Finance Committee on May 18th, 2023

[The Chair, Liberal, Peter Fonseca]

I'm calling the meeting to order.

Welcome to meeting 89 of the House of Commons Standing Committee on Finance.

Pursuant to the order of reference on Tuesday, May 2, 2023, and the motion adopted on May 16, 2023, the committee is meeting to discuss Bill C-47, an act to implement certain provisions of the budget tabled in Parliament on March 28, 2023.

Today's meeting is taking place in a hybrid format pursuant to the House order of June 23, 2022. Members are attending in person in the room and remotely using the Zoom application.

I'd like to make a few comments for the benefit of the witnesses and the members.

Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mike, and please mute yourself when you are not speaking. For interpretation for those on Zoom, you have the choice at the bottom of your screen of floor, English or French audio. For those in the room, you can use the earpiece and select the desired channel.

I will remind you that all comments should be addressed through the chair. For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function.

The clerk and I will manage the speaking order as best as we can. We appreciate your patience and understanding in this regard.

Before I welcome the witnesses, I want to thank the witnesses for graciously accepting our invitation.

I know you had very short notice to be with us today, to get your opening remarks ready and to be able to take questions from all the members. On behalf of all of us on the committee, thank you very much.

With us today we have Beer Canada and its vice-president of federal affairs, Luke Chapman. We also have with us the Canadian Bankers Association and Darren Hannah, vice-president, personal and commercial banking, and Angelina Mason, general counsel and vice-president of legal and risk. From the Canadian Canola Growers Association, we have president and CEO Rick White, and Dave Carey, vice-president of government and industry relations.

From the Canadian Chamber of Commerce, we have with us Alex Gray, the senior director of fiscal and financial services policy. From the Digital Asset Mining Coalition, we have Daniel Brock, a law partner with Fasken, and with Daniel we have a partner from EY Law, David Robertson. From the Hotel Association of Canada, we have with us Susie Grynol, who is the president and chief executive officer.

Welcome, everybody. It's great to have you here.

We're going to start off by hearing opening remarks from Beer Canada.

Go ahead, please, Mr. Chapman.

[Luke Chapman, Vice-President, Federal Affairs, Beer Canada]

Mr. Chair and honourable members, thank you for the invitation to appear this morning as part of the committee's study of the subject matter of Bill C-47.

My name is Luke Chapman. I'm the vice-president of federal affairs for Beer Canada, the only inclusive national trade association for Canadian beer companies. Our membership includes 48 small, medium and large-sized breweries, which when combined account for 90% of all beer produced in our country.

Domestic brewers are heavily invested in Canada. Last year, 88% of all beer purchased and consumed here was made here by some of the 20,000 Canadians directly employed by brewing companies.

The value chain for brewing, packaging, distributing and selling beer in Canada is long and interconnected. For a pint of beer to reach your glass, brewers depend on western Canadian barley farmers, can and bottle manufacturers in central Canada, and truck drivers and restaurant and retail staff from across the country.

When all the steps in the production, distribution and retail process are considered, the production and sale of beer in Canada supports 149,000 jobs, generating over $13 billion in economic activity and $5.7 billion in taxes. Currently, federal and provincial taxes and markups account for almost half of the retail price of beer, giving Canada the title of having the highest beer taxes among G7 countries.

I think we can all agree that beer is a social beverage. Enjoying a beer with family or friends at a backyard barbeque or sports event, an outdoor summer concert or a neighbourhood pub provides great social and community benefit. In a typical preCOVID year, restaurants, bars, concerts, sporting events and other public venues accounted for nearly a quarter of all beer sold in Canada.

It's not surprising, then, that the restrictions placed on social gatherings over the past few years due to the COVID pandemic had a dramatic impact on the Canadian beer market, with the total volume of beer sales declining by 6% over the past three years. Draft beer sales, which primarily occur at restaurants and bars, are still 25% below where they were prepandemic, in 2019.

As brewers were grappling with where and how they were allowed to sell their beer during the pandemic, inflation began to take hold, presenting a new set of difficulties and challenges.

For brewers, the concerns were twofold. First, in 2021 and into 2022, the cost of producing, packaging and distributing beer started to rise rapidly, with key inputs like barley and packaging materials up by as much as 60%. Second, the impact of rising inflation on the annual and automatic federal beer excise duty rate increases—which are determined using a formula that is tied to inflation—was also a concern that was front and centre.

