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]

Wednesday, February 16, 2000

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[English]

The Chair (Mr. Joseph Volpe (Eglinton—Lawrence, Lib.)): Thank you, ladies and gentlemen, colleagues. I call the meeting to order.

The order of the day, pursuant to Standing Order 110(1), is the Order in Council appointment of the Honourable André Ouellet. We have him with us from Canada Post Corporation.

I think, Monsieur André, you have with you a guest. Perhaps you would like to make the introduction.

We have a quorum to hear witnesses. I know you're a practised hand at committee proceedings. You'll have your time to make a presentation, and then we'll go back and forth to questions and answers.

Mr. Ouellet, as soon as you're ready, you can introduce your colleague and away we go.

Hon. André Ouellet (President and Chief Executive Officer, Canada Post Corporation): Mr. Chair, thank you very much for welcoming me.

I want to say at the outset that as a former parliamentarian and a member of the committee—the McGrath committee—that reviewed the rules of the House of Commons and that made the series of recommendations some years ago to enhance the role and responsibility of backbenchers, I recall that one of the recommendations at the time was to vest in the committee of the House the possibility to question a Governor in Council appointment. Indeed, having been at the beginning of this new policy, I am certainly quite happy to respond to your request and come forward today to answer your questions about my appointment by the government as president and CEO of Canada Post.

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My remarks will be relatively brief in order to allow you to ask questions. But I would like at the outset to remind members of this committee that my association with Canada Post goes back many years. I was appointed Postmaster General in the seventies. I served as Postmaster General twice, because the Prime Minister asked me to assume this responsibility a second time in order to turn the department into a crown corporation.

This was quite a challenge in the early eighties, and it was done with the cooperation of the unions through consultations with the union representative. And the act of Parliament creating the crown corporation was approved both by the government of the day and also all the political parties that sat in the House at the time. It was an effort of many months and quite extensive work in committee to prepare and have this legislation.

I served as chairman of the board from January 1996 to November 1999 and acted as interim president and CEO from January to November 1999. So as a chairman of the board I had the privilege to see the company in action, and certainly when I was asked to assume the job on a permanent basis, I felt I had enough knowledge and experience to accept this responsibility.

While I was, as I said, a central player during the important transformation of the post office department into a commercial crown corporation, the closing years of the 20th century have turned into one of the most exciting and probably crucial periods in our postal service history. I am certainly very proud to have been chosen to lead Canada Post Corporation as it faced the challenge and seized the opportunity of the new millennium.

[Translation]

I would particularly like to say that since taking on my new responsibilities, the most important thing I've done is to work with the management team to come up with a new vision for the Corporation and to set a number of priorities.

This vision was unveiled following internal consultations carried out through a series of meetings, workshops and discussions between 80 senior corporation managers. Our goal is to set down clearly the direction that the Canada Post Corporation needs to take in the future in order to prosper.

According to our vision, the Canada Post Corporation will be a world leader by offering innovative solutions to physical and electronic mail distribution in a manner that benefits its customers, its employees and all Canadians.

Let us take a look at the major components of this mission statement. The Canada Post Corporation is to become, and will be perceived as, a world leader. In other words, the Corporation must became an international stakeholder on a global scale. There is no question today that in order to properly serve the public and our other customers, namely Canadian businesses, and in order to compete in the global marketplace, we must take on the mantle of major stakeholder and be recognized as a world leader in the field of mail distribution services.

As such, it is critical that our customers be secure in the knowledge that ours is a solid, unique partnership and that we have access to leading-edge technology. As a corporation, we must aim for excellence in all aspect of our activities.

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The Canada Post Corporation will need to be innovative. We cannot be content with simply reacting to situations. We will need to keep one step ahead of our competitors by offering solutions that meet our customers' needs.

Our customers' opinion of us will directly depend on the services we offer. We will be perceived as innovative, forward- looking and flexible to the extent that we manage to be seen as a corporation that has mastered high technology. In other words, the Canada Post Corporation can no longer be content with being a company that reacts sporadically and slowly to markets. We must become proactive and move quickly to meet customer needs.

As we are seeing increasingly in Europe, all national postal administrations, and not just Canada Post, will survive only if they became experts in delivery services. Today, with the spread of the Internet, it's obvious that the people making transactions and purchasing goods on line will want to have their purchases delivered to them quickly. We must be able to provide reliable, rapid delivery service so that our customers can not only fulfill their commitments, but increase their level of activity as well.

