Proceedings of the Standing Senate Committee on
National Finance
Issue 14 - Evidence - July 5, 2010 - Afternoon meeting
OTTAWA, Monday, July 5, 2010
The Standing Senate Committee on National Finance, to which was referred Bill C-9, An Act to implement certain provisions of the budget tabled in Parliament on March 4, 2010 and other measures, met this day at 2 p.m. to give consideration to the bill (topic: Part 15).
Senator Joseph A. Day (Chair) in the chair.
[English]
The Chair: Today, honourable senators, we will start by dealing with Part 15, which is found at page 568 of this 900-page bill. Part 15 is one of 24 parts. This is the seventeenth meeting of the committee on Bill C-9, the budget implementation bill, 2010.
In our previous meetings, this committee has heard from the Minister of Finance, department officials and outside stakeholders who are interested in, or impacted by, the legislation.
Part 15 of the bill deals with Canada Post. It is a short portion of the bill, taking up only one page. We have two panels on this issue. We are pleased to welcome, from Canada Post, Susan Margles, Vice-President, Government Relations and Policy; and Gerard Power, Vice-President, International. From the Canadian Union of Postal Workers, we welcome Lynn Bue, Second National Vice-President; and Katherine Steinhoff, Communications and Research Specialist.
Thank you all for being here.
Susan Margles, Vice-President, Government Relations and Policy, Canada Post Corporation: Thank you for the opportunity to address this committee.
As Vice-President of Government Relations and Policy at Canada Post, it is my job and that of my team to ensure that all parliamentarians are fully informed about Canada Post and that we maintain a productive relationship.
With me today is my colleague Gerard Power, Canada Post's Vice-President, International. He represents Canada Post's interests in the international postal community and is responsible for the development and implementation of our international strategy. This includes negotiation with the Universal Postal Union and its member countries.
As the postal administration for this country, Canada Post has a statutory mandate to provide universal postal service to all Canadians regardless of where they live, and to do so while remaining financially self-sustaining.
[Translation]
Despite considerable challenges, our corporation generated $7.3 billion in revenue in 2009 and has remained profitable for 15 consecutive years. In the past 10 years, Canada Post has paid the Government of Canada almost $400 million in corporate income taxes and another $350 million in dividends.
Last September, the Government of Canada introduced the Canadian Postal Service Charter, which outlines the services Canadians can expect to receive from Canada Post. Canada Post continues to meet its published service standards and provide Canadians with postal service that is reliable and secure.
[English]
Traditionally, postal administrations have covered the costs of their obligations through revenues generated from the reserved service area for letters as well as from revenues derived from competitive services such as parcels and direct marketing.
Section 14 of the Canada Post Corporation Act states that "the Corporation has the sole and exclusive privilege of collecting, transmitting and delivering letters" to addresses within Canada.
Part 15 of Bill C-9 amends this section of the Canada Post Corporation Act and permits others to collect letters in Canada and then transmit them for delivery outside of this country.
International remailers are companies usually associated with foreign postal administrations. Remailers take large volumes of mail produced in Canada from Canadian businesses and ship it abroad to be inducted into foreign postal systems. Remailers have been increasing their presence in Canada over the past 20 years. In the past, Canada Post has taken the position that international remailers contravene our exclusive privilege. We have taken legal action against some international remailers and succeeded in court. Injunctions were awarded against two international remailers that would have prevented them from operating in this country.
In 2007, the Government of Canada, our shareholder, introduced legislation to permit these letter exporters, or remailers, to collect letters legally in Canada and send them for delivery outside the country. Following the introduction of the government legislation, the injunctions I mentioned were stayed until the intentions of Parliament were known. The current injunctions expire in December of 2010.
Canada Post's position on Part 15 is that, as our shareholder, it is up to the Government of Canada to determine what areas of the postal market to reserve for Canada Post and which ones to open up to competition. As our president and chief executive officer, Moya Greene, said recently before this committee, if the letter market is opened to competitors through this amendment, Canada Post will compete vigorously for that business. Because a market is competitive does not mean that Canada Post will be out of the game.
To remain competitive and deliver on our service commitment, Canada Post is already taking steps by modernizing our infrastructure, our equipment and our technology.
[Translation]
As part of our Postal Transformation strategy, we will invest more than $2 billion to purchase new equipment and upgrade systems and facilities across the country. At the beginning of June of this year, we opened a new state-of-the-art mail processing plant in Winnipeg, Manitoba — the first new mail processing plant in Canada in more than 20 years. We are changing the way we process and deliver the mail in order to ensure that we can continue to deliver our services in the future.
[English]
These investments and others will ensure that Canada Post is able to maintain its service commitments, compete successfully in the marketplace and remain financially self-sufficient.
Thank you. We will be happy to answer your questions.
Lynn Bue, Second National Vice-President, Canadian Union of Postal Workers: On behalf of the Canadian Union of Postal Workers, I want to thank you for the opportunity to appear before this committee on Part 15 of Bill C-9. We represent 54,000 workers in rural and urban communities from coast to coast to coast, and the majority of them work at Canada Post. CUPW urges this committee to give this small part of Bill C-9 a large amount of attention, because it amounts to partial deregulation of the public post office.
In Canada, letter mail is regulated for a reason. Canada Post has an exclusive privilege to handle letters so that it is able to generate enough money to provide affordable postal service to everyone, no matter where they live in our huge country. This privilege includes domestic and international letters.
We believe it will become increasingly difficult for Canada Post to provide universal postal service if the government erodes the very mechanism that funds this service, the exclusive privilege.
Canada Post's exclusive privilege to handle letters has received remarkably little attention over the years, but international mailers, who currently carry international letters in violation of the law, have recently taken issue with this privilege and waged a campaign to undermine the right of our post office to handle international mail.
Canada Post estimates that international mailers siphon off $60 million to $80 million per year in business. Concerns with remailers have grown as the international mail business has grown and as remailers have competed unfairly for international mail by exploiting the two-tier system of terminal dues adopted by the Universal Postal Union in 1999. It is our understanding that Canada Post attempted to address its concerns with international mailers through negotiations and finally through legal action against two of the largest companies, Spring and Key Mail.
One ruling by the Court of Appeal of Ontario stressed the importance of exclusive privilege in serving rural and remote communities, and noted that international mailers such as Spring are "not required to bear the high cost of providing services to the more remote regions of Canada." The corporation won this legal challenge all the way to the Supreme Court.
After that victory, a coalition of Canadian and international mail companies called the Canadian International Mail Association, CIMA, hired a lobbyist in an attempt to convince parliamentarians to remove international letters from Canada Post's exclusive privilege to handle letters. The government initially defended the importance of the exclusive privilege, but it was not long before it started to reconsider its position, presumably because of the CIMA lobby. Nevertheless, the government promised, in a letter to CUPW, that "no changes to Canada Post's exclusive privilege would be considered without a thorough policy analysis . . . ."
To date there has been no serious review or thorough policy analysis of the international mail issue or the impact.
The government's recent strategic review of Canada Post did not look at these issues. Unfortunately, this lack of analysis did not stop the review's advisory panel from recommending against deregulation of letter mail, with the exception of international letters.
It simply does not make sense to propose legislation before you look at the relevant issues. Canada Post's letter mail volumes declined for the first time in 2008 and again in 2009. The corporation clearly needs this revenue to maintain and improve public service. Furthermore, most people in this country are opposed to deregulation of Canada Post. They do not support eroding or eliminating Canada Post's exclusive privilege. Close to 70 per cent of people oppose postal deregulation according to a 2008 Ipsos-Reid poll.
Even the government's strategic review of Canada Post found that there is virtually no support for deregulation. The report from this review states:
. . . there appears to be little to no public support for the privatization or deregulation of Canada Post at this time, and considerable if not unanimous support for the maintenance of a quality, affordable, universal service for all Canadians and communities.
Of course, there is one group that supports partial deregulation of Canada Post and this group appears to have the ear of the government. International mailers want international letters removed from the corporation's exclusive privilege. They have argued that the English version of the Canada Post Act currently allows them to handle these letters. In other words, remailers have argued that the French version of the Canada Post Corporation Act should carry no weight and that the English version should prevail. This argument was thoroughly rejected by the courts.
Remailers have also argued that Canada Post's legal actions against remailers will effectively kill thousands of Canadian jobs, and that they should be allowed to continue to do business to save these jobs. An examination of the evidence indicates that there may be a few hundred jobs at risk, not thousands.
While we take this possible job loss seriously, the union does not think that the exclusive privilege should be sacrificed to save the jobs of businesses operating in violation of the law. The union also believes that there may be alternative ways of dealing with the issue of jobs.
With this impact in mind, we urge the committee to make two recommendations. First, we recommend that Part 15 of Bill C-9 be withdrawn or severed. Second, we recommend that measures be taken to shut down the five or six international mail companies that are violating the law, and that there be consultations with Canada Post and CUPW concerning the possibility of offering employment to workers at these companies.
We also urge this committee or another committee to study the business and job concerns of small businesses that produce or handle remail that is shipped to the U.S. and destined for U.S. addresses, and consult with stakeholders, including unions, with a view to giving advice about solutions to problems revealed by this study. Thank you for listening.
The Chair: Thank you, Ms. Bue. I am sorry, but I did not hear your second recommendation. Did you say five or six?
Ms. Bue: Five or six international mail companies violating the law.
The Chair: It is your position that there are five or six of what we are referring to as remailers operating in Canada; is that correct?
Ms. Bue: Yes.
The Chair: Ms. Margles, before I go to senators that want to engage in comments, questions and discourse with you, you made mention of the Universal Postal Union. What role, if any, has that organization to play with respect to this issue of remailers?
Ms. Margles: Mr. Power is better placed to speak to that question.
Gerard Power, Vice-President, International, Canada Post Corporation: The Universal Postal Union is a specialized agency of the United Nations. Every four years, the treaty that establishes the organization is renegotiated. It establishes the rules for transfer of mail between countries. It establishes certain baseline rates for letters that are transmitted from developing countries to industrialized countries and between industrialized countries. It also helps to establish standards for the sizes of envelopes so that manufacturers of equipment used in sorting are able to work with a common set of international standards.
It also plays a significant role in the development of the worldwide postal network so that people, whether they are in Canada or in Botswana, are able to communicate with people anywhere else in the world.
The Chair: Is this initiative in Part 15 resulting from anything that has been recommended by the Universal Postal Union?
Mr. Power: No, it is not. The Universal Postal Union typically will not become involved in domestic matters. A number of member countries of the Universal Postal Union have opened up their outbound letter mail markets; others have not. It is not consistent.
The Chair: Thank you. I will now go to senators. Next is a senator from New Brunswick, Senator Ringuette.
Senator Ringuette: Mr. Power, you have been the Canada Post person dealing with CUPW and ensuring that Canadians have good service internationally for a number of years. Who are the remailers in Canada?
Mr. Power: Several companies are involved in this business. Most have an affiliation with the post, for example, Spring was established by the Royal Mail of the United Kingdom, Singapore Post and the Dutch post. Another organization that is involved is Deutsche Post, the German post office, which also owns DHL. In addition, the Irish post has sought to open a remail operation in Canada. However, after discussion with Canada Post they decided not to do so. Belgian Post is involved in some of these activities; Swiss Post is involved in some of these activities as well. Some independent companies will become involved in these activities using the services of other foreign posts.
Senator Ringuette: Removing this exclusive privilege from Canada Post is giving a privilege to foreign postal administrations to come into Canada and pick up Canada Post revenue and take it outside of the country. People seem to mix up remailers, which are foreign posts like Royal Mail — and I think that Royal Mail has now hired the ex-CEO of Canada Post, Ms. Greene, who was in front of this committee two months ago. The issue right now is what is in this bill; namely, removing Canada Post's exclusive privilege for outbound letter mail, and giving that business to foreign postal entities.
Mr. Power: The bill will allow foreign postal administrations to compete for that business as they compete today for parcel business where we do not have an exclusive privilege. It also will give private companies the ability to collect mail. There can be a challenge for a private company that collects mail in Canada and wants to deposit it directly into, say, the German postal system, because the rates that they pay the German post for final delivery are high. A lot of those organizations will seek to find a postal administration that can facilitate, through their stamp, the mail entering, for example, Germany, as international mail, as opposed to being treated as domestic mail in Germany.
Senator Ringuette: Exactly; I do not think that UPU is giving out postmark numbers.
Mr. Power: If you are referring to the international mail processing centre codes, they are given to designated postal operators. However, there is presently an embargo or freeze on giving these codes to companies or individuals that are not the designated postal operator for a country; that is correct.
Senator Ringuette: Singapore Post is partnered with Royal Mail in this remail operation in Canada that is called Spring. With regards to UPU, however, the operation has the rates of a developing country?
Mr. Power: Singapore Post is currently benefiting from the preferential share tariffs but it will move into the target system, which is the same system that Canada Post is in. In some instances, we pay as much as three times what a developing country pays for that final delivery, but that final delivery cost is only one of the costs that a post or a remailer has in delivering mail in another country.
Senator Ringuette: The reason there is a partnership between Royal Mail and Singapore Post is that they use the developing country rates to deliver that mail and make those revenues from Canada Post. Instead of Canada Post receiving maybe 35 cents for that international letter from, let us say, France, through Singapore Post and Spring, Canada receives only 11 or 12 cents for that letter. In French we call it maraudage.
Mr. Power: France is paid less if the mail comes from a developing country than if it comes from an industrialized country and is paid at industrialized country rates. Technically, if Singapore Post were to collect mail in Canada for delivery into France, France should be able to collect from Singapore Post the same fee as Canada Post pays.
Senator Ringuette: With regard to fees, costs and so forth, when I questioned the officials from the department about returns, they did not have a clue; they were thinking about those little postcards that we receive, and if we want to subscribe to a magazine, we send them back. What is your experience with regard to remailers and returns to Canada?
Mr. Power: When one has a piece of undeliverable mail, because we exchange bags and bags of mail at a time between national postal administrations, the consignment note, in effect, should say: Here is the amount of mail that is return mail. The return mail goes back without a terminal due being paid because, in effect, the country that sent it has participated in the economic equation.