Since the automatic indexing of federal beer excise duties was included in the 2017 federal budget, beer taxes have increased every year. While we continue to be concerned over this automatic approach to beer taxation and its negative impacts on the Canadian beer and hospitality sectors, we recognize that CPI inflation was relatively stable for most of the period between 2017 to 2022. As a result, the annual increases amounted to an average of around 2% over that period.

While the past automatic increases were not inconsequential, as we monitored CPI inflation throughout 2022 we reached the conclusion that this year's increase was likely to exceed 6%, making it the largest federal tax increase on beer in the last four decades.

As a result of the effort and support of MPs from across parties—some of whom are in this room today, so thank you—we were pleased to see the government address our immediate concern by including in the 2023 budget a 2% cap on the 6.3% excise duty rate increase that would otherwise have gone into effect this past April 1.

While this temporary one-year cap was not all that our coalition of barley farmers, unionized brewery workers, restauranteurs, consumers and breweries had been advocating for, and while our position remains that the continued use of automatic excise increase is neither appropriate or effective—particularly in an era defined by high inflation and declining beer sales—we do view a temporary 2% cap as a fair compromise. We certainly welcomed and appreciated that it was included in the 2023 budget.

In this respect and in conclusion, we encourage the adoption of section 124 of the budget implementation act to reduce the scheduled increase in federal beer excise duties from 6.3% to 2%, retroactive to April 1.

We thank the members of the finance committee for the opportunity to provide our perspective, which we hope will be helpful as they review and consider Bill C-47.

I'm happy to answer any questions after the other witnesses. Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Chapman.

Now we'll hear from the Canadian Bankers Association, please.

[Darren Hannah, Vice-President, Personal and Commercial Banking, Canadian Bankers Association]

Good morning. Thank you for the invitation to speak at the House of Commons Standing Committee on Finance on Bill C-47, the budget implementation act.

My name is Darren Hannah. I'm the vice-president of personal and commercial banking with the Canadian Bankers Association. I'm joined by my colleague, Angelina Mason, general counsel and vice-president, legal and risk.

The CBA is the voice of more than 60 domestic and foreign banks that help drive Canada's economic growth and prosperity. The CBA advocates for public policies that contribute to a sound, thriving banking system to ensure that Canadians can succeed in their financial goals.

While Bill C-47 is extensive and the committee is studying numerous provisions, our remarks will be focused on part 2, clauses 114 to 116, which retroactively amend the Excise Tax Act. This is a very small component of the budget implementation act, but it has profound implications on how businesses, entrepreneurs and investors, both domestic and international, view the opportunities and risks of doing business in Canada.

Simply put, the government is attempting to legislatively override a decision by the Federal Court of Appeal and to retroactively change the GST treatment of payment card clearing services, literally back to the introduction of GST in 1991, by expressly overriding the general legislative limitation periods under section 298 of the Excise Tax Act. The effect is, therefore, to retroactively tax transactions that happened as long as 30 years ago. In doing so, the government is ignoring widely accepted positions among taxpayers and tax professionals, as well as its own published guidelines for the appropriate and exceptional use of retroactive legislation. The government's position is inconsistent with its own treatment of payment card network services as financial services for the purposes of regulatory oversight by the Financial Consumer Agency of Canada. Moreover, through this proposed measure, the government is adding this tax burden at the very time the government is claiming to lower the cost of card acceptance fees for small businesses. Increasing taxes on card issuers and acquirers will inevitably impact the cost of card acceptance for merchants.

Retroactively taxing past transactions, especially in the face of court rulings to the contrary, erodes investor confidence in Canada, period. This is a concerning signal to investors, entrepreneurs and business owners. Core to the decision-making criteria of where to invest are certainty and predictability, not only in the rule of law and in its application but also in the ability to ensure that I, as an investor, can access the legal system to get fair treatment if I feel the law is being applied incorrectly. Indeed, this proposed measure fundamentally challenges the traditional understanding of tax law. This approach not only raises serious questions about fairness and legal certainty but also potentially inhibits future economic activity.

Imposing such a retroactive burden undermines the trust in the certainty of the tax system. While it might seem like an easy fix for fiscal shortfalls, it's important to consider the long-term implications of such a precedent-setting move. The retroactive tax measures in part 2 contradict these principles and, in doing so, undermine investor confidence in Canada at the very time we need to be attracting new investment, both from at home and from abroad. A recent study by RBC indicated that Canada will need an estimated $2 trillion over the next 30 years to finance the transition to a low-carbon economy.

