Finance Committee on Nov. 9th, 2006

[Kim Furlong]

I do not have any concrete figures, but I can tell you that members of the Canadian Retail Council often use the figure of 6% in their arguments when they talk about the rebate to people visiting Canada. When one of our members sells a product that is sufficiently expensive, for example, a handbag worth $3,000 or $4,000, the 6% rebate becomes a valid argument. Once the person has left the store, there is no way to know whether he or she will claim the rebate back home, but the sale has taken place. In any event, the money stayed in Canada.

[Kevin Boughen]

I'd like to speak to the numbers for a moment, because you made the point extremely well. First of all, just to talk about numbers for a second, if you look at the numbers that are provided by CRA, it's approximately one million transactions a year. If you look at the overnight visitors to Canada from out of country, which is how every OECD country measures the success of the program, you see 20 million. If you take the number of average travellers per unit as two, you get 10 million travelling units. If you take one million transactions and 10 million travelling units, you get a 10% usage rate. That's exactly what other OECD countries see.

So first of all, the numbers in Canada are in line with other countries already.

However, to your other point, 12% is not better than 10% necessarily, not worse than 9%. The point is that 10% of the travelling units are using the program. They're receiving $74 million and $74 million represents 10% of the GST. You can see that the other 90% is staying here.

Your analogy is fantastic from the standpoint of a program like this. You measure it as a promotional coupon. You are marketing the discount to 100%, 20 million people coming into Canada. You're marketing it to all the potential clients out there. The fact that 10% take you up on it is a great thing.

[The Chair, Conservative, Brian Pallister]

Thank you, Monsieur St-Cyr.

We continue with Mr. Dykstra, for five minutes, sir.

[Rick Dykstra, Conservative, St. Catharines, ON]

Thank you, Mr. Chair.

I have a couple of questions to different members of the panel.

Dawn, I'm interested in the response that you had in terms of job protection and its importance in Prince Edward Island. One of the things I want to ask you about is the substantial job cuts that have happened in the industry over the last number of years. I appreciate Mr. McGuire being here today, but he did fail to point out that you've lost over 213 jobs since 2004.

[Dawn Hardy]

I guess one thing I would like to know is where those numbers come from, because from my perspective, when I watch my membership list, there are 700 people on there, on both lists all the time. If you come in April and you do a scope of how many employees are there, it's income tax time: you might see a thousand people there during the income tax season. If you come back and look at us again in October, the number will decrease, probably by 213 people.

[Rick Dykstra, Conservative, St. Catharines, ON]

The numbers here are provided by the CRA. I'd be happy to provide you with a copy of these if you'd like to see them.

Ms. Zabel, one of the things you pointed out was that you received some funding and that you made an investment a few years ago. I think it was about $15 million, and the strategy was an advertising/marketing strategy reaching out both here in Canada and, in large part, to the United States, where about $9 million of that investment went. One of the interesting parts of that is that I wonder if any thought went into trying to enhance the particular program we're talking about here today, rather than going to a marketing strategy. Why you would have chosen the marketing strategy over an investment or enhancement of the GST rebate program?

[Karin Zabel]

Well, our mandate is to market Canada, so the GST rebate program is not within our mandate. We wouldn't really be—

[Rick Dykstra, Conservative, St. Catharines, ON]

You don't see it as a marketing program then?

[Karin Zabel]

Not directly, no.

[Rick Dykstra, Conservative, St. Catharines, ON]

Okay.

I guess the other question I have for you is this. The work you've done, and the organization itself, is of course part of this government, but how much have you been cut since 2001?

[Karin Zabel]

I don't have the exact numbers since 2001, but I could certainly provide them to you. As I said earlier, our base funding currently is $78.8 million. We did receive some one-time funding in the last number of years to help us with SARS and 9/11, but I don't have those precise figures with me today.

[Rick Dykstra, Conservative, St. Catharines, ON]

Do you think a reduction in your annual budget is a positive thing from a marketing perspective?

[Karin Zabel]

As I indicated, first of all, every government organization would obviously like more funding. We are in a very competitive sector. We believe our strategy will give us the highest return on investment within the budget we have, but certainly there is significant competition now from around the world.

[Rick Dykstra, Conservative, St. Catharines, ON]

Chris, you pointed out a couple of things that I thought were very interesting, that the existing program is actually burdensome and administratively cost-prohibitive. Could you comment a little bit on that? I know you're not happy to be here today because of what happened to the program, but I think what this process has indicated is that we need a more focused endeavour if we're going to pursue it.

[Christopher Jones]

I think when we looked hard at the program, it was our sense that it could probably be delivered fairly efficiently by a third party entity. While we aren't pleased about the loss of jobs, we think that with the right incentives and the right restructuring, there could be some reduction in the overhead of this program, and that's laid out in our proposal. So we could understand how the government might look at the take-up rate of 3% and conclude that perhaps it wasn't money being spent as well as it could have been. We would dispute the number, but we think there is room for efficiencies and improvements in the program.

[Rick Dykstra, Conservative, St. Catharines, ON]

Mr. Pollard, would you comment as well?

[Anthony Pollard]

Maybe I could just respond to the question you were asking before about the CTC budget. I happen to have the number in front of me. Would you like that figure now, Mr. Dykstra?

[Rick Dykstra, Conservative, St. Catharines, ON]

Sure, that would be great.

[Anthony Pollard]

It's gone from $98.6 million in 2001 to about $75.8 million in 2007. So if you take into account inflation, the CTC budget is basically about $50 million less than what it was when the CTC was established in 1995.

The other point I'd like to make is that the visitor rebate program is most definitely one of the most important marketing tools we have for the group convention and tour business. I just want to underline that fact.

[The Chair, Conservative, Brian Pallister]

I'm sorry, Mr. Polllard, as it seems I'm picking on you all the time, but coincidentally you're again at the end of Mr. Dykstra's time.

We'll move now to Mr. McKay, for five minutes.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you, Chair.

Did any of the witnesses see this coming?

[Anthony Pollard]

No.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Okay.

Some of you said we've gone from seventh to twelfth in terms of rankings. Have any of the ones ahead of us taken a similar stand and cancelled their visitor rebate programs?

Mr. Jones.

[Christopher Jones]

Not to my knowledge. In fact, Mexico has just added one, and many of the European countries that have a value-added tax have been widening the scope of items that are eligible to be claimed. In fact, it's moving in the other direction.

[John McKay, Liberal, Scarborough—Guildwood, ON]

If I were a tour operator and looking at potential places to go, and looking at the top 12, the only one failing to provide a rebate would be Canada?