just have a general response from you as to whether, in your view, this is all now cleared up. I hear from various people in the media that a cloud of suspicion still hangs over this.
Mr. Clermont: As far as I'm concerned, no, the Auditor General looked at these transactions. I've not looked at this since last year.
Mr. Epp: Now, a question that comes to mind again - and this is old business; we'll get to new business in just a little while - is that at that time there was quite a bit made of your presumed relationship with the developer. Subsequently there has been an investigation of that developer. Has the result of that investigation ever been made public?
I'm asking out of curiosity, because I -
Mr. Clermont: I don't know.
Mr. Epp: You don't know either?
Mr. Clermont: No.
Mr. Epp: Okay, that will be a question -
Mr. Clermont: I have my explanation of this, which I gave you last year.
Mr. Epp: I'm sure there's somebody here now writing that down, so they can expect a question to the minister in the House one of these days.
I'd also like to ask specifically...and this has to do with your position as the chief executive officer of the post office. I believe you do come under the code of conduct for public office holders.
Mr. Clermont: Yes.
Mr. Epp: I'm sure you are then also aware of the fact that the code indicates that you must basically keep everything totally above board and clean, and not even give the perception of any impropriety.
Mr. Clermont: Yes.
Mr. Epp: Are you aware of whether anybody who is really independent, such as our ethics counsellor or anybody like that, has ever looked into all these things in order to clear these allegations and get them cleared up, or to shed some light on this?
Mr. Clermont: Well, there was nothing to look into. There was nothing to look into.
Mr. Epp: But the allegations were made, and it seems to me -
Mr. Clermont: The allegations were made in Frank magazine. If you want to believe -
Mr. Epp: Well, more than Frank.
Mr. Clermont: I'm don't think I'm answerable to Frank magazine.
Mr. Epp: Yes. There were other magazines and reporters as well that were on -
Mr. Clermont: Yes, one reporter essentially.
Mr. Epp: But as far as you know, there was never an independent investigation?
Mr. Clermont: Well, last year when we were here I explained the context of that transaction in great detail.
Basically the first premise was that I was not in my position then; I was not the chief executive of Canada Post.
Second, the transaction had gone at least - and I may be off a few - ten times through the board of directors of the company to an outside committee of advisers in real estate matters that had looked over this, and the Treasury Board. So the decision was not even ours alone, let alone mine, to make.
.1600
Mr. Epp: Do you sometimes wish there would be some truly independent investigation of things like this so that your name could...?
Well, I'm not saying your name should be cleared, because that implies there is something, but just to say... Here you're saying, hey, there was nothing wrong, but it seems as if the rumours keep persisting, because it can't ever be put to rest due to the fact that there's always an internal investigation, or...
You yourself are saying there's nothing -
The Chair: Excuse me, Mr. Epp, it's my understanding that when Mr. Clermont appeared before you in this committee he answered those questions and tabled some documents.
Mr. Clermont: Yes.
The Chair: I'm just wondering if, apart from just spreading hearsay or rumours -
Mr. Epp: No, absolutely -
The Chair: - is there a point to your question here?
Mr. Epp: Well, there were -
Mr. Clermont: Subsequent to the meeting you yourself came - you recognize this - to our offices. As I recall, we opened the books for you.
Mr. Epp: Yes, unfortunately I think that was a public relations exercise that left me really frustrated.
Mr. Clermont: No, I think Mrs. Kriegler sat down with you and opened the books for you.
Mr. Epp: Yes, but the record should also show that the books were four volumes this high. I was not permitted to take them out, for obvious reasons.
Mr. Clermont: Well, of course.
Mr. Epp: I accept that, but without any assistance or anything there, it's impossible to look at four volumes that high in one hour. So that was a problem.
The Chair: Mr. Epp, I think it's highly improper to impugn things if the documents were made available to you.
Mr. Epp: Yes, well, my -
The Chair: Further -
Mr. Epp: Okay, I accept that.
The Chair: - you could have sat there and perused through them. So I think it's highly irregular -
Mr. Epp: Well, I would have had to sit there for a year, because first, I'm not a lawyer.
Secondly -
The Chair: But you could have brought one with you.
Mr. Epp: No, I was told I wasn't able to.
Mr. Clermont: No, no, that's not so. You could have brought one.
Mr. Epp: They were confidential documents.
Mr. Clermont: It is confidential, because the developer, the owner, Standard Life, in the instance does not want the whole world to know what the deal is.
The Chair: I wonder, Mr. Epp -
Mr. Clermont: But you were perfectly welcome to bring anybody you wanted so long as they were not...
Mr. Epp: Okay, that was not my understanding at the time.
The Chair: Mr. Epp, I'm just wondering -
Mr. Epp: I'll change the direction -
The Chair: No, I'm not trying to censor your line of questioning, but I think it would be more productive to move onto more fertile ground than hearsay, rumours or -
Mr. Epp: I'm not talking about hearsay or rumours. I mean, these were things that -
Mr. Clermont: They were rumours.
Mr. Epp: There was a lot of evidence at that time.
What I'm asking for, and I'm going to continue asking this government and whoever is in power, is that these types of investigations be open and done by people who are truly independent, so that at the end of the day all innocent people are declared, and it's believable. That's the missing link.
The Chair: Well, people in Canada are still innocent until proven guilty. I think that's the rule of law.
Mr. Epp: That's why we need to have independent investigations in order to find that out.
But that was just an aside; I don't know how we got on to that.