The Universal Postal Union's treaty says that if someone has mail that they need to return, they should return it to the postal administration that gave it to them. The easiest way to identify that administration is through the stamp or indicia. In many instances, postal workers are doing things quickly. They may not be able to read the language on the stamp and so they look at the country of the return address, and send it back that way.
In the event that the reserved service area or the exclusive privilege of Canada Post no longer includes the outbound international mail, it will be incumbent upon us to verify that we are paid for the returns service. We will set that mail apart. Perhaps we can give it to the postal administration that had originally received it. Other alternatives are also available.
Senator Ringuette: For instance, if an undeliverable was picked up in Canada by the remailer, or Spring, and sent to France, with a Canadian return address, La Poste should send it back to Spring to comply with their responsibility as a remailer. However, we all know that practically, they will send it back to Canada Post. Therefore, not only will Canada Post not have that revenue, but it will also have to endure the cost of those returns; is that right?
Mr. Power: That is one option, that Canada Post could bear the cost of the returns. Another option is that Canada Post returns the items to France — which is rather costly because we have to send them back to France — to say: You have returned something that should have gone to someone else.
We can return the items to the sender and ask the sender to pay a returns fee, or we can look at other means of dealing with the matter, because technically it is not mail under the convention of the Universal Postal Union.
Senator Ringuette: Mr. Power, one of my important questions is that some members of this committee have a hard time believing that some remailing activity is happening domestically, called ABA remail, which is infringing on the exclusive privilege of Canada Post with regard to the domestic market.
With regard to the issue at hand, I am concerned that this start of deregulating and the current activity of foreign postal operators in Canada will not stop at what is in Bill C-9, because they are beyond that point right now. Is Canada Post aware of remailing taking place domestically?
Mr. Power: If you are referring to mail that is from a Canadian, to a Canadian, and has a return address in Canada, a delivery address in Canada, and foreign postage, it happens from time to time. Letter carriers see this mail; they identify it and they can give it to their supervisor. There is a possibility that this issue might become greater in the future. However, it is our responsibility, as officials at Canada Post, to ensure that where something is covered by the exclusive privilege, that legislation is followed.
There is nothing in this bill that will make that activity legal. Furthermore, if there were a decision, as has happened in Europe, to open up the mail market entirely, that is a matter of government policy, and something that obviously Canada Post will have views on. However, it is for the government to decide, not Canada Post.
Senator Gerstein: Ms. Bue, a letter was sent in April of 2007 to the president of the CUPW workers, and it stated:
It is our intent to support the continued operations of international re-mailers within Canada. . . . it is important to note that international re-mailers have been operating in Canada for several decades . . .
That was three years ago, so we are close to 25 years, a quarter of a century.
The Liberal Party does not believe that hurting these small business owners would be in the best interests of Canadians.
I would appreciate your comments on that letter.
Senator Ringuette: I have a point of order. You say this quote is from a letter dated 2007. I have here a statement in the House of Commons by the Liberal critic with regard to Bill C-44. The Liberal critic is Bonnie Crombie, Member of Parliament for Mississauga—Streetsville. She said in the House of Commons, with regard to Canada Post:
. . . I have been unequivocal that we do not support deregulation or privatization of any variety.
If you want a copy, I would be pleased to show it to you.
Senator LeBreton: I have a related point of order. I listened carefully to Senator Ringuette, and she obviously has an in-depth knowledge of the operations of Canada Post. However, despite what one person or another might have said, I believe that Senator Ringuette is in a conflict of interest because she held a position in Canada Post as manager of the international trade development unit. I suggest that Senator Ringuette is advancing something with regard to her former role with Canada Post, which puts her in conflict with asking questions in this committee.
Senator Ringuette: Can I respond to that point?
The Chair: We have two points of order, the second of which is different from the first. Let us deal with the first point of order. We have duelling quotations here.
Do either of you feel competent to choose between these two different quotations? Say "no" and that will be the end of it.
Ms. Bue: I can answer the question.
The Chair: Are you familiar with the 2007 quotation by Bonnie Crombie or the quotation by the Liberal Party of Canada, as referred to by Senator Gerstein?
Ms. Bue: We know the Liberals have been split.
Senator Gerstein: The point raised in the letter is about deregulation. We are not talking about deregulation at all; we are talking about remailers. This letter is from the Honourable Stéphane Dion, the leader of the Liberal Party, stating Liberal policy.
The Chair: Where does that get us?
Senator Gerstein: I understood the critic was Joe Volpe in those days. That must have been changed too.
The Chair: I respect your views on who the critic is of Canada Post at any particular time.
Is there anyone who can help us with these quotations or can we get on with finding out what the facts are behind this legislation?
Ms. Bue: Our experience has been that the Liberals have been divided on this issue — on this bill, because I do not think they want to bring the government down over this budget bill. However, I think they did not support a past bill before the house, Bill C-44. They did not support deregulation at that time, and almost everyone said there needed to be a thorough study of the issue.
Senator Gerstein: It was unequivocal, what was stated in this letter, and I will be happy to table this letter with the clerk.
The Chair: It would be helpful if both those comments were tabled.
Senator Gerstein: I want to follow up with a question to Canada Post.
The Chair: There is a second point of order, which you do not have to restate because it was made on top of the first one. Now that we have dealt with the first one, second point of order.
Senator Ringuette: I am not in a conflict of interest. I would be in a conflict of interest if I still occupied the position. I am not in a conflict of interest, except for the fact that I know what I am talking about here. That is the only conflict one can bring up in this committee with regard to my knowledge of the importance of this issue to Canada Post, its future and its future financial capability to deliver rural mail and to all citizens of Canada at a decent price. That knowledge is my only conflict in this situation. Senator LeBreton, I want you to withdraw that insinuation immediately.
Senator LeBreton: I absolutely will not. I have been around long enough, like some people here, to remember back in the late 1970s and early 1980s when Canada Post was made into a Crown corporation. At that time, people were sitting around committee rooms like this one bemoaning the fact that it was the end of the exclusivity of Canada Post, even though at the time an employee survey at Canada Post found that people who worked there would not even admit they worked for Canada Post. It was changed into a Crown corporation in 1981, under a government of your persuasion, and then carried on and further expanded upon by a Conservative government.
I believe, Senator Ringuette, this provision is a simple clause in this bill, and the Canada Post people adamantly stated that they are not out of the game. Canada Post is not out of the game. They will compete for this business.
You questioned Moya Greene about going to the Royal Mail as if there was something wrong with that, yet you do not see anything wrong with the situation where obviously the position you had at Canada Post was specifically to keep other people out of the business, in your position as manager of the international trade development unit.
I will not withdraw the point of order. Whether it is a legitimate point of order or not, it is something I want the record to show.
The Chair: Thank you. If you are admitting it is not a legitimate point of order, we can move on with the business at hand. You have it on the record.
Senator Murray: I want to make one comment here. The term "conflict of interest," in our world, has a definite legal and ethical meaning. I take the point that Senator LeBreton is making and that Senator Ringuette has confirmed. Senator Ringuette used to work at Canada Post and she has, as Senator LeBreton has suggested, an in-depth knowledge and she may be conflicted. However, a conflict of interest is a serious charge to make and, if pressed, you will have to prove it.
Senator LeBreton: I will withdraw "conflict of interest" and insert the word "conflicted."
The Chair: You have made your point. Let us proceed. Senator Gerstein, having dealt with two conflict of interest allegations, you, sir, have the floor.
Senator Gerstein: Ms. Margles, going back to the former president, Ms. Greene, she made this statement with regard to remailers:
It affects a tiny subsection of the mail, and I believe that we can compete vigorously and successfully for that subsection. Of the many challenges that face Canada Post, I do not consider remailers to be anywhere near the top 10 list.
Will you confirm that is still the case today, with her departure?
Ms. Margles: Absolutely: In fact, the estimates we have made of the potential revenue that would be at risk, that we absolutely would be competing for every single day, is quite small in the context of our overall revenues which are, as you may know, more than $7 billion every year. It is a small portion.
Moreover, we are facing huge challenges everyday in terms of the reduction in volumes of the letter mail we are seeing domestically, in terms of competing on a day-to-day basis in our parcel business with companies like UPS and FedEx, and in terms of the kinds of substitution that we are competing against in our direct marketing line of business. We have big challenges. I tried to lay out, in my opening statement, some of the ways we are addressing those challenges in terms of our postal transformation. Remailing is a challenge, absolutely, but we believe we can take it on.
Senator Gerstein: Thank you very much. There was no part of your comment or answer that I did not understand.
The Chair: Let us confirm: You indicated the total revenue of Canada Post is approximately $7 billion per year.
Ms. Margles: Yes, sir.
The Chair: The comment was made by Ms. Bue that this particular remailing business is around $90 million. Do you agree with that number?
Ms. Margles: It is difficult to put a number on the total size of the remailing business because we are dealing with competitors. We would not reveal those numbers to our competitors, nor have they revealed them to us.
However, based on the part of the market that we still have and the kind of market intelligence we have from our sales and marketing people across the country, we believe the revenues at risk would be somewhere between $40 million and $80 million. If you compare that number to revenue of more than $7 billion, that is the basis on which I am saying it is a small part.
Senator Baker: Thank you, Mr. Chair. I congratulate the witnesses. I suppose I would have said exactly the same thing as the witnesses have said in putting forward their arguments. I suppose I would say the same as the future witnesses will say in competition with those arguments.
As the sober second thought, with the institutional memory that we have, I want to ask you to verify the history of this amendment that we are talking about. It was Canada Post — Ms. Margles — that said that since the beginning — and I presume that would be 1981 — Canada Post has objected to the contravention of the act by certain companies. That is what I heard Ms. Margles say. The union says the law has been broken since 1981. That is not my recollection, as far as Canada Post is concerned.
Correct me if I am wrong in my recollection, because my memory sometimes fades. In the 1980s and 1990s, Canada Post encouraged — it even had joint ventures with — mailers who were depositing mail outside the country, and an industry grew up in Canada for 20 to 25 years. Do you deny that?
Ms. Margles: I am not in a position to deny it. Unfortunately, I was not with the company at that time. I have looked back at the history, and I think it is fair to say that the role of the company is to defend the law as it exists at any point in time.
Senator Baker: Let me ask you this: When did the law change?
Ms. Margles: It has not changed quite yet.
Senator Baker: Wait a second now. The interpretation of the law changed. It was the Court of Appeal of Ontario that changed the interpretation, and that was in 2005. The Superior Court of Ontario gave a ruling in 2004, and you read out the words at the beginning. It says that you believe you have exclusive rights within Canada. Those were your words. You are quoting what section 14 of the Canada Post Corporation Act says in the English.
Ms. Margles: Yes.
Senator Baker: However, the French interpretation of that section does not say so. Somewhere in 2004, a lawyer in Canada Post decided to challenge the interpretation of the Canada Post Corporation Act. I say "challenge" because you were not challenging it in any court up to 2004. Do not forget that this issue goes back to 1981 when these companies were forming in Canada. They had all these employees and you allowed them to continue without an objection. You had joint ventures with them and so on. Is my understanding incorrect on that point? Is that as you remember the history of the corporation and its dealings?
Ms. Margles: As I say, I was not at the corporation throughout that entire history. Today, I am in a position to speak to what we have before us, which is what I described in my opening statement. We did go to court, and there were injunctions. However, as the shareholder, it is the Government of Canada's right to determine what the policy and the extent of the exclusive privilege will be. It is our job as management at the company to do our absolute best to continue to meet our mandate in the context of that policy as it is set out for us.
Senator Baker: Yes, there were injunctions, but do you recall that the injunctions were imposed by a Superior Court of Ontario judge who gave the Parliament of Canada six months; a judge who stayed the injunction. In the judgment, it said that the court would wait six months to find out what the Parliament of Canada's intent was. That was in the last six months of 2006. In January of 2007, the government announced its decision.
How can you say it was illegal for these companies to operate if there was a six-month period of waiting imposed by the Superior Court judge, and then a stay put on the injunction until December of 2010, which you admitted in your statement? At what point was it illegal to do anything concerning the subject matter of what we are talking about?
Ms. Margles: I am afraid I am not a lawyer, and I am afraid I do not feel I am in a position to comment on the statement you are making except to say what I have already said, which is that our position is that the government, as the shareholder, will determine the size of our exclusive privilege, and it is our job at this point to find a way to continue to meet our mandate within whatever changes the government deems appropriate.
Senator Baker: Believe me; I do not side with this issue one way or the other. I like Canada Post the way it is. I like the exclusive nature of Canada Post, but I recall the procedure vividly up until this point, and it confuses me sometimes. You sought damages against those companies. You not only sought to stop it, but you sought damages, on which there was an adjudication, but I presume that has been stayed as well.
Mr. Power, please answer this question. I am sorry; it is a confusion I have, but at my age, I think about it and say: Am I right or wrong? Is my memory failing me?
When was it illegal to do what these companies are doing when you have had stays of injunctions and periods of waiting, the injunction period runs out in December and the judge rules we will wait to see what Parliament does?
Mr. Power: You are correct in saying there are stays in place. That is not uncommon in the case of an injunction. An injunction itself is the form of relief that a court gives on the basis of equity. It does not mean that when a stay is granted that the activity becomes legal. It does not mean that when an injunction is not granted that something is necessarily legal. Those are two different houses of the law we have to deal with.
In this particular case, we have a stay in place that we have consented to because it was made clear to Canada Post that the will of the government was that there would be changes to the Canada Post Corporation Act to make these activities legal. Twice there have been bills that would have done that. In one case, a bill died on the Order Paper when an election occurred. Another time, it died on the Order Paper when Parliament was prorogued. Now we have it within the budget bill, so we have that certainty that the changes will be made.
Senator Baker: You have certainty, but not a change in the law, not a change in the practice of the law, and you have made profits over the past 10 years under this regime. Companies are operating today, at this very moment, doing what you say is illegal to do. Why do you claim that there will be this great loss of profit? What we are talking about here is anything below 800 grams; is it not? We are talking about a letter.
