NRGO Committee Meeting

STANDING COMMITTEE ON NATURAL RESOURCES AND GOVERNMENT OPERATIONS

COMITÉ PERMANENT DES RESSOURCES NATURELLES ET DES OPÉRATIONS GOUVERNEMENTALES

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, October 29, 1998

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[English]

The Chairman (Mr. Brent St. Denis (Algoma—Manitoulin, Lib.)): Good morning, colleagues. It's my pleasure to call to order this Thursday, October 29, meeting of the Standing Committee on Natural Resources and Government Operations.

I'm pleased to welcome witnesses from Canada Post Corporation: Mr. Georges Clermont, president and chief executive officer; and Michel Tremblay, vice-president of retail business.

Thank you for being here.

Is Allan Bisback here as well? Allan is general manager, retail business.

Before I invite our witnesses to say a few words, with your indulgence I'll take 30 seconds here just to mention that our colleague, John Duncan, has brought it to my attention that a group of representatives from the forestry industry, both companies and unions, working cooperatively, would like to talk to us about the European issue.

Unless I hear major objections—and I think it would be very helpful to us in our pursuit of an issue that we discussed at our future business meeting, but I would like to leave it now to members to let me know whether that's a good idea or a bad idea—then notionally, if there are no objections, November 26 we'll plan to have that group before our committee.

Is that sufficient, John, at this point?

Mr. John Duncan (Vancouver Island North, Ref.): The only thing I would add to that is that they want to discuss the European and American boycott initiatives. This is to do with preservation groups protesting in the European and American markets against the importation of forest products from B.C.'s west coast.

The Chairman: John, with your indulgence, maybe we'll leave it at that. If I don't hear objections from committee members over the next few days, we would just simply proceed with that on the 26th. if you want to brief us more at a future meeting—because we have witnesses here—I'd invite you to do so, if that's okay.

Mr. John Duncan: Yes.

The Chairman: Second, on the franchisees, we've talked to them, and if Bill C-41 doesn't come up on Tuesday, we'll try to slot them in on Tuesday. Failing that, we'll try to do them as soon as we can after that.

With that, Mr. Clermont, I invite you to open with a few remarks and then we will start our questions from there.

Mr. Georges C. Clermont (President and Chief Executive Officer, Canada Post Corporation): Thank you, Mr. Chairman, and hon. members.

We are indeed very pleased to have an opportunity to discuss some of the important issues surrounding our retail renewal program. Our mission at Canada Post is to provide all Canadians with affordable universal service, no matter where they live. This is a very challenging mandate indeed in operational terms and in terms of ensuring that the postal network does not become a burden on taxpayers.

When Canada Post first became a crown corporation, in 1981, we were losing hundreds of millions of dollars every year. Reversing this situation took enormous effort, but by 1988 the corporation succeeded in recording its first profit.

In the 10 years since, we have managed to improve service and meet the ever-growing needs of every Canadian, all without any financial support from taxpayers.

[Translation]

Continuing this success requires that we constantly look at how our business is changing and—where necessary—to make changes to how we do things. Our retail network is one such area.

It has been over 10 years since we introduced the first franchised retail postal outlet in Canada. There is no question that postal franchising has been successful in extending the reach and scope of Canada's postal network.

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It has also benefited our franchise partners, who have been able to use the presence of a postal outlet in their host business to attract more customer traffic for that business.

But the simple fact is that our original model—while very good at the time—hasn't kept pace with changes in the retail sector, nor with the evolution of our business over the past decade.

Ten years ago, the franchising formula was untested and it was difficult to get businesses interested: thus the high discounts. Today, we receive more requests for franchises than we can accommodate.

[English]

Canadians need a postal network that allows them to find an outlet easily, that is accessible during convenient hours, and that has all of the features of a modern retail operation. Our retail renewal plans will provide just this.

In addition, the changes we are making to the franchise compensation structure are necessary to: first, protect the revenue of the majority of our dealers: second, eliminate the incentive that currently encourages some operators to sell stamps outside of their territories and allows them to give special discounts to friends or business associates, discounts that aren't available to the general public: and finally, and more importantly, ensure that Canadian postal users do not subsidize the franchise network.

Our franchise operators are successful business people who ran well-established, thriving businesses before they ever had a postal franchise. We certainly want that success to continue, but it cannot rely only on revenues from selling stamps.

I know some of you will have heard from private postal operators in your riding who have raised legitimate concerns about how these changes will affect them. We are talking with these people directly, explaining the program and in most cases allaying their concerns.

[Translation]

But the simple fact is that we face a number of important challenges that require Canada Post to make changes to how we have done things in the past. This goes from our labour agreements, to our involvement in new lines of business and, yes, to how we structure compensation to our franchise partners.

If we are allowed to change with the times, I am confident that we can continue to meet the needs of all Canadians and continue to fulfil our mandate into the next century.

I will now turn to Michel Tremblay to provide you with the details of the program.

[English]

Mr. Michel Tremblay (Vice-President, Retail Business, Canada Post Corporation): Thank you, Georges.

Thank you for the opportunity to address this important issue with you. I know you are very busy, and I will take just a few minutes to give you an overview of the program in summary. This will allow you ample time to ask questions and clarifications on this program.

Canada Post values its private dealer network. The retail renewal program we're implementing is focused on ensuring the long-term viability and fairness of the dealer network.

[Translation]

Our renewal program is part of a continuous process over the past 10 years. Ten years ago, we introduced a franchise program to which we have made no major changes since that time. Our intention is to equip our dealers with new technology that will enable them to meet customer needs and enhance their image and to make it consistent and uniform across the network, as well as give our partners growth opportunities in a number of areas.

It is also important that Canada Post inject a certain amount of fairness into its system as a whole right across Canada. I would simply like to remind you that this change in the program's compensation method will apply only to urban dealerships and that in no case will the rural network be affected by these changes.

[English]

Since January 1997, at numerous meetings with our dealers they have consistently told us about the need to address the issue. Our dealers have requested a minimum base revenue. Our dealers have also told us there were inadequate fee structures to provide a number of services. As well, and most importantly, they have asked us to make the system equitable, fair; high-volume dealers have a disproportionately high income.

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I invite you to look at the graph on the screen right now. The current situation gives us a situation like this one. There are several dealers who are below the break-even point. The distribution of this network is something we wanted to cure.

Some of the larger-volume dealers, illustrated at the top of the chart, are discounting and reselling, having an impact on the other outlets in their region. This is not fair. What we've wanted to do, and will implement with this program, is to take the bottom portion of this distribution, see these dealers treated fairly, and bring them above the break-even level.

The proposed situation gives us the following distribution. It is very clear that the ones that are impacted at the bottom are now in a much better financial situation than they were before. I have to admit, some of the people who were at the high end of the distribution are being affected by this. I also have to tell you that we're not too much concerned about people who are making $1 million, $1.5 million and sometimes $2 million of revenue in those situations.

We want to tell you again, we want this system to be fair for everyone. The fact that 17.5% commission was on the table allowed abuse of the system. Let me explain to you what this looked like and how it happened.

Originally, we had designed a program that would confer selling territories to our franchisees. Some in these territories varied in income, but generally speaking, they were from anywhere around $250,000 to $500,000. The 17.5% discount allowed some of the abuse, for some of the operators to go outside their territories and earn larger revenues from that activity. The reason we're trying to curtail this is to prevent some of these dealers from abusing the system, against the other ones, who are seeing their revenues decrease dramatically.

Another effect of this situation is the fact that Canadians can now buy stamps at a price cheaper than other Canadians, depending on who they know.

[Translation]

We believe this practice is unacceptable. If you know someone who can give you a discount on the price of stamps, you can buy your stamps for 42 cents or even 40 cents, whereas most Canadians who buy them for their personal use must currently pay the full price, 45 cents.

I would like to conclude by saying that some of the changes we are making to the system will not apply until the agreement is renewed. This will be done as the agreements expire over the next few years. We will not require anyone to comply with a new agreement or purchase new equipment or new signage.

However, as in a number of other sectors such as government or commercial operations, some of our high-volume dealers will have to update equipment that cannot address the year 2000 problem. Our equipment, like that in several other sectors, is Y2K compatible. We have also designed an affordable rental arrangement for these people.

For those who may have heard that we have not consulted our dealers over the past few months, allow me to remind you that this program was announced to all our dealers last April. Each of our dealers was met personally, or at least received documentation outlining the entire program. Since then, the transition has been made, and we are currently meeting, on a one-to-one basis, all our Canadian dealers who are having difficulty as a result of these changes.

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Our objective is to treat all our dealers fairly and equitably and, in certain instances, to reduce the operations of some dealers whom the 17.5 percent commissions enabled to carry out all kinds of illegal activities.

It is important for us to re-establish the balance that has been destroyed over the years in our franchise system. We believe this fairness must be re-established across the system as a whole, precisely because we are convinced our franchise system is important for Canada Post and for the Canadian public.

We will now be pleased to answer any questions you may have.

[English]

The Chairman: Thank you to you both for your opening remarks.

By way of past practice, for those new members of the committee, yes, I ask you to indicate to me your interest. We'll start with the official opposition and go back and forth. By the end of the meeting, everybody will have had their fair opportunity.

We'll start with Werner.

Mr. Werner Schmidt (Kelowna, Ref.): Thank you very much, Mr. Chairman.

First of all, may I express my appreciation to Mr. Clermont, Mr. Tremblay and Mr. Bisback for appearing here. I'm happy to recognize that you're here, and your opportunity to come and appear before us.

I also want to express appreciation for your desire to treat the franchisees fairly and equitably across Canada.

I notice in one of your remarks, Mr. Tremblay, that you said there's active consultation taking place, and that indeed this happened in April and is happening now.

