Finance Committee on Oct. 25th, 2011

[Krista Prochazka]

It's crucial to our market. We do receive direct air flights from Frankfurt, and we did receive direct flights from Zurich this year, although the cost of refuelling in Canada has prohibited Zurich from coming back this coming year. We hope they may change their mind at some point.

Our biggest market outside of the U.S. is Germany and German-speaking Europe. They represent a growing percentage, and I think it's reflective in the fact that tourism numbers in the Yukon, unlike the rest of Canada, have actually grown year over year. We were protected by the recession in a number of ways because of our presence in German-speaking Europe and in France, even though they have had challenges in arrivals in the U.K. Those, for us, are key markets for growth, and we simply could not do that.

We saw this year that direct air arrivals changed from two days a week to one day a week. That alone affected our European numbers. People really want to go direct. As you well know, there's a big difference on that flight from Vancouver to Ottawa if you have to change flights and stop in Toronto in-between. Our tourism business is very dependent upon those direct flights for growth.

[Ryan Leef, Conservative, Yukon, YT]

Thank you.

I will move over to the mining sector now. We heard about some of the exploration growth. And I think dating back as far as 2004 the Yukon was somewhere in the neighbourhood of $20 million in exploration. So we've gone from $20 million in 2004 to $300 million in exploration.

Now we're talking on a national level. We're obviously seeing employment benefiting all of Canada from that exploration growth. Can you expand a bit more on what that means for jobs across Canada, and not just for jobs here? As we heard Ms. Babcock indicate, we're enjoying about a 5% unemployment rate. How are we doing for finding workers here in the Yukon and across the nation to fill that growth?

[Philip Bousquet]

Thank you.

As we heard, when you're in a period of growth there is a challenge for finding skilled workers, and the mining sector is facing that challenge across the country. We've worked through an organization called the Mining Industry Human Resources Council. It's a sector council based in Ottawa that helps us to identify where the growth is going to be and where the needs are going to be. We have seen a great increase in exploration across the country. You mentioned the Yukon. When you look across Canada, the increase in exploration is up to about $3.2 billion for 2011, as a Natural Resources Canada estimate. With that is an increasing demand for workers at the exploration stage.

At the production stage we have a demand for all work categories and we are looking at looming retirement in the sector as well. So that organization, the sector council, is identifying exactly where those needs are.

[Ryan Leef, Conservative, Yukon, YT]

How well do you think that's marketed across Canada? Do people open up a paper in the east and know there are jobs up north?

[Tara Christie]

I guess from the number of résumés that I get from back east, I'd say they do. I do think we can always do a better job. I think another really important thing is some of the former INAC programs for training first nations people have been really successful and they've contributed greatly to our being able to fill some of the gaps that we have.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Leef.

I should have acknowledged Mr. Leef as our member of Parliament here from the Yukon, who will be treating all members of the committee to lunch.

[Ryan Leef, Conservative, Yukon, YT]

I think they figured that out.

[The Chair, Conservative, James Rajotte]

He'll be treating all members of the committee to lunch after the meeting.

[Ryan Leef, Conservative, Yukon, YT]

Right.

[The Chair, Conservative, James Rajotte]

We'll go to Mr. Brison for a five-minute round.

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

I'd like to start with Ms. Prochazka on the tourism side.

You asked for a review of the aviation cost structure. Beyond a review, what are the specific recommendations your organization would make that could potentially help spread the tax burden more broadly among Canadian industry, and not specifically target aviation?

[Krista Prochazka]

Not specifically target aviation?

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

I'm saying to broaden the tax base so it doesn't specifically target aviation.

[Krista Prochazka]

The tourism industry association is a member with the provincial and territorial industry associations across Canada. This is a priority for all of us. We work with the Tourism Industry Association of Canada and the National Travel and Tourism Coalition and they've done a lot of work in this area.

Their specification recommendations beyond the review would be to eliminate airport rents and municipal taxes imposed on airports and payments in lieu of taxes; to dedicate the proceeds of the excise tax on aviation fuels to aviation infrastructure; to significantly reduce or eliminate the air traveller security charge through greatly expanded funding for aviation security and passenger screening services; and to modify the foreign convention and tour incentive program by reintroducing a tax rebate.

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

So for instance on the security side you would say certainly invest in security, but pay for it through general revenue, as opposed to trying to cover the costs of it with this--

[Krista Prochazka]

Absolutely.

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

Thank you.

Does your organization support cabotage?

[Krista Prochazka]

I'm sorry...?

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

Cabotage, the capacity for foreign airlines to fly between domestic locations within Canada.

[Krista Prochazka]

I would say that my specific organization does not currently have a position on that. We really have an emphasis ourselves in developing northern capacity, and we're really fortunate to have a Yukon-based airline that flies here along with Air Canada and Condor and others. So we've been looking at trying to internally grow our thing.

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

Thank you.

To the Prospectors and Developers Association of Canada, we've benefited the last few years from really tremendous commodity prices. Growth in commodity prices was huge and was in many ways our national recovery from the commodity-based industries. With the current volatility in commodity prices, and with drops in demand on the Chinese manufacturing side the last few months, are there some concerns about the capacity to sustain that growth over the next while? You mentioned a copper mine as an example.

To help the committee understand, what do you believe could be the effects on your capacity to continue that growth with this fluctuation, if the volatility continues?

[Tara Christie]

Thank you.

That's a good question, because that's exactly where the mineral exploration tax credit helps. When markets are unstable, it's an added incentive to get investors to help the juniors raise money for projects that might not be quite as in favour as the metal of the day. So it helps to bridge that gap when markets are unstable.

We're also lucky that some projects have gone from the exploration stage to the mining stage. So their mining and development is going on, and that's a little bit less prone. Once you've moved into the mining stage, it's a little less dependent on the market cycles. The metals may be depressed, but often you're too far in, you're already into the mining production, so--

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

It may have a dampening effect.

[Tara Christie]

It may have a dampening, but I think we've had enough development that some of it will continue even if some exploration in parts of the country does fall off. There are others that will pick it up.

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

I'd be interested in the views of the chamber or the tourism industry in terms of the impact of payroll taxes and should we keep payroll taxes frozen where they are, particularly in tourism; it's a very labour-intensive industry, in terms of the hospitality sector particularly.

There's a scheduled payroll tax increase of $1.2 billion for January. Would your members be better served if we held payroll taxes where they are now?

A response from either the chamber or the tourism--