Thank you very much, Mr. Chair.
First, let me thank the committee for the opportunity to appear before you to share our views with respect to your investigation of the impact of the rising value of the Canadian dollar in various economic sectors.
First let me thank the committee for the opportunity to appear before you to share our views with respect to your investigation of the impact of the value of the dollar.
Tourism in Canada is a $66.9 billion sector that accounts directly for more than 630,000 full-time jobs and indirectly employs 1.66 million Canadians. Its economic impact is felt in all regions and communities across the country. Moreover, it is a key generator of tax revenue for all three levels of government. In 2006, an estimated $19.4 billion in tax dollars were generated, including $9.1 billion at the federal level.
Without question, Canada's tourism sector is greatly affected by the recent rise in the value of the Canadian dollar vis-à-vis its American counterpart. Earlier this month, TIAC held its annual tourism leadership summit in Victoria, British Columbia. We titled this year's summit “Red, White and Blues—Renewing American Travel to Canada”, and the focus of our program was the significant declines we have observed in visits from our neighbours to the south.
In five years we have seen the number of inbound customers from the U.S. drop by a significant 34%. This figure is particularly worrisome to the sector when you consider that Americans make up 86% of non-resident travel to Canada. Moreover, this decline pre-dates the historic appreciation in the value of the Canadian dollar that we have seen in recent months.
The reasons for the decline in the number of Americans visiting Canada are not strictly tied to the dollar. The overall declining economy in the United States and the significant rise of gasoline prices have created a disincentive for the rubber-tire visitor to come to Canada. Gas prices are encouraging more Americans to fly rather than drive to their holiday destinations, and the relatively high cost of flying to Canada creates a price disadvantage compared to U.S. domestic destinations, Mexico, the Caribbean, and some European ones.
Significant issues exist at our border crossings for Americans as well, with lengthy wait times and confusion over the documents needed to be able to return to the United States. These factors have combined to alter what were longstanding leisure travel patterns for residents of both the U.S. northern border states and Canadian provinces.
These are all contributing factors that would have impacted Canada's tourism industry independent of the dollar's rise. But what we know from having observed the travel patterns over the past 25 years is that the number of inbound visits traditionally tracks very closely—as my colleague Paul indicated--the value of the American dollar. As the value of the U.S. dollar rose throughout the 1990s, the number of person trips to Canada rose to more than 45 million. But over the past four years, as the greenback slid in comparison to the Canadian dollar, the number of person visits has dropped to the lowest levels in 30 years.
The higher value of the Canadian dollar will also encourage Canadians to travel and spend their tourism dollars abroad, further magnifying our tourism deficit. We measure this deficit by looking at the amount that Canadians spend abroad versus the amount that foreigners spend when they're travelling in Canada. Since 2002 this deficit has risen exponentially, from $1.7 billion in 2002 to $7.2 billion currently. We can only assume by what we have observed this summer and fall that this number will rise. Numbers released this week by Statistics Canada demonstrate that in September, with a 95¢ dollar, overnight car travel to the United States rose to its highest level since 1993.
I know there are members of the committee from the Niagara region, and my guess is that tomorrow morning there will be a significant exodus of your constituents across the Rainbow Bridge looking for black Friday bargains. This doesn't only mean that local retailers will take a financial hit at a crucial time of the year; it also means that those families will spend money on food, lodging, and other attractions that they might have otherwise spent here in Canada. At the same time, we are being told by Niagara Falls tourism that they've seen a 16% drop this year in the number of people making day trips from the States. We're hearing similar stories from other border towns, such as Windsor and Victoria.
What steps can we take to ensure that tourism can regain its footing? First of all, let me emphasize that because of the foreign currency earnings that tourism generates, it has always been considered an export industry. It is affected by the rise in the dollar in the same way that forestry and manufacturing are. As such, we would urge you to remember tourism if you get around to recommending any sort of adjustment or mitigation policy to help defray the impact of the rising dollar.
We can also ensure that we invest sufficiently in the physical infrastructure at Canada's crossing facilities, including increased investment in the development of new biometric-based forms of ID, such as an enhanced driver's licence.
To help manage the flow of people across our borders, we should get the Canada Border Services Agency to actively monitor and evaluate peak border times with the intent of reducing processing delays experienced by visitors.
We should also invest in our border crossings so that wait times at the border can be actively monitored and evaluated with the intent of reducing delays experienced by visitors and of helping to manage the flow of people across our shared borders.
We also need to assess how we can make Canada a more economical destination by air. The tourism sector, the Canadian economy, and Canadian citizens will benefit from further open skies negotiations, which would increase competition and result in more flights to and destinations in Canada.
My final point is that marketing assistance for the Canadian Tourism Commission would be extremely helpful.
Thank you.