We have been given a unique opportunity to forge a link between Canadians by carrying out our social mandate and by remaining accessible, regardless of the need. We need to prove that our integrated network can provide solutions for physical as well as electronic distribution systems in an efficient, economic and beneficial manner.

If customers are to appreciate our true value, they clearly must be the focus of our operations. We must simplify our activities by tailoring our products and services to specific requirements so that we are perceived as a special supplier. We must also ensure that our profits continue to grow, along with our market share, in order to maintain customer satisfaction and uphold our commitment to excellence.

[English]

One of the things that are absolutely essential for us to be a successful company is we have to leverage the quality of our employees. The values of our employees have to be demonstrated by developing a shared goal with employees to improve their satisfaction and to motivate them into believing in the future of the corporation, by tasking management to gain employee confidence in our business, and by committing to employee training and development aimed at continuous improvement, team building, business, and people management.

It is quite clear that the success of a company equates with customer and employee satisfaction. They are directly linked to one another. If we are able to increase the satisfaction of our employees, their performance will be better. As their performance is better, our customer will feel that they're also better served.

It is a task that we have already started. We hope that in the coming weeks and months the level of satisfaction and the level of pride in our employees working in Canada Post will increase substantially.

We are obviously implementing our vision in specific, tangible terms, focusing obviously on our major strategic priorities. Expansions into e-commerce, with products such as epost, e-parcel, post-x, and volume electronic mail will bolster our competitive advantage as we meet the new needs of our customers, taking advantage of the new technology, which takes the most accurate pulse of our day-to-day operations, such as the enterprise resource planning systems.

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As we are the principal owner of Purolator, there has to be, between Canada Post and Purolator, a greater level of synergy in purchasing goods and services and using our purchasing powers to get a better deal for both companies. We have in fact a purchasing power of about $2.3 billion a year, and we feel that by just leveraging this power, we can save between $25 million and $50 million easily. So this is an area that I'm looking at very carefully and on which I hope we will make progress.

As I said earlier, we need to involve all our employees if we are to realize our objectives. Clearly I want them to play an active role in shaping the future of Canada Post. I've made a point, since my appointment, to meet regularly with union members, or employees, to exchange frank views on the progress of our business and to foster better labour relations. I firmly believe in the importance of a long-term collective agreement for the stability and health of our corporation.

Employees represented by the Canadian Union of Postal Workers are currently voting on a new collective agreement. If this agreement is ratified, it will send a very clear signal to our customers that they can rely on us. As president and chief executive officer, it is my purpose to lead my fellow employees in a joint effort to build a successful, world-class business with a strong future. By adding our wealth of experience to a common will to achieve our visions, we will strive in the next century to benefit all Canadians.

I think Canada Post is an institution that has a good reputation. Since the creation of the corporation, we've gone a long way in improving the service, in dealing with our mandate of giving essential service to communities all across Canada. This is a mandate we cherish. We have a network that is incomparable to any other organization in Canada. This is a retail network that should be leveraged, that should be used to a greater degree. Clearly, while some people think national postal administration might not have a future because of the potential decline in traditional letter mail, I believe that nevertheless, in the distribution business, in electronic mail, and clearly continuing in letter mail because there are going to be a lot of people continuing to use the traditional way of writing letters, there's a great future for Canada Post, and we are enthusiastic about this future.

Thank you, Mr. Chairman.

The Chair: Thank you, Mr. Ouellet. I know that colleagues have been anxious to speak with you for quite some time, and we had to defer a couple of meetings. So the enthusiasm of having you here has not abated.

Mr. Schmidt, you can lead off.

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

Mr. Ouellet, thank you very much for finally appearing. It wasn't your fault that you weren't here. You were ready to come and you couldn't come. So I'm really pleased that we can finally meet in this way.

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I would like, Mr. Chairman and Mr. Ouellet, to divide my question into two parts, one part having to do with the process of your appointment, and the other one having to do with the progress of and your vision for Canada Post and its operation. With regard to the first part, as chairman of the board, were you a voting member of that board?

Mr. André Ouellet: We do not vote. We make decisions by consensus.