The question I have for you is, what does “consultation” mean, in your mind? Because these people admit they have been talked to, but they have not been asked what they thought, and neither were they given any opportunity to express their position. They were simply told, “This is the program, and this is what's going to happen”—even today, in the consultations that are going on now.

I've talked to several of these people who have been consulted, and the consultation is a one-way step: Nothing will change, and we are here to tell you what the program is.

Now, is that consultation, in your mind?

Mr. Michel Tremblay: The consultation is taking place to make sure that everyone understands and sees and realizes the impact on their own business activities.

We are hearing from, and you are hearing from, those affected by this program to a large extent. In many cases, these people, we know for a fact, have been resellers and discounters for a long period of time.

As I said before, I'm not too much concerned by people who've been earning $1 million and $2 million.

Mr. Werner Schmidt: With all due respect, that's not who I'm hearing from. I am hearing from the small sellers, the small franchise owners. It's not the big ones I've had complaints from. It's the people who are selling $300,000 or less, and perhaps slightly more than $300,000, but none of those who are making $1 million. I've not heard one complaint from these people whatsoever. It's small mom-and-pop operations I've heard from.

The most recent one is a very small operator, who has said, look, I was not consulted, at least not what I thought was consultation. They were simply told, “This is what's going to happen”.

I have an affidavit here as well that's telling me—in fact, it's sworn before legal counsel—that in fact not only were they not consulted with, but they were forced, or coerced, or told, look, your contract is over unless you sign this letter of intent.

Or at least that's what they're telling me. That's not consultation.

So I really have to ask you, in your mind, what does consultation mean?

Mr. Michel Tremblay: The intent of that letter was not to force or to drag anybody into this program. The intention was to find out what these people wanted to do in the future as we roll this program along.

What we are trying to do, Mr. Schmidt, right now, is listen to these people. Of course we're making our presentations. We're presenting our program and trying to make them understand what we're trying to reach.

At the end of this consultation, or of this “presentation” period, if you'd rather use this word, we know very well who is going to be losing, losing very much, or losing very little of this. It's also our intention to review these situations one by one.

We have not set up a forum for these people to come as a group simply because these are individual contracts between operators and us, and we are respecting this kind of operation.

We do not want to put anybody out of business—it is not the intent—but we want to curtail the activity that has been taking place. And this is our intention as well. We will look after the small people, there's no doubt.

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Mr. Werner Schmidt: I think that's very admirable, and I fully support that. I'm not here either to defend or even to protect those who are abusing the provisions of the current contract. That isn't the issue here. The issue here is to look after those who are in very serious trouble right now, and these are the people who are complaining.

Even after your current round of consultations, they are saying, look, we are not being listened to; it seems as though Canada Post doesn't want to know that we're losing money, and they don't believe we're losing money.

How can the message come through in this consultation process, that they are in fact in trouble, and what are you prepared to do about it?

Mr. Michel Tremblay: Mr. Schmidt, Canada Post is an institution that will respect its mandate and wants to have the retail network franchise group working adequately. We will take every possible step to make sure these small people are listened to and taken care of.

In some cases, we know the program was intended not as a highly profitable operation in that part of their business. This program was designed to be an add-on to an existing, solid host business, generating extra traffic for their businesses. It has happened over the last 10 years that some of these host businesses have degenerated, and they're not what they used to be.

There's possibly a limitation to what we can do to help these people, but I can assure you, we're not trying to put anybody out of business, and we will look into each and every one of these cases and try to accommodate for the duration of their contract.

Mr. Werner Schmidt: At the moment, I think you're saying, those who sell between $299,000 and less will have a cash infusion of about $6,000, and those selling $300,000 or more will have a cash infusion of $25,000.

Now, some of these people below $300,000 will lose more than $6,000, and some of those in between $299,000 and $300,000 don't need $25,000.

Are you prepared, then, to adjust the amount of money they will get on an annual basis to reflect the lack of profit, or even a break-even? So would you give some of these people more than $6,000 and some of the others less than $25,000?

Mr. Michel Tremblay: We're prepared to consider this in individual situations, but there has to be a rule. We should not be considering this too arbitrarily in one instance, and we should also take care of the people who are particularly impacted.

I can assure you, we will do all possible not to drive anybody out of business and cause losses of jobs. And we're prepared to consider your suggestion.

Mr. Werner Schmidt: Thank you.

The Chairman: Werner, thank you very much. We can come back to you after, if we need to.

Next, Roy Cullen, and then we'll go to Ghislain.

[Translation]

Mr. Roy Cullen (Etobicoke-North, Lib.): Thank you very much, Mr. Chairman, and welcome Messrs. Clermont, Tremblay and Bisback. I want to thank you for announcing a change in the effective date of the new system. It's very much appreciated.

[English]

I have, Mr. Chairman, three questions to start with. Maybe we'll have another round.

Monsieur Tremblay, you said in your presentation that these changes are reacting to dealer concerns for changes in the minimum-base revenue, providing services, etc.

The Association of Canadian Postal Franchisees presumably represents a broad range of franchisees. When we speak with them next week, or whenever it is, does that mean they're going to be endorsing these changes, if you're responding to their concerns?

Mr. Michel Tremblay: To answer your question, Mr. Cullen, we've all heard about the association, but honestly, we just don't know who they are. At this point in time, we don't know exactly how many people they represent. We don't know if anybody has been appointed to a board of directors and an executive from the franchisees. All we know is that there's a paid lobbyist right now who is sort of putting this thing together.

Never has this association communicated with Canada Post. Never has this association asked for meetings. Never has this association asked to discuss such matters.

This is where we're standing right now with the association.

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Mr. Roy Cullen: You were at a meeting I was at not too long ago, and you outlined this proposition. The way you presented it, and I think the way you're presenting it today, is that a vast majority of franchisees, whatever the number, will be better off under this new system.

I took your remarks to heart. I have three franchisees in my riding. I thought, well, let's do a statistical sample, and I phoned them. Maybe we're outside the bell curve in my riding of Etobicoke North, and maybe we're unusual, but all three said this new system would work against them.

I got into discussions with some of them, one in particular. I said, look, what about this discounting of stamps—that's a concern—and high revenue levels? I have a concern that if we're going after high revenue levels, then maybe we're penalizing people who are successful.

This franchisee told me that in my riding— and it's very multicultural; they have a huge volume of packages that go overseas. Now, I don't know what to believe. You're saying that roughly 70% of the franchisees should be better off, but by the same token, in my riding they're telling me that's not the case.

I'm not sure that they're giving me all the straight goods, but by the same token, when you say this is going to move the playing field and make it more equal, does that mean there's no bottom-line impact on Canada Post? Will this create more profits for Canada Post or not?

Mr. Michel Tremblay: To answer the first part of your question, I cannot say if your sample was right or not. I just can't correlate this to the curve. But what I can do is invite you and every member of this committee to contact my colleagues and I, and it will be our pleasure to discuss, confidentially, each individual matter from your ridings. We're ready to do that, and would be very happy to do so.

With regard to the bottom line—

Mr. Georges Clermont: I'll take that.

Mr. Michel Tremblay: Sure.

Mr. Georges Clermont: There's no question that this is also designed to help our bottom line. As you know, I'm sure, we have a mandate to earn a rate of return on the investment that Canadians have put in Canada Post. We're not there yet, although, as I indicated in my opening remarks, we've not used taxpayers' money for ten years, and we've generated operating profits for the last six years. Still, it's at a very low level.

So there is improvement, but whatever we benefit from this or other programs in turn benefits the postal users, because every consumer has to pay 45¢ for a stamp. I don't think it's fair that these postal users, you and I and all around us here, help out some businesses that perhaps were not running very well to start with, because the postal franchise is always an add-on to a business. It is never a business in itself. It could never become a business in itself unless in a very major centre, in a central location.

I don't think we should ask every Canadian to subsidize or help bail out some businesses that perhaps were in the wrong place or not efficiently run.

Mr. Roy Cullen: So just to clarify, then, it's not exclusively a matter of shifting the profitability of the franchises; there is some benefit to Canada Post. I just want to have it clear in my mind.

Mr. Georges Clermont: The reselling hurts the smaller franchise, but it also hurts us, because it's stamps we would sell at 45¢.

Mr. Roy Cullen: Yes.

One thing that confuses me, Mr. Tremblay and Mr. Clermont, is that normally in a franchise arrangement—and let's use the classic one that everyone uses, McDonald's—you'll have a franchise agreement. You won't find a McDonald's franchise in Canada selling burgers at a price that's different from what they've agreed to as part of their deal. If they started doing that in a big way, they'd have their franchise lifted, just like that, for something serious.

It seems to me that if you're trying to deal with a problem, and if there are some franchisees that are discounting in other markets—and I agree that's an issue—is there no way that can be policed and those franchises lifted? I don't understand why we can't deal with it that way.

Mr. Michel Tremblay: Maybe I can answer this question, Mr. Cullen.

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We have indeed in the past, on several occasions, literally gone after some of these high-volume resellers and discounters. After lengthy legal procedures, and costly legal procedures, we've been able to obtain justice. These people were extracted from the system. But the fact that there's a 17.5% margin on the table works so well that two months later, we were facing the same problem once again in that same district.

This is an experience we've had in the Montreal area as well as other places in Canada.

So we've done that. We've been there. We've tried it. The problem is inherent to the large discount structure that allows all these activities to take place. We've done it.

The Chairman: Thank you, Roy.

We'll go to Ghislain and then Carolyn.

[Translation]

Mr. Ghislain Lebel (Chambly, BQ): Your remarks here this morning are a surprise to me, gentlemen. I feel as though I'm talking to the Robin Hood of franchisees. You come here claiming that you're now going to make your dealers perfectly happy through changes to their dealership contracts.