Some hon. members: Oh, oh!
The Chair: All the more reason why we should move on to more fertile ground.
An hon. member: Just stumbled on to it, eh?
Mr. Epp: No, when I looked through my things, this was where I left off in this committee, and I'm glad to be back here.
I'd like to ask some questions now with respect to your report and to the operations of Canada Post as they stand now.
Now, this vote for which we're here... Really, strictly speaking, you're before this committee because you're asking the Canadian taxpayers for about $14 million?
Mr. Clermont: Yes.
Mr. Epp: My question is about that $14 million, I believe approximately $12 million or$13 million is used to subsidize the transportation of goods and other commodities to the north. Then there's approximately $1 million used for parliamentary purposes. Is that close?
Mr. Clermont: No.
Mr. Epp: Okay, set me straight.
Mr. Clermont: Of that $14 million, $11 million is used for parliamentary mail -
Mr. Epp: It is $11 million?
Mr. Clermont: - and $3 million for literature for the blind that by law moves free of charge in the system.
Mr. Epp: Okay, so then there's another vote somewhere else for northern transportation?
Mr. Clermont: Well, that would be in the Indian and Northern Affairs budget, and I think there's some also in the Heritage Canada budget, which covers the subsidies to publications. But these are not ours to-
Mr. Epp: Okay. Although it's not specifically within the purview of this committee, how much do you get from Indian Affairs? We are looking at the public post office here, so -
Mr. Clermont: How much do we get from Indian...?
Mr. Henry J. Klassen (Vice-President, Administration, Canada Post Corporation): It's $11.105 million.
Mr. Epp: Okay, that's for the north.
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Now, one of the questions we often get asked is about the whole structure, your accounting structure and the fact that you have consolidated accounting instead of divided accounting.
It's no secret in many parts of the country that Canada Post has moved right into the competitive industries of other businesses. These people continue to be frustrated - and I'm here to represent them - because they're not able to get the cold, hard facts on the breakdown of your costs and the breakdown of your revenues from the different parts of your operations.
How do you respond to that? Why -
The Chair: Mr. Epp, this will be your last question for this round.
Mr. Epp: Okay.
The Chair: It's your turn.
Mr. Clermont: We establish our accounts according to generally accepted accounting principles. The accounts are the book, the annual report. The financial statements are prepared by auditors, just like at any other corporation.
We are a business that is competing, as you said it, in many respects. In all respects we are competing. I don't see that this business, this corporation, should be held to any more disaggregation of costs than any other company in Canada.
Mr. Epp: Even though you enjoy a monopoly -
The Chair: Mr. Epp.
Mr. Clermont: We have a monopoly on letter mail, and that's worth more on paper than in fact.
The Chair: Merci, monsieur Clermont.
We have Mr. Malhi, who is sharing his time with Mr. Harvard.
Mr. Malhi (Bramalea - Gore - Malton): Thank you, Madam Chair. These questions are asked by me on behalf of my constituents.
According to page 36 of your report, on your five-year review, a total of $246 million was made in 1994 and 1995 as a result of profits in the advertising market, on addressed ad mail, or what is more commonly referred to as junk mail. Is that correct?
I further note on page 22 of the report, on your financial performance, that over the past year the revenue for addressed and unaddressed ad mail increased by $39 million or 6.8%, while volume increased by 528 million pieces, an increase of 9.2%.
With figures like these, is Canada Post Corporation in a position to consider reducing the amount of unaddressed direct mail it distributes so that Canada can become a more environment-friendly nation? How would such a move effect Canada Post's bottom line?
Mr. Clermont: Thank you. On the figures I will ask Mr. Bourne to comment.
Mr. Bourne: Yes, those are the numbers you've taken out of the annual report?
Mr. Malhi: Yes.
A witness: So, excuse me, what was the question with respect to the figures?
Mr. Malhi: My question is that with figures like these, is Canada Post Corporation in a position to consider reducing the amount of unaddressed direct mail?
Mr. Clermont: Well, again, this is a business in which we're not alone. Actually, we do not have a controlling share of the market for unaddressed ad mail.
There are, and we have helped and worked on, a number of committees and task forces in various provinces looking at environmental problems caused by advertising mail.
We're doing the same thing the others are doing, whether newspapers or distributors of ad mail purely. So we're in the same business these people are in.
Mr. Malhi: I have a second question. Would you be able to give me an idea of the minority quotas at Canada Post's various distribution centres?
If possible, I'd also like to know if you have established any target for minority quotas for the next few years?
What is Canada Post's record with regard to dispute resolution involving employees who are visible minorities?
Mr. Clermont: I cannot give you the figures right now. I don't have them with me, but these are figures that we have, and I think we would be pleased to provide them to the committee, Madam Chair.
The Chair: Thank you.
Mr. Harvard.
Mr. Harvard (Winnipeg St. James): Thanks, Madam Chair, and welcome to the committee, Mr. Clermont. I think I'll just run off three or four questions, and you can perhaps then answer them all at once, if you don't mind.
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A witness: Yes.
Mr. Harvard: I don't want to draw you into the work of the Radwanski commission; I think we'll let that stand alone. I'm sure, though, Mr. Clermont, that you do have some hopes and expectations coming out of Mr. Radwanski's work. Do you really think it will be a source of refocusing or revitalizing the corporation? That would be the first question.
Second, corporations are going through changes at a very rapid pace these days. Do you foresee in the near future for your corporation, short of privatization...? Do you see more, say, outsourcing, partnering, that kind of thing, to make your corporation more competitive?
