Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 16 - Evidence, April 23, 2013


OTTAWA, Tuesday, April 23, 2013

The Standing Senate Committee on Transport and Communications met this day, at 9:31 a.m., to conclude its study of Bill C-321, An Act to amend the Canada Post Corporation Act (library materials), and to give the bill clause-by- clause consideration.

Senator Dennis Dawson (Chair) in the chair.

[Translation]

The Chair: Welcome to the Standing Senate Committee on Transport and Communications.

[English]

This morning we continue our study on Bill C-321, An Act to amend the Canada Post Corporation Act (library materials). The purpose of this bill is to provide for reduction in the rate of postage for library materials.

Appearing before us from Canada Post Corporation is Mr. Rod Hart, and from the Canadian Library Association, Kelly Moore.

Ms. Moore, I understand you will be speaking first. Following your presentation we while hear from Mr. Hart and then proceed with questions. Ms. Moore the floor is yours.

Kelly Moore, Executive Director, Canadian Library Association: I am the Executive Director of the Canadian Library Association, or CLA. We greatly appreciate this opportunity to present to you today in the context of your study on Bill C-321, An Act to amend the Canada Post Corporation Act (library materials).

CLA is the national voice for Canada's library communities. We have both individual members, such as your local public librarian, and institutional members, such as larger public, university and college libraries. We represent libraries and library workers from libraries of all types across the country.

Data from 2010 shows that 360 million in-person visits were made to all types of libraries across Canada. That is nearly 1 million visits a day. There are 16,000 public, academic, special and school libraries in Canada, and that makes more libraries than Tim Hortons and McDonald's outlets combined.

CLA is extremely pleased to offer its full support for Bill C-321. Introduced by MP Merv Tweed, this bill would preserve the existing reduced rate for postage on books between libraries and between libraries and their users within Canada. This reduced rate, known as the Library Book Rate, has been offered as a service by Canada Post since 1939.

Not only does Bill C-321 seek to enshrine the Library Book Rate in the Canada Post Corporation Act, but it also proposes to expand the definition of library materials to include new media such as CDs, DVDs and other audiovisual materials. Library collections have evolved significantly over the years to include new formats as technology changes, so this expanded definition recognizes that information comes in many different formats, not just books.

Since 2006, Canada Post has reviewed its provision of this service annually and to date has renewed its commitment each year. At the end of 2012, Canada Post announced that it would again renew its reduced postal rates for libraries but with a slight fee increase for 2013. Even with this increase, the Library Book Rate remains very economical and continues to be substantially lower than the most discounted commercial parcel rates.

We thank Canada Post for helping to improve the lives of Canadians by helping provide access to the books they want to read that are not available at their local library.

The Library Book Rate is about more than a reduced rate for libraries to send and receive books. With over 2,200 libraries actively using the Library Book Rate and over 1 million Canadians benefiting from it annually, it is an indispensable part of the service delivered by libraries across this country. The program is essential to protecting library services. It contributes to the national public policy goals of literacy and lifelong learning and supports inclusive, vibrant communities.

The Library Book Rate provides a bridge between all Canadians, including those who are disabled, homebound or live in remote locations. The service is particularly beneficial to smaller rural and remote libraries. Though they may have smaller permanent collections, they are able to offer access to more comprehensive collections from larger centres. It also helps students enrolled in distance education programs and Canadians pursuing lifelong learning goals to access essential materials.

Libraries have indicated that without the Library Book Rate we would have a two-tiered library service in Canada: one for those who can afford to pay to access information and one for those who cannot. If libraries had to offer this program on a cost-recovery basis, patrons and distance learners would bear the costs and such user fees would impede access to information.

A strong library system is one of the best and most important services that a community can offer to its residents. Libraries contribute to strong local communities by supporting literacy, fostering inspiration and enjoyment, and connecting people to each other and the world.

Libraries are a crucial entry point into the world of knowledge. They are information and community centres where people learn, engage, discover and connect. Libraries help people find their way in a large and increasingly complex information environment by connecting them with employment resources, providing them with access to an affordable means of entertainment and assisting them to acquire skills that will allow them to compete in a changing economy.

The Library Book Rate is a vital component of these library services. It ensures equitable access to materials located in libraries across the country, supplies the intellectual needs of remote northern and rural communities, supports the principle that the collections of all libraries are a national asset that must be accessible to all Canadians and, by extension, it supports education and lifelong learning, helping to maintain Canada's global competitiveness and productivity.

In conclusion, on behalf of CLA and its members, I would like to thank Merv Tweed, who has taken the lead and championed this issue that is so important to Canadians. I would like to thank Mr. Hart and his colleagues at Canada Post for their continued dedication to providing this service to our libraries, and I would also like to thank the Government of Canada for its ongoing support.