But isn't your main goal at Canada Post Corporation to make money, more and more money? I have trouble understanding the message of your presentation this morning. I would like you to enlighten me on that, but this won't be my only question.

Mr. Georges Clermont: As I explained to Mr. Cullen, we definitely have a twofold objective. We must re-establish fairness in the dealer system; some are making too much money, others not enough. The goal is to prevent reselling.

Second, as for making more and more money, that's not quite the issue: the idea is to make enough profits so that we can invest in the corporation to establish new systems and maintain the postal rate at a present or future level that is one of the lowest in the world or at least in the Western world. All postal users, Mr. and Mrs. Everyone, are benefiting from it.

Mr. Ghislain Lebel: You know, I buy stamps, but I've never been offered stamps at below-market prices. My colleague tells me the same thing.

Mr. Georges Clermont: That's because you don't know where to go. There are plenty of them.

Mr. Ghislain Lebel: There's one thing I don't understand. You talk about consultation, but you remind me of my mother when she consulted me before making me take castor oil.

Some hon. members: Oh, oh!

Mr. Ghislain Lebel: My impression is that you sent them a letter telling them that this was the way things were going to be. You noticed that some might be making too much money for your taste. You thought it was unfortunate that the money that was going into the dealers' pockets wasn't going into those of Canada Post Corporation.

If that's what you were telling us, I would be inclined to believe you, but when you tell me you want to re-establish fairness among dealers because some are making too much money and others not enough— You're proposing that they— What am I saying? You're shoving new computer equipment down their throats because of the year 2000 bug, equipment they'll have to pay for themselves, since you're reducing their commissions from 17.5 percent to—

Mr. Georges Clermont: To five percent.

Mr. Ghislain Lebel: To five percent. You're doing that to be fair because you love everybody. Come off it— We're not children. Tell us the truth. You want to make millions of dollars and you feel they're making too much, based on your forecasts. That's what's bothering you. Tell us that and we'll understand.

Mr. Georges Clermont: Both factors are involved, sir.

Mr. Ghislain Lebel: You were quite silent about that in your presentation.

An hon. member: Bravo!

Mr. Georges Clermont: I didn't talk about it at all, but there's no doubt about it. You saw the distribution in the table and the crosses marked on it.

Mr. Ghislain Lebel: Yes. I was told by them, at one point— When there was a post office for sale and a number of businessmen in the area wanted to buy it, I called Canada Post to see whether it was in fact for sale and if they were proceeding by bids or in another way. I was told it was none of my business and that if they wanted to give it away, they would do so, because they were an independent corporation managing their own business. They added that, as long as they had a little profit to show at the end of the year, the government was happy and didn't ask any questions. That's the attitude that prevails at Canada Post. I know because my mother spent her life working at the Post Office.

We have people in our ridings, Liberal ridings, and members from all parties, people who have invested, who have signed long- term leases at shopping centres of various sizes. Their leases expire and the post office puts a knife to their throats, pretending to be Robin Hood. They're told their commissions will now be five percent instead of 17.5 percent and that they have to invest $10,000 and do this and that, all because they've heard some guy is going around the countryside selling cut-rate stamps.

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You could include a clause in your dealership contract prohibiting—

Mr. Georges Clermont: It's there.

Mr. Ghislain Lebel: A clause with dates.

Mr. Georges Clermont: It's there.

Mr. Ghislain Lebel: Well, enforce it instead of penalizing the others.

Mr. Georges Clermont: That's what Mr. Tremblay explained: enforcing is easier said than done. Court cases drag on for years.

Mr. Ghislain Lebel: In any case, you won't have my support for this plan, based on the way it's been introduced.

Tell me you want to increase the profits of Canada Post Corporation, which very much needs higher profits, and I might believe you, but don't try to make us believe you've come here to save your poor dealers, some of whom are in trouble, or that you're here for their financial, emotional and moral well-being. I'm not fooled. Thank you.

[English]

The Chairman: Any comment?

[Translation]

Mr. Georges Clermont: I don't believe that was a question.

[English]

The Chairman: It speaks for itself.

Merçi, Ghislain, and welcome to the committee. You're starting with a flourish.

Carolyn and then Gilles.

Ms. Carolyn Parrish (Mississauga Centre, Lib.): Well, everybody has thanked you for coming, but I am going to be very rude and tell you that you guys do a great job running the post office but you do a lousy job doing presentations.

I'm going to walk you through this. I want short answers so that it will clarify things for people. I've been through this presentation three times, and I know you're doing the right thing. My job here is to convince everybody else, I guess, because you haven't done it.

One of the things you talk about is people dipping into other franchise areas. One of the reasons you've taken the profitability or the profit margin from 17% on stamps and moved it down is that it's not a labour-intensive process.

Mr. Michel Tremblay: Well, it's partly—

Ms. Carolyn Parrish: Yes or no?

Mr. Michel Tremblay: Yes. It's not a labour-related—

Ms. Carolyn Parrish: You have tripled the fees you're paying for handling packages and doing labour-intensive jobs, have you not? Yes or no?

Mr. Michel Tremblay: Yes.

Ms. Carolyn Parrish: So one of the reasons you've given, and that we seem to be belabouring, is that we're trying to stop the crooks from selling outside their areas. I understand that. But what you're also trying to do is give money for labour-intensive services and you're cutting back on a very snappy little thing, which is to hand over a pack of stamps. Correct?

Mr. Michel Tremblay: Absolutely right.

Ms. Carolyn Parrish: I really wish you'd make that point when you do this presentation for the 43rd time.

Mr. Michel Tremblay: We will.

Ms. Carolyn Parrish: The other thing you haven't stressed enough is that this is not a sole-source business. You have to have a healthy business. You investigate carefully when people apply, and this is only supposed to increase their walk-in traffic by 12%. Correct?

Mr. Michel Tremblay: As much as 15%, in some cases.

Ms. Carolyn Parrish: But no more. It's not supposed to triple the volume of business they do.

Mr. Michel Tremblay: Right.

Ms. Carolyn Parrish: So if somebody is depending on this for bread and butter, they're in the wrong business.

Mr. Michel Tremblay: Wrong.

Ms. Carolyn Parrish: No, “right”. Say “right”.

Mr. Michel Tremblay: Well, it's a “right”, but they're in the wrong business.

Ms. Carolyn Parrish: Mr. Tremblay, even when I'm wrong, say “right”.

Voices: Oh, oh.

Ms. Carolyn Parrish: I'm on your side.

Mr. Michel Tremblay: I'll do that.

Ms. Carolyn Parrish: Okay.

With regard to the base fee that Werner talked about—and I get very nervous on this—you've said that you give a franchise and it's based on a certain volume; $300,000 to $500,000 is a typical franchise.

I've also heard from the minister that this base fee, which you've never paid before, of $6,000 to $25,000 will be based on the expected volume of the franchise.

Mr. Michel Tremblay: Yes.

Ms. Carolyn Parrish: So if Werner says to you, “This guy's losing tons of money”, that's really not your problem. If he's supposed to have a certain volume, then he fits in the category of the $6,000, and it's graduated up to $25,000.

Is that not right?

Mr. Michel Tremblay: Right.

Ms. Carolyn Parrish: It's not just $6,000 or $25,000.

Mr. Georges Clermont: No.

Ms. Carolyn Parrish: It's graduated.

Mr. Michel Tremblay: We'll consider that, yes.

Mr. Werner Schmidt: That's what exists at the present time, but it was either/or, was it not?

Mr. Michel Tremblay: You're right.

Ms. Carolyn Parrish: But it's been changed.

Mr. Michel Tremblay: And we're considering, right now, graduating it.

Mr. Werner Schmidt: Well, if you're considering it, that's not change. Is it changed?

Mr. Michel Tremblay: We will change it.

Mr. Werner Schmidt: Thank you.

Ms. Carolyn Parrish: Werner, I know it's changed.

Anyway, I'm not finished, Mr. Chairman, and you're not supposed to let him interrupt.

The Chairman: Oh, no, I was going to ask Werner just to let Carolyn finish.

Ms. Carolyn Parrish: Okay.

I did the same thing Mr. Cullen did—called one of my franchisees, who's really complaining. She explained to me that when she bought her pharmacy, she had to pay the former pharmacy owner, above and beyond the goodwill on the pharmacy, $250,000 goodwill on the little postal franchise.

Mr. Michel Tremblay: She was had.

Ms. Carolyn Parrish: She was had. And she's not the only one. There are hundreds of people out there turning this into a million-dollar business. It's not fair to you.

• 1140

In the small town of Caledon, one of them went in there and said, “Don't use your postal meter any more. We'll pick up all your letters once a day, lick and stick stamps, and we'll do it for 40¢ a stamp instead of 45¢”.

Is that not correct?

Mr. Georges Clermont: Yes.

Mr. Michel Tremblay: Yes.

Ms. Carolyn Parrish: So you have a horrible problem out there.

Let's get back to the original reason you changed it—because you should be able to police that; you should charge those people; you should arrest those people; you should do all those things. You're paying more for labour-intensive work and less for non-labour-intensive work.

Mr. Michel Tremblay: Yes.

Ms. Carolyn Parrish: And you are consulting with everyone. Association House's Jean-Paul Sirois is really a lobbyist. He doesn't own a postal station.

Mr. Michel Tremblay: Not to our knowledge, no.

Ms. Carolyn Parrish: All right.

I may come back again, Brent, if you will allow me—or if Werner will allow me.

The Chairman: Thank you, Carolyn.

Gilles, then I have Marlene, Werner, and Jocelyne.

Mr. Gilles Bernier (Tobique—Mactaquac, PC): Thank you, Mr. Chairman.