Third, the first-class letter is so much identified with the corporation. It sort of connotes your monopoly and your exclusivity. Is there a chance that because of technology the first-class letter could go the way of the telegram? If that were to happen, what does that do to your corporation?
Fourth, there is a lot of anxiety in rural Canada about Canada Post. Not only rural Canada but all of Canada depends on your corporation for service. But rural Canada feels a great need to depend on your corporation as a source of employment. They're afraid of changes in practices and in technology.
What is the immediate future for the post office in the small rural communities that depend on your corporation so much?
Mr. Clermont: Thank you, Mr. Harvard.
On your first question, we have publicly stated that we welcome the review Mr. Radwanski started in Canada Post.
We are hoping for a number of things out of this. One of those would be that, again, he satisfies himself, or finds a way to satisfy the public, that the issue of cross-subsidization is more myth than reality.
As you may recall, this issue was looked at in 1993 by the Competition Bureau, and was then discarded as without foundation. Still, notwithstanding this, it's a refrain that comes back every so often - fed, I must say, by very able, well-organized competitors. So that would be one of the things we'd like to come out.
We would also like the Radwanski committee to agree with the direction we see Canada Post taking in the world of electronics. Again we do not have, and do not wish to have, a monopoly, any kind of exclusive privilege in that respect. But we feel - and this will be tied to your last question on rural Canada - that we are the only ones who have an infrastructure, and perhaps interest, and indeed a mandate to go into every small community of whatever size and to reach every Canadian five times a week. Notwithstanding what the competition says, nobody else does.
On your second question, we have outsourced a number of functions in Canada Post. The largest one is our information technology function, where, after looking at everything we do in the core business... Our core business is the delivery of messages, the transfer of information or parcels from point A to B. We are not in the business of developing or maintaining systems. So we looked at it, and after a number of companies had made submissions, we did outsource our IT function to SHL Systemhouse here in Ottawa.
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Realizing that we are not in the business of managing real estate, we also outsourced our property management last year or a year and a half ago. That's not our core business. That's not our core competence. So we outsourced to various consortia of companies across the country who now do this for us, I should add, at considerable savings.
We are indeed always looking for partners. We have just recently signed a partnership agreement with IBM Canada to look into the development of a hybrid data interchange of the mail of the future.
We welcome partnerships with the private sector or the public sector. We are negotiating with the Government of New Brunswick on piloting certain government services in rural areas in New Brunswick.
Will letter mail go the way of the telegram? I wish I had a crystal ball and could tell you, but I don't believe so. When asked that question, I like to quote a postmaster general of the United States who in 1876 prophesied that letter mail was dead because of the invention of the telephone at the time. But today in one week the United States Postal Service processes the amount of mail we do in one year. So I think letter mail is here to stay.
There has been a lot of substitution. One used to send cheques, etc., and payments are done at an ATM, an automatic banking machine, today. It can be done by phone.
But we believe that new ways of communicating breed new needs of communications. We don't see that the physical, tangible letter mail is going to disappear.
A number of our customers, the large-volume mailers, feel there's a very implicit message in a physical piece of mail when the recipient sees the logo of the company, etc., can examine... So we think that while there will be substitution, there is still a future.
It's interesting to note that the Internet has caused the greatest growth in magazine publications in recent years. Here's the essence, the essential, the epitome of non-physical things, the Internet, and yet there are more magazines published on this subject than on any other subject.
On rural Canada, we are there. I know that, as Mr. Fillion mentioned, a number of communities are concerned, but we are there to stay.
What we're looking at is how to make these outlets pay for themselves. Right now a number of them are, of course, losing propositions. But other countries have found a way of maximizing revenues from these outlets, and that's what we are looking for, that's what we'd like to do, that's what we're talking about with the various levels of government and other institutions.
For instance, we are talking with some financial institutions about co-locating in the post office where they're not present and they would like a presence. We can perhaps put in an ABM and have it serviced by our employees. So we are trying to improve and increase the usage of the bricks and mortar we have in these communities.
The Chair: Thank you, Mr. Clermont. It sounds as though Canada Post is en route to becoming a more commercialized organization with a very diverse product line.
[Translation]
Mr. Fillion: In your last paragraph, you say: "given the freedom to compete". Currently, the Bureau of Competition Policy is studying your case to see if you have a monopoly. What do you think? Are you waiting for a response on that matter?
Mr. Clermont: I don't know if the Bureau of Competition Policy is studying... They have presented a brief to the Radwanski Commission in which they state that there is perhaps no reason to have a postal monopoly and that the postal service should not have exclusive privileges.
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I am not an economist, and I am therefore not able to discuss economic theory, but this is also a government policy. There is only one country in the world where the exclusive privilege for lettermail was eliminated, and that is Sweden. This is the only example that we have.
There was a lot of lobbying to get the European Community Bureau to end what is known in Europe as reserved services, known here as the exclusive privilege, and this was not accepted by the governments of the European community.
Therefore, there is no model. Even in Sweden, it is quite recent. It occurred some months ago.
Mr. Fillion: But please explain to me what you mean by "given the freedom to compete".
Mr. Clermont: This has to do with the services that we offer, such as parcel services, courier mail services, and Media-post distribution services, that according to some people we should not have.
We were involved in all these areas well before we had to compete. In order to maximize the potential of our present postal network, in order to make it profitable, we must offer other complementary services, such as parcel and courier mail services and distribution.