Mr. Power: It is 500 grams now. It is a letter.
Senator Baker: It used to be 800 grams.
Mr. Power: It has been 500 grams since 1981 when the Canada Post Corporation Act was passed. I understand you have institutional memory.
From Canada Post's perspective, we have been aware of violations of the exclusive privilege that were entirely domestic. There was the Postpar case that went to the Quebec Superior Court in 1985, and a decision came from that court in 1987 with a permanent injunction. That was one example.
There were municipalities that had violated the exclusive privilege. We have had long and extensive discussions with them about the violation of that exclusive privilege on a purely domestic perspective.
As Ms. Margles pointed out, Canada Post is a $7 billion company, and Canada Post has to look at where to expend its limited resources, not in terms of the enforcement of the law but in terms of the measures that are necessary to ensure it has sufficient revenues to cover its costs. Following the 1999 UPU convention, a two-tier scheme of terminal dues was created where developing countries were paying less than industrialized countries. At that point, we saw a dramatic change. Those changes did not come into effect until 2001.
Following 2001, we saw the Irish post office knocking at the door saying it would open a post office in Canada to collect mail from Montreal and Toronto to send to the rest of the world. We said to the Irish post that we do not think it had the authority to do that. Ultimately, the Quebec Superior Court agreed, and we had an injunction at that point. Subsequently, we obtained injunctions with respect to Key Mail and G3 or Spring.
Senator Baker: I am still confused, Mr. Chair, but perhaps my memory is not correct. I think my memory is correct; do you not think so, chair? You are a lawyer — a great lawyer.
The Chair: Sorry, I only try to run the meeting.
Senator Baker: Anyway, I did that simply for the viewing audience. Somehow, all these illegalities have been taking place for years, when that was not my memory of the situation.
Senator Marshall: Ms. Bue, can you explain further why CUPW is adverse to this legislation? It does not prohibit Canada Post from participating. When Ms. Greene, the former CEO, testified, she said that the corporation would compete with the private sector for this business. The legislation is not removing that line of business from Canada Post, so why is CUPW opposed? It seems to me that by allowing others to participate, it opens up the area and gives consumers another choice. Can you explain from that point of view?
Ms. Bue: We think that in the end it can have a bad effect for consumers. The post offices are having a hard time right now. Canada Post has had profits. It has lost mail for the first time since 2008-09. We do not know what the future is. The United States and the economy are drastically affecting the post office because a lot of mail comes from the States, and we do not know when that situation will turn around. It may be hard times for a while.
We also know that deregulation may be the thin edge of the wedge, but when deregulation comes in, there is often job loss and loss of revenue. Cities will continue to receive mail because they are profitable. It is the rural areas, the small towns, such as in Newfoundland and Labrador, and my place in Saskatchewan, where they will say, We do not have the money to do that. We think that is the beginning of it.
I am glad Moya Greene said they would compete, but if I were here as the president of a corporation that gets jobs through the government, I would be super woman and say I could do anything as well. If that is possible, why take $60 million to $80 million, which is what we were told that amount is, and start giving it away? That business may grow because of the worldwide business. Why give away some of that mail? This is one of the most expensive countries in which to deliver mail. We are not Germany, Ireland or Great Britain with a huge density, or even the United States. We have this huge area. The government wants people to be able to survive in these communities. The post office is the lifeblood of a community. Soon the post office will say, We cannot do it. Big businesses will say, We want to deliver it, and we want the cities. What will happen to these small communities?
We think it is the edge of the wedge. We are worried about it. There will be pressure from Europe, from these big, strong post offices and governments. They want the business all over. They will not go to the rural communities.
Senator Marshall: You say Canada Post is going through hard times. It seems to me that is not a good excuse to allow Canada Post exclusive jurisdiction in this line of business. It is not necessarily all big businesses that will compete with Canada Post. We have heard from small businesses, too. From my perspective, it seems fair to throw it open and let everyone compete. Competition is good. May the successful bidder or the successful enterprise win.
When Ms. Greene testified before the committee, she was the CEO of Canada Post, so of course her words carry weight, but she enthusiastically endorsed this legislation. She felt that Canada Post would get in there and compete. It seems to me to be fair to throw that business open for those who want to participate or compete.
Ms. Bue: If you look at the strategic review, first, almost everyone said, do not deregulate. They want the universal service. Even the government most times said we need to have a thorough policy review. In the report that came out in December of 2008, there was no thorough policy review of what this move would mean.
Senator Marshall: I do not see this legislation as deregulating the postal service. That is a big leap when you say that.
Ms. Bue: I think it is partial deregulation. At Canada Post, we have exclusive privilege to deliver this mail. That privilege was put in place to ensure this country can support a universal postal service. We do not have exclusive privilege on many other services, such as parcels. There is other mail in which we do not have exclusive privilege. I think we need to keep that core business so we can have that service.
Obviously, if the government passes what our union finds fundamentally undemocratic — in the midst of all this bill there is one little sentence that throws the post office open to partial deregulation — then of course we hope Canada Post will be able to compete. However, our concern is the service, especially in remote areas. I think this is the beginning of more and more deregulation. I am not confident about where we will go next.
Senator Callbeck: Thank you all for appearing today. Ms. Bue, in your presentation, you say on page 2 that "The government initially defended the importance of the exclusive privilege." You go on to say that the government promised in a letter to CUPW that "no changes to Canada Post's exclusive privilege would be considered without a thorough policy analysis." What time frame are we talking about here? You say the government initially defended the importance of exclusive privilege, and then they changed their mind. When was that change? Do you have a rough time frame?
Ms. Bue: I will check with Ms. Steinhoff because I have lost my report.
In a letter to us on July 25, 2006, from the office of the former minister responsible for Canada Post, Lawrence Cannon, he said there would be a thorough policy review before there was any change to the exclusive privilege. Then we started to see the bills come forward. I believe it was Bill C-44 and Bill C-14, which did not make it through.
Katherine Steinhoff, Communications and Research Specialist, Canadian Union of Postal Workers: I believe it was in 2006 that they promised a thorough policy analysis which, as Ms. Bue pointed out earlier, has not happened. I challenge anyone to read the report of the Canada Post Corporation Strategic Review and show me where in that document there is anything resembling a thorough policy analysis. It has not happened. Nothing should happen until that analysis happens.
Senator Callbeck: You were promised in a letter in 2006 that nothing would happen until there was a thorough review.
Ms. Steinhoff: They did not promise that nothing would happen. They just promised to do a thorough policy analysis.
Senator Callbeck: You say that no changes to Canada Post's exclusive privilege would be considered without a thorough policy analysis.
Ms. Steinhoff: Yes; we can present that letter, if you like.
The Chair: If you send it to the clerk of the committee, with whom you have been in contact, he will see that everyone in the committee receives a copy. Was it in both official languages?
Ms. Steinhoff: We have had it translated.
The Chair: That would be great, because it saves us time.
Senator Callbeck: No study was done, and that strategic review of Canada Post did not address this issue at all. Is that right?
Ms. Bue: No; there was nothing in this review except finally this recommendation that there should be no deregulation. No one supports it, and if you look at the presentations, no one supported it except I think there was one. At the same time, at the end, they made a recommendation. We do not know what the recommendation is based on because there was nothing in the review explaining why they would make a recommendation not to deregulate anything except international mail.
Senator Callbeck: There was no explanation?
Ms. Bue: No explanation.
Senator Callbeck: Is there anything in that report that tells us how much international mail leaves Canada internationally, and how much is through Canada Post, how much is through private industry and how much it costs?
Ms. Bue: No, I do not think so.
Senator Callbeck: No analysis has been done that you are aware of?
Ms. Bue: No; if you are wondering about jobs, we were told by CIMA that there are five or six businesses in Canada. That is where that number is from. Among them, they have about 110 employees, so we estimate there to be about 300. That information was not in the review. That is from CIMA.
Senator Callbeck: Has there been any analysis by Canada Post in this area at all?
Ms. Margles: Yes, some analysis has been done, but as I pointed out, because we are dealing in a competitive market place, it is difficult to obtain exact numbers. The estimate we made is the one I mentioned earlier, that about $40 million to $80 million of revenues could be at risk if this change is made, and that figure again is on a base of more than $7 billion of total revenue each year.
Senator Callbeck: Are we talking revenue or net?
Ms. Margles: Revenue.
Senator Callbeck: I ask both of you, in your honest opinions, do you feel that these measures will threaten the integrity of Canada Post as a Crown corporation to be able to continue the services to the rural areas? That is where I am from, and that is my concern. If Canada Post loses revenue, what will happen?
I understand that this government has already closed 42 rural post offices and closed 55,000 roadside rural mail boxes. Will these closures continue in rural Canada?
Ms. Margles: I can tell you unequivocally that this one change will not have an impact on our service delivery or the number of post offices in rural Canada. We are committed to our service in rural Canada. We have invested tens of millions of dollars over the past several years to improve our network in rural Canada and to introduce technology into post offices there.
With regard to the Rural Mail Safety Review, which you mentioned, we are doing our utmost to ensure that only when a mailbox is not safe do we consider any alternative or change to delivery. This change will not affect our commitment, which is laid out for us in the Canadian Postal Service Charter, to continue to consider rural delivery as integral to our entire delivery network.
Senator Callbeck: How will you reassure Canadians of that commitment in view of the track record of closing 55,000 roadside rural mailboxes and 42 rural post offices? Ms. Bue talked about the post office being the lifeblood of rural communities. I agree.
Now the government has brought in legislation that will reduce the revenue of Canada Post. My concern is that, to try to balance the books, Canada Post will look at rural Canada again.
Ms. Margles: Senator, I can only restate our absolute commitment to delivery in rural Canada and to rural post offices. As you know, there is a moratorium in place against the closure of rural post offices. That moratorium was reiterated in the service charter put out last September.
As to reduction in revenues, we face many challenges on the revenue front, and we have already done many things to address them. For example, we reduced the ranks of our management by more than 12 per cent last year. We faced a $500 million reduction in revenue last year, and we were able to cut costs to remain profitable in the face of that reduction. We have introduced our postal transformation, which will invest more than $2 billion across the country to allow us to reduce our costs and be more efficient so that we can continue to meet our service commitments in both urban and rural Canada.
Senator Callbeck: I hope you are right.
I will ask both of you a question. These changes to Canada Post were in stand-alone legislation introduced in the House of Commons twice in Bill C-14 and Bill C-44. Now the changes are lumped into a 900-page bill. How do you feel about that approach? I believe that if the government felt that the post office is as important as I do, there would be stand-alone legislation, and it would not be lumped in with all these other things.
Ms. Margles: I am not in a position to comment on that point. It could be a reflection of what I have already said, which is that Canada Post has many challenges today, and this is one small one that we believe we can take on and do well with.
Ms. Bue: A thousand cuts — where will the service be cut? The communities that you are talking about, like mine in Saskatchewan and yours in Prince Edward Island, have fought hard to ensure it does not happen, and they will have to continue to fight. These communities still have service because of their commitment to the public post office.
We think it is clear that the government grew impatient with the democratic process, and we are not happy with this impatience. Why do we not have a stand-alone bill with real debate and study so that everyone can decide whether this legislation is in the best interests of the public, and whether the post office will survive all these cuts?
There are 13,000 rural workers at Canada Post. It is difficult to keep good jobs in rural communities. It is not only having the post office that helps the communities stay viable, it is also the jobs. The communities cannot afford to lose these jobs. If Canada Post loses revenue and needs to cut back, it will not be the cities that will lose, it will be the small communities.
Senator Callbeck: I agree with you 100 per cent.
Senator Runciman: It would be nice to see that, in the current negotiations, CUPW is trying to ensure that rural post offices remain open. I encourage that support. I represented a rural area for 29 years. I think this government has indicated its concern and support for rural post offices with the moratorium.
I appreciate Senator Baker's questioning. It may have confirmed your view that there is division in the Liberal ranks. I thought his questioning helped our cause.
Senator Ringuette quoted Ms. Crombie, but I believe that was speaking to the broader issue of deregulation. I will repeat a quote I put on the record earlier. John McKay, a member of Parliament from the Scarborough area, said in this past session of Parliament:
Canada Post is pursuing injunctions against a number of small Canadian businesses that are in the business of international remailing, some of which have been in the business for 20 years. Thousands of employees will lose their jobs, hundreds of businesses will close and Canada will lose $150 million in business.
That is his view on the issue we are dealing with.
Ms. Bue, I believe you quoted the independent advisory committee study. Do you question the independence of the panel that was engaged in that study?
Ms. Bue: No; it is curious. Without showing anything in the study — and I do not think you can find anything — why would they make that recommendation?
Senator Runciman: They have recommended that Canada Post's exclusive privilege not be diminished, that Canada Post not be privatized and that Canada Post continue to ensure universal postal service. You like three out of four. It is number four that you do not like.
I have a summary of that report, which indicates that this recommendation comes following a comprehensive review of information and consultations with many stakeholders, some of whom supported the maintenance of the international mail market and others who opposed the continued operations of the industry. I have not had access to this report, but they concluded that maintenance of this industry will not impact the future sustainability and growth of Canada Post or Canada Post's exclusive privilege and ability to provide universal postal service. I think you believe they did a good job on three of the four issues they dealt with in that report.
My concern is that we are talking about thousands of jobs. This business has been in operation for many years, while I gather Canada Post and others did not realize it.
Senator Ringuette also referenced returns of undeliverables. I have a letter here from the Canadian Federation of Independent Business. I gather the federation talked to Canada Post about this issue, because it has been raised by others. Canada Post indicated that this business is but a fraction of a per cent of their total overseas mail. Canada Post said that this small cost is hardly justification to monopolize a business that employs so many Canadians in small- and medium-sized enterprises.
The Chair: Senator Runciman, if you are quoting the testimony of witnesses who are not here, can you please file it?
Senator Runciman: I will do that. It is a letter from the vice-president of national affairs of the Canadian Federation of Independent Business. I will be glad to provide that letter.
Do you want to respond to that comment provided by the CFIB to me?
