Finance Committee on Nov. 9th, 2006

[Christopher Jones]

I can add that if you take the convention sector--and by this I mean the stand-alone convention centres, not the ones that are located in hotels, and there were about seven that we surveyed--in 2005 they reported total spending of $119 million, of which the GST was $8.3 million. The individual delegates who were coming to these conventions were spending in the order of $76 million of that $119 million. So clearly there's a substantial amount of money being spent that, as I mentioned, given how tight the market is, is now threatened or imperilled by this decision.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Pollard, would you like to add something?

[Anthony Pollard]

Yes, I would. It is very important for the entire committee.

Mr. Paquette, thank you for your questions.

There are two separate and distinct areas to what we are looking at in the visitor rebate program. There is one area for the independent traveller, and that's all the government has been focusing on in various announcements, with the 3%, 7%, and 10% take-up in that, and the savings of $78 million. The other part of this is the exemption component for conventions, groups, and tours coming into Canada. That part is the one that has always had the exemption component therein.

Ladies and gentlemen, I encourage you to make the distinction that it's not lumping everything together. The exemption component is critical for our business, and that is the one, as Mr. McCallum was stating, where there is virtually 100% take-up, but that part is exempt. That is the part that is very separate and distinct from the $78 million that we're talking about, with whatever percentage of people who are taking us up on that.

Thank you for giving me this opportunity to answer your question.

[Pierre Paquette, Bloc, Joliette, QC]

Mr. Jones, given the situation, it seems that you are prepared to subcontract the running of the program in order to save the federal government money.

Do you feel that this is the ideal solution, or should the status quo be maintained?

[Christopher Jones]

We're mindful of the government's desire to make some savings here, so in a spirit of cooperation, we thought we would put forward a proposal that would see the privatization of the scheme and the reduction in the overhead or expense costs of the program. Had we been consulted at the beginning, our preference would have been to keep the program in place as it was, but we're faced with a shifting ground here and we're trying to react to that responsibly.

[The Chair, Conservative, Brian Pallister]

The next questioner will be Mr. Del Mastro, for six minutes.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you, Mr. Chair.

Ms. Zabel, I have a couple of questions. You basically summed up the mission statement of the Canadian Tourism Commission. In short, you said your ultimate goal is to grow tourism export revenues. What has gone wrong there? We're hearing about declining market share, and it sounds like you paint a fairly dire picture, but I assume the Canadian Tourism Commission has been in place for some time.

[Karin Zabel]

We've been in place as a crown corporation since 2001.

As I tried to reflect in my opening comments, the challenge of the sector is that we are in a very competitive sector worldwide. Many more people are interested in travel, and if you look at the world as the market, many more countries have recognized the potential of tourism as an industry. They are now also investing in the sector to attract tourists to their countries.

[Dean Del Mastro, Conservative, Peterborough, ON]

Would you suggest that perhaps the previous government was somewhat boneheaded for not investing enough money in tourism and promoting it globally?

[Karin Zabel]

I can't speak to government policy.

[Dean Del Mastro, Conservative, Peterborough, ON]

I would probably make that contention. As the kings of capitulation, they did in fact capitulate in forming a new action plan on tourism in Canada, didn't they? They made that promise three years ago.

[Karin Zabel]

I'm not sure.

[Dean Del Mastro, Conservative, Peterborough, ON]

For the record, they did.

Ms. Furlong, you made the point that a number of your members were ambivalent to the existence of the program. Why was that? Was it just not well explained to them? Did they come into business subsequent to it being implemented?

[Kim Furlong]

It's a question of their interaction with the level of visitors. People along the border—Niagara, for example—receive a large number of visitors, and the people in that area are very cognizant of the program and use it very successfully. People in other parts of the country who don't see an influx of tourists that is as intense have less understanding of the program.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you.

Mr. Pollard, the events of 9/11, and subsequently the events surrounding SARS, had a pretty devastating effect on tourism in Canada, didn't they?