These are large, long-term investments that Canada is seeking from investors to pivot our economy to a low-carbon future. An investor will make that type of commitment only if they are certain that the terms, conditions and business environment upon which they make their investment decision will be respected, that the government will not suddenly seek to retroactively revisit those conditions, and that they will have recourse to the legal system should they need it. That's why we strongly encourage MPs to take action to restore investor trust in the Canadian economic and legal environment by removing the retroactive provisions of part 2.

I thank the committee for your invitation and look forward to your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Hannah.

Now we'll hear from the Canadian Canola Growers Association.

[Rick White, President and Chief Executive Officer, Canadian Canola Growers Association]

Thank you for the invitation to appear here today. My name is Rich White, and I am the president and CEO of the Canadian Canola Growers Association, or CCGA. I am joined today by Dave Carey, our vice-president of government and industry relations.

CCGA represents Canada's 43,000 canola farmers on issues that impact their farms' success. It is led by a farmer board of directors, with representation from provincial grower associations from Ontario west to B.C. CCGA is also the largest administrator of Agriculture and Agri-Food Canada's advance payments program.

Canola is Canada's largest agricultural commodity, earning farmers $13.7 billion in farm cash receipts in 2022.

Canada exports 90% of the canola we grow to approximately 50 countries as seed, oil or meal. Exports were valued at $14.4 billion in 2022. Canada is the world's largest exporter of canola. International trade underpins the canola sector's $29.9-billion annual economic contribution that supports 207,000 Canadian jobs.

Rail is the only practical means of transportation to move canola from the areas of production to port. Canola on average travels 1,520 kilometres by rail from farm to tidewater to be in export position.

Transportation of grain is one of several commercial elements that directly affect the price offered to farmers. When issues arise in the supply chain, the price farmers receive for their grain can drop, even at times when commodity prices may be high in the global marketplace.

Additionally, recent announcements in the Prairies over the last two years of five new canola processing facilities or expanded capacity of existing facilities signal that demand for canola is on the rise. These private investments of over $2 billion will increase Canadian processing capacity by over 50% of what it was in 2020. Increased rail capacity will be required to move more produce, and the reliability and timeliness of rail service will be critical to enable Canada's farmers to meet this demand.

At full build-out, this increase in domestic processing will likely create a shift in dominant trade flows of canola products, with less raw seed being destined for the west coast for export and more canola oil being transported domestically, especially to supply the expanding renewable fuel sector in North America.

As such, we are very pleased to see the budget recognize the need to incentivize competition in our class 1 railways by proposing a pilot trial to increase the extended interswitching limits in the Prairies. If done correctly, this pilot will promote fair competition, reduce transportation costs and enable Canada to build its reputation as a reliable supplier of canola. To further strengthen this policy, this commitment should seriously consider the following three points:

One, set the extended interswitching distance to 500 kilometres to ensure competitive market forces are available to all grain elevators and major agriculture producing regions. Under the 160-kilometre radius proposed, there are significant regional geographies in the three prairie provinces that remain outside of the pilot, producing an even playing field based on physical location.

Two, ensure that extended interswitching is available to all North American railways to further integrate the North American—

[The Chair, Liberal, Peter Fonseca]

Mr. White, I'm sorry. I don't know if other members heard, but I was hearing another voice coming through. We paused the time. I apologize for the interruption.

Mr. White.

[Rick White]

Two, ensure that extended interswitching is available to all North American railways to further integrate the North American market and shorten the distance goods need to travel.

Three, ensure the pilot lasts a minimum of five years to unlock the full potential of competition. The functional use of an 18-month extended interswitching pilot may be limited due to the fact that many shippers have previously negotiated service contracts with the railways.

For my closing comment, although it is not in the BIA specifically, we were also pleased to see the announcement on the funding of $85 million for the Canada water agency, and that it will be located in Winnipeg. We believe the CWA can support existing provincial and new national water monitoring work, incentivize natural water management infrastructure and build on proven approaches to stakeholder engagement.

Thank you for your time. I look forward to answering your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. White.

Now we're going to hear from the Canadian Chamber of Commerce.

[Alex Gray, Senior Director, Fiscal and Financial Services Policy, Canadian Chamber of Commerce]

Thank you.