So, we want to continue in the same direction.
Mr. Fillion: Do you believe that a mixed formula in this area might exist, not necessarily excessive privatization, but rather a joint formula where the two might offer perhaps different services, that could be distributed by one or the other, and that would give the private sector the opportunity to participate?
Mr. Clermont: It's not up to me to decide on the formula, because this is a government policy issue. We coexist today, and no one is dying of hunger.
We have to see where the competition and the arguments are coming from. The companies that will dominate in Canada tomorrow are UPS and FedEx; they corner the market in the United States and they are trying to do the same in Europe.
In what measure do their profits made in the United States, where their presence is greatest, subsidize their operations in Canada? I don't know. They are private companies that do not publish any figures. So, we coexist.
Mr. Fillion: I understand that it is not up to you to define the mandate of the Corporation. However, when you discuss with members of your board of directors, you certainly give them leads, directions to take in order to find the best possible niche markets. But when there is competition, the client, the taxpayer, quite often, comes out ahead. This is competition.
Now, one thing always concerned me with regard to Canada Post Corporation. It has to do with labour relations. Things were a bit of a mess, a hullabaloo between 1980 and 1985.
Are you currently about to start new collective negotiations? What is the general climate with regard to labour relations with your employees versus your unions?
Mr. Clermont: First of all, you mentioned competition and the fact that Canadians will benefit from this. I would like to highlight an anomaly here.
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During the hearings held by Mr. Radwanski, many medias complained about the fact that they used to be the only ones to offer these services in their villages and that when we arrived, prices went down.
If our auditors and ourselves feel that the prices are fine, then the consumer, in the end, will benefit from it.
With regard to labour relations, they were always the stumbling block, the Achilles heel of the Corporation in the past, but much progress has been made. In December 1994, we signed a collective agreement with all our unions, the last one in December 1994, a few days before Christmas, with the Canadian Union of Postal Workers. This union is the most important one, because it has roughly 40,000 members, and the agreement was very beneficial to both parties.
It was advantageous for us, in that there were no increases in hourly rates and for them, in that their job security was maintained. This agreement was negotiated smoothly, without any yelling, without even a vote to strike, without any mention of a stoppage. This agreement expires in July 1997, in 13 or 14 months.
It is thanks to all our employees that we got to that stage. We were also able to renew the agreement in 1992, for two years. It ended in 1994, because the old agreement had not yet expired when we signed the new one before Christmas 1994.
This demonstrates the state of labour relations in the Corporation. We have done a lot of work in that area. Two years ago, we set up the Canada Post Corporation Learning Institute, an institute where our employees are trained at a cost of $50 million per year.
Our employees are productive and dedicated. Unfortunately, they haven't always had the necessary tools to progress within the organization, and we have given them those tools. There is still a lot of progress to be made; there are still a lot of problems. I don't want to minimize them, but I think that we have given a fairly positive tone to our labour relations.
Mr. Fillion: With regard to complaints...
Mr. Clermont: Grievances?
Mr. Fillion: No, complaints from clients.
When a taxpayer is not satisfied, what is done with regard to complaints? Quite often, these people end up in our riding offices because their representations were not satisfied. What is your policy with regard to complaints?
Mr. Clermont: Our motto is that we are in business to serve you. We have a customer service network where customers with problems can call. There are thousands of people that have received special training in this customer service area.
Mr. Fillion: Is this in all regions of the country?
Mr. Clermont: Yes. Of course, we can't please everyone. Quite often, it is our fault. It is the customer service representative that didn't know exactly what to do. So this increases and it is true that quite often this ends up...
Mr. Fillion: Have you assessed the cost of this service?
Mr. Clermont: I can't tell you, but I will give it to you. I don't have the evaluation here with me.
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The Chair: Thank you, Mr. Clermont.
[English]
We now have Mr. McTeague, who will be sharing this time with Mr. Bryden.
Mr. McTeague (Ontario): Do you want to go first, John?
Mr. Bryden (Hamilton - Wentworth): Well, I wouldn't mind.
Mr. McTeague: Go ahead. I have only one question.
The Chair: This committee is usually very courteous.
Mr. Bryden: Ask one question, then, and I'll go from there.
[Translation]
Mr. McTeague: Mr. Clermont, I would like to thank you, you and your colleagues, for being here today. I have one simple question with regard to retailers.
[English]
A few years ago, under the previous government, there was a policy of allowing the decentralization, if you will, of certain postal facilities. There was the closure of some in some instances and of course the proliferation of a lot of these franchises. I'd like to find out from you, sir, if you might be able to give us an idea of just how successful they were. I know that in the particular instance of one of the outlets in Oshawa there was some difficulty, which I was involved in, but that's not why I'm asking the question. Have you had many of these outlets since fail as a result of economic conditions or the presence of competition within the same community?
Mr. Clermont: Of course, unless you're downtown in a major centre...we have never tried to sell a stand-alone postal franchise, because it wouldn't make its worth. So it's always associated with a host business - a drugstore or whatever. It's generally a drugstore. We've had very few failures. Actually, the franchisees love it, and I think the public also likes it. Some of these franchises are open 24 hours per day, and some are open 12 hours per day. You go there not just to get a stamp or a money order. You go and purchase a number of things. The polls - and they go back a few years perhaps... Generally speaking, the public was very satisfied with the service it was getting at these franchises, and very few have failed.
Mr. McTeague: Very good. Thank you.