Ms. Margles: The small percentage is very much in line with what I have already said. I hate to bore people by repeating myself, but I have spoken of $40 million to $80 million of revenue on a base of $7.3 billion. There is no question that the legislation will be a challenge, but we believe we are up for that challenge and we will compete to keep as much of that business as possible while providing the best product possible to our customers.
The Chair: You have said two or three times that you are losing an exclusive privilege but you will fight hard to keep as much of that business as possible. Can you compete outside of Canada and try to develop business in England and wherever else you have talked about? Can Canada Post compete for that business, and will you compete for that business?
Ms. Margles: I believe under the framework that exists that competition will be possible. Whether it is within our business strategy, and looking at all the commitments we have to deliver on our service promises today, I am not sure we would choose to go that way. However, I believe it is possible.
The Chair: That is not part of the plan to try and make up any lost revenue. Is the plan to compete on an equal footing with your competitors?
Ms. Margles: We will look at every option. We have to look at every option because, as I said, we face many challenges and there is no question, mail is declining and we have competition on almost every front so we will look at every option possible. However, it will always be within the context, senator, of the service commitment that we have and the necessity of remaining financially self-sufficient.
The Chair: That is understood, and I am wondering what other options you are looking at. That is what I was trying to say. You are losing something. What did you get for that?
Ms. Margles: I do not think it is as simple as losing this business and getting that business. A lot of our focus is, as I say, on our cost structure right now because obviously, with such a large network, the postal transformation is key, but I can tell you that there are people within our transaction mail line of business and within Mr. Power's shop on international who are looking at every option.
I am a bit reluctant though, because I know others are appearing on later panels that might be head-on competitors with us in the future, but I can assure you we will look at every opportunity to ensure that we can continue to meet our mandate.
The Chair: Thank you. We have no doubt of that.
Senator Mitchell: I am concerned about rural Alberta — I am from Alberta — and rural Canada. One of the key elements of rural communities is a post office and postal service. They lose their school, they lose their gas station, they lose their bank, they lose their credit union, they lose their post office and there is no town. I absolutely do not accept that if you are making money in a business here under the postal service that it does not help you subsidize business in rural Alberta and rural communities elsewhere.
Ms. Margles, you argued yourself that you use income from certain areas of service to subsidize other areas because this country is huge. Is this legislation perhaps another step in a slippery slope that is increasing its incline, and that is, no parcels and no remailing, maybe. All the arguments you are applying to say it is okay to privatize remailing can be applied to privatizing the whole operation.
I know you give me a nice smile about that, but I know the ideology of this government. Canadians know the government's ideology and they see it when those post offices close in rural Alberta. The government says it is defending rural post offices but they are not. In your estimation, is this legislation a slippery slope or is it not? Why should we have any confidence that the next slide will not be deeper and deeper into that corporation's ability to provide the kind of service that, in many respects, has sustained the unity of Canada and rural communities across this country for literally decades and decades?
Ms. Margles: Are you addressing the question to me?
Senator Mitchell: It is addressed to anyone who wants to answer.
Ms. Margles: All I can say is, there is no question that we continue to face new challenges every day. I think that it would be difficult, and it would be a stretch, to say that this one change will result in what you are implying. I believe that we have many challenges. This area is one of those challenges. We have many commitments and our commitment to rural Canada is one of our important commitments.
We are constantly working — the management team at Canada Post — to balance all of those challenges. The changes we are making in things like postal transformation are absolutely meant to make up for challenges that come from this change, or perhaps other changes that we will see in the marketplace in the future. However, what remains at the heart of that issue, senator, is the service commitment we have, our mandate, the moratorium on the closure of rural post offices and the service charter. All those changes and everything we do to react to them are to try and maintain that balance.
Ms. Bue: I am worried about where the government is going to be about the post office and protecting it for rural Canadians. Even if Canada Post competes with this business, they will not do what the remailers do and go to developed countries, when a system was set up and an agreement was made through the United Nations for developing countries to have a better deal so they can support a post office. The industrialized countries did not think that the mail coming from another industrialized country would slip around that agreement and be sent through a developing country. This practice puts the whole system in jeopardy and these remailers are being subsidized. I do not think Canada Post will be able to compete with that business.
This bill may be the thin edge of the wedge, but we have seen the kind of fight the communities have had to put up, and they have. They have fought hard for these post offices and to keep themselves viable.
Canada Post may want to support rural post offices, but if they lose money, how will they support them? Will they come to the government and say, can you give us some money to keep the rural post offices going?
Senator Mitchell: The government representatives have been saying they will compete for this business. On the one hand, they say they will complete hard for it and on the other hand, they say it is not even one of their top ten priorities. Do I believe they will compete for it? I do not. If they were planning to compete for it, why are they not competing for it now?
Ms. Margles: We are competing for it now, senator.
Senator Mitchell: Are you winning it?
Ms. Margles: We are winning some of it, sure.
Senator Mitchell: Will you win all of what you will lose?
Ms. Margles: It is hard to know in a competitive business how much we will win or lose. If I look at our parcel business, which has already been competitive, sure, there are certain contracts that we keep on a year-to-year basis and there are other contracts we lose, and we make up for the loss by winning new customers. I foresee this area of the business being similar. We will be in a better position to meet the needs of some customers than these remailers. For instance, remailers will not be set up with a network to pick up mail from individual consumers. We are talking about remailers competing for mail from large business customers. Some of those customers are customers of ours in direct marketing in parcels, and we will be able to make them an offering that either keeps them with us if they are with us today, or we may be able to win them from the international remailers in the future. Competition is not only on price; it is on the service and the product we offer.
Senator Mitchell: None of the people you compete with will have to subsidize parts of the country for mail delivery and mail service that are expensive to deliver to. You always have to keep that subsidy in mind. Otherwise, if you do not, then we are going down a slippery slope. I do not believe you will compete particularly successfully for this business if you are paying regard to places like rural Alberta and their post boxes. It does not make logical sense.
I have one last question. If you are so ready to compete, do you have a business plan? Do you have a team that is developing a business plan to compete for that business? Of the $40 million to $80 million — the post office does not even know how much there is, which makes me wonder how close they are to analyzing being competitive in it — how much is profit? How much of that amount is profit that you will walk away from or you will lose because of this bill?
Ms. Margles: First, let me say we are not walking away from anything. We absolutely will compete, and we do compete successfully in many markets today, including the parcel market and the direct marketing market.
Second, yes, we have a team that is developing a business plan. Of course, as I said earlier, in a competitive business it is not that wise to expose our business plan, or what our profit margin is when we know we have competitors listening. I will say only that if you look to where we have been successful in the past, such as in the parcel market, in the direct marketing business, we know what we are doing, we will have a plan and we will execute on that plan. I do not believe I said this business is not on our top 10 list. I believe I said that we have many challenges.
Senator Mitchell: You absolutely did. You said this business is not a top 10 priority.
Ms. Margles: If I did, then it was a slip of the tongue because what I meant to say is that we have many challenges and this one is among them.
The Chair: Thank you. Honourable senators, I remind you that we have another panel on Canada Post following this one. We have about 10 minutes left on this panel and I have four senators. My list grows every time I look down. I have Senator Finley, Senator Dickson, Senator Moore and Senator LeBreton.
Senator Finley: Thank you very much for your presentations.
By the way, Senator Mitchell is an absolute expert in the principle of disappearing credit unions. I mention that point to you.
I am surprised, Ms. Bue, by your comment that you did not know what the inputs were, or what the basis was of some recommendations in the strategic review advisory. According to the summary, among the inputs received were 23,500 postcards and documents from members of the public from across the country as a result of a campaign by the Canadian Union of Postal Workers, Canada's largest union. You obviously tried to skew a particular issue here. Can you tell me what those postcards were relevant to?
Ms. Bue: I will ask Ms. Steinhoff to explain. We were trying to bring attention to this issue. The strategic review was happening over the summer and we thought it would happen without the public and the municipalities even knowing that there was a review. The time period was short, and this information was to bring awareness to these small communities.
Senator Finley: Obviously you received feedback, I assume, of some description; that is where it came from.
Ms. Bue: Yes.
Senator Finley: What was the feedback driven by?
Ms. Bue: We did not receive feedback on the international remailers. We are saying that within this review, we have explanations of why the advisory panel made recommendations on other matters but not on the remailers.
Is that correct, Ms. Steinhoff?
Ms. Steinhoff: It was not so much the input as there has been no policy analysis. We know who made submissions to the strategic review, but there was little analysis.
Senator Finley: Further to the summary, the advisory panel also commissioned a number of research studies in areas where it felt that it needed in-depth professional independent or expert analysis. These areas included public policy and universal service obligations. Are those studies under way at the moment or have they been completed? Perhaps Ms. Margles might know.
Ms. Margles: My understanding is that all the studies that were commissioned were completed before the review was submitted, so those studies would have been completed for Dr. Campbell and his panel.
Senator Finley: They would have been part of this review?
Ms. Margles: That is my understanding, yes.
Senator Finley: There was a certain amount of consultation, inputs and analysis?
Ms. Margles: Absolutely; a website was put up, and press releases were issued to make people aware. Dr. Campbell and his panel went across the country and met with several witnesses. In the back of the review, there is a list of all the submissions they received. There was wide consultation, I would say, in preparation for that report by Dr. Campbell.
Senator Finley: One final question: I am confused about the scope of the employee situation here.
Early in your presentation, Ms. Bue, you mentioned that only a few hundred jobs are at stake here and they might well be absorbed by CUPW or Canada Post. However, a former post office employee, in fact a shop steward, presumably with CUPW, said in 2008, talking about then Bill C-14:
In terms of the second question the member asked, about the representation that approximately 10,000 Canadian jobs are dependent on the passage of Bill C-14, I believe the member is correct in that figure. I believe that is the approximate number of jobs. . . .
Those statements were by Marlene Jennings. Can you tell me what the difference is between your take of a few hundred jobs and her suggestion that 10,000 jobs might be involved?
Ms. Bue: We obtained from CIMA that there are about 110 employees in the two main companies where they have employees, and then there is subsidiary business from the printers or mail houses. Right now we do not have that work, so we do not see an immediate loss of jobs. We are more concerned about the revenue to support the post offices at the moment. We think this bill is the beginning of deregulation, and I am not sure about the 10,000.
Senator Finley: It is not the CUPW jobs we are talking about here; it is the jobs that are attached to, and support, the remailing industry, which you said were a few hundred jobs. Marlene Jennings, who presumably has knowledge of this area, said there are 10,000 jobs. We already know that it has not had much effect on CUPW because your own president, Deborah Bourque, said in 2007:
No, I couldn't say there's been a decrease in our membership because of the competition.
She was referring to the remailers. This business has not had much of an impact in terms of the union here; am I right?
Ms. Steinhoff: As Ms. Bue said earlier, CIMA indicated there are five or six businesses that work primarily in remail. At the time, in 2007, they told us there were, I think, 70 employees in Spring and 40 in Key Mail; and based on the five or six, we estimated there were 300 to 400 jobs operating primarily in remail.
In addition to those jobs, there are the associated businesses in printing and mail houses, which, as far as we know, are not primarily engaged in remail but are associated.
Senator Finley: Those businesses will be affected if the remailing industry disappears?
Ms. Steinhoff: Yes; at the time, the Canadian dollar was going up in value and we presumed that many of the problems they were having could be related to the rising value of the dollar as well. Again, this effect is one of the reasons we think there needs to be more analysis than there has been to date.
Senator Dickson: I am as concerned as everyone else about rural mail delivery because I am serviced by rural mail delivery. Particularly, the post office workers do an excellent job.
I am looking now at the House of Commons Standing Committee on Finance minutes of May 11, 2010. The president of the Canadian Union of Postal Workers gave evidence at that time and said that the CUPW membership had not been affected. You have 54,000 members and you represent people in urban areas. You now represent people in rural areas, so I guess at one point in time you did not represent people in rural areas. I do not have the history that Senator Baker has, but that is my recollection.
Notwithstanding that the mail volume has decreased internationally, your membership has not suffered; is that correct?
Ms. Bue: Correct.
Senator Dickson: Furthermore, to put balance into the discussion relative to rural mail delivery, having had a briefing on rural mail delivery not too long ago here in Ottawa, I understand that some of the rural mailboxes were closed for safety reasons as a result of discussions between CUPW and the post office. Is that correct? Can you give me some sense of the number of changes that occurred as a result of those discussions?
Ms. Bue: A number of those mailboxes were in dispute and were not agreed to by the union. Once in a while there is a road that used to be rural and is now busy, and we have to look at where that mailbox is situated. Our view is that most times, moving the mailbox will take care of the problem. Often we have had one or two mailboxes that may be in trouble, and we have had whole communities or a whole area where the mailboxes have disappeared. We are having disputes about that issue.
Now when we have a dispute, if someone says there is a safety problem, both the union and Canada Post — as it should have been under our collective agreement — look at the situation before there is a decision about whether it is unsafe.
Senator Dickson: Do you have any sense as to how many mailboxes were moved as a result of intervention by your membership? In other words, how many disputes has the membership won versus how many the corporation has won, as to where the boxes will be relocated?
Ms. Bue: I do not have those numbers with me. I do not deal with that area directly, but I can provide that information to you.
The Chair: You can send any information to the clerk and it will be distributed to everyone.
Senator LeBreton: I have one specific question for Mr. Power. Following up on a question by Senator Ringuette, when we talked about returns, you outlined several options. One of the concerns Senator Ringuette had was that returns were coming back and landing on Canada Post's desk to handle. How much are we talking about in terms of volume and dollars related to returns?
Mr. Power: Because it is hard to obtain straight information on the industry of remailing in terms of the size of the industry, the comparison I will draw is to the United States where somewhere in the neighbourhood of 2 million pieces per year come back into the country with bad addresses.
Senator LeBreton: Into the United States?
Mr. Power: Yes.
Senator LeBreton: It is proportional to the population.