Budget 2023 presented the government with an opportunity to enable and sustain the conditions necessary to grow our economy and raise future generations’ standard of living. Some elements are laudable. Taken as a whole, however, we see budget 2023’s lack of a decisive strategy to attract the investment required for a strong, sustainable economic future for Canada as a missed opportunity that would have ensured our competitive advantage in perpetuity.

Indeed, the disruptions caused by the pandemic continue to reverberate through the economy. According to Statistics Canada, Canadian real GDP in the fourth quarter of 2022 was 6.5% less than the preCOVID trend would have predicted. That is more than $180 billion per year in lost output. If that lost output were its own industry, it would be Canada’s third-largest contributor to GDP, behind real estate and manufacturing.

Additionally, our international competitors continue to outpace us as Canada experiences low growth and weak labour productivity. It was budget 2022 that first noted that labour productivity growth in Canada has slowed from about 2.7% in the 1960s and 1970s to less than 1% today. Correcting this trend requires government to create a strategy that eliminates the disincentives that drive away investment, while focusing on pro-business policies for the benefit of all Canadians.

However, strategy without execution is pointless, and there are many obstacles for Canadian businesses to overcome. We cannot hope to attract private sector investment without pragmatic, predictable policies.

Start with our inadequate trade-enabling infrastructure. The status quo impedes our ability to get goods like critical minerals and agricultural products from where they’re produced to the ports of export and beyond. We need several measures, such as twinning rail capacity, increasing industrial lands around airports and ports, and investing in warehousing and bridge capacity. As with much of the Canadian economy, we need to move faster to evaluate and approve projects.

Indeed, the way we regulate major projects is badly broken. Said projects for developing and exporting energy and critical minerals take so long and are burdened with so much unpredictability and uncertainty that they die, not from government decisions but from its inability to make and implement them.

Additionally, our convoluted tax code continues to drag down our economic competitiveness. Most recently, the introduction of several sector-specific taxes introduces unwelcome volatility and unpredictability to the Canadian business climate.

In BIA 1, we are particularly concerned about the proposition of yet another such tax—the proposal to alter the GST and HST definition of a “financial service” in the Excise Tax Act to exclude payment card network operator services. First, as with the digital services tax, we oppose the retroactive nature of this proposal, which would allow the CRA to assess taxpayers as far back as 1991. Canadian businesses cannot plan and invest for the future with the ever-looming possibility of retroactive taxation.

Additionally, this new tax will decrease Canadian competitiveness while increasing the costs of doing business in Canada. In general, other jurisdictions exempt their payment card network operators from similar taxes. In defying this best practice, the government would be placing Canada's financial services sector at a competitive disadvantage relative to its international peers. Further, increasing the cost of card acceptance would force businesses to weigh shouldering a new fee or passing it along to consumers, a difficult proposition while the cost of living remains high for many.

Finally, with over 800,000 job vacancies in Canada, we'd also hoped to see the budget focus more sharply on the skills and talent our workforce will need now and into the future. Measures such as enhancing the express entry program, improving interprovincial and foreign credential recognition practices, and reducing seniors’ disincentives to work would cost little while helping businesses address a core challenge.

If these exhortations for progress on regulation, taxation and skills sound familiar, it is perhaps because they were singled out as impediments to growth in the 2017 final report of the Advisory Council on Economic Growth. We had hoped to see more progress between then and now.

It is regrettable that budget 2023 did not contain several of these low- or no-cost growth measures, yet Canadian business remains eager to partner with government to create a strategy that will meet the moment. Given the headwinds we face, this is needed more than ever.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Gray.

We'll now move to the Digital Asset Mining Coalition.

[Daniel Brock, Law Partner, Fasken, Digital Asset Mining Coalition]

Thank you, Chair, and thank you, committee members, for having us here to speak with you today.

My name is Daniel Brock. I'm a partner at the Canadian law firm Fasken. I'm joined by David Robertson from EY Law. Together, we are advising an industry coalition representing more than 23 companies and organizations, all participating in Canada's growing digital asset and blockchain ecosystem. The coalition came together last spring to address a surprise legislative proposal published by the Department of Finance in February 2022, which would increase our members' costs of carrying on business in Canada by 5% to 15%. It is about this proposal as it appears in Bill C-47 that we are here to speak with you today.