The Chair: Mr. Bryden.
Mr. Bryden: Thank you.
Mr. Clermont, you mentioned a Coopers & Lybrand study in your comments that looked at the financial impact of several models. Could this committee have a copy of that study so we could examine it ourselves? It would probably be very useful.
Mr. Clermont: Yes.
Mr. Bryden: We'll look forward to that.
You mentioned in your remarks connected with this that the study said the withdrawal from competitive services would leave a deficit of $200 million to $500 million. Let me reverse that question for you. If Canada Post consisted only of competitive services - the parcels, the courier, and the direct mail - would it be a viable profit-making organization?
Mr. Clermont: If it had only competitive services?
Mr. Bryden: That's right.
Mr. Clermont: With the existing infrastructure?
Mr. Bryden: No. Only the competitive services. if I understand you correctly, the existing infrastructure is paid for by the $200 million to $500 million. Is that not true?
Mr. Clermont: No. What we're saying is that we need a pipeline to put the letter mail through. I like the analogy of a pipeline. The basic oil is the letter mail, which goes to every point and every point of call in Canada.
Mr. Bryden: And it is run at a loss, I take it.
Mr. Clermont: No, no, that's not run at a loss. But the letter carrier walks that street every day. Whether he or she delivers three, four, five, or ten items, the cost is the same. It's a fixed cost.
Mr. Bryden: I understand that. I want to separate it. I have a little village post office, and they process the mail in my village. They process the direct mail and the junk mail at the same time as they process the real mail. The direct mail, I presume, is a competitive service. You're making money on it, presumably.
Mr. Clermont: Yes.
Mr. Bryden: My question is, if you have only the competitive services, can you operate a profit-making corporation?
Mr. Clermont: I'll ask my colleagues in Finance to -
Mr. Klassen: Let me try that. First of all, there would be a very different corporation, because basically we would be operating and focusing on courier services and on advertising distribution.
Mr. Bryden: Absolutely.
Mr. Klassen: Furthermore, we would assume that, without question, you would not have the obligation of providing universal service.
Mr. Bryden: That's right. That'll be done by somebody else.
Mr. Klassen: Right. So you would focus totally on the lucrative, competitive areas.
Mr. Bryden: Exactly.
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Mr. Klassen: I would suggest that with the experience we have in the distribution area - in fact, all these products contribute to overhead - we would be just as competitive as anyone else.
Mr. Bryden: That's music to my ears. So I could look forward to a situation where the government could return to the status quo ante in which the responsibility of the government is only to provide the universal service at a cost. You used the word ``deficit'', but I would say the word ``cost''. You would go out in the marketplace and compete competitively with newspapers and other businesses. You feel you could do this viably and that this would be reasonable. That's the answer.
Mr. Clermont: The government would have to subsidize the -
Mr. Bryden: Oh, that's what I would like to know. Is there a government subsidy hidden here or not? You said a little earlier in your remarks, Mr. Clermont, that when it came to the direct mail business, you're competing fairly and equally in the communities with the local newspapers. Yet you are telling me in the same breath, I think, that there is a subsidy of some kind involved here with respect to infrastructure, with respect to employees who are dealing with the universal service, which is an obligation of the Government of Canada.
Mr. Klassen: I'd just like to be very clear in the response I give you. I said that Canada Post, focusing only on the courier and the ad mail distribution business, and not having the responsibility for an affordable universal letter mail service, would virtually restructure itself totally and could compete on that basis. Obviously, if it had the responsibility to provide letter mail service to all communities at an affordable rate and transfer costs from these competitive services to fund those, it could not do so without subsidy.
Mr. Bryden: I certainly think that would then be a situation where you would be competing in a fully competitive way without any special advantage in the marketplace, because the criticism is constantly that you are using, as Mr. Clermont was suggesting, the same letter carriers who are doing the universal service, which is subsidized by the taxpayer, to carry out the direct mail service.
If I could separate that - and I take it you approve of separating that - you can see yourselves as a private corporation, not a public corporation, engaged in the courier services and the direct mail services, and not engaged in the universal service. If I can persuade my government to go back to the period in which a post office was a post office and not a profit-making centre, would that be okay by you?
Mr. Bourne: I think you're really mixing apples and oranges here. The issue is that with a huge infrastructure across Canada to support the universal access at a universal price, we do not have enough going through this with just the exclusive privilege product, in and of itself, to be able to make money. We are contributing to the overhead of the company in the non-exclusive privilege product.
As Hank said, if we were running just the competitive services, then we would be a very different business, and that, by definition, means that the infrastructure to support the exclusive privilege product could not be sustained.
Mr. Bryden: As it sits now, though, you are competing in the marketplace with the benefit of an exclusive privilege infrastructure.
Mr. Bourne: No, we're not. The costs and the earnings from the competitive products are over and above the variable costs associated with those product services.
Mr. Bryden: Do you mean to say there are no advantages to having post offices and letter carriers and all these other people who are part of the infrastructure of the exclusive privilege? Is that not anywhere in your bottom line?
Mr. Bourne: But the whole essence of the cross-subsidization issue is that we are moving money from the exclusive privilege product and not paying the full way on the competitive products, and we've demonstrated that this is not the case.
Mr. Bryden: Okay, that's fine.
Can I change the line of questioning very quickly?
The Chair: This is your last question.
Mr. Bryden: I looked at your 1995 annual report, and I'm going to follow on from my colleague here with a little observation. You talk about your competitive services in the 1995 annual report and you talk about revenues from these services.
