Thank you, Mr. Chairman, and good afternoon. It's a pleasure to speak to you this afternoon on behalf of the $65 billion restaurant industry.
The restaurant industry is the fourth largest private sector employer in Canada, with 1.1 million employees. This is more than agriculture, forestry, automotive, manufacturing, mining, and oil and gas extraction combined. Each one of these industries has been the focus of far more government resources and attention than the restaurant industry.
Every $1 million in restaurant sales creates nearly 27 jobs, making our industry one of the top five job creators in the country. Every dollar spent at a restaurant generates an additional $1.85 in spending in the rest of the economy, well above the average for all industries in Canada.
We indirectly employ over 250,000 Canadians. So far in 2012, the restaurant industry is one of the top two job creators in Canada, and its net employment has risen by 28,000 jobs already this year.
One in five Canadian youth between the ages of 15 and 24 work in restaurants. This represents more than 483,000 young people and accounts for more than 40% of the jobs in our industry. The restaurant industry is also the source of first job experience for 22% of Canadians, and nearly one-third of Canadians have worked in the industry at some point in their lives.
Canadians operate restaurants in every corner of the country, from large centres to remote communities, and they continually demonstrate their innovation and drive. For government to focus primarily on industries in crisis or in need of subsidies and bailouts ignores a key group of entrepreneurs and a tremendous opportunity for the Canadian economy.
Restaurants need a home in Ottawa. Currently no government department is responsible for the restaurant industry and no minister champions the industry.
Our primary ask today is the assignment of an assistant deputy minister to be responsible for our industry within a key department such as Industry, and to ensure there is a restaurant lens through which policy decisions are reviewed.
With the short time available to me, I want to key in on three issues, two that were in our submission that was submitted earlier this year.
The first is the unfair tax treatment of restaurant meals. When the GST was first contemplated, the concept was to tax everything sold at the retail level without exemptions. A strong argument was made, however, that since food was essential, it should not be subject to GST. This seemingly reasonable compromise in 1991 has had unintended consequences over 20 years later.
Diane and I cooperate and agree on a lot of issues, but this is one where we have to agree to disagree. Her industry, the grocery sector, has capitalized on the GST exemption advantage by introducing thousands of new products, heat-and-eat versions of almost everything found on restaurant menus. Frozen meals processed offshore are tax-free while meals prepared in restaurants by Canadians are taxed. The rules are arbitrary and they're confusing.
Restaurants introduce Canadians to new cuisine, whether it's African, Thai, or Indian, and once Canadians decide they like these items, groceries come along and package them and sell them tax-free to Canadians. This loophole is unfair and it's hurting restaurants. We are asking for the GST exemption for ready-to-heat meals to be removed.
Second, I want to talk about modernizing our supply management system. The price of milk set by the Canadian Dairy Commission has climbed to unprecedented levels, resulting in cross-border runs on U.S. stores and milk and cheese smuggling operations. Currently, frozen pizza manufacturers are allowed to pay for Canadian mozzarella at U.S. market prices. Fresh pizza makers who must pay up to 30% more for their mozzarella are asking for a level playing field.
CRFA is asking the federal government to modernize the supply management system. It's not only hurting businesses and consumers, but it's also curtailing growth in the market for dairy and poultry products. We think we can help grow the dairy and poultry market in Canada.
Finally, I'd like to focus on credit card fees. It wasn't originally in my submission, but the Visa announcement recently that they are going to significantly increase their prices next year and add another super premium card has our members really incensed, so I felt I needed to bring it to your attention today.
We appreciate that government introduced and is now updating the code of conduct for credit and debit card companies in Canada. While the code of conduct has prevented MasterCard and Visa from introducing reward-based debit cards with much higher fees, it has not curtailed the rising cost of credit card fees and the market share of high-cost premium credit cards that offers rewards to cardholders.
The premium cards carry significantly higher fees that are charged to merchants, even though they see no increase in benefit. In some instances, the credit card can attract a different processing fee once it has been deemed high spend. Merchants are required to accept all credit cards and cannot charge cardholders a fee to offset any of these changes. As a result, premium credit cardholders reap the benefits, and the additional costs are reflected in higher menu prices for all restaurant customers and tighter margins for restaurant operators.
The Competition Bureau has challenged Visa and MasterCard's unfair merchant rules.
Basically, what I'm asking for here, Mr. Chair, is that government take action to eliminate the “honour all cards” rule and permit surcharging, and that it be included in the code of conduct.