Finance Committee on Oct. 13th, 2023

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Cannings.

We'll have MP Small, please.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Thank you, Mr. Chair.

My question will be for Mr. Foley.

The hospitality industry is built around travel. Right now, we're looking at the impact of the carbon tax, and we're somewhere around 20¢ per litre on gasoline in carbon tax and HST combined. What do you think the impact will be on your industry as that triples? This applies to airline tickets, prices on gasoline and whatnot. Do you think it will have a negative impact on your industry, which is already struggling?

[Craig Foley]

Without question, any increased cost has to be passed on to the consumer and, at a certain point, the consumer is going to say, “This surpasses my appetite.”

In our industry, most of the revenue we get, outside of business travel...and again, thank you very much for coming. It's great to have all of you here. This actually affects our industry when we have people travelling.

If you're looking at families travelling, it's coming out of discretionary funds, and at a certain point those funds run out. Any increase to the cost of getting here, particularly to Newfoundland and Labrador, where we do not get the accidental tourists, or in the provision of the experiences is going to drive the cost higher, and it may out-price the product for the market.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

It's becoming more and more evident and it's being pronounced by governments of the world that our transition to electric vehicles is basically a pipe dream. It can't happen for one reason or another, mostly because we don't have the resources to be able to do it as quickly as everyone wants. We all want cleaner air and lower emissions, of course, but with all the costs to get here to Newfoundland and Labrador—and you indicated that the automobile traffic is up—at what point do you think people will just simply stop coming because it will get too expensive?

[Craig Foley]

It's a very subjective question you ask, but I think that has probably impacted some of the residential travel this year. I didn't see as many people moving around the province. You can see that fairly quickly. This summer, when you looked around, there just wasn't that much automobile traffic happening.

I do think it's a delicate balance, because we're also very committed to the environment. We're committed to preserving our culture. We only get what we've got, and one of our greatest selling propositions here in Newfoundland and Labrador is our natural environment. I think we have to find and strike that balance and continue to work toward that, but for the very immediate future, any increase in cost is going to affect visits.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Small.

MP Thompson, you will be our last questioner of the witnesses.

[Joanne Thompson, Liberal, St. John's East, NL]

Okay. I'll try to get in as many questions as I can.

I am going to start with you, Mr. Foley. You referenced changing consumer choice. I'm thinking of Iceland now and the choice they made in a time of struggle to really become the destination for people who want the experience of the climate, the outdoors.

Do you see Newfoundland and Labrador moving in that direction, particularly as we become much more aware of our climate crisis, as we understand it, and as the attention of the world is on what's happening here in terms of renewable resources? Do you think we'll see a change in the type of tourist experiences people will expect going forward?

[Craig Foley]

I think that's fair, and what Iceland has also done really well is to say that there is no such thing as bad weather; there's just bad clothing.

We are kind of preprogrammed here to talk about weather all the time. They've managed to break through that perception.

I think many of our operators also hold Iceland as the aspirational goal because we are so similar. Again, our biggest challenge on that will be access—getting people here who want to come and spend the money. We know there is pent-up demand for that right now, so access remains that challenge.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

Mr. Bonnell, again, I appreciate how you answered, and I'm trying to get in as many questions as I can.

Quickly, you commented on the rising temperatures this summer in the Flemish Pass and how the highest temperatures ever were recorded. What were the impacts of that on your industry?

[Carey Bonnell]

That had a huge impact. Last year we had hurricane Fiona, which was obviously devastating to the southwest coast of Newfoundland, but that system pushed it onto the Grand Banks. We fish yellowtail flounder in a very shallow water environment. We had temperature spikes—I forget the exact temperatures—up around six, seven and eight degrees on the sea floor, where the normal temperature would be three degrees perhaps. That is outside the comfort zone for yellowtail flounder.

We encountered major issues around bycatch species we wouldn't normally see. We have strict rules in the offshore. It impacted our business severely, so we understand the changes that are occurring, and we are fully supportive. As Mr. Foley said, at the end of the day it's about finding some balance in this.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

I'll wrap around to you, Mr. Templeton. Could you speak quickly on the very real clean-energy advantage that we have in this province, because we're backed up by an electric grid?

[Alex Templeton]

That's another aspect of our unique opportunity. We have the existing renewable generation and ultimately this opportunity to feed into it, and, as I said in my comments earlier, there continue to be hydro assets that are yet to be developed in this province, major assets.

Those prospects are very good. The wind resource in this province is second to none.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

Finally, Mr. Leet, could you comment on how, going forward, we manage supply and demand?

[Sean Leet]

Supply and demand with respect to renewable energy...? I would start with supply-and-demand imbalances being recognized.

On green hydrogen, there will not be enough of it, whether it's green hydrogen or converted green ammonia for shipping, to meet the demand in Europe or globally. We're starting to talk to offtakers now.

I just came from Germany. One significant German utility said this to us two or three times in the meeting: “We recognize that the supply is going to be very limited. We just need to understand how we can afford to buy the premium green product.” Of course, that's going to take governments working together to stand up the subsidies. That situation is likely going to persist for many years. Nobody has a crystal ball to understand what that might look like. Conceivably, it could be 10 to 15 years of having that supply-demand imbalance.

It's going to be very interesting to see how it develops. Again, taking a first-mover position in Atlantic Canada is going to allow us to prosper from that supply-demand imbalance while being a leader in the fight against climate change.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

I think that's my time.

[The Chair, Liberal, Peter Fonseca]

Thank you.

That's great. Everybody got an opportunity.

Thank you, MP Thompson.

This is our final meeting of our Atlantic tour. We started in P.E.I. We went to New Brunswick and Nova Scotia. We're here now in Newfoundland and Labrador, and it's really been a crescendo to our tour.

We thank you. We've said it all along: It's really about the people we've met—the hospitality industry, the entrepreneurs, the leaders, those in energy—and it has been a really great experience for all of us. I won't name again everybody who is part of our committee, because I think Gabriel Ste-Marie has done a great job of that, but we want to thank you for your testimony and for helping to inform our study as we look in advance to the 2024 budget.

Thank you so much. This concludes our meeting.

We're adjourned, members.