Mr. Bourne: What page are you on?
Mr. Bryden: I'm on page 22: ``Revenue from Operations, Publication Mail, Revenue Declined'', etc., ``Addressed and Unaddressed Mail''.
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I'm not so much interested in revenue. What I'm interested in is profit from these various... How do you decide on the competitive services? Is it possible to actually see this in an annual report? Maybe the actual money you make on the competitive services is in the annual report that's coming up.
Mr. Bourne: No, that's not information we disclose publicly.
Mr. Bryden: But why not?
Mr. Bourne: Because we feel it's commercially sensitive information that would put us at a disadvantage relative to our competitor.
Mr. Bryden: But you're not a private company -
The Chair: Mr. Bryden, your time is up. Finish your point, and this will have to be your last one.
Mr. Bryden: Who are your shareholders?
I'll ask another question. Is that information available to your directors, then?
Mr. Bourne: Yes.
Mr. Bryden: Can your directors give it to me?
Mr. Clermont: No.
The Chair: Thank you, Mr. Bryden.
Mr. Epp.
Mr. Epp: How much time do I have?
The Chair: We are having a five-minute round.
Mr. Epp: I'm going to have to really fly here.
Mr. Bryden, my colleague, called it junk mail. I would be more polite, because that is, after all, your bread and butter, isn't it?
Mr. Clermont: We wouldn't call that junk. Why is there junk mail and no junk television or junk telemarketing?
Mr. Epp: Yes, right on. Let's be fair here.
I'd like to get to my point. I was going to ask that question but he asked it for me. Your board of directors, your chief executive officer, and your other people there know exactly how your costs and how your revenues break down.
I have a question. The information we have from the field is that you are undercutting the costs of other businesses, such as courier businesses and other people who deliver ad mail. Obviously you can claim that your costs are lower because you're going there anyway. I think that's your justification for it. You have your delivery people. They're already driving the route, so if you put on another package for them to carry along, the costs are incrementally almost zero. Is that the way you compute your costs for your own corporate decision-making or do you actually apportion the costs of running the route in proportion to the revenue or in proportion to the volume carried? How do you do that?
Mr. Bourne: We do it on the basis of the effort applied, and what is truly fixed and what is truly variable. In other words, some parts of any activity are fixed and some are variable. So we make it a policy to ensure that all of our prices generate revenue sufficient to more than exceed our variable costs in any given transaction.
Mr. Epp: So when you say ``variable costs'' what do you mean?
Mr. Bourne: Those are the costs that would disappear if we stopped doing that.
Mr. Epp: In other words, you charge only incremental costs.
Mr. Bourne: No, we charge enough to ensure that there is an adequate margin over and above those costs to contribute to the fixed costs of the total company.
Mr. Epp: Looking at your annual report, also on page 22, according to your own figures the number of pieces of addressed and non-addressed mail you're delivering has gone up 9.2%, but your revenue has only gone up 6.8%. Why? Why would your gross revenue not go up in proportion to the number of pieces? As far as I know the cost of moving products has gone down.
Mr. Bourne: What that reflects is some price pressures in the overall marketplace. You made reference earlier to the fact that people are accusing us of undercutting them on their price. I can assure you that we have also lost our fair share of business on price. So there are a number of occasions where competitors are taking prices down below our prices.
In the overall marketplace, prices over the last couple of years have in fact been going down. If you look at the cost of letter mail, the real cost of letter mail has been going down for the last number of years. If you look at it in terms of inflation and real costs, the rate of our deliveries has gone down.
Mr. Epp: But you're not dealing here with inflated dollars. Your numbers from year to year are not cost-price adjusted.
Mr. Bourne: That's right.
Mr. Epp: They are absolute numbers. Therefore, if we're dealing with absolute numbers, you can't claim that.
Mr. Bourne: Prices have deteriorated in some segments of that marketplace.
Mr. Epp: Okay. Now, how do you -
Mr. Bourne: The other thing, of course, is that when you get a product mix that changes and you have addressed ad mail that is going out at a higher price than unaddressed ad mail, and you get a greater proportion of one than the other, then the mix will drive that to a point where it would appear as if prices may have done something different from what the individual prices have done.
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Mr. Epp: Right. My contention is that the cost of stamps went up last year, so the revenue per piece, in absolute -
Mr. Clermont: No, not in the year reported there. The cost of stamps went up -
Mr. Epp: The day after Parliament closed. I remember that too well.
Mr. Clermont: We filed a rate increase a year and half before.
Mr. Epp: Yes, you did, and it was turned down because it couldn't be justified.
Mr. Clermont: So that's not reflected in this.
Mr. Bourne: This is the year ended March 1995.
Mr. Clermont: That year, there was no rate increase.
Mr. Epp: Okay. At any rate, though, your number of pieces went up and your revenue did not go up in the same proportion, because, you're saying, revenue in your competitive areas went down.
Mr. Bourne: Yes, to the extent that we have more pieces of unaddressed ad mail than we do addressed ad mail and one's at a lower price than the other. By definition, as the mix moves it will appear as though the average price is going down when in fact each of the two prices may be going up. So it's very difficult to infer those numbers from -
Mr. Epp: I'd have to really work hard on this, but the way my logical mind works, there is in that statement inherent proof that you're cross-subsidizing - the very fact that your revenues have gone up at a lower rate than what your number of pieces are. I'd have to look at the actual numbers here, because there's a discrepancy there as well, but I won't have time to get into that.