I would venture to guess that this bill may be one of very few private members' bills to have received two unanimous votes of support in the House of Commons. We hope for a similar show of support from the Senate because Canadians deserve equal access to library and information services regardless of where they live. We strongly urge you to support this bill without further delay. Your leadership is critical in determining the future of this vital service and the net benefits it provides to all Canadians.

Thank you for the opportunity to speak you today.

Rod Hart, General Manager, Parcels, Canada Post Corporation: Good morning. I am Canada Post's General Manager, Parcels, which is the competitive side of our business and a key element of our future going toward. Library book rates fall under my responsibility. I welcome this opportunity to appear on behalf of Canada Post.

Libraries remain important institutions in this country, even in this digital age. Like Canada Post, the public library is a long-standing, trusted and vital public institution. We appreciate the important role libraries play in our communities, particularly in rural Canada. We are proud that we also serve Canadians in every community — urban and rural. That is over 15.3 million addresses. With nearly 6,400 retail postal outlets, we maintain Canada's largest retail network.

Canada Post and Canada's libraries have enjoyed a long and cooperative relationship. Both the Canadian Library Association and the Association pour l'avancement des sciences et des techniques de la documentation have been great organizations to work with.

Canada Post understands the needs of public and academic libraries. They need to provide their patrons access to a broad range of materials, even if a library does not have specific items on its shelves. Libraries benefits from the Library Book Rate. If rates do increase periodically out of necessity, libraries need them to do so predictably and reasonably. In each of the last two years, we have had modest price increases of 5 per cent. The associations have said the Library Book Rate, even with those increases, continues to be a great benefit for the Canadian library community. I assure the committee that Canada Post wants to support libraries by offering these rates.

Today I want to speak to three overarching points. First, despite its serious financial challenges, Canada Post is committed to maintaining discounted library book rates. Second, we will manage the effect of Bill C-321. Third, as the leader in providing digital delivery of bills and other documents to Canadians, Canada Post understands the desire to expand the bill's definition of library materials to include digital and other media.

Allow me to elaborate on the first point, our commitment to discounted rates for libraries. Canada Post faces serious challenges primarily due to the accelerating decline in volumes of our core product, which is letter mail. For 2012, the Canada Post segment reported a before-tax profit of $98 million. However, had it not been for one-time non- cash adjustments that reflect future savings negotiated with our largest union, Canada Post would have reported a before-tax loss of $54 million for 2012. In 2011, the Canada Post segment reported a before-tax loss of $327 million. We expect to report a significant financial loss for 2013.

We have significant challenges and we need to address them. The rate concession provided by the Library Book Rate supports public and academic libraries. The government does not provide funding to Canada Post for this service. The rates are substantially lower than the most discounted rates available to other customers.

Under the Library Book Rate, in 2013 a single two-way shipment — an item's round-trip between libraries — is priced at $1.02 for a typical item. In 2012, nearly 747,000 items were shipped under the Library Book Rate, which was then 97 cents. Delivering these items generated $857,000 in revenue. At commercial market rates, these shipments would have generated approximately $9 million in revenue.

That said, let me describe the size of our overall business and our parcel business in comparison to the library book shipments. Canada Post generated $5.9 billion in revenue in 2012 from the sale of our products and services. Our parcel shipments in 2012 numbered 154 million items, generating approximately $1.3 billion in revenue.

We are in a very competitive market, having to stand out against global giants like UPS and FedEx. We are very good at delivering to consumers, and this works to our benefit as e-commerce continues to grow. Our legislated mandate includes an obligation to remain financially self-sustaining, and we embrace this responsibility. However, in the context of our size, shipments to libraries are relatively small. Canada Post is committed to maintaining a discounted rate for libraries.

Second, Canada Post is confident that the effect of the legislation would be manageable. Canada Post does not anticipate a significant financial effect to its business as a result of this legislation. As well, the shipment profile has been stable; the items are not changing drastically in size or weight from year to year.

This leads me to my third point, which is that Canada Post understands the desire to expand the definition of library materials. As you know, under the bill, ``library material'' means books, magazines, records, CDs, DVDs, other audio visual items and similar library materials. Canada Post believes that with this definition enshrined in law, the shipment profile would remain similar to what we have seen for the past few years. This is because for a number of years Canada Post has applied the Library Book Rate to all library materials, including the list contemplated under the bill.

In conclusion, on behalf of Canada Post, I can assure the committee and the country's libraries that Canada Post understands the rationale for the legislation. If Bill C-321 becomes law, Canada Post will certainly comply and do so in the spirit that our existing pricing and practices have demonstrated.

Again, thank you for the opportunity to appear before the committee. I would be happy to take your questions.

