Industry Committee on May 30th, 2007

[Michele McKenzie]

An increasing number of Canadian communities have been putting hotel room levies in place to fund various aspects of tourism development. The way these things have developed is that it's been up to the communities themselves as to how they choose to direct those funds. Some of those funds have been directed toward tourism marketing. To the extent that has happened, we've been able to partner with those communities for tourism marketing purposes.

I will say, however, that much of the dollars that are coming into place from tourism levies are not allocated for tourism marketing purposes but rather for tourism development purposes, to help with special events or to build infrastructure in some cases. But to the extent there is some money being spent on marketing, much of that has been directed to the domestic market and much of it is in fact fuelling what we've seen in terms of a very steady growth of domestic tourism within Canada.

[The Chair, Conservative, James Rajotte]

Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I'm going to move to feebates and ask what role Industry Canada played in actually developing the public policy for feebates and what your role is as it continues to evolve. There have been several times where different cars have appeared and disappeared in terms of the eligibility of feebates on the web pages. As well, there's been concern about entry of new market models and whether they're going to meet the same criteria in time given that there's a resource issue. I'll start with that.

[Richard Dicerni]

The program, as you know, was developed by the Department of Finance and introduced in the budget of 2007. It is administered in part by the Department of Transport and in part by the Canada Revenue Agency.

Secondly, the role and mandate of the Department of Industry is the same as many other sectors where we have an advocacy and a responsibility for a given sector to ensure that the interests of that sector are brought to the attention of the appropriate decision-makers. In that context, the minister and Guy and I met with CAPC, and that gave us an opportunity to hear quite directly from the industry as to what they thought about this program. We undertook to feed that back to the Department of Finance.

[Brian Masse, NDP, Windsor West, ON]

Was there an economic impact study done for the industry in terms of how the model that was eventually developed would impact the marketplace?

[Richard Dicerni]

Not that I'm aware of.

[Brian Masse, NDP, Windsor West, ON]

Will there be a study done on that? Will it be your department? What's going to happen in terms of Industry Canada protecting the auto industry if the Department of Transport has management of the file and the Department of Finance makes the decisions about how it is actually implemented?

[Richard Dicerni]

We are in regular contact with the sector, with the various auto manufacturers, with the association, in terms of getting feedback on this program. I can go back to the comment made by the minister that in the context of every budgetary cycle, these things are looked at, evaluated, and so forth.

There was a discussion a little while ago about tour operators and the decision made in Budget 2006, which some would argue had a negative impact on the tourism sector. Budget 2007 sought to make some adjustments. This is a program that is being monitored, implemented, and so forth, and it is part of our role to monitor the impact it has on the industry.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Masse.

We'll go to Mr. Brison, please.

[Scott Brison, Liberal, Kings—Hants, NS]

I wanted to discuss the visitor rebate program and the impact on the industry. We've seen the hotel associations and the tour associations united in opposition to the elimination of the visitor rebate program. The tourism commission, of course, serves that industry, among others. The elimination of the visitor rebate program makes Canada the only industrialized country with a consumption tax to not have a commensurate visitor rebate program. There were some steps taken to soften that, but it still did not go back to the original approach.

Furthermore, as a member of Parliament from Atlantic Canada, we're particularly sensitive to this due to the fact that we have a higher consumption tax. The federal tax, the combined HST in Atlantic Canada, has had a disproportionately negative impact on the industry in our region.

I would like to hear from the tourism commission's perspective what representations you are making to ensure full restoration of the visitor rebate program.

[Michele McKenzie]

As a crown corporation with a mandate to market Canada, it is not within our mandate to advocate government policy in any public forum. We would meet with the minister responsible for tourism, the secretary of state, and provide advice with respect to how to grow tourism in Canada and what we believe to be various impediments and work very closely with Industry Canada, which has the lead role for tourism policy.

[Scott Brison, Liberal, Kings—Hants, NS]

So you would provide public policy advice to the government as to how to strengthen the tourism industry in Canada.

[Michele McKenzie]

Yes, and particularly to Industry Canada, where the lead role is placed.

[Scott Brison, Liberal, Kings—Hants, NS]

If part of your mandate is to strengthen the Government of Canada's role in promoting tourism, have you provided advice to the government in terms of the negative impact of the elimination of the visitor rebate program?

[Michele McKenzie]

We did not provide advice in advance of the announcement of the elimination of the visitor rebate program. We worked very closely with government after that to look at the exemption piece versus the rebate piece that I spoke about earlier.

[Scott Brison, Liberal, Kings—Hants, NS]

Have you heard or been informed by industry members of the negative impact on their industry, specifically hotel and tour operators?

[Michele McKenzie]

Yes, we've heard from those operators extensively over the last number of months. The hotel association, for instance, has responded quite favourably to the introduction of the new incentive program and the extent to which it deals with the precise issue of the elimination of the exemption, so there has been some positive feedback with respect to that--

[Scott Brison, Liberal, Kings—Hants, NS]

That is to some of the ameliorative steps, but the hotel association would still prefer the original visitor rebate program.

Would you agree that it is your job to represent their interests to government, not simply to defend the government's decisions to the industry?

[Michele McKenzie]

We certainly do have an opportunity to provide our perspective to government with respect to how policy impacts our ability to market Canada successfully as a destination, and we do that.

[Scott Brison, Liberal, Kings—Hants, NS]

So you have then in fact presented to the government a representation of the negative impact of eliminating the visitor rebate program?

[Michele McKenzie]

We had extensive discussions with Industry Canada with respect to the exemption piece and the impacts of the elimination of that, and we saw that reflected in the new program.

[Scott Brison, Liberal, Kings—Hants, NS]

Would you be able to provide us with your analysis on that? Your representation on that impact would be very helpful. You said you made that representation, so the committee, I'm certain, would appreciate that.

[Michele McKenzie]

We have not provided a written report. We were asked for advice in meetings and we've had those discussions.

[Scott Brison, Liberal, Kings—Hants, NS]

I thank you.

My colleague, Mr. McTeague--

[The Chair, Conservative, James Rajotte]

You have 20 seconds.