Carolyn, did you ever pass your bar test?

Voices: Oh, oh.

Ms. Carolyn Parrish: I passed my LSAT, but—

Mr. Gilles Bernier: I want to thank Mr. Clermont, Mr. Tremblay, and Mr. Bisback for coming before this committee this morning.

I like to play with numbers. I'm a businessman, and I've been in business for 20 years, operating a little convenience store, where some of those out-of-store franchisees are. I'm not one of them, although I had a similar problem in the province of New Brunswick with N.B. Power. I really feel it's all for big corporations and nothing for us.

I'll come to the numbers. If you will remember, during the strike of last year Canada Post claimed they were losing $17 million a day. That's according to what the minister said publicly. The strike lasted some 10 days. That means Canada Post would have lost $170 million.

If Canada Post would have done everything possible to avert that strike, it would have shown a profit of $206 million for 1997-98, because you have a net profit now of $36 million, and plus $170 million makes $206 million.

Yes, that's what it would have shown, a profit of $206 million.

If you take your earnings before the interest and the tax, it would have been $245 million. It's $170 million plus $75 million.

Following the recommendations of TD Securities, of which I have a copy, on page 2 of the report, it says the minimum target required return on equity should be set at 11.25%, or $175 million.

Given the fact that the corporation is operating at a profit level well beyond what the government has mandated it to do—because now you're way beyond what TD Securities had projected—why are you shaking down retailers for extra money for the corporation?

Mr. Georges Clermont: Thank you, Mr. Bernier. We were indeed losing roughly $17 million a day in revenues, not in profits. There would have been a cost associated with these revenues.

We estimate that we lost $100 million in net earnings last year, 1997-98. The corporate plan that was tabled in the House for that year forecast a profit of $132 million, I think, or $136 million, something in that area, which would not have been the 11% recommended by TD Securities. Instead of that, the strike, having cost us, in terms of earnings, $100 million, we finished with $32 million in net earnings.

So you cannot add the $170 million to the $32 million. The $32 million is net earnings after interest and taxes. The $170 million is the pure revenue stream.

Mr. Gilles Bernier: With the interest and the taxes.

Mr. Georges Clermont: Yes.

Mr. Gilles Bernier: But my point is, let's say it was $100 million instead of $170 million; it's still a 20% return.

Mr. Georges Clermont: No, on $1.2 million, it's—

Mr. Gilles Bernier: If you add your $36 million net profit also there.

What I'm saying is, if you have money and you want to invest money in a bank, you'll get what, according to the interest rates, 3%?

• 1145

Mr. Michel Tremblay: Probably.

Mr. Gilles Bernier: Bonds, roughly 5%. If you play the stock market, you will have 7%, 7.5%, 8%, maybe. Even if it was 15% and not 20%, can I buy a share in your company?

Mr. Georges Clermont: No, because they're not publicly traded.

We are not generating anywhere near 11% return on equity, which was the recommendation. On $1.3 billion, $100 million is not 10%.

The recommendation of TD Securities is based on what utilities, such as phone companies and gas companies, that are in a business that may or may not be similar but do have a broad range would have to earn to attract capital today. That's the BCEs and the Consumers' Gases and Teluses, etc., which are required to attract capital to earn in that range, between 10% and 13% return.

Mr. Gilles Bernier: But again, on your equity you have a total equity of $1.15 million, or something like that. That's what the corporation owns.

My next question is this. If you pay so much money—it doesn't matter if it's five or fifteen and a half in the amount of stamps a franchisee sells—does it matter to you if it brings business into their own business? Let's say the main reason they're going there is to buy stamps. Once they get inside the business, they decide, hey, I need a loaf of bread or a jug of milk.

Does that impact on your decision to lower their profits from 17.5% to 5%?

Mr. Georges Clermont: No.

Mr. Gilles Bernier: Absolutely not.

Mr. Georges Clermont: No. We know for a fact that the postal franchise has a positive impact on generating traffic for the host business.

As a matter of fact, you were talking about the strike. We had letters from franchisees after the strike telling us, “Your bloody strike has impacted our business by 15%, because we had 15% less people coming into our stores and making purchases”. That's where we get that number.

Our interest is not to cut their traffic. Our interest is not to see their host business growing. As a matter of fact, we'd rather see them having a better host business. This is the basis of why we're going with a franchise model. The problem with the 17.5% commission variable on stamps is that it is too large an amount of money that it allows abuses of the system.

We're saying we're going to give a little less, we're going to give 5%, and we're going to compensate with a fixed fee for operating a franchise. This is how we're trying to balance this out.

Mr. Michel Tremblay: And fees for handling—

Mr. Georges Clermont: And increased fees for handling other products as well.

Mr. Gilles Bernier: One more short question?

The Chairman: Very short, Gilles.

Mr. Gilles Bernier: Okay.

Let's say there are lot of those franchisees in rural areas. Some of them can't go to the bank for two or three days. When they go there, and a customer comes in and buys stamps, they collect money for Canada Post. That's what they do. They collect money for Canada Post. They are totally liable for that amount of money.

Let's say somebody comes in during one night and steals that money. That person, the owner, is totally responsible to pay Canada Post whatever money he had to pay. There's not an insurance company that will supply them more than $2,000. If they stole $10,000, that means the owner has to pay the other $8,000.

My point is, do you really feel that in rural areas, by dropping from 17.5%— Because that's where their profit is. It's on stamps. It's not on packages and stuff like that.

By dropping their profits from 17.5% to 5% do you feel that some of those franchisees will just get out of it, and the people who live in those rural communities might have to travel ten or fifteen miles to go the nearest post office or the next franchisee?

[Translation]

Mr. Michel Tremblay: Mr. Bernier, allow me to answer that this program is aimed solely at urban dealers, not at all at rural dealers. Rural dealerships are treated completely differently and their compensation base is different as well.

Mr. Gilles Bernier: There is one such dealership in my riding, which is completely rural, and we received a letter from Canada Post informing us that it was being terminated.

Mr. Michel Tremblay: With your permission, Mr. Chairman, I will ask Mr. Bernier to contact us.

Mr. Gilles Bernier: Are you going to give me the address?

Mr. Michel Tremblay: We'll be pleased to respond to this particular situation and to explain what is happening in detail.

Mr. Gilles Bernier: Thank you.

• 1150

[English]

The Chairman: That's good.

Marlene, then Werner, Jocelyne, Angela and Roy.

[Translation]

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Good morning. I must tell you that you're lucky Ms. Parrish—

An hon. member: Is in a good mood.

Some hon. members: Oh, oh!

Ms. Marlene Jennings: —spoke before me because her questions and the answers you gave considerably clarified the situation in my mind. She also put us on the right track.

I'm also pleased to hear you say you are quite prepared to meet the members of ridings where particular situations have arisen, that you will be open to their representations and that you will listen to them, study the situation and take the necessary corrective measures.

I represent the urban riding of Notre-Dame-de-Grâce—Lachine, which is located on Montreal Island. It embraces three municipalities and a portion of the City of Montreal. Statistics Canada figures show it has a very high percentage of elderly residents compared to the rest of the greater Montreal area.

A sub-office which was a Jean Coutu dealer was closed down last spring at Jean Coutu's request. That's what I learned when I looked into the matter. I'm currently looking for another business that would be interested taking on the dealership, and it appears that, this time, a food market is interested in doing so. I'll be contacting you on this matter.

Another situation has arisen in the Town of Montreal West. A dealer and the mayor of the town recently came to meet with me to explain it. A representative of Canada Post Corporation had gone to see the owner, whose contract expired at the end of September, and provided him with documentation on the new program. He told him that he had to accept the program and—this is the interesting part—to sign a letter to Canada Post Corporation saying he was no longer interested in operating the dealership and that he did not wish to renew his contract.

Mr. Michel Tremblay: Without consultation?

Ms. Marlene Jennings: No. Although the situation may not be the same everywhere, this information made by flesh creep.

I'm a lawyer, and, although I don't have much experience in business law, I had excellent marks in the subject at law school and on the bar admission exams. That always surprised me because I expected to get better marks in social law, for example. I did get good marks on it, but my marks were excellent in this other field.

Dealership contracts usually contain a renewal clause, which means they should be renewed almost automatically, failing notice by the owner to the contrary three to six months before expiry.

I'm afraid some of your representatives are not giving out satisfactory or accurate information concerning the policy of Canada Post Corporation and this is undermining your image.

The post office I told you about is now closed. The owner would like to reopen it, but he's coping with a few problems that I'll bring to the attention of the Quebec region director, to whom you introduced me a little earlier.

• 1155

I really want to draw your attention to a communication problem involving your field representatives, who are not properly informing owners or inviting them to sit down with them when problems arise so that adjustments can be made or the necessary measures taken to ensure services can still be provided. I leave this matter in your hands. As for the problems involving Somerled Street in Montreal West, I'll be contacting your representative directly. But I want you to be aware that this problem exists.

Mr. Georges Clermont: Ms. Jennings, it is definitely not our company's policy to take that kind of action. You must understand that we have a very large organization here where thousands of people work. Unfortunately, we can't control everything. We have training programs, but we can't control everyone. I'm convinced the kind of situation you describe may have occurred and I encourage you to contact us so that we can look into it. I would also say in passing that the law is one of the great professions, and I can feel free to say that since I am a lawyer as well.

Ms. Marlene Jennings: I ran into the mayor of the Town of Montreal West on Monday evening and he informed me that a petition demanding that the dealership be given back to the former owner, that his contract be renegotiated and that services continue to be available was circulating in the municipality and had more than 200 signatures on it. Without this service, people have to take at least three buses to get to the nearest dealer.

Mr. Georges Clermont: There's no reason for that.

