Finance Committee on Feb. 17th, 2016

[Andrea Kent]

The short answer is that it's not true. When the industry started—you'd have to go back 30 or 35 years, really—there would have been more concerns in terms of the impacts on agriculture. Ethanol comes from corn. We use soybeans too.

Look at traditional platforms and where they started. Certainly you wanted to make sure, as with any resource industry, that the environmental and agricultural components were worked out responsibly.

We've come so far, but the information about our industry hasn't really kept pace. There are still some people who think there is a correlation between the biofuels industry and the price of food, or that maybe we're taking up too much land. But in fact, if you look at some of our plants in Ontario as an example, GreenField ethanol and IGPC Ethanol, the latter of which is a farmer-owned co-operative, they have actually reinvested in agriculture to make it more efficient. We are not using any resources that would otherwise be going into the feed market. As a result of making ethanol, other by-products are made that actually enter the animal feed market.

It really is an issue that has gone from food versus fuel to food and fuel, because both are being produced. The innovation part of it is really important. There have been so many strides in the industry, but we still get people who haven't quite kept pace with our advancements.

Our polling done in April showed that about 10% to 12% of Canadians still thought there was a correlation between the biofuels industry in Canada and food prices. By comparison, that same polling group thought there was a correlation between climate change and higher food prices: that was 37% of people. It's a vocal minority, but more people now think that climate change is having more of an impact than us on food prices and agriculture.

[The Chair, Liberal, Wayne Easter]

I'll have to cut it there.

Mr. Liepert.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Thank you.

My question is for you, Ms. Bell. If someone travels from the United States to Canada, when they land in Canada and rent a car, they pay generally a fairly stiff tax at the airport to rent a car. They go to the hotel and they pay a hotel tax. They fill up the car and they pay a gas tax. Then they pay GST, HST, PST. Then, when they go to leave, they pay twice as much taxes in user fees out of Canada than coming in the other direction.

Have you done any studies on how much of a negative impact the tax burden has on our tourism industry and on how we compare with other countries? These are the only taxes I could think of just off the top of my head. I'm sure there is a whole bunch more, a variety of municipal, provincial, and federal taxes.

[Charlotte Bell]

I think the one area that definitely has a direct impact on our industry is the cost of air travel and the taxes and levies that are imposed on flights. Right now, because of the low dollar, it's serving to actually offset some of that, so it's not as noticeable. The cost of air travel is actually about 40% higher than it is in many other places. That's why you've also seen about six million Canadians every year going across the border to fly out of border communities.

I'm not aware of any research that directly addresses all of the different other taxes that people would be paying if they were coming here. It would be interesting to take a look, but I haven't seen anything particularly related to that.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Just as a follow-up question, Ms. Kent, can your industry stand on its own today?

[Andrea Kent]

Absolutely. Look at where we've come; from initially putting the mandates in place, we're looking at 1.8 billion litres of ethanol produced every year. For biodiesel it's about 500 million litres. All of the ethanol mandate is being filled with domestic production, as is the majority of the biodiesel one. The other product that's coming in is natural North American market product flow. It goes both ways for us.

So yes, we are a sustainable industry, but you have to look at how the market operates in a bit of a broader scope. There are still investments that went into the traditional fuels platform, built out 100 years ago, that have contributed to its ability to diversify. We're a third of that, a lot younger in a lot of ways. For us, that policy certainty that's been embedded in the Canadian system is critical, because it complements other systems like that of the U.S., which has a renewable fuels standard as well. It keeps us on pace with what's happening globally with all the countries that also have mandates.

It's not about sustaining or propping up an industry so much as it is about creating a floor that we can build off of, compete more aggressively, and continue to grow and diversify.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Good.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Liepert.

Mr. MacKinnon.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you, Mr. Chair.

My thanks to all the witnesses for coming to meet with us this evening despite such short notice.

Ms. Bell, you talked about the growing investment in advertising and in marketing in the tourism industry. Have you studied the benefits that come with increased investment in marketing?

[Charlotte Bell]

That is a very, very good question.

Over the years, we have tried to determine what the return on investment is. I heard that, for every dollar spent, $34 went back into the economy. However, I'm not sure whether that is the exact figure. I know that Destination Canada's research unit is studying the issue in order to gather more accurate data.