Mr. Werner Schmidt: So when the decision was made to appoint Mandrake Management Consultants to do a search for candidates to replace the president, the office of which was vacant at that time, were you part of that decision?

Mr. André Ouellet: Yes. I was the chairman of the board, and indeed the decision to hire a firm to do the search is one that was collectively taken by the board.

Mr. Werner Schmidt: Do you know how much that search cost?

Mr. André Ouellet: I know, but it is not my prerogative to reveal contractual engagements between firms and the corporation. But I can assure you that the amount is one that is in keeping with that type of activity in that field.

Mr. Werner Schmidt: Were you also part of the board that made the decision not to accept the recommendation of Mandrake Management Consultants?

Mr. André Ouellet: No. As you know, we hired the firm, but the appointments of both the chairman and the president and CEO are Order in Council appointments that are made by the government, and not by the board of Canada Post.

Mr. Werner Schmidt: So who rejected the management consultants' recommendation?

Mr. André Ouellet: The government did.

Mr. Werner Schmidt: Okay. Who made the recommendation to the cabinet to appoint you to the position of president?

Mr. André Ouellet: I was not in cabinet, but I suppose that the minister responsible was the one who made the recommendation.

Mr. Werner Schmidt: Usually, ministers have a group of people who make recommendations to them before they go into cabinet. Was the board of Canada Post involved in assisting or advising the minister as to the appointment of the president?

Mr. André Ouellet: The minister consulted both management and members of the board before making a decision and making a recommendation to the government. I can assure you that in the early stage I was not interested in the job. I was trying to find a suitable alternative to the president. My interest was to continue as chairman of the board. But I was asked to act as interim president, and I guess I did too good a job, so they decided to keep me.

Mr. Werner Schmidt: Mr. Chairman, I would like to move to the actual vision, if you will, that the new president has for Canada Post. In particular, I would like to refer to a couple of areas. One of them has to do with the relationship between epost and the Bank of Montreal and the particular operation here.

Mr. André Ouellet: The electronic post operation is something we believe has a tremendous future. While Canada Post has the knowledge and certainly the expertise in the distribution, delivery, and handling of mail, our technical knowledge was limited. That is why we decided to have a joint venture with a firm that had this expertise, which is a subsidiary of the Bank of Montreal. The name of the company is Cebra. So epost is jointly owned by Canada Post and Cebra. This is a company that is now marketing a service called epost, which we launched a few months ago and which offers the public the possibility to receive their electronic mail through an electronic post office box.

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What we are trying to say to the people is that just as they traditionally have a letter carrier depositing so many accounts in their mailbox every day—telephone bills, hydro bills, retail bills and so on—they could now have an electronic postal box in which would be deposited all of the same bills from different people. You'd now find them all under your electronic postal box. The level of security that you have enjoyed through the years with the traditional letter mail will be given to them in the electronic service.

Just as you can be sure that no one will be tampering with the mail, because it's a criminal offence and you have a level of security so that the handling of the traditional mail is safe, we could give you the same level of comfort through the electronic mail. With encryptions and with the technologies that we have purchased and developed, we could give to the Canadian public the same level of confidence that their electronic postal box would be secure. All of these transactions that they make with other citizens or with companies will have a postmark, just like postage stamps, to guarantee their level of confidentiality and security.

The Chair: Thank you, Mr. Ouellet.

Mr. Schmidt, I am going to go over to the government side. We have a vote in 15 minutes, so I'm going to try to get to the people who have indicated that they want to ask Mr. Ouellet a question. It might come back to you.

Mr. Ianno.

Mr. Tony Ianno (Trinity—Spadina, Lib.): Thank you very much, Mr. Chairman.

First of all, thank you for coming to the committee. I have four questions. Due to time, I want to pose them. Then, depending on the time that you have and that the chairman allows you, see what you can answer.

One is on the epost. In terms of the transition, in terms of cost and the loss of possible revenue to Canada Post until the system picks up, is there much difference? And there's a second part to that question. If this system works, are you considering exporting the knowledge to other countries that may not necessarily be up to speed with where you may be? So those two were related.

We've talked over the last several years about—

The Chair: Can I interrupt here, Mr. Ianno? Just out of deference to all colleagues, can we get Mr. Ouellet to answer that one or two? We'll then see where we go, and that will give me the flexibility to give other people a chance.