Your costs are up 17%, according to your numbers. They go up from $4.087 billion to$4.774 billion. That's an increase of 17% in costs.
Mr. Clermont: The costs of operation.
Mr. Epp: So your total costs are up 17%, whereas your revenue from this part is only up 9.12%.
Mr. Bourne: There's no linkage there.
Mr. Epp: I think there is, because it's a consolidated statement.
Mr. Bourne: No, there's no linkage on that at all. Among other things, in 1994-95 we had a full consolidated year of Purolator. In 1993-94 we had a partial year of consolidation of Purolator, because the acquisition happened in December. So you're just mixing apples and oranges.
Mr. Epp: Okay.
I have one more quick question. This has to do with the debt. True or false: most of your debt is due to the debt taken over when you purchased the shares for Purolator.
Mr. Bourne: The debt of Purolator is free-standing and is supported on the strength of the Purolator balance sheet. It is not supported by Canada Post. It is completely non-recourse debt to Canada Post.
Mr. Epp: So in terms of the debt that appears in your consolidated statements, do you actually add that to the costs of operating your courier business directly?
Mr. Bourne: It's in the costs of Purolator's business.
Mr. Clermont: It's not ours.
Mr. Bourne: It's not in the Canada Post business, it's in body corporate Purolator.
Mr. Epp: So it's totally Purolator. Without disclosing the numbers, if you include the servicing of that debt in your Purolator operations as well as a good proportion of the operational costs, does Purolator make a profit for you?
Mr. Bourne: Yes. In 1994-95 they contributed at both the operating income and net income levels.
Mr. Epp: Including the cost of the debt.
Mr. Bourne: Yes.
Mr. Clermont: As Ian said, they service their own debt, so much so that this year Purolator had to renew their financing with their lenders. It took almost a year, because we wouldn't move even a finger to indicate we'd help. They are free-standing. It would have been very simple to provide a letter of comfort, but even that we did not provide.
Mr. Epp: Madam Chair, you've been kind to me. I will pass to the next person.
The Chair: Actually, I was in error. You did have ten minutes. That's why I stretched the five minutes.
Mr. Epp: I thought you were just being kind to me. I can carry on, then.
The Chair: Yes. We're still on our ten-minute round.
Mr. Epp: Looking into the future, when can we expect Canada Post to make application for the next increase in the price of first class mail? When is the price next going up from 45¢ plus GST?
Mr. Clermont: In a couple of weeks the minister responsible will file the annual report for the year just ended and the corporate plan for the next year. There are no plans for a rate increase at this point.
Mr. Epp: So we're not going to have the same scene we had last year, where the rate was announced -
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Mr. Clermont: No, the year before last, sir, was when we published an increase.
Mr. Epp: At my age, the years run together.
Mr. Clermont: The government then did not accept it until last year, when it was accepted as of August 1, I think.
Mr. Epp: To conclude, Madam Chairman - and I am in my last 30 seconds - I would like to simply have the record show that I, on behalf of the taxpayers in my constituency, object to the government monopoly mail system being able to continue to show consolidated figures without dividing out the part in which they're competitive. I want the record to clearly show that. We will continue to fight - and I don't know exactly what we're going to have to do - to get Canada Post to start disclosing their true costs and true revenues in their various departments.
With that, I close. Thank you.
The Chair: Thank you, Mr. Epp.
We have a few minutes remaining. Mr. Cullen followed by a quick question of clarification from Mr. Bryden.
Mr. Cullen (Etobicoke North): Thank you, Madam Chair, for giving me an opportunity to speak. I'm not a full-time member of the committee, so I appreciate that. I'll make this short.
Mr. Clermont, gentlemen, from where I sit, first of all, I think Canada Post is to be congratulated for the improvements over the last few years in terms of customer service - setting the standards, monitoring them and meeting them. I think there has been an enormous improvement.
As well, I think from a customer service perspective franchising operations has given added value and been a really positive step.
I'm glad my colleague agrees.
The Chair: It's unanimous.
Mr. Epp: We get very few complaints from our constituents on post office service.
Mr. Cullen: Right.
My question has to do with the franchising operations. Frankly, I have a problem that's been gurgling away in the riding for some years. I spoke with your director of franchising not too long ago, and he was very helpful. But in terms of your philosophy and your business practice related to new franchise operations, I can understand from a business point of view... For example, do you put into new franchise agreements restraint of trade, that if I'm going to open up a McDonald's or something, I'll have in my agreement that another operation cannot open up within five kilometres and so on?
There's a large seniors group in my riding and a major drugstore that wants to open up a new franchise. I guess it's being blocked, in a sense - and maybe that's the wrong word - out of concern about other franchisees.
If you've been successful in not putting in restraint of trade into the agreements, I take my hat off to you. If you haven't, then what would preclude a private sector operation of some substance saying they believe they can make it work? Why would that be blocked, effectively?
Mr. Clermont: I would have to look at that particular situation - and I will, certainly, sir. The fact is, when someone buys a franchise from us, the franchisee puts in I think $100,000. He's committed to put a lot of money up front in a counter, in hardware, in software, etc. So he or she of course expects that we will not dilute his or her potential earnings by opening around them. There's a very sophisticated system called ``locational analysis'', which tells you where this office should be. So we do have some restrictions on openings in the area, but sometimes the market forces change.
I'm sure we will look into this, sir, on your behalf. I'll ask Mr. Tessier to take a note.