Mr. Power: If we were to say 200,000 pieces in Canada were coming back with a bad address, that figure would be 10 per cent but, frankly, we do not know. We will find out over time. We have to devise the appropriate mechanism to deal with that situation. The treaty gives us a number of mechanisms that we can follow, and we will decide on which one. Obviously, policy consultations may take place as a result of that process.
Senator LeBreton: As a final comment on the rural mail delivery, I will put on the record that it was our government that brought in the measures to maintain rural mail delivery service. I am glad Senator Dickson asked questions about the mailboxes because we heard that a lot of these issues on country roads, once rural mail delivery fell under CUPE, that was the basis of the concern for people who live in rural parts of the country.
The Chair: Thank you, Senator LeBreton. Senator Moore, is your question specific to these witnesses?
Senator Moore: Oh, yes.
The Chair: Go for your very best question.
Senator Moore: Thank you, witnesses, for being here. On page 2, Ms. Bue, you mention that international mailers siphon off $60 million to $80 million per year. Ms. Margles, you said that Canada Post grosses between $40 million and $80 million. We are looking at a total, I guess, and I assume this total is a combination of both these numbers, of $100 million to $160 million?
Ms. Margles: Can I give a bit of an explanation? I would not add those two numbers and come to that conclusion.
The way we arrived at our $40 million to $80 million — I will try to be quick — is we looked at how much of the business we think is with the remailers today. We made an estimate on that business because we believe that if this change were not taking place, we would have a better chance of winning that business back. That estimate gave us about $40 million. That number could be higher, but that was the estimate that we made.
We also looked at the amount of business we have today. We divided that number between retail and business customers because, as I explained, we do not believe that retail customers will be accessible to the remailers. We looked at the portion of our business customers and how much of that business we felt would be at risk, and we estimated about another $40 million. That is how we arrived at $40 million for our low end, up to $40 million plus $40 million; $80 million of revenue that is at risk with this change. That is not an estimate of the total size of the business.
Senator Moore: I understand. You are talking about what you have now and what is at risk if you lost it all; between $40 million and $80 million.
Ms. Margles: Yes, sir.
Senator Moore: This lady is saying that the international mailers are taking another $60 million to $80 million. That is what she says here. That business is not Canada Post's; that business is the other international mailers. That brings me to $100 million to $160 million. What is wrong with my conclusion here?
Ms. Bue: We used $60 million to $80 million because that is what Moya Greene used before a standing committee. Do you know the date, Ms. Steinhoff?
Ms. Steinhoff: I can find it.
Ms. Bue: We used her number.
Ms. Margles: I believe that is the number that Canada Post felt was at risk. It was not an estimate of the total size of the market.
Senator Moore: We will look at that document. Right now, that number is what stands on record, which tells me that we had only a quarter to a half of the business. Senator Mitchell mentioned your drive to increase revenues and to have revenues to look after the rural areas. I have a couple of questions related to that point. The chairman touched on something I wanted to ask.
Mr. Power, can Canada Post go to Singapore and set up a similar institution or business?
Mr. Power: I cannot answer whether Singapore's laws allow us to do that. However, many industrialized countries do allow that. Most developing countries do not allow the establishment of a foreign post office on their territory.
From a pragmatic perspective, it would not make much sense for us to put Canadian postage on mail from Singapore going elsewhere in the world because we would have to pay the rates that Canada pays, which are three times what Singapore pays. Diversifying in that area does not make sense under Canada's flag.
Senator Moore: You mentioned Singapore, the U.K., Holland, Belgium and Switzerland. In theory, you can set up a remailing business — aside from the monetary costs — if you wanted to.
Mr. Power: Yes.
Senator Moore: We have the right to set up a remailing business. We have reciprocal opportunities to do that, except our ground is more fertile for them monetarily?
Mr. Power: That is correct.
Senator Moore: Senator LeBreton mentioned the record and so on. Since this government has been in office, since 2006 — I think Senator Callbeck put it on the record — 55,000 rural mailboxes and 42 rural post offices have been closed. Ms. Margles, you are the government relations and policy vice-president, so tell me about your policy in regard to this issue. I live in a rural area. I have had the pleasure of serving as a mail sorter and mail deliverer during my student days and I am not at all conflicted by this issue. What is your mission here if these things have happened? Were you in office when these things happened? What did you do about them?
Ms. Margles: First, I have been with Canada Post since September of 2005. Second, I do not believe that the 55,000 number is correct. I will be pleased to provide the correct number to the committee.
I can tell you that today, when we go out and look at any mailbox that is considered unsafe, which is either identified to us by the people delivering the mail, by the people taking mail out of the box or by statistics, we look at each individual mailbox. We do not take groups or communities of mailboxes out of service today. We have a tool that we use, and we go to each individual mailbox. If we find it is unsafe, the first thing we do is to see whether it can be moved. We have a high success rate across the country — I believe it is greater than an 85-per-cent — in finding ways to maintain or move the location, therefore counting as maintaining these rural mailboxes. I will be pleased to provide those detailed statistics to the committee.
Senator Moore: That information will be helpful.
Ms. Margles: Absolutely; as far as the rural post offices go, we have had a moratorium on the closure of rural post offices in place since before I came.
Senator Moore: You said September 2009.
Ms. Margles: It was reiterated in September 2009 in the Canadian Postal Service Charter. However, that moratorium has been in place for many years. It was in place well before I came to the company in 2005. The only time a rural post office may be looked at in terms of whether it can stay open is when there is an incident such as the death of a postmaster, the post office burns down or it blows off the wharf, as sometimes it does.
In that case, we have a system called our community outreach program, and we go to each individual community, meet with the people there and try to make a determination and find a solution. We try to find an alternative for the post office that may no longer be there or the postmaster who may be retiring or who had an unfortunate incident.
Again, I am not familiar with the number that you are quoting in terms of the number that have closed, but I can tell you, as I have said, that moratorium remains in place. It has been in place for many years. The only time a rural post office closes is if we cannot find a solution with the community where someone else is willing to take on the service of the post office.
The Chair: You will provide us with the information?
Ms. Margles: Absolutely.
Senator Runciman: Can Senator Moore provide us with the source of that information? For clarification of the record, between 2001 and 2005 — this information was provided by CUPW — 50 rural post offices were closed under the former government.
The Chair: Can you send us all that information? Regarding any undertakings that you have given us, the sooner you can send that information to us, the better. We are trying to deal with this bill as expeditiously as possible.
On behalf of the Standing Senate Committee on National Finance, I want to thank you, Ms. Margles and Mr. Power, from Canada Post Corporation. From the Canadian Union of Postal Workers, Ms. Bue and Ms. Steinhoff, thank you for being here and helping us understand this piece of legislation on remailers.
In the second section this afternoon, we will focus on Part 15 of the bill, dealing with Canada Post. We are pleased to welcome on this second panel, on behalf of the Canadian International Mail Association, Evan Zelikovitz, Representative; on behalf of the Canadian Printing Industries Association, Robert Elliott, President; and from Classic Impression Inc., Barry Sikora, President. Joining us by video conference, all the way from beautiful British Columbia, on behalf of the International Direct Response Services Inc., Mark Weeks, General Manager.
We will start with you, Mr. Weeks. Do you have introductory comments?
Mark Weeks, General Manager, International Direct Response Services Inc.: Good afternoon, everyone. Thank you for hearing from me today. Unfortunately, I was not able to travel to Ottawa, so I appreciate the committee providing me the opportunity to appear via video teleconference.
For those of you who may not have a full understanding of what our businesses do and how we operate, I welcome the opportunity to answer any questions that you might have, and will take you through specific examples of the type of work we do here in Canada.
IDRS is a Canada-based direct mail company, mail service provider, letter shop and fulfillment house.
The Chair: Mr. Weeks, if you can hear us, give us a wave, but we are not hearing your comment.
Perhaps we will hear from the others who are here, and when we sort out our technical problems, you can come in at the end, Mr. Weeks. Unfortunately, the first few words of your comments are all we heard.
I will go to Mr. Zelikovitz, Canadian International Mail Association.
Evan Zelikovitz, Representative, Canadian International Mail Association: Thank you, chair and committee members for having us all here. I hope that you will ask us all the same questions that you asked CUPW and Canada Post, as we are the people that are in the industry. We can answer your questions far better than CUPW and Canada Post can as to how the industry works, the issues relating to the revenues and where that revenue will go. We welcome all your questions.
On behalf of CIMA, thank you for inviting me here today to discuss this matter. At stake is the imminent collapse and elimination of a more than 20-year-old competitive industry made up of hundreds of small businesses and, yes, thousands of employees from across the country, if this one-sentence amendment to the Canada Post Corporation Act is not made.
CIMA is a coalition of Canadian companies that participate within Canada's international mail services industry, preparing, designing, translating, sorting, printing and delivering mail weighing 500 grams or less to destinations outside of Canada.
To be clear, the international mail industry does not deliver mail destined for final delivery in Canada. That delivery is the exclusive privilege of Canada Post, and this industry respects and supports Canada Post's domestic exclusive privilege.
If there is ABA mail taking place in Canada, this industry does not accept it, and those people involved in that activity should be dealt with appropriately.
After more than 20 years of accepting the existence of private international mailers, in 2004, Canada Post brought an application before the Ontario Superior Court seeking a narrow interpretation of the exclusive privilege provisions of the Canada Post Corporation Act, claiming that Canada Post is the only entity that can deliver mail within Canada and to destinations outside of Canada. In legally interpreting the words of the statute — I use the word "interpreting" — the court ruled in favour of Canada Post and exercised its discretion to ignore all facts and issues relating to public policy and Canada Post's historical behaviour in this market. The job of the court was only to interpret the words of the legislation.
While CIMA respects the role of the courts, we believe it is the role of Parliament to rule on what the act intended to do. Respectfully, we find it hard to believe that parliamentarians meant to kill Canadian jobs — the same jobs that Canada Post allowed and acknowledged for over 20 years. This issue is about public policy, competition, fairness and common sense.
It is important to note that even Canada Post acknowledged and accepted this industry, as some have already noted in the earlier hearing, by stating it specifically in its own publication as far back as 1988, and I believe honourable senators have been provided with this Canada Post publication.
You will see a highlight on the second page where they state that outbound mail is not protected by exclusive privilege, leaving this lucrative business open to a new threat — aggressive competition from international mail companies. I need to repeat that: Outbound mail is not protected by exclusive privilege. This simply cannot be ignored. For an international mail company to read this statement more than 20 years ago, it would clearly suggest that such business activity is accepted in Canada.
More recently, the legitimacy of this industry was also confirmed by the independent CPC strategic review advisory panel's report presented to the government and made public in April 2009. Following an extensive public consultation and review in 2008, the advisory panel recommended neither a general deregulation of the postal market nor a reduction in the existing level of Canada Post's exclusive privilege, yet it still recommended the maintaining of the private international mail market in Canada as the lone exception. Outbound international mail was the only market specifically identified in this manner. Recommendation number 10 of the panel's report stated: The advisory panel recommends that outbound international mail be open to competition, as has been the practice, and in parentheses, if not the law, in Canada.
Who will benefit after our industry is shut down? It will not be CUPW or rural mail service, as our industry has had no negative impact on CUPW jobs whatsoever. On two separate occasions during testimony before Parliament over the past few years, one as recently as a month and a half ago, CUPW stated on record in response to direct questions before the house Finance Committee that they have never seen a decrease in jobs as a result of this industry. Both the House of Commons and now the Senate have heard Canada Post itself state that it does not believe that the existence of this industry will have any impact on Canada Post's ability to provide universal postal service. In fact, Canada Post has been clear in noting that it is quite prepared to compete more vigorously within the international mail industry. I would also add, when we have perhaps discussion and questions, that this is not about Canada Post starting to compete. Canada Post has been competing in this industry for over 20 years side by side these much smaller competitors. I would note that Canada Post has been offering some very competitive international rates in certain parts of this country. That is fine with this industry. It is called competition, and we welcome that. Such competition will be good for all Canadians.
For more than two decades, this industry has been operating in Canada, and no one in the industry ever heard or received a complaint from CUPW until this matter became more public in 2006. Now, all of a sudden, they have stepped forward claiming that this small, competitive industry will be the demise of a multi-billion dollar Canada Post and the demise of rural mail and universal postal service, and that this industry is attempting to all of a sudden erode Canada Post's exclusive privilege. We are doing no such thing. The independent strategic review advisory panel agrees with us. We are fighting to maintain the status quo. The only job losses that will continue to occur are from the small businesses that operate in this industry throughout Canada.
We are not asking for something new. We do not want any special treatment. We are asking for the ability to maintain our businesses and protect the livelihoods of our employees and maintain a competitive edge for Canada that brings foreign investment into this country. There is plenty of room in Canada for both private companies and Canada Post to compete in this market, as is the case in most other countries around the world and as has been the case here for over 20 years.
To this end, we respectfully encourage this committee to support Part 15 of Bill C-9, let Canadian businesses compete in the international markets, and let everyone win by keeping the jobs here in Canada instead of seeing them leave this country, to the benefit of no one.
Thank you. I would be happy to answer questions.
Bob Elliott, President, Canadian Printing Industries Association: Thank you for inviting me here today as part of your review of Bill C-9, the Jobs and Economic Growth Act. As the chairman has indicated, my name is Bob Elliot, and I am the president of the Canadian Printing Industries Association. We represent over 7200 printing establishments that employ some 65,000 plus Canadians. Not all printing establishments in Canada participate within the international mail industry in Canada, but a significant number of printing companies are involved in this industry, many of whom have been significantly impacted over this situation and who will see their business operations further threatened if this minor amendment is not accepted.
The need for this amendment has significant implications for Canadian printers and allied industries who produce a wide variety of products, such as advertising material, envelopes and more for Canadian and international customers, and then bulk ship this material to the U.S. or some other foreign destination.
My comments are specific to Part 15 of Bill C-9 dealing with a one-sentence amendment to the Canada Post Corporation Act, which will enable competitive and long-standing industry made up predominantly of small and medium-sized Canadian businesses to continue doing what they have been doing for more than 20 years, as Mr. Zelikovitz has indicated. This is not about some new industry attempting to just enter the Canadian market. This is also not about diminishing Canada Post's domestic exclusive privilege or its ability to provide universal postal service. This small one-sentence amendment does absolutely nothing more than maintain the status quo of the past 20 years. All during this time, while the international mail industry has competed openly and transparently in Canada, Canada Post has continued successfully to provide universal postal service throughout Canada.