Mr. Tony Ianno: Sure.

Mr. André Ouellet: Let me say that it's quite clear that as a new service, the early stage is one in which we have to invest money and we have to test the systems. Clearly, an electronic postal service generates much less revenue than the traditional mail. Clearly we could put our heads in the sand and think the volume of mail will not erode, but we know it will. There's more and more direct depositing. More and more people are using computers and are using the Internet. So since it is a part of the market that is booming, we want to have a piece of this action. We're there, and we think we have a very good, very secure service.

That's why we're trying to convince the Government of Canada—which wants to create a secure channel—to use us. We have already spent the money. We've already invested in it. Since we belong to the public of Canada, it boggles our minds that some officials are ready to spend millions of dollars investing in a new secure channel when we already have one they could use. Frankly, we hope that as time goes on, the use of Canada Post by the government for their services with the population will generate some action, some revenues, and will help us to grow this business.

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Secondly, in regard to exporting this technology, let me say that Canada Post is in the forefront in this regard. Just as we were the first national postal service to become a crown corporation, and just as we were the first postal service to purchase a courier company, Purolator, we're now the first postal service to have an electronic postal service. Other postal administrations are very interested in this. We have started negotiations and discussions with them. I have to say that in Europe and in countries in Asia to a certain degree, the discussions are very encouraging, because we might have an alliance with other national postal administrations to give the world electronic services.

Mr. Tony Ianno: There's a second part relating to that.

The Chair: Mr. Ianno, let me come back to you, because we have about seven minutes for three others.

Mr. Martin.

Mr. Pat Martin (Winnipeg Centre, NDP): Thank you very much, Mr. Chair.

Mr. Ouellet, thank you for being here, and congratulations on your appointment. I'm going to go right to the point, because I know I don't have much time.

It strikes me that as the new CEO, you have the unique opportunity to correct what to my mind has been a historic injustice since the corporation was created in 1981. That is the fact that one specific group of workers, dependent contractors, is barred by legislation from free collective bargaining. These contractors are the only group of workers in the country I can find who are specifically barred from collective bargaining for strictly economic reasons. There's no other justification.

In the not-too-distant future, would you eliminate that section in the corporation's act, or advocate for that, in order to allow that group of workers the same bargaining rights that the rest of your employees enjoy?

Mr. André Ouellet: Mr. Martin, I'm quite familiar with this problem that you raise. In fact, I have met on numerous occasions with representatives of this group. And you're quite right, the legislation does not allow them to become a bargaining unit.

We at Canada Post treat them as small entrepreneurs, and we deal with them as small entrepreneurs. If the Parliament of Canada decides otherwise and wants to amend the legislation, obviously I will respect the legislation. But it is beyond my mandate to decide what to do with these people. For the time being, I want to be as fair as possible with them in order to alleviate some of the difficulties.

Some members around this table have raised issues with me in my capacity as president and CEO, and even before as chairman. I have tried to correct some of what I would say are bad habits that have occurred in the past. Hopefully these people will be treated with respect, their work will be valued, and they will be remunerated according to the contract they have signed with us.

The Chair: Mr. St-Julien.

[Translation]

Mr. Guy St-Julien (Abitibi—James Bay—Nunavik, Lib.): It's a pleasure to meet you, Mr. Ouellet. I can appreciate the excellent work you are doing at Canada Post and I congratulate you on your appointment. It doesn't come as a surprise to me, Mr. Chairman, because Mr. Ouellet was formerly a Liberal member and Liberal Cabinet minister. He has always worked hard on behalf of Canadian taxpayers and I applaud his efforts.

I'd like to focus for a moment on the Air Stage Service which provides transportation services in northern regions and in Nunavik. The Inuit of Nunavik are concerned about the high cost of transportation. As everyone knows, several million are spent transporting non-perishable food items by cargo plane.

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By the way, I'd like to take this opportunity to congratulate you publicly for the speedy way in which you and your staff resolve the problems that occasionally arise in our ridings. You respond quickly and accurately to our problems within 24 hours.