The Chair: Before questions, I want to remind senators that if we get through questions early enough and if it is acceptable by the committee members, we could go to clause-by-clause consideration of the bill this morning.

Senator Mercer: Ms. Moore and Mr. Hart, thank you very much for being here. We appreciate your time and effort. Some people think it is a minor bill, but this is an important bill for the people involved.

Ms. Moore, I think your comment that there are more libraries than Tim Hortons and McDonald's combined is a visual that Canadians need to remember. That is how important libraries are to Canadians, particularly to Canadians in rural and smaller communities. Those of us fortunate to live either in or near big cities have access to big libraries, and those of us fortunate to have access to technologies have libraries at our fingertips.

I did some minor research, and I used the annual report of the Nova Scotia Public Libraries. I was interested in a couple of numbers that confused me. There is a category in the financial report that talks about interlibrary loans. They talked about two things: They talked about ``borrowed,'' and the number happens to be 36,544; and then they had a number which was ``loaned,'' which was 31,443. I am confused. If they were borrowed, were they not also loaned?

Ms. Moore: That is a very interesting question. I am not sure how Nova Scotia has been compiling those statistics.

Senator Mercer: There is just a little inconsistency that I noticed.

Ms. Moore: There is.

Senator Mercer: I was impressed, however, by the number of people in my small province of Nova Scotia who are using the library and the service.

Mr. Hart, this is a huge job to handle. Canada Post is a complex but efficient operation. How does it work when people use the services of Canada Post to have a book or something come in through the program at any Canada Post outlet? Let us say I live in a little village at Mount Uniacke in Nova Scotia and I have a book. I go to the post office with a package and drop it off. Does it magically appear back in the library whence it came? How do you do it internally? With these 16,000 libraries, how do you do this? I know you are not making money on this; you are losing money. However, you still need to be efficient.

Mr. Hart: We did one thing in conjunction with the Canadian Library Association. Prior to five years ago there were a lot of unknowns around this program. For example, we did not know who was using it, how they were inducting it, what labels they were using or how they were paying. We did not have a great mechanism to understand how people were using it, and therefore we could not comment other than taking surveys and a few other things to understand the usage.

With the Canadian Library Association, we created a process and tool called the Library Book Tool. If a library wanted to access the rates, they would have to go to the Canadian Library Association and register themselves, thus ensuring that they were a bona fide library that should be entitled to the rates. They would also get access to a tool, and that tool back in their library would enable them to generate labels that they would use to address the packages and to understand where they were going.

They would generate two labels at a time: one for the outgoing shipment and also a return label at the same time. They would put that return label into the shipment, bag or box so that when they dropped off the package to us, it would contain the label on the outside for the outbound so we would know where it would go. When the patron was finished with that book, they would take the return label included in their package, place it on the box and we would have it back.

This has also helped us understand a bit more of the economics behind the program. Before, we did not understand how many shipments per year there were — 1.8 or 2 million. Lots of numbers were flying around back in the early 2000s when we were trying to understand what the library book program was actually delivering. This has now given us precise information about what shipments are being sent, their weight and their profile, as well as which libraries are using it.

Senator Doyle: I wonder about the long-term implications of the bill itself. Do the long-term implications of the bill worry you in that the Conference Board of Canada is reporting today that Canada Post may very well be in a deficit of $1 billion a year by 2020? The bill has long-term financial implications for Canada Post. Does that worry you in any way?

Mr. Hart: That is a great question. I have not actually seen the report yet; I believe it was just launched this morning.

Canada Post's financial problems stem from the huge shift in how Canadians are behaving, with email and digital formats replacing letters. It is obviously placing enormous strain on our network as the volume of letters declines faster than perhaps parcels can grow. My area of expertise is around the parcel business, so I can certainly speak to that.

When we look at this particular program, it is in our base. We have been doing this for over 74 years. The cost of this program is currently in our base, so we will not increase our costs by moving forward with this legislation. If we were to discontinue this or we were to double, triple or quadruple rates, it would not have an impact on what we need to do as a company to change the network and to change our financial picture. We have other things that we must do and look at going forward.

Senator Doyle: Given that you are losing about $8 million a year because of the bill and you are going to be adding to your losses well over that when you do CD-ROMs and CDs, do you not have any plans to make up that loss with an additional cost to the consumer?

Mr. Hart: We would look to offset any losses of this program if there was a reasonable way to continue with modest increases so that the gap of the cost to provide the service and the contribution that is currently being made did not continue to grow and expand. I think that makes it manageable.

Senator Doyle: Is Canada Post unique in what you do here? Is Canada the only country to have that type of arrangement with its postal service that you offer with these subsidies to libraries?