Because this one amendment to the Canada Post Corporation Act adds no new or additional powers to anyone in the international mail industry, or any industry, for that matter, Canada Post and CUPW and all other relevant stakeholders will continue to operate no differently than they have over the past two decades.
Canadian printers and remail companies have already seen a significant decrease in business, given this industry's uncertainty over the past few years. Without this amendment, these companies stand to lose even more business, as their customers are and will continue to take their business to another country. The economic contribution to Canada will be lost, and Canada Post will not reap the benefit. No one will win — not Canada Post, not our small businesses, and not the Canadian economy.
This amendment to the Canada Post Corporation Act is indeed all about jobs and economic growth. Following the passage of Bill C-9, thousands of Canadian jobs will be secured, and the benefits that the Canadian economy has realized from the activities of this industry will solidify and grow.
In short, the Canadian printing industry is in full support of Part 15 of Bill C-89. Thank you, and I, too, would be happy to answer questions at the appropriate time.
Barry Sikora, President, Classic Impression Inc.: Thank you, Mr. Chair and fellow senators, for inviting me. I am a little nervous. Bear with me. I only get to wear my suit a couple times a year, for weddings or funerals, and I do not see either of those here. This is a first time for me.
Mr. Chair and committee members, thank you for having me here today. I am starting to think of Ottawa as my second home, as this is my second time in two and a half months to have travelled from Vancouver to appear before a government standing committee. I even cut my Canada Day weekend short to travel from Vancouver yesterday, because that is how important this matters to me, my family, my employees, my business and the entire industry.
My company, Classic Impression Inc., is a small, independent, Canadian-owned-and-operated printing and packaging company operating in British Columbia. Before problems began with Canada Post approximately five years ago, my company employed 31 people. Now, because of this situation, we are down to 17 employees. Many of our customers have left us, and they have not gone to Canada Post for their foreign mail delivery needs. They have taken their business out of Canada to another country, and they have forced our industry to layoff long-time employees. With this lost revenue has come lost economic activity for Canada, and that was just on the whim of what was to happen.
A significant part of our business is the printing of envelopes and letters for letter shops, who then prepare these materials for delivery outside Canada. While my company does not specifically deliver mail from Canada to a foreign destination, my company and many others like mine are an integral part of the competitive industry. As an example, Mr. Mark Weeks, from International Direct Response Services Inc., a good customer of mine, is with us via video conference from Vancouver, B.C. Mr. Weeks and I have been doing business together for a long time. My company prints envelopes for IDRS, who then prepares materials for their clients for delivery outside of Canada.
To be clear, we are not just entering this industry because of some newfound opportunity. We are not some fly-by-night operation looking to make a quick buck or take advantage of the system. We have been operating for a very long time, employing Canadians, paying taxes, competing with Canada Post, and doing it fairly and transparently.
The international mail industry in Canada consists of hundreds of small and medium-sized letter shops, mail boxes, printers, direct marketers, graphic designers, envelope manufacturers, transport companies, international mailers who employ thousands of hard-working Canadians and contribute significantly to the Canadian economy.
To be clear, this amendment is not only about five or six remail companies and a few hundred employees. It is important for the committee to understand that during the past 25-plus years while this industry has operated in Canada, Canada Post has continued to provide universal postal service successfully. There was no crisis. Our industry has not stopped this important mandate from happening. Moreover, Canada Post experienced significant profits for more than 12 consecutive years in the early 1990s and throughout most of the 2000s, all while this industry operated in Canada.
Chair, how can it have been the intent of Parliament when it established the Canada Post Corporation Act to allow small businesses like mine to start up in Canada, employ thousands of Canadians, invest in the economy with the full knowledge and acceptance of Canada Post only to have Canada Post go to the courts and say, Thanks for building up the market, but sorry, you need to stop operating immediately. They did this with the hope of driving all this business to them, which has not and will not happen. This is why this government introduced Bill C-14 in 2007, Bill C-44 in June 2009 and now, Part 15 of Bill C-9.
Mr. Chair, this amendment is about common sense and fairness. This amendment has nothing to do with diminishing exclusive privilege or the ability to provide universal postal service or rural mail service to Canada. It has not been about any of these issues for the past two decades while we have been operating, so why, all of a sudden, will this one sentence completely disrupt and dismantle our entire postal industry and postal authority? The reality is that it will not.
We welcome the opportunity to continue to compete and operate side by side with a much larger Canada Post, which will be good for all involved and good for the Canadian economy. Mr. Chair, if this small amendment is not passed, this business will continue to leave our country along with many more jobs. Thank you for the opportunity to speak here today.
The Chair: Thank you very much.
Mr. Weeks, are you able to hear us now?
Mr. Weeks: I can hear you fine now.
The Chair: You can start your remarks again.
Mr. Weeks: Did you hear part of my remarks?
The Chair: We heard only about one or two sentences.
Mr. Weeks: Thanks for hearing me today. I appreciate the time. I was not able to travel to Ottawa to appear before you, so I appreciate the committee providing me with the opportunity to appear by video conference. My opening remarks will be brief. For those who may not have a full understanding of what our businesses do and how we operate, I welcome the opportunity to answer any questions and take you through specific examples of the types of work we do here in Canada.
IDRS is a Canadian direct mail company, mail service provider, lettershop and fulfillment house. We were established in 1989. As well as being a member of the Canadian International Mail Association, IDRS is a member of the Canadian Direct Marketing Association as well as the Mailing & Fulfillment Service Association. IDRS has been providing leading-edge direct marketing and direct mail services and solutions in Canada for Canadian and foreign customers for over 20 years.
The one-sentence amendment to the Canada Post Corporation Act that is part of Bill C-9 will do nothing more than clarify and substantiate what this industry has been doing openly in Canada for more than two decades — nothing more, nothing less.
CIMA and its members have been involved in discussions relating to this matter for over five years now with government and industry stakeholders, and we have been overwhelmed by the support we have received from the vast majority of parliamentarians and from numerous national and regional business groups representing a variety of industries right across the country, including the Canadian Federation of Independent Business; the Canadian Printing Industries Association, who is here with us today; and various boards of trades and chambers of commerce.
I have personally participated in meetings with Transport Canada's Crown Corporation secretariat in Ottawa, and I also met in person with the independent Canada Post Corporation Strategic Review Advisory Panel during their comprehensive consultation in 2008.
IDRS and other companies involved in this industry have made efforts to be transparent and to provide as much information as possible so that all relevant stakeholders and decision makers understand the value that this industry brings to Canada.
Chair, if our customers lose their conduit to mail their international pieces, most will leave the country and take their business with them to the U.S., to the British letter shop or to another international mail company. They will not take their business to Canada Post. In the course of shutting us down, potentially, Canada Post will lose the revenue they presently receive from us from the mail that our clients have destined for Canada and other parts of the world.
Furthermore, IDRS has used Canada Post for foreign delivery for our customer when Canada Post's international rates are competitive compared to other private international remail companies in Canada. We have no problem working together with Canada Post if it is cost effective and makes sense for our business and our clients. Interestingly enough, over the last few years, Canada Post has become much more competitive with their international mail rates for us, but if this legislation is not passed, the majority of our customers will take their businesses out of Canada and no one in Canada will benefit.
Chair, I will be happy to respond to any questions that the committee might have, and I thank you again for allowing me to testify before you today.
The Chair: Thank you very much, Mr. Weeks. The video conference went smoothly the second time.
A number of you have mentioned that if this legislation is not passed the business will leave Canada. Is there a threat that Canada Post will bring other injunction applications? On what do you base that comment?
Mr. Zelikovitz: We base it on a couple of things. First, we base it on what is happening now. There are foreign customers, for example, or even Canadian customers who may have a U.S. subsidiary that will send their international mail now through their subsidiary in the United States because the United States allows this practice.
Perhaps Mr. Sikora can speak to this point after, but someone asked the question as to whether Canada Post has employees doing the exact same thing that remailers do here in the United States. They try to have U.S. companies go through Canada Post instead of going through the United States Postal Service, so they do the exact same thing.
Back to your question, some companies have left here and gone to another jurisdiction because it is not only about the international mail delivery; it is about the printing, design and sorting. It is about the entire industry. They have left the country and have not gone to Canada Post because they cannot find the other companies, like Mr. Weeks or someone else, to help them with some of the things required for international mail. It is not only the delivery; it is the facilitation, preparation and sorting. Some of these companies, because of the fear and uncertainty about what was happening in the market, have left or will leave.
As a quick example, and I do not have it with me, are you familiar with a resort in Barbados called Sandy Lane? It is a well-established, posh resort. Sandy Lane hired a Canadian printer for its international printing and preparation for delivery of Sandy Lane material, 500 grams or less, to destinations around the world. They hired a Canadian printer. Because that Canadian printer could offer the one-stop shop, they hired a Canadian international mail company to facilitate the delivery of that mail.
If this legislation is not passed, Sandy Lane will not give that business to that Canadian printer because they will not be able to deliver that mail because Canada Post may not have the right rates. The company will go to Britain; it will go to the United Kingdom; or it may go to the United States. It will take that economic activity out of Canada.
The Chair: Does anyone else wish to comment?
Mr. Sikora: It is happening with my company as well.
The Chair: You are concerned that what has been taking place for 20 years cannot take place any longer because of these injunctions?
Mr. Sikora: No, because when Canada Post brought the court action, our customers could not wait. They were using an established business when all of a sudden, at the drop of the hat, they had to find another system. As Mr. Zelikovitz said, the system is complicated; the printer, the letter shop and the transportation. They could not wait, and bank that we will win this case. They have already started to move.
They have come back and told us that we are competitive on the letter shop part that Mr. Weeks provides, and the printing part that I provide. There is uncertainty, if the bill goes through, where they will be left. Today, not all, but one quarter, of my loss of employees is due to the business that has left the country already. We hope to get that business back with a positive message that we are open for business. Most of the post offices around the world are doing this; and, as Mr. Zelikovitz pointed out, Canada Post does it themselves. When they talk about the $40 million, $60 million or $120 million, they are not losing anything; it has been this way for 30 years. How can they lose something they never had? It is a surprise to me.
The Chair: If it has been like this for 30 years, is it the threat of litigation that is interfering with your business?
Mr. Sikora: Absolutely.
The Chair: That is the point I was trying to reach. Thank you. Canada Post now says they are happy with this legislation.
Mr. Sikora: My family asked me why I was going to Ottawa and what is happening here. I know Mr. Zelikovitz does not like me to point this out but, to simplify it, this is how it works. If we go across the border for shopping because we are close to the border in Vancouver, and we take a bunch of Christmas letters to mail to our relatives in the United States to take advantage of their lower postal rate, we break the law. It is as simple as that. We are doing something that Canada Post says they have the exclusive privilege for, or want exclusive privilege for now, so we are not allowed to take our letter across the border and mail it in a United States post office.
The Chair: We had Canada Post here. I do not know if you were here when they were here, but they said they were happy with the legislation and they can live with it.
Mr. Sikora: As Mr. Weeks points out, they compete very well and always have.
Mr. Zelikovitz: To be clear, this business is not about an international mail company in Canada going to Susan Jones' house, picking up her mail for her relatives in the United States and delivering it into the United States. This business is about commercial operations. International mail companies in Canada were doing work for a number of federal governments. Universities send material out. Law firms in Canada send material out. This business is to deal with those entities. It will not change the market.
Again, to be clear, because you never know what type of questions will come, over 95 per cent of the international mail in Canada is destined for the United States; that is, an industrialized country. I know there have been discussions about developing and industrialized countries, and the discussion was accurate about how the UPU works, but 95 per cent of this mail is going from one industrialized country to another industrialized country.
Senator Gerstein: Almost a month ago, on June 9, I had the great privilege of introducing Bill C-9 into the Senate for second reading. In those few remarks that I made, I referred, amongst others, to His Royal Highness George III, Gladstone, Asquith, Churchill, and I also referred to Barry Sikora. The others are gone but Mr. Sikora, you are here. It is a pleasure to meet you. The reason it is such a pleasure is because you represent the backbone of Canada. You are a small businessman; you have been in the business, as I recall it — because I quoted this number in my speech — for 30 some years. Now, we have had several witnesses here today who have talked about the sky falling. They have talked about what might happen. The difference is you can talk about what has happened.
As I understand it, what has happened is a business that you have built over 30 years that employed some 31 people, has now lost slightly in excess of half its employees. You have experienced what might happen. I want you to share that experience with the people around this table.
Mr. Sikora: First, when people say they care about their employees, it is often a lot of rhetoric. We have a small company and we refer to our company as a family. We know all the employees, their kids and everyone else. I am talking about this happening suddenly, and Mr. Weeks can verify this information. Overnight, practically, it was months, all of a sudden our business dropped and we had to look at those employees and tell them we were sorry, but although they had been with us for 15 years, 20 years, there was no work for them.
We cannot replace that work instantly. Someone does not walk into my office and say they would like to do a couple hundred thousand mailings. We do not find that situation.
The international mail had grown and flourished all those years. We helped develop it. Some of my colleagues tell me that perhaps we are doing too much of that business, but it is hard to turn down nice business and it looks stable. When I started this business 25 years ago, I had been in it 10 years before that for another company. It looked solid for me. Then out of nowhere — where does this come from — Canada Post says wait a minute, the law has changed. I had to research and I was as mad as hell. How could I have been in this business for 35 years and suddenly the law changes? I did not see a new postal act. Someone discovered a smart lawyer — not the chair personally, although I was told you are a smart lawyer. How did this happen? All of a sudden, somehow we have two different messages here between the French and the English? Canada Post jumped on it. The ABA mail was brought up earlier today. That practice is what brought this whole incident forward. We have laws in place for that type of mail. We discriminate, and if we find out that anyone is in that business, we will not even do business with them. There are laws to look after that type of mail, but Canada Post found an opportunity through the French-English difference to slam the nail into the coffin. It is a coffin because half my people do not have jobs.
