Portfolio organizations: Standing Committee on Government Operations and Estimates—May 29, 2023
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Canada Post Corporation financial stability
Context
Note: Canada Post’s mandate is to be financially self-sufficient and it is striving for ways to do that while facing continued challenges of lower revenue and volume trends. Canada Post continues to provide Canadians with affordable postal rates.
Suggested response
- Canada Post is a Crown corporation that operates at arm’s length from the government
- As is the case with other postal carriers around the world, Canada Post is evolving to meet the changing customer needs and expectations
- Canadians relied heavily on the essential services provided by Canada Post during the COVID-19 pandemic
- Canada Post connects this country from coast to coast to coast. We continue to work with the corporation to examine opportunities to improve the financial sustainability of its important operations
If pressed on specifics of the financial situation:
- In its 2022 financial results, Canada Post recorded a loss before taxes of $548 million. Total revenue declined by $167 million from the previous year
- While it is forecasting a fifth consecutive year of operating losses in 2022, Canada Post’s immediate focus is on much-needed investments and improvements to meet the changing needs of Canadians and businesses. Financial self-sustainability remains the corporation’s medium-to-long term goal
- Parcel revenues and volumes have declined as Canadians’ online shopping slowed from elevated levels in 2021
- Direct marketing continued to recover compared to 2021, although volumes remain below pre-pandemic levels
- Lettermail volumes continued to decline due to ongoing digital substitution
Canada Post Corporation 2022 Annual Report
Context
On May 4, 2023, Canada Post Corporation released its 2022 financial results and recorded a loss before tax of $548 million.
Suggested response
- Canada Post has a long-standing mandate to serve all Canadians while remaining financially self-sufficient
- Canada Post recorded a loss in 2022, as growing competition in the parcel delivery sector, combined with economic uncertainty and reduced consumer spending, negatively affected parcel volumes and revenue
- With parcels representing approximately half of Canada Post’s revenue, the Corporation is investing to better position itself in a competitive market and ensure the postal service continues to be a valued delivery partner
- While the immediate focus must be on critical investments and improvements to meet the changing needs of Canadians and Canadian businesses, financial self-sustainability remains the Corporation’s medium- to long-term goal
If pressed on the $548M recorded loss before taxes:
- Total revenue declined by $167 million, or 1.9% from the previous year. While parcels revenue declined from 2021, the line of business ended 2022 with stronger revenue than before the pandemic started
- Transaction mail volumes continued to erode. Direct marketing revenue and volumes slowly recovered from the prior year
- Canada Post's overall cost of operations fell by 0.8% from the previous year. This was largely due to lower employee benefits driven by higher discount rates, and reduced labour costs related to lower parcel volumes
- As the business shifts from mail to parcels, pressure on costs continues. The Corporation is making strategic investments to improve service and tracking, enable its network, increase capacity and enhance the customer experience
- With an obligation to deliver to all Canadian addresses, the continued growth of the Canada Post network added to costs in 2022. Addresses increased by approximately 219,000 during the year
Rehabilitation of National Capital Commission assets including 24 Sussex, Stornoway and Rideau Hall and Harrington Lake
Context
The Official residences of Canada: 2021 Asset Portfolio Condition Report was released by the National Capital Commission (NCC) in 2021 and identified a requirement for a 1-time injection of $175 million over 10 years to address the deferred maintenance deficit for all 6 official residences.
Suggested response
- The NCC is an independent Crown Corporation and is responsible for the maintenance and operations of the 6 official residences in Canada’s National Capital Region
- Both the NCC and the Government of Canada recognize the importance of the official residences and their heritage and cultural value
- The NCC is committed to full transparency and reports annually on capital expenditures incurred at the official residences
If pressed on 24 Sussex:
- 24 Sussex remains the only official residence in critical condition
- To protect the health and safety of residence staff and ensure the integrity of this Classified Heritage Asset, the NCC is in the process of closing 24 Sussex Drive to provide easier access for proper planning of urgent and necessary work
- This project includes the abatement of designated substances as well as the removal of obsolete systems, work that must be undertaken regardless of any decision taken on the future of the residence
- The estimated cost of this project is $4.3 million
If pressed on Harrington Lake:
- The NCC’s work at Harrington Lake was part of a broader program to preserve, maintain, and restore all official residences under NCC management
- As detailed in the 2018 Asset Portfolio Condition Report released by the NCC, the Harrington Lake main cottage was 1 of 2 main residences deemed to be in “critical” condition; the other being 24 Sussex
- The NCC completed works at Harrington Lake in December 2020 with an overall cost of $5.8 million. The asset is now considered to be in “fair” condition
- As an independent Crown corporation led by its board of directors, the NCC plans, initiates, and implements the works and investments related to the official residences to ensure their continued operation and to safeguard their national heritage
If pressed on Stornoway:
- The NCC works in close collaboration with the offices of each future resident of an official residence-including leaders of the official opposition destined to live at Stornoway-to determine the timing and logistical details of their move, including required updates to the residence
- During transitions, typical moving tasks are performed to ensure the residence is clean and appropriately furnished so that occupants can feel at home and are able to execute their official duties as soon as they move in
- Moving costs are not associated with the occupant’s personal belongings
If pressed on the NCC’s asset portfolio condition report:
- The NCC released this report in June 2021 to remain transparent and open with the Canadian public and it remains committed to working with its partners to ensure that issues related to security, heritage preservation, sustainability, and accessibility are addressed
- The 2021 report found that the overall condition of the portfolio continues to deteriorate with only 24% of the assets considered to be in “good” condition, down from 34% in 2018
- Of the 6 main official residences, 4 are in “fair” condition (Rideau Hall, Harrington Lake, Stornoway, 7 Rideau Gate), and the Farm is in “poor” condition while 24 Sussex remains in “critical” condition
If pressed on Rideau Hall:
- All NCC projects that are planned or underway at an official residence are important to ensure the residence’s continued operation and to safeguard its national heritage
- The NCC works in close collaboration with the Office of the Secretary to the Governor General to ensure the effective implementation of planned projects
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