Ms. Marlene Jennings: We're also talking about an elderly population here.

Mr. Georges Clermont: There's no reason for that.

Mr. Michel Tremblay: The Canada Post system has 7,400 full- service offices and 12,000 sales outlets or stamp agencies. We feel these 19,000 or 20,000 offices should enable us to provide satisfactory service to the Canadian public at this time. However, in the specific case you just mentioned, where there is a lack or a particular need in the municipality, please be assured that we will cooperate with you to provide the best possible service to the public.

Ms. Marlene Jennings: Thank you very much.

Mr. Michel Tremblay: You're quite welcome.

[English]

The Chairman: Thank you, Marlene.

Now Werner, and then Jocelyne and Angela.

Mr. Werner Schmidt: Thank you, Mr. Chairman.

I would like to respond a little bit to one of the comments Carolyn, my hon. member opposite, made with regard to the exorbitant, if you like, goodwill payment that somebody made. I want to make it absolutely clear and on the record that I'm not sympathetic to somebody doing that. I mean, if they've gone ahead and paid that kind of money, well, that's their problem. That's not Canada Post's problem, either.

Mr. Michel Tremblay: If I may, Mr. Schmidt, in our procedures, when there is a sale of a host business, automatically the franchise contract becomes invalid. Of course, we cannot monitor what goes on beyond the scene, but the franchise is not automatically granted to the new owner of the business.

Mr. Werner Schmidt: No, I understand that. I accept that, and I do that, too. But people still do things.

Mr. Michel Tremblay: The sale is not our concern.

Mr. Werner Schmidt: And I don't want to spend much time on that, either, except to register that.

What I do want to ask you is in regard to the level of compensation you are prepared to make. I think I heard one of you gentlemen say that you had the individual balance sheets of the individual franchisees, and that on a confidential basis you would be prepared to discuss them with us.

That tells me that you know exactly which franchise is in a negative position as a result of this change and which franchise is in a positive position. Is that true?

Mr. Michel Tremblay: That is true.

Mr. Werner Schmidt: If that is the case, then you know exactly what the remuneration would have to be to bring these people into a break-even position. Is that true?

Mr. Michel Tremblay: That's the basis of the model we're presenting today.

Mr. Werner Schmidt: Okay. I suppose that is the reason you are now prepared, as you said about five minutes ago, to graduate it from $6,000 to $25,000.

• 1200

Mr. Michel Tremblay: As I said, we're prepared to do something to help people who are in difficult situations.

Mr. Werner Schmidt: I don't like this “something” business. You either are or you're aren't.

Mr. Michel Tremblay: We will graduate it.

Mr. Werner Schmidt: Good. We have a commitment. That's good.

Mr. Georges Clermont: Mr. Schmidt, it is not our mandate or our intention to make sure that every business with which we deal is breaking even or making money.

Mr. Werner Schmidt: We're talking about the franchise.

Mr. Georges Clermont: Purely on the contract basis, but the business could be losing money and selling, I don't know, lotto tickets or whatever.

Mr. Werner Schmidt: And I agree. I want to have this separated out, and I would hope your balance sheets show that there's the business operation and there's the franchise operation.

What I want to make sure is that we get a commitment from you that says, “We, the franchise operation, will not require cross-subsidization from the other business in order to function”. That's the commitment I'm looking for.

If the franchisee loses money in his other business, he should be responsible for that, but the postal franchise should not be a drag on the business. That's the point I'm trying to establish here.

Is that correct?

Mr. Georges Clermont: I don't think that's a commitment we can make, sir—

Mr. Werner Schmidt: Why can't you?

Mr. Georges Clermont: Because if some franchisees choose to lose money—

Mr. Werner Schmidt: Ah.

Mr. Georges Clermont: —in order to attract the 15% traffic, and that's why they discount prices themselves—

Mr. Werner Schmidt: But you should be able to tell that.

Mr. Georges Clermont: Well, we're not.

Mr. Werner Schmidt: Well, if you have the balance sheet, and if they are separated out—

Mr. Georges Clermont: We have the balance sheets; as for the books, though—

Mr. Michel Tremblay: We have the balance sheets of the postal operations. We don't have the balance sheets of the host businesses.

Mr. Werner Schmidt: Okay, but that's pretty important. If you're really going to get serious about this, and if you really mean what you've just told us, that you don't want to drive them out of business, then it has to be possible for that part of the business to stand not alone, perhaps, because it wouldn't make enough money to do that, but at least not be a cost to the other business.

If an individual wants to make it a loss-leader operation, that's their decision, but it should be possible, even in that situation, for that business to say, “If I did this properly, I could make money on it”.

Mr. Michel Tremblay: We believe so. We have enough information on hours of operation, on other costs involved in the franchise operation, to be able to determine that, given a business volume, done properly.

Mr. Werner Schmidt: Okay. That's all I want to know, to make sure that this isn't a cross-subsidization either way. I don't want the post office to subsidize the business and I don't want the business to subsidize the franchise, either one of them.

Mr. Michel Tremblay: Right. That's the model.

Mr. Werner Schmidt: Then that's fair. I think that's an equitable, fair kind of proposition.

I want to know now for sure whether, when you look at these situations that way, you are prepared to make the adjustments necessary in order to make this happen.

Mr. Michel Tremblay: We are prepared to do the adjustments necessary in conditions where people are not discounting and reselling stamps. We have to take this off the table. That is a fact.

Mr. Werner Schmidt: That's fair. I think I understand that very well.

Let's go to the other part of this, which has to do with the documentation on the consultation. You see, I have a real problem here. I'll go back to the point I made before. A lot of these people are telling me, look, we're not being listened to at all; we're simply being told this is how it is.

I really appreciate what Madam Jennings said a moment ago. I don't know how many franchisees, all the way from Halifax through to Vancouver, have told me, “We were not given any option. We were told you either do this or your franchise is over”. They felt coerced. They signed those letters of intent under duress.

Now, you both know, gentlemen, that a document signed under duress isn't valid. And that should not be the case.

I'm sure it wasn't your intention—and I'm not suggesting it was—to force these people into it, but I can tell you, without any question of contradiction, that there are a number of your personnel—many of them, not one—who are coercing or giving the impression that, “You'd better do this or else”.

Mr. Michel Tremblay: We will not hold anybody responsible for any letter of intent that has been signed so far. If they wish to change their minds about it, if they want to turn around and do something else, we will disregard the letter of intent that was originally sent to us.

Mr. Werner Schmidt: That's good.

The Chairman: Werner, I can come back to you.

Mr. Werner Schmidt: You can? Please do. Thank you.

The Chairman: I want to go to Jocelyne and then to Angela.

[Translation]

Ms. Jocelyne Girard-Bujold (Jonquière, BQ): I come from a riding where Canada Post can't possibly have a turnover of more than $1 million a year. You say that, to even out the profits of dealers, some of whom are earning $1 million, while others make $300,000, you're going to reduce their commission from 17.5 percent to five percent. Will that apply to everyone?

• 1205

Mr. Michel Tremblay: No.

Ms. Jocelyne Girard-Bujold: No? Will there be an adjustment to the rate level?

Mr. Michel Tremblay: Allow me to clarify this point. The Adjusted Compensation Program will apply strictly to urban dealerships.

Ms. Jocelyne Girard-Bujold: Yes, but I'm talking about the urban dealerships in my riding.

Mr. Michel Tremblay: Oh, I see. Rural franchises will not be affected by this model.

Ms. Jocelyne Girard-Bujold: No, no. I agree with you on that.

Mr. Michel Tremblay: Good.

Ms. Jocelyne Girard-Bujold: In my urban riding, dealers do not have annual turnover of $1 million, but their turnover qualified them for a small retail postal outlet discount. However, the dealers informed the small retail postal outlets that they could no longer do this, to which the small outlets answered that they would stop selling stamps. A number of convenience store representatives in my riding came to meet me and told me that the system no longer made any sense and that they were not prepared to work free of charge for dealers who are making money. I apologize for going so quickly, but I'm very pressed for time.

Mr. Michel Tremblay: No, no, it's all right.

Ms. Jocelyne Girard-Bujold: Second, you say there is a questionnaire here. I received a letter from the representative. You say they will be able to get their stamps at the local outlets. How will that work? Will you be giving those outlets a discount?

When you decided to introduce the dealership system, you forecast that a certain percentage would go to dealers for stamp sales. If we returned to the previous arrangement and stamps were sold to us by unionized employees of Canada Post Corporation, what difference would that make for the price of stamps to consumers? What percentage profit would you make if we bought our stamps at those outlets?

Mr. Michel Tremblay: I'll try to answer your questions in the order in which you asked them.

The 12,000 retail postal outlets in Canada are supplied from two sources. Some 4,000 outlets are supplied from Canada Post's corporate offices and they are compensated at a rate of five percent. Canada Post has control over this relationship. As for the other 8,000 offices, they are supplied from dealerships and you are perfectly right in saying that the variable commission is reduced and offset by a fixed commission; they receive five percent on stamps.

With your permission, I'll give you an example. We intend to propose to send these postal outlets that are no longer supplied by the dealership system what we call Post Office in a Box. This is a display unit that they can get from our distribution centre. If a dealer in your region no longer wants to supply the small postal outlets, they will be supplied from our distribution system and compensation of five percent will also be available for the small postal outlet.

Ms. Jocelyne Girard-Bujold: But the situation is the other way around: it's the postal outlets that don't want to be supplied by the dealers because they no longer pay them a commission.

Mr. Michel Tremblay: Canada Post Corporation is offering these outlets the opportunity to get their supplies by acquiring this product which they will set out in their businesses.

Mr. Ghislain Lebel: Let's say they're going to circumvent the dealer.