When they say 200 employees or 300 employees in 5 or 6 companies, I do not know any major printers — when I say major, I do not mean a Zippy Print at the corner but a bona fide commercial print shop — that are not affected by doing some kind of printing for international mail. Most of it goes to the United States, as Mr. Zelikovitz stated. I do not know of anyone.
Stand at the loading docks of the biggest printers in the country — Quebecor and St. Joseph — and see how much of their printing goes to the United States. A lot of it is destined for the mail.
Do not worry about a few hundred jobs at Canada Post. They cannot determine even how many jobs it is. I will tell you how many jobs it is. In my company, it is half of them. There are other companies, many like us, that are losing those jobs. We pay the taxes and we pay those people pensions, benefits and everything else. I am starting to sound like a politician. However, that is the point. I become heated about the subject because I have to look at those employees, and I am still looking at those employees and trying to tell them things will improve and that Bill C-9 will be passed. Maybe it is not a lovely way that it was done, but thank goodness a majority of the members of Parliament had common sense and said we are not changing the world here; we only want the status quo. Everyone in this world wants to compete now, which is the new thing; we have to compete. There are no free tickets anymore and Canada Post has done well.
I was surprised when Susan Margles said earlier that they made the cuts and adjusted their business, and they still made a profit. Well, I did not make a profit for the last two years.
Senator Gerstein: Mr. Sikora, in my remarks on June 9, I said you brought your points forward most forcefully. I am delighted that you did again today before our committee, and I want to express our great appreciation for appearing before us and sharing your story with us.
Senator Callbeck: I have one question. I believe you were here and heard the testimony of the Canadian Union of Postal Workers. They said that under the strategic review, a recommendation was made but no in-depth analysis was made. Do you know whether any in-depth analysis or a review has been done of this whole issue?
Mr. Zelikovitz: My comments will be biased because I think there has been in-depth discussion. We met with the objective bureaucrats at Transport Canada's Crown Corporation secretariat. They invited us to discuss the market. We provided them with confidential business information about how the market works, which allowed them to look at this subject objectively. CIMA provided a submission of over 40 pages to the CPC's Strategic Review Advisory Panel. A number of other entities, CUPW as well, provided input. I understand the chair, Robert Campbell, is an expert in postal authorities and mail operations.
I cannot answer your question because I was not on the panel, and I do not know what type of other policy analysis they have done, but clearly they conducted other research on the impact that some of the other things they were looking at would have with relation to universal postal service and exclusive privilege. When they looked at those things they said they can allow this to happen because it will not impact universal postal service. I believe that research was done. I cannot speak specifically to the policy work they did in our market. It is a competitive market, so it is difficult even for us to find information about all the competitors.
Senator Callbeck: Are there any further comments?
Mr. Sikora: If it quacks like a duck and walks like a duck, then it is a duck. That is what we have here. We have business we have been in for 30 years. As was pointed out earlier, we are not doing anything new here. We are not building a new jet plane. It is the same business. Let me do my job. Let me go back and employ people and print for the international market, enjoy that business, and pay taxes to pay you people. That is all we are asking. Yet, we hear this bill is the beginning of a slippery slope. What is the slippery slope? We have been in this business for 30 years and Canada Post competes.
Senator Marshall: Thank you for appearing here today. It is interesting to hear the other side of the coin.
Mr. Zelikovitz, can you tell us something about the Canadian International Mail Association? Is this association everyone who participates in the remail industry? When we heard from Canada Post and CUPW, we were trying to get a handle on how big this industry is, the dollar amount, and how many employees there are. Can you tell us a bit about the association and provide information on the membership?
Mr. Zelikovitz: I will try my best, but you are asking the right people, finally. No disrespect to you but to the fact that other people responded to questions about CIMA without asking CIMA.
Senator Marshall: They were guessing.
Mr. Zelikovitz: CIMA was formed as a result of this situation. The industry decided to form a coalition and bring together companies that were willing to participate in the coalition to lobby the government and go to Parliament because the industry lost in the courts. The companies felt that it could not have been the intent of Parliament to allow this industry, after 25 years, to go down the drain.
I have coordinated and represented the Canadian International Mail Association since its inception, with a number of other members. At times there were 30 members and at times there were fewer; some members dropped off. We are talking about small companies.
I do not know how many employees Mark Weeks has, but he has been a member of CIMA, as has Mr. Sikora. The Canadian Printing Industries Association has been a huge supporter of CIMA. Other members include a number of smaller letter shops and Spring Global Mail, Key Mail and DHL.
It has been difficult to reach a whole bunch of letter shops. We reached out to a number of letter shops, and there are literally hundreds of small letter shops in border towns in Ontario, British Columbia, Quebec and around the country. They said: We are not becoming involved in this issue. Canada Post does not come around bothering us. They are going after the big fish, Spring and Key Mail. Yes, we are doing some remail across the border for some of our clients, but we are not becoming involved. We are keeping our head under the radar screen.
It has been difficult, but we have had a successful advocacy program because it has been about common sense and fairness. That is really all this has been about. We have tried to provide the facts. We looked at the market and suggested that we are talking about $60 million to $80 million in business. This business is not $60 million to $80 million that Canada Post ever had. This is $60 million to $80 million that was not stolen from Canada Post. These companies competed for this money fairly and openly against Canada Post.
Canada Post has hired people from Spring and Key Mail. There are people from Canada Post who have worked at Spring and Key Mail. They all know each other. Canada Post owned 12 per cent of Spring between 1994 and 1996. Senator Baker alluded to that point.
I can tell you the facts. That venture is a reality. I will provide the specific information, but between 1992 and 1996, Canada Post owned 12 per cent of the international mail component business of Spring, which was part of a company called TNT Mailfast as well. I do not have the exact particulars, but it is clearly known that Canada Post was part of this business, they knew what was going on, and they accepted and acknowledged it. This is about a competitive industry that does not share all its sensitive business information.
No one asked this question of Canada Post. The reality is that this industry was probably $60 million to $80 million four years ago. I do not think it is there now. A significant amount of business has been lost. Spring no longer has 75 employees. I believe Spring is down to 55 employees.
There are five or six primary international remail companies, but there are a whole bunch of other smaller companies that do the exact same thing, and printing companies that do it as well. When we add it together, we are talking about thousands of jobs. Perhaps Mr. Elliott can speak to the printing industry.
Senator Marshall: You say that some companies are staying under the radar. How many members does your organization have? You indicated that your organization is new, within the last five years?
Mr. Zelikovitz: Yes.
Senator Marshall: How many members do you have? Do you know how many employees, in total, all your members have?
Mr. Zelikovitz: We tried to assess that, and I confess, it was difficult, because we have large printing companies that might have 5,000 employees. We will not include 5,000 employees in the number involved international mail. If perhaps 20 per cent or 30 per cent of that company involves international mail, that is 1,000 to 1,500 employees.
The assessment was difficult. We have lowballed the number and said it is somewhere between 25 and 5,000 employees. Ms. Jennings gave testimony at the House of Commons about potentially 10,000 employees. She may have obtained that information through her own research. The reality is that thousands of jobs are at stake here, particularly in the printing industry as well.
Senator Marshall: You say that even if this bill does not go through, that business will not go to Canada Post. If I had the impression that all the business would revert to Canada Post, that is not correct. Are you saying it will go south of the border or somewhere?
Mr. Elliott: It will go elsewhere, yes. The scary part for our industry is that their involvement as printers in the mailing aspect is generally as a new niche, if you will. Companies like Willow Printing and Harmony Printing in Toronto, which have purchased or taken on mailing operations to supplement their business opportunities as printers, are now asking how much of this business they will be able to continue; and if that business goes away, what will that mean to their market share in other areas? Will it take away from their core business of printing and will they maybe go out of business entirely because they have built up this mailing business to the point where it is now perhaps 60 per cent or 70 per cent of their business?
The scary part is the uncertainty of what might happen to a lot of those printing companies that Mr. Zelikovitz spoke about in terms of mailing companies. I have numbers I can share with you. We have over 7,000 printing companies in Canada. My estimate is that somewhere in the neighbourhood of 30 per cent of those companies are involved in some way, shape or form in mailing. We are a small industry. In terms of small- and medium-sized enterprises, an average-sized company is anywhere from 5 to 15 employees.
Senator Marshall: We do not know how pervasive the industry is, how big it is or what will happen if the bill does not go through. There is a big unknown.
Mr. Elliott: It is a difficult number to pin down, and I think you have heard that from a number of people. At the same time, we all believe the number is significant, and I think even Canada Post refers to that fact. There are a lot of people out there whose livelihoods depend on this part of the business.
Senator Marshall: If you are not in the business, it does not necessarily go back to Canada Post?
Mr. Zelikovitz: Some of it definitely will. There is no question that some of that business has gone, and will go, to Canada Post. That is part of the uncertainty. Perhaps there will be competition now for that business.
All the government departments that used Spring to send pension cheques around the world — they decided to use Spring because I guess they had good rates into, for the most part, industrialized countries and good service — that changed. They have moved and they have gone to Canada Post, and I suspect that Spring, if this legislation is passed, will tender for that business and it will be open for competition. I think that competition is good for Canada.
The Chair: Thank you, Senator Marshall. Mr. Weeks, if you want to intervene at any time, just give us a signal.
Mr. Weeks: Can I put in my two bits quickly?
The Chair: Please go ahead.
Mr. Weeks: We are like Mr. Sikora. Our company is more like a family than a large business. We are a small business. Right now, we have 43 full-time employees and about 20 part-time, on-call employees that we employ at different times of the year or even month. We have laid off anywhere from 12 to 15 staff over the last few years, primarily because of our foreign customers moving their business elsewhere in the world.
To give you an idea, the postage on a direct mail piece accounts for about 80 per cent of the cost of what it costs them now. If it costs a dollar to mail something to another part of the world, we see only 20 per cent of that — 80 per cent goes to whatever postage method we use. We see only a small part of the money. If our postage is not competitive globally, that is 80 per cent of our cost to our customer that is not competitive, and they will not use us.
Right now, we have a number of different methods. Frankly, over the last four years while this battle has been taking place, Canada Post has become more competitive than they were in the past. In the past two years, they have lowered their rates to us. They negotiated international mail rates for large-volume mailers such as us. They do not negotiate domestic rates, but they negotiate overseas rates. I am not sure everyone realizes that. They have become competitive based on what they know we are paying, or what the market competition is like. They have become more competitive over the last few years.
Our customers that mail internationally overseas are not Canadian companies. Only about 10 per cent of our foreign mail customers are in Canada. We have customers in South Africa, the U.K., Mexico and Australia. Our customers use us because we are experts in foreign languages, and are able to deal with the translation, consulting and marketing into those foreign countries. Over time, we have built an infrastructure of those specialties. If we cannot be competitive on the postage, we cannot provide those services in Canada. We will have to move our production end of things to another part of the world where we know we can compete.
We are like Mr. Sikora; we have had to lay off people. We have had this issue hanging over our heads. We have had two larger clients, one of which moved their production to Hong Kong away from us and one moved to the U.K. because Royal Mail has better international rates than Canada for the markets that we cater to. That information gives you an idea of our company and how we operate.
Fifty per cent of what we mail is Canadian mail, but half my company is based on our ability to service foreign companies that want to market into overseas countries from Canada. I do not want to lose that competitive advantage.
If Canada Post forces their rates on us, we will lose that competitive advantage to a degree. Canada Post has become more competitive in some markets than they were in the past. The timing and how all that came into effect is interesting. I will be happy to answer any other questions.
Senator Baker: I do not have many questions, but perhaps my memory was better than I thought it was. After listening to your comments, I discovered that my memory was, in fact, correct.
For the listening audience, for the great happening in 2004, I was in Parliament and was part of the preparation of the bill in 1981 when it passed, and these very words that we are talking about now went into the bill. The English version said, the collecting, transmitting and delivery of letters within Canada. The French version said, the collecting, transmitting and delivery of letters to their addressees. That was the error we made. That was the error that Parliament made when they passed the bill.
Canada Post, as you say, went with the English version. It was clear. Your businesses built up in the 1980s and 1990s, and along comes 2004.
We cannot blame that on anyone, I suppose, except the courts, the Court of Appeal and then the Supreme Court of Canada, which refused the appeal to the Supreme Court of Canada. It must have been a jolt.
The point is that I can understand the union for Canada Post and the position they have taken. They received a new condition of working. They received a new bonus, a gift by the courts, so they said they would grab onto this condition. Of course, it did not happen that way because the courts put it off. They gave six months before their decision would become effective to wait for Parliament, and then they stayed everything. I think they even stayed the damages. I think it was Key Mail that was involved.
In looking at this issue, there is a doctrine of natural justice. There is a doctrine of legitimate expectations. The chair is familiar with these legal terms. That decision must have hit you like a tonne of bricks in 2004 that, all of a sudden, the law changed when, prior to that, everything was going along great with Canada Post.
Can you explain to the committee how that felt, that the courts had all of a sudden made the business illegal, but they put off the decision. It never did come into effect, but that must have hit you like a tonne of bricks.
Mr. Zelikovitz: We do not like to delve into the past, and we respect the courts. Legal counsel for Spring tried to bring forward evidence of past behaviour and activity and what has gone on, and the court said, My job is to interpret the words of the legislation.
I am a lawyer by training as well, so I respect the role of the courts and I understand what the role was. That is why we have been saying for the past five years, this issue is about common sense and fairness.
It is now time to go to Parliament and say, what was the real intent of the legislation? What was the intent with this legislation? This legislation is not a slippery slope or a thin edge of the wedge; all those different terms. This legislation is not about universal postal service going by the wayside because it has been fine for the past 25 years. Canada Post has said it themselves.
It is difficult to have CUPW make an argument to say universal postal service is in jeopardy, rural mail service is in jeopardy, but it has not been for 25 years. If universal postal service and rural service is in jeopardy, it is not because of international mail companies because they have never been a problem before.