Mr. Cullen: Thank you.
The Chair: Thanks, Mr. Cullen.
Mr. Bryden, do you think we can be out of here by 5 p.m.?
Mr. Bryden: I'll do my very best.
I don't think I explained myself very well in the earlier rounds. Let me just come back to it. Am I to understand from what you said earlier that it is your opinion, it's your feeling or your knowledge, that the fact that you have exclusive privilege gives Canada Post no competitive advantage in the marketplace whatsoever in the competitive services of courier, parcel delivery and direct mail services? The fact that you have exclusive privilege is not a factor in your competitive position here. Is that my understanding?
Mr. Clermont: Yes, because we make sure, as I think Ian Bourne explained, that every competitive product contributes to -
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Mr. Bryden: So if the little newspapers or anyone else competing with you in direct mail services is suffering or you are gaining ground, it has nothing to do with your exclusive privilege, nothing at all.
Mr. Clermont: No, it's just our savoir faire.
One thing I would say, Mr. Bryden, is that much is made of the exclusive privilege or the monopoly. I made the comment earlier that it wasn't worth the paper it's written on, and it's a fact. In this day and age there isn't much that cannot go other ways.
We have to demonstrate, and good marketers realize that... Maybe the job is no less than good marketers, where you have a super marketing organization. We have to demonstrate to people the value of mail. It is very simple to send a message on the Internet or e-mail, but is the value at the receiving end the same when you read something on a screen as when you have a paper or a cheque with a bar and maple leaf? Is it better than a notice from the bank that the Government of Canada has put some money in your bank account? There is a message.
But the fact is that a lot of the material we transfer could be moved through other means, through private distributors for that matter. The monopoly is not what it once was.
Mr. Bryden: Yes, I can appreciate that.
You're a special type of corporation because you are a crown corporation as opposed to other types of corporations. The mechanisms of accountability have always puzzled me in such an exceptional circumstance as a crown corporation. Is there any way that I, on behalf of my constituents, can satisfy myself that Canada Post is not competing unfairly in the area of junk mail? Is there anyone who can come in and look at your books?
Mr. Clermont: The bureau of competition. We are subject -
Mr. Bryden: Okay, that's fair enough. Has the bureau of competition come in and actually examined that? So I could request it?
Mr. Clermont: We are subject to the laws of the land in our commercial activities, even as a crown corporation. This was a Supreme Court decision many years ago.
Mr. Bryden: That's great. Thank you for that reply.
Cabinet has decided to divest itself of the Canada Communications Group, and you know it's been a complicated business of selling parts of it that are competitive and retaining parts of it that are necessary. This is a little speculative, so take it as you will, but is this an avenue that could be followed with respect to Canada Post? Are there sufficient parallels to make the same thing possible? You are a very big organization and there are many similarities between you and the Canada Communications Group.
Mr. Clermont: I would not venture to comment on this, but I don't think the CCG touched every Canadian's life every day, five days a week, as we do.
Mr. Bryden: You could retain the post offices, just as you're retaining the Canada Gazette and things like that. You can retain things. The formula for the divestiture of the Canada Communications Group is to retain those things that are in the broad and deep public interest. I certainly wouldn't propose closing post offices where I can wave the Canadian flag, but there are a lot of other things you're doing that perhaps we could give away - not give away, sell.
Mr. Clermont: I'm not the policy maker, sir.
Mr. Bryden: I suppose I am, but it's hard to get a hearing sometimes.
I take it you have no objection to this committee seeing Mr. Radwanski's report when it's tabled.
Mr. Clermont: The report is not mine. The report is made for the minister.
Mr. Bryden: But you would have no objection, I'm sure, at least -
The Chair: I believe the minister already answered that question, Mr. Bryden.
I would like to thank all of you for providing very useful insights. I think under your leadership we can expect that Canada Post can deliver more than mail. Thank you very much, and thank you for indulging us.
Mr. Clermont: I appreciate the good comments that were made on Canada Post. Every week of the year there is a delegation, someone from a foreign country coming to Ottawa to see the technology we have developed in Canada Post. We are, I'm glad to say, cited as a model of technology and efficiency around the world in postal administration. It would be our pleasure to greet any member of the committee at the national control centre.
The Chair: Thank you very much. Mr. Epp.
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Mr. Epp: I may be out of turn here, but I really enjoyed that same display of the technology and the way they track mail movement and everything. I'm a bit of a ``techno-nut'' so I enjoyed it, but I would encourage the other committees, with your permission, to ask for an invitation to get down to the Canada Post headquarters. It is very interesting and I think very useful.
The Chair: Thank you, Mr. Epp. Your comments are very welcome.
Mr. Clermont: There is a standing invitation for the standing committee.
The Chair: Thank you very much. Mr. Fillion.
[Translation]
Mr. Fillion: With regard to stamp collecting, you hold exhibitions all over and I believe that the highest percentage of people who are interested in them live in Quebec. But we rarely see these exhibitions. Are you responsible for them?
Mr. Clermont: No, but one will be held in Toronto next week. We are not responsible for it, the Royal Philatelic Society of Canada is. We are participating because we put out stamps in Canada, but the Royal Philatelic Society is the one that...
Mr. Fillion: You are not in charge of these exhibitions?
Mr. Clermont: No.
Mr. Fillion: We will enquire elsewhere.
[English]
The Chair: You can see that we want to keep you here forever, but I know your time is pressing, so thank you for indulging us.
The meeting is adjourned.