Ms. Jocelyne Girard-Bujold: Yes, they're going to circumvent the dealer. Will the price of stamps be different for them? Will we consumers have to pay 45 cents a stamp or will stamp prices be lower if we go around the dealer?

Mr. Michel Tremblay: The price of stamps is fixed at 45 cents for all Canadian citizens.

Ms. Jocelyne Girard-Bujold: But you said a moment ago that there were—

Mr. Georges Clermont: Yes, there are some who— Yes, yes.

Ms. Jocelyne Girard-Bujold: I can tell you that the price of stamps in my region is now 47 cents because the outlets no longer get a percentage on stamp sales.

Mr. Michel Tremblay: It's illegal to sell stamps above their face value.

Ms. Jocelyne Girard-Bujold: They know it's illegal, but they want a discount or commission.

Mr. Michel Tremblay: To date, Madam, the commission paid to stamp sellers has not been changed and will remain at 17.5 percent until December 1.

Ms. Jocelyne Girard-Bujold: But I'm talking about a point of sale, not about the dealer. Convenience store representatives came to see me and said they were having problems with dealers. They won't be getting a cent. This is already the situation in our riding; they no longer get a discount; they no longer get five percent. So they've decided unilaterally to stop selling stamps or to raise the price.

• 1210

Mr. Michel Tremblay: I can tell you that people who have trouble getting supplied from the dealer system can now turn to us. Turn to us or to people in our organization and these people will be supplied quickly and receive a commission at an equal and fair rate for everyone.

Ms. Jocelyne Girard-Bujold: Does that mean they can turn to the regional office in our riding? Or should they contact you directly?

Mr. Michel Tremblay: We've prepared a form for these people. They can place their orders directly with our distribution centre and they'll be supplied.

Ms. Jocelyne Girard-Bujold: Could I have a copy of that? I have to meet them Saturday morning and I could taken them one.

Mr. Michel Tremblay: Mr. Bisback can provide you with that information.

Ms. Jocelyne Girard-Bujold: All right. Thank you for being so kind. I'm sorry, but I must leave now.

[English]

The Chairman: I have Angela, then Roy, and then Werner.

[Translation]

Ms. Angela Vautour (Beauséjour—Petitcodiac, NDP): Good afternoon and thank you for your presentation.

I was wondering whether you had conducted a study on the impact the changes you are proposing might have on service to the public, particularly where those changes result in closings.

Mr. Michel Tremblay: Yes, we have done studies. It seems clear that, with a few exceptions—some people who are thoroughly abusing the system—there will be very few post office closings. Once again, to minimize this impact, we are prepared to meet each dealer and to consider each case where there is a threat of closing.

Without wanting to appear presumptuous, I should say that, in many places, there have been applications to obtain a postal dealership. We are convinced that, although some will likely abandon their dealerships, we will be able to replace them all satisfactorily.

Mr. Georges Clermont: Absolutely. For every dealership closed, there are three more that want to open.

Ms. Angela Vautour: Have you calculated the increase in profit you will make as a result of these changes? Instead of ordering this profit increase, could you have used that money to soften the negative impact of the changes?

Mr. Michel Tremblay: Some changes will be made starting— At the time we conducted the studies, the impact was less than 0.1 percent of the total turnover of Canada Post's retail sector. That's the impact for the corporation, at least in the sector I'm responsible for.

However, we think that, by increasing commissions on other types of products than stamps—to go back to what Ms. Parrish was saying, a stamp transaction is not very costly for an operator—we will be able to improve retailers' incomes in many cases, in addition to providing them with a fixed base revenue. You should not forget that we introduced the fixed revenue principle to offset the decline in variable compensation.

Ms. Angela Vautour: And how much profit will you make? I'm sure you have conducted analyses to calculate that amount.

Mr. Michel Tremblay: We think that it will be between $5 million and $8 million.

Ms. Angela Vautour: A year?

Mr. Michel Tremblay: Yes.

Ms. Angela Vautour: I mainly represent rural communities.

Mr. Michel Tremblay: Yes.

Ms. Angela Vautour: You're saying that this will not affect the rural communities. Is there a reason for that? Does that mean that there's no fraud in rural communities? Is this a good sign?

Mr. Michel Tremblay: Generally?

Ms. Angela Vautour: Does that also mean that you won't touch rural communities?

Mr. Michel Tremblay: Yes, that's what it means. The compensation method for rural dealers is different from that for urban dealers. In many cases, rural dealers have a minimum revenue guaranteed by Canada Post Corporation. The model we are introducing guarantees this minimum for these people. I can confirm that no rural dealers in Canada will see their profits affected by this change.

• 1215

Ms. Angela Vautour: Okay. I just want to let you know that we've received a lot of complaints about the post office. This is a subject I received a lot of complaints about even before I was appointed critic. I can speak to you on behalf of the community of Sackville, which has seen its services decline enormously. They have been equipped with Superboxes, but the snow around them is not removed in winter. Mount Allison University in Sackville has two or three addresses and the cost of an address change is very high. Non-profit organizations have to pay hundreds of dollars to register a change of address.

Today, your decisions are already made, and, even though I haven't yet seen it, we know that everything has probably been decided in advance. You seem prepared to try to help people, but I must say we don't see that in our communities. We absolutely do not see it.

The case of Sackville is the most important. I understand them; their services have declined enormously and prices are exorbitant for elderly persons. I find it ridiculous to charge non- profit organizations $150 to register a change of address.

So it seems to me Canada Post would do well to step back a bit, to agree to make a little less profit and to go and see what is happening in the field as a result of its decisions.

Mr. Georges Clermont: Ms. Vautour, the degree of service is quite relative. They now have community mailboxes whereas they used to have a community distribution service. For most of them, this is an improvement because they are not required to go to the village or town post office.

Ms. Angela Vautour: You have to think of people who are in wheelchairs, the elderly and so many others. These people have been forgotten.

Mr. Georges Clermont: It's possible to make arrangements for people who are unable to go pick up their mail. However, I believe it is much easier, Ms. Vautour, for disabled or elderly persons to ask a neighbour to go to the mailbox 200 metres away rather than to the post office in town.

Ms. Angela Vautour: And yet that's not what these people are telling us. That's your analysis of the situation, but it's not the sense people have in this community or in other communities. I'm trying to explain that people are discontented. There is some serious discontent.

Mr. Georges Clermont: I understand that.

Ms. Angela Vautour: I'm suggesting you should try to send people into the communities to consult seriously with people and try to understand them instead of implementing decisions that you subsequently try to make people accept, but that are very hard to accept.

Mr. Georges Clermont: We'll take note of your recommendations.

Ms. Angela Vautour: Thank you.

[English]

The Chairman: Thank you, Angela.

We have Roy, Werner, Ghislain and Gilles.

Mr. Roy Cullen: Thank you, Mr. Chairman.

Mr. Clermont and Mr. Tremblay, I went to the operations centre at Canada Post, and I must say, I'm a convert. Canada Post is a world-class operation. On this particular issue, though, I'm still a bit perplexed.

As I said, I did a 100% sampling in my riding of Etobicoke North. The first thing that surprised me was that there are only three franchisees. Mine is an urban riding geographically, a very large urban riding, and I was surprised there were only three.

On the one hand, I've had people approach me for new franchises. In fact, you and I talked at one point in time about a group that wanted to put in a franchise. Then it went into the bowels of Canada Post, and the answer was, you know, geographically— and we have all these markets, etc.

At that point in time, I thought the issue in my riding was that the revenues were skinny for the existing franchisees, so if you put in another franchisee, you would be cutting into the profits of the existing franchisees. Now I'm being told that their revenues are too high, and these revenues really are in the $600,000 to $800,000 range, as I understand it.

What I would really like to do is take you up on your offer to sit down on a confidential basis—and I may not be a lawyer, but I am a CA, and I think I understand numbers—to get a better grip on this myself. When we talk about this franchise arrangement in the private sector, what I think I'm hearing you say is that this commission structure is flawed, in a sense, if I can use that word.

Now, hindsight is 20/20, but I'm wondering why it was structured that way at the outset. In the private sector, if I'm McDonald's and I've missed the boat, then I'm going to have to wait until I have a chance in either the next contract phase or whenever.

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Can you tell me how you've dealt with that, please?

Mr. Georges Clermont: The reason the structure was so high, Mr. Cullen, was that, as I said in my opening remarks, ten years ago we were testing this for the first time. The first franchise we opened was in Toronto, in a Shoppers Drug Mart. Immediately the Canadian Union of Postal Workers jumped on the franchise and forced it to close. They went to court. It went all the way to the Supreme Court on this issue.

In light of this, nobody wanted to touch a postal franchise with a ten-foot pole. This went on. I think the second one was perhaps in New Brunswick, and the same thing occurred.

So we had to revise the original. I don't remember the exact percentage of commission or discount that was awarded the first time around, but we had to sweeten the pie to ensure that we had volunteers for franchising.

All these legal problems are behind us now, but that's essentially the background.

Mr. Michel Tremblay: Perhaps I can answer the latter part of your question. I'm not a lawyer, either. I come from business, and I come from a retail environment.

Ms. Marlene Jennings: You know, I did law school while working at the post office.

Mr. Michel Tremblay: Good for you.

Ms. Marlene Jennings: So I'd like to stop hearing “I'm not a lawyer, but—”.

Voices: Oh, oh.

Mr. Michel Tremblay: It is a common practice in the franchise world—and that's where I come from—that the operating agreement is separate from the payment structure. I come from food distributing. The sales agreement, which is how it's referred to, is reviewed once a year. Anybody can have a long-term agreement as being a franchisee of such-and-such organization, but because of market conditions—and that's what we're talking about here; this is real, commercial down-to-earth stuff—it is imperative that these sales agreement can be revised in shorter periods of time than the duration of the agreement.