The decision was a shock. We do not know the history as to how it all came about and how Canada Post came up with this argument. It was a clever and good argument, and it caught us by the wayside. That is when a decision was made to form a coalition of companies to say we have to fight this issue and take it to Parliament, and that is what we have done.
Senator Baker: Of course, this issue has been held in abeyance now.
Mr. Zelikovitz: On consent with Canada Post.
Senator Baker: On consent with Canada Post. I do not know whether you consented or not. I do not know if that consent would have played a major role in waiting for Parliament to determine exactly what Parliament wishes to do, which is what the courts have ruled.
Mr. Zelikovitz: The consent part was important. I think the industry would have made a valid argument to get the stay in any event, but the reality was, we needed to go to the judge to say it makes sense to impose a stay on this injunction. By the way, Canada Post, who brought this injunction against us, is consenting to the stay. The consent was important. It has now been extended to December 2010, and we hope it will go by the wayside once, hopefully, Bill C-9 is passed.
Senator Baker: The injunction runs out in December of 2010.
Mr. Zelikovitz: That is correct.
Senator Baker: If this bill does not pass, then the ruling of the Ontario Court of Appeal in November of 2005 shall prevail.
Mr. Zelikovitz: That is correct. To some extent, you can say that Mr. Sikora and perhaps Mr. Weeks and others in the industry may have six months before injunctions are imposed on Spring Mail. If Mr. Weeks uses Spring Mail for some of his international mail, he will not be able to do so. He may have to let go more employees, and the industry will collapse, but we are hopeful that will not be the case.
Senator Baker: I have a final question that bothered me when I read the judgments. I read all the judgments, as a lot of senators have. One thing bothered me: It is one thing to get an injunction, but it is another thing to demand damages, and Canada Post demanded damages. I do not know what happened to the damages, so I want to put the question to you because I am sure Canadians are wondering. The very words of the Superior Court judge were that it would require a special hearing on damages and it would be decided at a later date. Whatever happened?
Mr. Zelikovitz: I do not know the particulars. With all due respect, again, having a legal background, if the opportunity is there, one uses the opportunity to ask for damages. It is what it is. I do not have information about that situation.
Mr. Sikora: Canada Post has no damages. They have lost nothing. Mr. Weeks and I lost a business. Small printing companies across the country have lost like we have. Canada Post lost nothing. You said it exactly, Senator Baker: what damages?
Mr. Zelikovitz: If I can make one more comment, I do not think the question was put to Canada Post because there was some confusion over numbers. How much revenue does Canada Post generate in international mail? I do not know the answer because the landscape is competitive, but I would bet that they do more business than all the private international mail market in Canada combined. I do not know how big the market is because it is competitive, but Canada Post has been involved for 25 years. They are doing business. They are competing actively. They are losing business, they are winning business, but they have a large portion. I do not know how much that business is and that question was not asked, so I am not sure. I can tell you that I suspect it is probably more than what this whole market does.
Mr. Sikora: To add to that answer, that is only Canada. Canada Post is searching all over the world. We see all the reps they have in the United States selling all the packaging and the mail coming back here. They are not even talking about that business.
Senator Finley: Most of the questions I wanted to ask have been exhausted. This is all the more reason to pass this bill as soon as possible.
Senator Ringuette: Mr. Zelikovitz, I listened carefully to the questions asked by Senator Marshall with regard to your association, and you said that the Canadian International Mail Association is a coalition. Is that right?
Mr. Zelikovitz: Yes.
Senator Ringuette: What is it a coalition of?
Mr. Zelikovitz: It is a coalition of companies that are involved in, and participate in, the international mail market in Canada. They are not all international mail delivery companies. Some of them are printers, some are designers, and some are envelope companies like Mr. Sikora's.
Senator Ringuette: Can you supply us with the list of members in your coalition?
Mr. Zelikovitz: Yes, I can do that, and I can also tell you that the members of the coalition have gone up at times and down at times, because many of them do not wish to have their names appear in public for fear of retribution from Canada Post or others because they have been engaged in this international mail activity — legally, I would add. They have never operated illegally, contrary to comments that have been made in the house and in the Senate by other witnesses. It has never been an illegal operation at all, but the numbers have gone up and down. I will try to obtain for you as accurate a number of coalition members as possible.
Senator Ringuette: I want the names of the current ones; never mind the ones two years ago, et cetera.
Mr. Zelikovitz: Yes.
Senator Ringuette: I was trying to identify what your relationship was with the international mail coalition.
Mr. Zelikovitz: I was expecting you to ask me that question, Senator Ringuette, and I am happy to answer. I was hired by a group of the companies who formed the Canadian International Mail Association in late 2004 after the legal situation began. I am a government relations consultant, and I have advocated for this industry. I have gone across the country meeting with letter shops and mail houses, and trying to understand. I have gone to a meeting with Mr. Elliott to meet with CUPW. We met with Ms. Steinhoff, and with Deborah Bourque when she was CUPW president, because we wanted to reach out to as many stakeholders as possible.
To be clear, I have nothing to hide. I am a government relations consultant that has been working for the Canadian International Mail Association proudly for the past five years, and I do not want them as a client anymore. I say that with all honesty.
Senator Ringuette: Do you work for a public relations company?
Mr. Zelikovitz: That is correct.
Senator Ringuette: The name is APCO Worldwide.
Mr. Zelikovitz: That is correct.
Senator Ringuette: I was interested in understanding your perspective. When you began your opening remarks, you said "we" from the industry.
Mr. Zelikovitz: I consider myself a part of the family now.
Senator Ringuette: With respect to Bill C-14, which was brought down in 2007, you issued a press release making accusations on December 10, 2007. It starts as follows: "The Canadian Union of Postal Workers (CUPW) is working overtime to oppose the passage of C-14 . . . by misrepresenting facts."
The Chair: Can you confirm that quote?
Mr. Zelikovitz: Absolutely.
Senator Ringuette: Then on June 18, there is a statement by one of your members at the time, a member of the Canadian International Mail Association, J.J. Hian-Cheong, President of Spring Global Mail. Are you familiar with Spring Global Mail?
Mr. Zelikovitz: Of course I am; they are a member of CIMA.
Senator Ringuette: With whom are they in partnership?
Mr. Zelikovitz: You are asking about their ownership? Spring is a company that has approximately 55 employees in Canada, pays taxes in Canada and, yes, Spring is a company that has foreign ownership. You have already mentioned this point in past hearings, and they are fine to let everyone know that they are partly owned by Royal Mail and, I believe, Singapore Post and Deutsche Post. That is correct, and they provide significant economic activity in Canada.
Senator Ringuette: Mr. Elliott, you have indicated that the Canadian Printing Industries Association represents 7,200 printing establishments. Do you represent all of the industry?
Mr. Elliott: We feel we do, yes. They are not all of our members, but we represent and speak, we believe, on behalf of an industry as opposed to only our members.
Senator Ringuette: How many of the 7,200 printing establishments are members within your association?
Mr. Elliott: We have roughly 600 members. However, within that number, probably 80 per cent of the volume that is printed in Canada is printed by one of our members: people like Quebecor, formerly, Transcontinental, St. Joseph and companies like that.
Senator Ringuette: Quebecor prints 80 per cent of the printing by the membership?
Mr. Elliott: No; I am sorry if I was not clear. In 2009, 80 per cent of the volume, roughly $9.2 billion, was printed by a member of the Canadian Printing Industries Association, and Quebecor, now World Color Press, soon to be perhaps something else, and others, are members of CPIA.
Senator Ringuette: So 80 per cent of the volume —
Mr. Elliott: — yes, is printed by a member of our association.
Senator Ringuette: I visited your website to understand your association, your goals and so on. There was a link with regard to membership. Perhaps it is because I do not know under which name it is listed, but I know Quebecor operates an entity called MediaPages that is involved in printing. Is there another name under the membership list that I should look at?
Mr. Elliott: If you are looking for Quebecor?
Senator Ringuette: Yes.
Mr. Elliott: You would not have seen our entire membership list on our website. We do not put that list on our website. That is private information. We have a spot on our website, which is what you might have been looking at, which is called member sites, and it is members that have chosen to link their site to our site. As you might imagine, we receive many requests from the general public and businesses as to what printer is in Atlantic Canada or Montreal or something like that. We have links there, but only of those who choose to have their link there.
Senator Ringuette: Further on, under industry information, it says the regional distribution of the industry's output is as follows: British Columbia, which is your area, Mr. Sikora, is 6.6 per cent of printing; Alberta is 9.3 per cent; Saskatchewan is 1.2 per cent; Manitoba is 4.8 per cent. There is nothing there with regard to Atlantic Canada. I hope we do some kind of printing in Atlantic Canada. Then you go to Ontario, 47.7 per cent, and Quebec, 28.6 per cent. These two provinces have 76 per cent of the printing in Canada? Is that the way I read that information?
Mr. Elliott: That is correct, yes.
Senator Ringuette: With regard to the printing industry, how many companies are in trouble in B.C., Alberta, Saskatchewan and Manitoba?
Mr. Sikora: I am in trouble.
Senator Ringuette: I hope you will not be for a long time.
Mr. Sikora: I hope not. Pass the bill.
Senator Ringuette: I am sorry. I do not necessarily agree. Mr. Elliott, because I love to learn about issues that I have to deal with, an interesting press release with regard to this budget bill, Bill C-9, was issued on March 5, 2010. Given the importance that the association has accorded to Canada Post, and how it creates jobs, I looked through the press release with regard to this budget bill and there was not a word about Canada Post in it.
The Chair: Can you confirm that, Mr. Elliott?
Mr. Elliott: Senator Ringuette has the press release. I would say it is probably true.
The Chair: Either we put it in front of you, or you can recall having issued it.
Senator Ringuette: I have a copy.
The Chair: Can you make it available to Mr. Elliott?
Senator Ringuette: Sure; I will go on. You have written a letter to Minister Flaherty with regard to further budget issues. I agree with the letter that you signed, which was sent by the Canadian Manufacturers & Exporters. It is on your website for your members. The issue that is of importance in the next budget bill for the minister is to have the depreciation extension for the equipment because the equipment with regard to a printing business is of extreme importance and is costly.
Senator Finley: Point of order. With all due respect, what does this issue have to do with remailers?
Senator Ringuette: This has to do with Bill C-9, the bill that is in front of us. Issues in Bill C-9 have been highlighted by either a press release or a letter to the Minister of Finance by the industry. I can table this information so everyone has copies. At no time has the issue of the deregulation of Canada Post been highlighted to the minister.
The Chair: You are welcome to make these arguments at the appropriate time.
Mr. Elliott: With that press release and that letter, you are correct. However, for some reason you do not have a copy of the letter that I did write to Minister Flaherty on this very issue.
The Chair: Why do you not send it to us?
Mr. Elliott: I will be happy to.
The Chair: Senator Ringuette, your time is up. Do you have a concluding remark?
Senator Ringuette: If we have time, I want to ask another question.
The Chair: We do not have time now. We have another panel later on, and you may be able to work your point in then.
Senator Runciman: I thank you, gentlemen, for travelling here today, some of you coming from a great distance. It is much appreciated. Your testimony has been informative and helpful in showing the unsupportable nature of the opposition to this legislation. You have been helpful in that regard.
A couple of issues have been raised primarily by Senator Ringuette, the issues of returns and undeliverables, and those issues have been cited as perhaps a major loss and a significant burden for Canada Post. I wonder if you can comment on that issue.
Mr. Zelikovitz: To be honest with you, I do not have specific information. I know, based on what Canada Post has told us, that it is insignificant. Those types of issues will happen, have been happening and, I suspect, will happen. I suppose mechanisms will be in place, and perhaps mechanisms need to be in place, to deal with them. I have to rely on Canada Post's comment they are insignificant.
Senator Runciman: I would not mind you responding to a comment we heard during the CUPW presentation here today. We heard this business has been going on for 30 years, or has been operating over a quarter of a century in any event, and there seems to be agreement on that, until some sharp-eyed, legal beagle found this loophole and pursued it. Ms. Bue, Second National Vice-President of CUPW, described this bill as the thin edge of the wedge in terms of deregulation. This bill is a newfound threat, I guess, after a quarter of a century. I wonder if you want to respond to this newfound threat after 25 years of operation.
Mr. Zelikovitz: Before 2006, when CIMA began operations, where was CUPW complaining about us? Where were the concerns raised after consecutive profits year after year by Canada Post? Where were those concerns about the international mail industry? Did they even know who we were, the types of employees we had and what we did? We never heard from them. I cannot respond. All I can say is, this amendment will not dismantle universal postal service because it has not for the past 25 years.
Senator Runciman: Finally, we heard again from Senator Ringuette with respect to an appearance earlier by the former head of Canada Post, who we now know has moved to Royal Mail in Great Britain, and there has been an implied suggestion that there is a nefarious plot underfoot with her strong endorsement of this initiative and her move to Great Britain. There are continued suggestions of a secret agenda and a nefarious plot underfoot here, that something is rotten in Denmark. Do you want to respond to that perspective we have heard on a number of occasions?
Mr. Zelikovitz: Sorry, I do not have a comment to make. I think what has been said has been said.
Senator Runciman: You do not see any real threat from Royal Mail with respect to the operations in Canada and the transfer of this individual, or this individual taking over the new position at Royal Mail?
Mr. Zelikovitz: In my discussions, it is nothing that our industry has been a part of. This is the first time I have heard a question like that.
Senator Runciman: It is a mystery to us, too.
The Chair: On behalf of the Standing Senate Committee on National Finance, I thank each of you for being here: unfortunately, we have lost Mr. Weeks via video conference; Mr. Elliott from the Canadian Printing Industries Association; Mr. Zelikovitz from the Canadian International Mail Association; and Mr. Sikora, President of Classic Impression Inc. Thank you for preparing the written remarks as well as your preliminary remarks because written remarks are always helpful to keep as a record. We appreciate you going to that trouble.
This meeting will suspend for one hour. We are back here at six o'clock for another panel.
(The committee adjourned.)
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