[Anthony Pollard]

I don't want to sound Torontocentric—I happen to live in Ottawa—but the city of Toronto alone lost $600 million. Right across the country, we lost $1.6 billion because of SARS. The unfortunate thing is that it was located strictly in Toronto, but business in Vancouver, for example, was down by $350 million.

So yes, there was the impact of that, and then the subsequent impacts of such things today with WHTI. The Conference Board of Canada has said that the losses because of the passport issue will in fact be greater than what happened with SARS.

[Dean Del Mastro, Conservative, Peterborough, ON]

I'll come back to that in just a moment, but I did just want to highlight that, because there have been statements made by opposition members that the impact of eliminating the GST visitor rebate would be in fact bigger than 9/11 and SARS combined. I think that shows true ignorance of the impact of 9/11 and SARS.

Mr. Pollard, does the western hemisphere travel initiative specifically present an opportunity for enhanced domestic tourism, enhanced opportunity to keep some conventions here in Canada, involving Canadian companies? And should we be investing some dollars into building domestic tourism?

[Anthony Pollard]

First of all, the Canadian Tourism Commission does invest some dollars into it. Typically, it's a responsibility of the provinces. I don't want to get into the BNA Act and sections 91 and 92, but that's what the reality is.

The fact of the matter is that it's a double-edged sword, though, because when you have a dollar sitting at about 89¢ to 90¢, it makes it a lot easier for a Canadian to go outside of the country than for an American to come up here. That's the reality that we're dealing with. But when you compound that with the proposed cut to the visitor rebate program, particularly for the convention business, which has effectively become 6% more expensive, it really exacerbates the problem.

[Dean Del Mastro, Conservative, Peterborough, ON]

Well, we'll continue working with the industry to find ways to build tourism in Canada. Thank you.

I have nothing further, Mr. Chair.

[The Chair, Conservative, Brian Pallister]

Thank you very much, Mr. Del Mastro.

We'll move now to Madam Wasylycia-Leis, for six minutes.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Thank you, Mr. Chairperson.

It must have been a Liberal who compared the loss here to a tsunami or a 9/11. It's like nuclear bombs and income trusts.

I'm sorry, Mr. Chairperson. I just had to slip that in.

The real issue for us here today is that we're all interested in cost savings if they make sense. When you do a cost-benefit analysis, what is the outcome? Do we lose more than we save or not?

I haven't read all your briefs, but in previous testimony when we were on the road, we heard from Rod Taylor in Whitehorse, who said that for every dollar the government pays, we make $37 back. When we were in Toronto, Rod Seiling said this is like giving us an automatic 6% increase in our costs.

So my first question is whether or not that's accurate. By doing this, are we actually costing more to our economy?

[Anthony Pollard]

May I respond to that?

The fact of the matter is that the announcement was trying to save $78 million. The federal government alone is making $218 million a year on the convention business. You weren't in here when I made my presentation, but I fully agree. Is that entire $218 million at risk? No, because there still is going to be business coming here.

But let's say there's a 50% elasticity factor in that. We're still looking at $109 million in lost revenue to Canada from the convention business. You're trying to save $75 million while losing $109 million?

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Just before I go to the other two on this, I don't want to lose the opportunity to also make the connection to lost jobs.

Dawn, can you tell us again what the potential loss in jobs would be to people working at CRA? What percentage of the total complement in Summerside is that? And what's your sense of the impact?

[Dawn Hardy]

As I stated earlier, we foresee a loss of between 60 and 80 permanent jobs, of the 700 members who work at the tax centre. We have about 524 permanent employees who work at the tax centre, and we're staffed to capacity. For our programs that run during income tax time, we also have contract workers—between 200 to 300 people—who come in and work on a less-than-year-round basis.

If these permanent jobs are lost in the visitor rebate program, those people will move into other operational streams of the Summerside Tax Centre. What that could mean is that there could be 200 people unemployed in Summerside. The impact is huge for our area.

Thank you.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Thank you.

Chris, and then Kevin.