Clearly, there is an obvious correlation between investment in marketing and international arrivals. There are no two ways about it. We must realize that there is a direct link to marketing.

[Steven MacKinnon, Liberal, Gatineau, QC]

Perhaps we can make a suggestion to the tourism commission in Vancouver that is actually studying the issue.

[Charlotte Bell]

Actually, the tourism commission is now Destination Canada.

[Steven MacKinnon, Liberal, Gatineau, QC]

I'm sorry.

[Charlotte Bell]

I just wanted to make sure that we are talking about the same organization.

[Steven MacKinnon, Liberal, Gatineau, QC]

On Canada's 150th anniversary in 2017, do you intend to have a big stake in the event? Will you encourage any sort of investment from the federal government? Do you have any suggestions on that?

[Charlotte Bell]

That event is very important for Canada and it is not to be missed. I think that it would be really important to invest in Canada's 150th anniversary. I know that there have been consultations and we are waiting to see the results. We feel that it is important that the government continue to invest in special events. Whenever there are special events, be they in sports, culture or arts, we also see an increase in international tourist arrivals. The 150th anniversary will encourage Canadians to visit Canada even more. That is very important and we fully support this initiative.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you very much.

Since I have a bit of time left, I would like to address Mr. Nepton and Mr. Eby. I will continue along the same lines as Mr. Caron, talking about service in rural regions.

Telecommunications companies are trying to recoup their capital costs more quickly. As I understand what Mr. Nepton was saying, he mentioned, just like Mr. Caron, that there was a shortage of services in rural regions.

Mr. Eby, would you be in favour of a type of tradeoff if the government were able to provide you with a more accelerated depreciation? Would the companies you are representing then be willing to invest more in rural regions?

Mr. Nepton, would you welcome something like that?

The question is for Mr. Eby first.

[Kurt Eby]

What we've requested would result in increased investment in urban areas, obviously, to meet demand, extend networks into areas that don't currently have service, and improve poor or substandard service in rural areas.

I don't know exactly how a trade-off would work in a situation like this, where it's a tax writeoff. I don't know how it would be structured.

The other issue is, I represent a variety of members, some of whom are still building networks in urban areas to catch up to the companies they are competing with that have had networks for a lot longer. Certainly they want to be able benefit in urban areas. But as you've seen from the data, all our members need to enhance these networks to meet the demand everywhere.

From what we've heard today, a rural strategy is certainly very appealing and makes a lot of sense. We've heard from other members that are doing similar things: bringing people together, identifying the gaps, and trying to work with the industry to build out.

I think that what we've requested, the accelerated capital cost allowance, will certainly help. It will free up capital for that. I don't know if it is the solution to a rural issue.

[The Chair, Liberal, Wayne Easter]

Mr. Caron, you have two minutes.

[Steven MacKinnon, Liberal, Gatineau, QC]

Could we just ask Mr. Nepton to—

[The Chair, Liberal, Wayne Easter]

Oh, sorry, Mr. Nepton. It will cut back on Mr. Caron's time, but go ahead.

[André Nepton]

I understand that the needs in terms of capacity in urban areas are great. We must continue to address those needs because the demand is quite significant, but the idea of being able to share the amounts related to an accelerated CCA to stimulate development in rural regions might please the municipalities. In addition, they could have access to more money to support the development of infrastructure through the building Canada fund.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Caron.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much.

I was going to ask pretty much the same question.

Our recommendation is the same: an accelerated capital cost allowance. However, there is some discussion that it should be contingent on the presence of your members. I understand that the small members of your association are still setting up shop in urban areas, which is more profitable, but there are bigger members. I am thinking in particular of the three big companies that have the ability to go to rural regions and sign an agreement with the members so that those regions are served.

I only have one minute left to ask you one last question. Are you familiar with the AIDE-TIC model? The towers are built by the communities and the telecommunications companies then come to set up the network and serve the region. What do you think about that model? Would you be able to promote that model of co-operation within your organization?

[Kurt Eby]

I'm familiar with a lot of collaborative models. We've seen that with various regions and municipalities. The Eastern Ontario Regional Network has done something very similar. I'm not really familiar with the model where the municipality owns the towers. They help facilitate. They also help facilitate the investment and help share the cost. Typically our members own the towers, but we're certainly familiar with and support this type of model, this collaborative model of working together and finding the money or capital in areas where it's not economical to deliver service.