This is really the answer. The agreement designed for Canada Post at the time took that into consideration as well.

Mr. Roy Cullen: If the revenues of the franchisees in my riding are too high, I have another solution: Put in a couple of new franchisees. Because I have a lot of elderly, as well.

I'm not here to lobby—

Ms. Carolyn Parrish: No, they're stealing from Mississauga.

Voices: Oh, oh.

Mr. Roy Cullen: —for other franchises, but—

Mr. Michel Tremblay: We should consider two distinct issues here—the service to the population and if these franchisees have too-large territories or have grown it too large. The population may have shifted in the riding, as well.

We will reconsider this. It will be our pleasure to do it with you.

Mr. Roy Cullen: Can I follow up on a couple of other things?

The Chairman: Very quickly.

Mr. Roy Cullen: Okay.

I had a call from a very small stamp reseller. Outside a Dominion store they sell stamps and a bit of packaging. They told me that under this new arrangement they were going to be cut off, and I was told by your officials that they didn't want that to happen. They'd be talking to this person.

Can you clarify the role of these resellers within the context of this? If this chap has a little place outside of a Dominion store, would he actually be cut off under this scheme?

Mr. Michel Tremblay: No.

Mr. Roy Cullen: Or are they totally unrelated issues?

Mr. Michel Tremblay: They're actually quite related. The fact of the matter is, as I've said before, there are 12,000 stamp shops or stamp agencies. A third, about 4,000, are supplied by corporate post offices and are remunerated on the basis of a 5% discount. Basically, what these people are doing is handling stamps over the counter. In that sector, everyone was pretty happy with this.

The franchise network has then been asked to develop within their territory another stamp shop network. If we reduce the variable commission, as we've said, in excess of 17.5% to 5%, and compensate with fixed compensation, it doesn't leave very much for the franchisee of a territory to share with the local stamp shop.

What we are suggesting and proposing, and are ready to implement, is that Canada Post take over the relationship that existed between the franchisee and the stamp shop. We will take it over and supply and distribute and remunerate, at a 5% discount, those small stamp shops.

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Mr. Roy Cullen: So he'll be okay. Because he was concerned; he had no business other than stamps and packaging. So he'll be okay.

Thank you.

The Chairman: Thank you very much, Roy.

Werner, Ghislain and Gilles.

Mr. Werner Schmidt: Thank you very much, Mr. Chairman.

I'd like to come back and figure out exactly where we're going to be.

You're going to do this one-on-one consultation—

Mr. Michel Tremblay: We're doing it right now.

Mr. Werner Schmidt: —yes—and you're going to determine whether or not some adjustment needs to be made.

Now, when will that adjustment be made?

Mr. Michel Tremblay: We intend to make this adjustment take place as of December 1, as our new compensation model rolls in.

Mr. Werner Schmidt: You're assuming, then, that you will have completed all of the consultations between now and December 1.

Mr. Michel Tremblay: We will have met with each and every one of the dealers impacted between now and probably the first week of November—10 days from now.

Mr. Werner Schmidt: Let's take a particular scenario here. That consultation results in a particular case—and they're going to be all across Canada—as impacted negatively. Let's say it needs an adjustment of whatever dollars.

When will that adjustment take place?

Mr. Michel Tremblay: December 1.

Mr. Werner Schmidt: Will he be paid as of December 1 or at the end of that month?

Mr. Michel Tremblay: I don't have an exact answer to your question, but as we determined—

Let's say the adjustment is $5,000 annually. I think we would consider an adjustment that is done on a monthly basis to cover off the $5,000.

Mr. Werner Schmidt: In any event, it would be effective as of December 1.

Mr. Michel Tremblay: As the new program rolls in.

Mr. Werner Schmidt: Okay.

The other question I have, which runs into a totally different area, has to do with the use of ATMs at the banks and the dispensing of stamps there.

I'd like to tell you that to my understanding—and if it's not right, please correct me—at the ATM the purchase price of the stamp is the price of the stamp, 45¢.

Mr. Michel Tremblay: Yes.

Mr. Werner Schmidt: The customer, therefore, does not pay anything at all, as far as Canada Post is concerned. The bank receives the stamps at a discount, but the bank has the right to charge the customer, or the person who's doing a transaction, a transaction fee.

Is that what happens?

Mr. Michel Tremblay: Let's backtrack a minute.

The current agreement is with the Canadian Imperial Bank of Commerce. It is a pilot project that has exactly 22 ATM machines dispensing stamps. It's just like a cash machine dispensing dollar bills.

I would ask Mr. Bisback for the length of this agreement with CIBC.

But the fact is, CIBC receives a 5% commission on selling stamps.

Mr. Werner Schmidt: Does the customer also get a charge from the bank for the transaction?

Mr. Michel Tremblay: I'm unaware of this.

Mr. Bisback.

Mr. Allan Bisback (General Manager, Retail Business, Canada Post Corporation): The bank charges a service fee to the customer for the distribution of that postal service.

Mr. Werner Schmidt: So the bank gets paid twice; once, commission on the stamp from Canada Post, and then from the customer who does the transaction.

Mr. Allan Bisback: Currently within the pilot project, yes, they are, and the pilot goes until April 1999. Then it will be reviewed.

Mr. Werner Schmidt: Okay. I just wanted to be clear as to what was going on.

The Chairman: Do you have a short question, to finish?

Mr. Werner Schmidt: Yes, I do have a very short question.

Is there a record of the consultation that took place before this new commission structure was put together—a record of who you consulted with, what the results of that consultation were, and when that consultation took place?

Mr. Michel Tremblay: Yes, there's a record.

Mr. Werner Schmidt: Is this record available to us?

Mr. Michel Tremblay: Not now. I don't have it with me.

Mr. Werner Schmidt: Could it be made available to us?

Mr. Michel Tremblay: Yes.

Mr. Werner Schmidt: I would request that it be made available.

Thank you, Mr. Chairman.

The Chairman: Thank you, Werner.

Ghislain.

[Translation]

Mr. Ghislain Lebel: The committees enable members to conduct an in-depth study of government policies and programs, in this case, a study of Canada Post Corporation. This committee should not be the place where we resolve specific cases that arise in each of our ridings. Unfortunately, however, we are human beings and we can't avoid these kinds of situations.

• 1230

I gather from your remarks that you expect to recover $8 million to $9 million. When you began awarding dealerships in the early 1980s, you had no experience or scales to rely on. You didn't know what profits dealers might hope to make. You nevertheless entered into contracts with them and realized along the way that some dealers were doing well and making a little money, at least $8 million or $9 million too much.

Is Canada Post Corporation now adopting the philosophy that dealers may perhaps be making a little too much money, or more profits than you realized 10 years ago when the contracts were signed, and it's time for it to pick up its marbles?

As a member of Parliament, I see that there are already too many poor people in Canada and I won't help increase their numbers. Your purpose is to make profits, and I believe you're changing the ground rules. I don't resent you personally for that, but I'm afraid you are changing the rules because you can see your corporation may have made a mistake 10 years ago when it signed these dealership contracts.

Mr. Georges Clermont: As I explained a while ago, Mr. Lebel, we set such a high discount because, 10 years ago, people who wanted to open franchises had to face picketers who caused some dealerships to close. We had to give them a percentage of 15 to 17 percent to attract dealers. As Mr. Schmidt said a moment ago, our purpose was never to interfinance the rest of dealership operations. We don't guarantee their success either.

Mr. Ghislain Lebel: No, but you are the head of a large corporation that can retain the services of experts, specialists in market evaluation and economists, who can make short-, medium- and long-term projections. You have all the necessary expertise to show that you should shape your policy in this or that way. What I gather from your dealership shake-up, from the renewal project you have presented to us, is that you will recover $8 million to $9 million if things go poorly and, if things go well, the sky's the limit: you may pocket more than that.

Mr. Georges Clermont: No, no.

Mr. Ghislain Lebel: That's where I object. Dealers signed long-term contracts in good faith. I did a law degree too, Madam. You're better equipped than them, thanks to the services of your research officers and economists, who tell you that a drug store with a dealership makes a little more profit and won't abandon the post office because it brings in customers who buy shampoo. You figure you'll strangle them and skin the cream off the milk. That's what you're doing.

Mr. Georges Clermont: Sir—

Mr. Ghislain Lebel: That's what leads me to believe that you're changing the ground rules as you go along and that, when you have a guy on his knees in front of you, you force him to sign or else you close his business.

Mr. Georges Clermont: Mr. Lebel, allow me to say that—

Mr. Ghislain Lebel: Damn it! Allow me not to agree on this.

Mr. Georges Clermont: All right. I should point out that our business objective is not in the order of $9 million, but probably between $5 million and $8 million. Our objective is not simply to generate profits, but mainly to re-establish a balance and a degree of fairness in the way people use the system so that some do not make profits at the expense of others. That's the essential point of our message. As a result of practices used in the past, some Canadians have had the opportunity to buy stamps at lower prices because they knew someone.

Mr. Ghislain Lebel: From experience, I tend to trust Brother André for balance, justice and fairness more than Canada Post Corporation. You have a job to do and you are required to appear before parliamentarians such as us, but I'm afraid once again that it's the little guy, and generally the very little guy, who will suffer the consequences of this policy.

Some of my colleagues around this table are quite pleased because they live in the country and this won't affect them, while others are happy because specific problems in their ridings have been solved this morning. However, there are still others, like me, who are not necessarily in touch with the dealers and who believe that there's something wrong with the policy. If you really wanted to rebalance the distribution of profits, you wouldn't take the opportunity, out of the goodness of your heart and in the name of fairness, to stick it to the dealers and pocket $5 million to $8 million. I have trouble understanding that. In any case, we'll do our jobs as politicians when the time comes and we'll be—

[Editor's Note: Inaudible]—

• 1235

[English]

The Chairman: Merçi, Ghislain.