Mr. Hart: I am not sure. I do not know whether other posts in fact bear the cost to provide public policy types of services. I am not sure.

Senator Plett: I apologize for being a bit late this morning. Maybe Ms. Moore has covered what I will ask. Our chair is very efficient in starting the meetings on time and that, obviously, created a little problem for me this morning.

The Chair: I have no comment.

Senator Plett: As the chair has said, I am the sponsor of the bill so I am very supportive of it.

Mr. Tweed, the sponsor in the other place, has emphasized the importance of the rate, stating that many rural libraries would not be able to exist if we did not have this program. I certainly support that. I am from a small village of 1,500. Many of our communities share a library in another small community, so it very much impacts the village I am from. I also support the fact that our library would not be able to exist if we, all of a sudden, had our rates go up the way they possibly would have to.

Either one or both of you can certainly answer this. How do you feel about that? Do you agree that many rural libraries would not be able to operate if we did not have this program?

Ms. Moore: I think it would certainly be a challenge for them to continue to offer the services they currently do and to be able to provide access to materials that their patrons require. It would be much more difficult if they had to pay commercial rates, for example. They would either have to stop the service or make cuts elsewhere within their budgets to accommodate that.

Mr. Hart: We understand the importance of our presence in rural Canada. We often use that as we are competing against FedEx and UPS for business. We talk about our reach and ability to get to Canadians no matter where they live right across the country, coast to coast to coast. We understand that the program specifically supports those areas where libraries are small.

The place where I have a cottage, McKellar, has a tiny library that has few books. When you go in there, to know that you can access a world of other books is obviously a good service.

Senator MacDonald: Is moving this material based on weight or volume?

Mr. Hart: This material is based on origin, destination and weight.

Senator MacDonald: This arrangement has been around since 1939 but now there is compulsion to put it into law. There must be something to trigger this compulsion to put it into law on our end. Have there been indications that Canada Post was going to change the fees to a certain level?

Mr. Hart: We have been consistent with our statements to both the library associations and to Canadians when we said we would never make unilateral decisions as they relates to this specific program and that we understand the need of it. Each year we have reinforced that with either no increase or a modest increase in consultation with the Canadian Library Association. Our behavior suggests that we understand the role of this program and that we have no intention to create a surprise or change. As I mentioned, charging commercial rates for this program will not solve our financial problems.

Senator MacDonald: Are there any efficiencies that the libraries could put in place in terms of the management of these materials that they are not doing at present that would help Canada Post in terms of its handling of the materials?

Mr. Hart: That is a great question. I can speak to the fact that we had that as a purpose to address when we introduced the Library Book Tool. When they generate a label for us off the computers that have been provided to every library, it provides a bar code that our machines can use to sort. Before, when libraries were manually writing their addresses and throwing them in bags, it would be a more costly ``sortation'' and movement for us in processing those shipments. We believe we have been able to streamline that. Now, with the labels they are using, with clear addresses and bar codes that our machines can read, they are probably giving us as good a shipment as they can.

The Chair: Mr. Hart and Ms. Moore, thank you very much.

If the committee agrees and someone makes the proposal, we could now go to clause-by-clause study.

Senator Greene: Yes.

The Chair: There is a proposal to go to clause-by-clause consideration. If you permit me, it is agreed that the committee proceed to clause-by-clause consideration.

You can stay if you want. Unless the clauses each have to be debated, it should be quick. We can take 30 seconds and let you free yourself from the table, if you would like.

It is agreed that the committee proceed to clause-by-clause consideration of Bill C-321, An Act to amend the Canada Post Corporation Act (library materials), better known as the ``Library Act''?

Shall the title stand postponed?

Hon. Senators: Agreed.

The Chair: Shall clause 1 carry?

Hon. Senators: Agreed.

The Chair: Shall clause 2 carry?

Hon. Senators: Agreed.

The Chair: Shall clause 3 carry?

Hon. Senators: Agreed.

The Chair: Shall the title carry?

Hon. Senators: Agreed.

The Chair: Shall the bill carry?

Hon. Senators: Agreed.

The Chair: Carried.

Is it agreed that I report this bill to the Senate with no amendments or observations?

Hon. Senators: Agreed.

The Chair: Madam, your bill has been adopted by this committee. We hope it will get the same treatment in the Senate that it got in the House of Commons and that it will proceed as quickly as possible.

I would like to remind the audience and honourable senators that our next meeting will be Wednesday, May 1. We will hear from the President and Chief Executive Officer of CBC, Mr. Hubert Lacroix, and the Director of Radio Canada International, Hélène Parent.

Senator Mercer: What will the subject matter be?

The Chair: It will be Radio Canada International and only Radio Canada International.

Senator Mercer: Thank you.

(The committee adjourned.)