I want to know if a meeting could possibly be arranged here in Ottawa between some people from Nunavik and Canada Post representatives to examine the future of food transportation in northern regions. We realize that this a complex issue, where costs can total several million dollars. However, a loaf of bread, and a stale loaf at that, costs $3.09 in Salluit compared to $1.09 in Ottawa. In addition, Canada Post employees working here in Ottawa could meet with their colleagues from the administrative centre of the Makivik Corporation in Kuujjuak.

[English]

The Chair: Mr. Ouellet, I almost feel remorseful that I have to interrupt you, because Mr. St-Julien has given you a question that's lasted five times as long as Mr. Ianno's.

Mr. André Ouellet: I'll be short.

The Chair: Knowing your penchant for giving us very brief answers, I'm going to remind you of your excellent tradition of being extremely brief, because Monsieur Bernier would like to say something. So I'm going to ask you to do that.

We have exactly three minutes, and I'm going to ask one other question. Because this is something we didn't anticipate, we can come back after the vote, but I don't know when that will be.

Mr. André Ouellet: All right. Well, I'll be very brief.

The answer to Monsieur St-Julien

[Translation]

is yes. If you would like a meeting, we will be happy to arrange one. Unquestionably, this service is partly subsidized by the Department of Indian Affairs and Northern Development. The Canada Post Corporation is willing to discuss this matter. The definition extends to food products as well as to other products. By all means, the answer to your query is yes.

Thank you for your high praise for my staff. As for my former job as an MP, I think and I hope that I wasn't appointed CEO of Canada Post because I am a former Liberal MP.

Mr. Guy St-Julien: I said that you were a good MP.

Mr. André Ouellet: I would hope that I was appointed because of the experience acquired over the years and because, when I was acting CEO, I demonstrated my knowledge and ability to run this company. I may have been appointed CEO because I am a good Liberal. However, I hope I was appointed for reasons other than that.

[English]

The Chair: Mr. Ouellet, I know the opposition parties know the only reason you were there has everything to do with merit, despite their cynicism.

Go ahead, Monsieur Bernier.

Mr. Gilles Bernier (Tobique—Mactaquac, PC): Thank you, Mr. Chairman. I'll be very brief.

As you know, Mr. Ouellet, we had problems with rural mail carriers, as Mr. Martin pointed out. I met with you personally in December of last year. I told you of a proposal that would put an end to the disparities in the tender process. I know firsthand, because I've been in the contracting business for 23 years. Whether or not you want to go that way, I feel if we don't go that way, it shows you're not willing to negotiate in good faith with the rural mail carriers. So can we fix that impasse once and for all? My proposal would not cost Canada Post one red cent. That would be a great start.

Mr. André Ouellet: Mr. Bernier is quite right that if we were to apply exclusively the tender process, no one could complain. In my negotiations with these people, I was quite surprised, because on one hand they were complaining about the systems, but on the other hand they don't want and they do not recommend the tendering systems.

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While it is clear that we are going to continue to have the tendering system for any new route or anybody who has resigned and therefore we have to find a new rural route contractor, we will implement the procedure you have suggested, which is a tender system.

In regard to those who are currently holding their jobs, we're still in the process of negotiation with them. I want to be fair to them. Certainly there's one thing we all have to acknowledge: many of these people have learned to serve their route, and they're doing it well. For a company to lose these people because somebody else comes and presents a lower bid might not be in the long-term interest of the company. You have to take this into account. Obviously you won't have the best price, but also you want to protect the service, because it's not only a question of price; it's a question of quality of service. A lot of people are served by the route.

So we're looking at it, and we'll try to have a Solomon judgment.

Mr. Gilles Bernier: Thank you.

The Chair: Thank you, Mr. Ouellet. I apologize both to you and to colleagues, but the circumstances are beyond our ability to control.

Mr. André Ouellet: I will come back with pleasure, if you want. I would be willing to come back at another time, if it's the wish of the committee.

Mr. Werner Schmidt: Mr. Ouellet, you can't stay here today?

Mr. André Ouellet: Oh, I could. I don't mind, if you want me to.

Mr. Werner Schmidt: The thing is we don't know how long...

The Chair: I appreciate your willingness to do this, Mr. Ouellet, and I'm not interfering with any schedule you might make, but we don't have any control over when we're going to come back. So I'm going to accept your offer to come back to this committee. We'll discuss at our own meetings when we'd extend an invitation back again. Thank you very much for coming.

The meeting is adjourned to the call of the chair.