Gilles, and then we'll give the last word to Werner.

Mr. Gilles Bernier: You said awhile ago that the price of a stamp across Canada is 45¢. That means if I go to a CIBC now and want to buy a book, it's going to be sold by the book. If I remember correctly, there are 10 stamps in a book. That's $4.50.

If you come from Atlantic Canada, we now have an HST of 15%. It's not 7% but 15%. In the provinces where you have a federal and a provincial tax, you only charge the GST, but in Atlantic Canada and most of the provinces there, it's 15%. So you have to pay 15% because of that.

If you go to the CIBC again, they will probably charge you, and every time you put your card through the system, that's 75¢. If you calculate that, you end up paying $5.93 for 10 stamps.

Does that make sense to you?

Mr. Georges Clermont: Excluding tax, you mean?

Mr. Gilles Bernier: No, with the tax.

Mr. Georges Clermont: With the tax. Well, you know, we're not the taxing authority.

Mr. Gilles Bernier: But my point is, if CIBC is going to charge that 75¢ every time you put your card in the machine, it costs the consumer.

Mr. Georges Clermont: But, sir, that's a choice you make for the sake of convenience. It's not our fee, it's the bank's. Every time you go to get money or deposit, there's a fee at an ATM.

Mr. Gilles Bernier: But the point I want to make is that you said awhile ago that the franchisees who will be affected by this will come from urban areas, not rural areas. Yet my riding is in New Brunswick, and most of New Brunswick is rural. In my riding in particular, I have a few franchisees, and one in particular is closing his doors. I just got a note on October 31 that he'll close his doors because he doesn't want to go through this. He's affected by this. He received a letter from Canada Post saying that with those changes, he'll be cut also.

So how can you say that it only affects the urban areas when those letters were sent to the rural areas?

Mr. Georges Clermont: If you could tell us which one it is, we'll see whether it's rural. Where is it in—

[Translation]

Mr. Michel Tremblay: Mr. Bernier, it will be a pleasure for us to discuss this problem with you. Unfortunately, I don't have all the details before me today. We are convinced that none of the rural dealerships will be affected in any way by this change in compensation. I invite you to review the case you raised with me and we will look into this entire situation.

[English]

Mr. Gilles Bernier: I have one last, small question. You were talking about the pilot project, and said it will be making approximately $5 million to $8 million a year for Canada Post. That's what you said awhile ago.

Would it be possible to restore some of the customer services at post offices so that we won't have to wait half an hour to get service? Personally, in my riding, the only time a lot of people can go to the post office is during lunchtime. They have to wait at the counter 20 to 30 minutes to get service.

They're overworked and understaffed because of cuts made by Canada Post.

Mr. Georges Clermont: Is this in a franchise or at a corporate office?

Mr. Gilles Bernier: It's a Canada Post corporate office, yes. Customer service is very poor.

So if you're going to be making $5 million to $8 million—

Mr. Georges Clermont: We certainly would look at that. Lunchtime is a busy time—at the bank, at the post office, everywhere. Whether you have to staff maximum— because we have to staff all day. It's a business decision.

Mr. Gilles Bernier: Thank you.

The Chairman: Merçi, Gilles.

Werner, Roy, and then Marlene.

We're approaching the last word, but we're not there yet.

Ms. Marlene Jennings: We'll leave the last word to you, Mr. Chairman.

Mr. Werner Schmidt: I think that's fair. That will always be the case. That's why he's chairman, so that he gets the last word.

There are two points I'd like to make. One, very simply, is that I would hope, Mr. Chairman, these gentlemen would be prepared to return after we listen to the franchisees, because there may be additional questions that may arise from their consultations.

• 1240

If they're prepared to do that, I'd really encourage that we invite them back, because I think some really good points have been made here.

The other point I'd like to raise is very close to Mr. Lebel's, although it's slightly different.

It seems to me that what's happened here is that the expiration of existing contracts is staggered across Canada. Is it the intention of Canada Post to impose this, regardless of what the terms of the contract were? Because this will create certain hardships. Some of these people have capital expenditures they have incurred because of this, and others have lease arrangements that coincide with the terms of the contract with Canada Post.

Will that be factored into this adjustment so that if the changes in the contract are happened through the term of the contract, that indeed will be accommodated in this one-to-one consultation?

Mr. Michel Tremblay: It is our intention, Mr. Schmidt, to go forward with this change of fee structure. We need to do this all at once across the country, regardless of the end of the contract, for the simple reason that Mr. Bernier's franchise could expire tomorrow, and mine would expire a year from now, and if we relate the compensation to the end of the contract, he would therefore be remunerated on a different basis than I would. So that's the problem.

Mr. Werner Schmidt: I understand that, but that's not my point.

Mr. Georges Clermont: I think I understand your question. The contract is in two parts. The basic franchise agreement is for ten years; the remuneration and compensation part is reviewable—

Mr. Michel Tremblay: Within 30-days' notice.

Mr. Georges Clermont: —yes—so the integrity of the contract remains, but the compensation is variable.

Mr. Werner Schmidt: I understand all that. My point, though, is that the reality is that these people in good faith entered into a lease agreement to coincide with the terms of the contract. If one of the conditions of that existing contract, including the fee structure, now changes unilaterally, they are now impacted negatively in their situation.

This is part of the hardship, I submit, that these people are experiencing. My question is, will that be considered by you, on a one-on-one consultation basis, as a hardship issue, and there be compensation for in those cases?

Mr. Michel Tremblay: It will be considered for the duration of their contract.

Mr. Werner Schmidt: But “consideration” is a weasel word. I want to know whether you will compensate this cost to them. It's something they had no control over at all. They entered into an agreement in good faith; they said these are the expenditures, these are the anticipated revenues, and now, suddenly, it's gone.

Mr. Michel Tremblay: We took that into serious consideration by adding a fixed fee, just to take care of some of these considerations in many cases. We also intend to consider this as we review the cases one by one. If the case is that a new compensation structure endangers this man's business, because of our change in fee, we will consider making accommodations for the duration of the contract. It will be part of it.

Mr. Werner Schmidt: Now, what does that mean? It will be part of it or it will be considered?

Mr. Michel Tremblay: In our discussions one to one, if the fixed fee that this particular operator has to incur in operating the business is too high, we will have arrangements to compensate him for the duration of the contract. We can't go on forever with these things.

Mr. Werner Schmidt:

[Inaudible—Editor]

Thank you.

The Chairman: A short question, Roy, then Marlene.

Mr. Roy Cullen: Thank you, Mr. Chairman.

This briefing, if you like, has been very useful for me. I would really like to speak about the individual franchisees in my riding. I don't know if I should call someone or if someone will call me to go over those numbers.

Mr. Georges Clermont: We will call you, sir.

Mr. Roy Cullen: I would appreciate that.

I have one quick question in terms of clarification on this business of discounting stamps. If I walk into a Canada Post franchise, a small business, and say, look, I want to buy 2,000 stamps but I'm only prepared to pay 43¢ each for them, am I committing a criminal act?

Mr. Georges Clermont: No.

Mr. Roy Cullen: Okay.

If he or she sells them to me, are they committing a criminal act?

• 1245

Mr. Georges Clermont: Not criminal, but it's against their contract. They're not supposed to be doing that.

Mr. Roy Cullen: So they're breaching their contract?

Mr. Georges Clermont: They are breaching the common law, yes.

Mr. Roy Cullen: And it's irrespective of the fact that I have, say, a business in that particular territory. That doesn't matter.

Mr. Georges Clermont: The franchises, as it stands, are for sales to consumers only, not businesses.

Mr. Roy Cullen: In the drug trade you hear about sting operations. Have you ever tried just walking into a franchise and saying, “I want to buy 3,000 stamps at 42¢”? If they said “Yes”, you'd then say, “Oh, oh—we just cancelled your franchise”.

Mr. Georges Clermont: I think we've done that.

Mr. Michel Tremblay: Mr. Cullen, we know it's a general practice. It's very widespread.

The Chairman: Thank you, Roy.

Marlene, the last word.

Ms. Marlene Jennings: Very briefly—and this has nothing to do with the new program you're putting into place—I'd like to follow up on a comment made by Mr. Bernier.

In the Canada Post installations, particularly because people do tend to use them in the urban areas in their off hours, etc., you might want to follow the example of the banks, which is to have a service that is seated in those areas where you do have people who have physical handicaps, or seniors who cannot take standing in line for 20 or 25 minutes to get to the counter.

As well, you may wish to look at an express line, where there's a limited number of transactions a client can do at one time so that people who are doing their transaction during their lunch hour can know, okay, I have only one thing to do, and it's going to take a maximum of five minutes to move through that line.

Those are things you may want to consider, if you don't already have them in place.

Mr. Georges Clermont: Very excellent recommendations.

Ms. Marlene Jennings: I want to thank you for your presentation. You've provided me with a lot of clarification, a better understanding, and I do appreciate your openness to look at case-by-case incidents to see how you can best accommodate the dealer and ensure that the service does get to the public. I do appreciate that.

Mr. Georges Clermont: Thank you.

The Chairman: Do you have any concluding comments? No?

Let me on behalf of all members thank you for coming, Mr. Tremblay, Mr. Clermont, and Mr. Bisback. Echoing Ms. Jennings' comments, I do feel you've helped us a lot today, on both sides of the table, to understand better the dilemma facing you and the dilemma facing some of our franchisees. We're going to try to have them in Tuesday, if we can.

Thank you for that, gentlemen.

We're adjourned.