In 2017, Canadians might have been using their computers in their basement or garage to mine for Bitcoin. Today, almost all digital asset mining is big business. Companies are using industrial-scale computing to verify and secure transactions that occur on a public blockchain. At today's market rate, the transaction fees and subsidies for adding a single block to the Bitcoin network have a value of almost $200,000.

More than 1,000 blocks get added to the Bitcoin blockchain every week. That's more than $200 million in potential revenue per week for mining pool companies that mine for Bitcoin. There are, however, no major mining pool companies in Canada. All are non-residents to Canada, based primarily in the U.S.A., Asia and Europe.

Canada's role in this emerging industry is not in mining for Bitcoin. Instead, Canadians are the suppliers of high-performance computing power that makes Bitcoin mining possible. Canadian companies take advantage of our cooler climate, our skilled workforce and our excess hydroelectric energy to produce and export clean computing power as a commodity like wheat or precious metals. Canadian computing companies are quickly becoming industry leaders in the supply of the clean computing power that international blockchain mining pool companies want.

Since 2018, this high-performance computing sector has brought in more than $2 billion in revenue to Canada. It has paid millions of dollars in corporate property and payroll taxes. It has invested $1.5 billion in the rural and resource communities in which they operate, and it has created 1,500 well-paying high-tech jobs in these communities. The average age of employees in most of these companies is under 35 years old.

Our main concern with the Finance proposal on crypto-asset mining is that this early success and the potential for future growth in Canada are being put at risk. There are several problems with the proposed GST changes. Let me highlight three.

First, proposed new section 188.2 declares that a Canadian company that (a) allows its computing resources to be used by foreign non-resident mining pool companies for crypto-asset mining, and (b) shares in the proceeds of that mining, is not engaged in commercial activity and will not be able to receive input tax credits. By contrast, all other companies that allow their computing resources to be used by non-residents are entitled to input tax credits, regardless of how that computing power is used or how their fees are calculated.

Second, by denying input tax credits to Canadian computing companies, these new rules make them less competitive in the international marketplace. The GST replaced the old federal sales tax in 1991, specifically to remove Canadian sales taxes as an input cost for Canadian businesses. The GST is to encourage investment both in Canada and in Canadian exports, and to make our goods and services more competitive in international markets. Proposed new section 188.2 does the exact opposite.

Third, the GST proposal creates a competitive disadvantage for computing companies across Canada, depending on the province in which they reside. The GST proposal creates an incentive for companies operating, for example, in Quebec, or in Newfoundland, where the embedded sales tax cost will be 15%, to move their operations to Alberta, where the sales tax cost will be only 5%, or outside of Canada altogether. The GST should never lead to this type of competitive imbalance for businesses within Canada.

What's the solution? We think there is a simple solution that is consistent with good GST policy. We are asking this committee to add a clear and unambiguous exception to the GST proposal.

What's the solution? We think there is a simple solution that is consistent with good GST policy. We are asking this committee to add a clear and unambiguous exception to the GST proposal. This exception should state that if a Canadian company supplies its computing power to a mining pool operator that is a non-resident of Canada, then proposed subsection 188.2(2) does not apply to them and, instead, ordinary GST rules will apply.

We look forward to your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Brock.

Now that we're experiencing better weather—I'll keep my fingers crossed on that—we're going to hear from the Hotel Association of Canada and Ms. Grynol, please.

[Susie Grynol, President and Chief Executive Officer, Hotel Association of Canada]

Thank you for inviting me to join you today.

My name is Susie Grynol, and I am the president and CEO of the Hotel Association of Canada.

Three years ago, tourism was in a total lockdown. Our industry was devastated. We lost a million workers in the first two months of COVID.

Since reopening, our sector has experienced a dramatic leisure demand renaissance. Domestic spending has already surpassed 2019 levels. U.S. bookings are up 111%, and Europe and Asia search patterns are up 132% and 114% respectively, while business travel and major events continue to lag behind prepandemic levels.

The problem is that we can't service the demand we have today or our future growth. We simply can't keep up, and we are turning guests away every day. That's because when you shut down an entire sector for two years and it loses its most precious asset, its people, it becomes very difficult to reopen and operate effectively.

This summer our industry will be short a staggering 360,000 workers. That's exponentially higher than any other sector. Today, in our off-season, 47% of Canadian hotels are pulling rooms off the market because they don't have the staff needed to maintain service standards. This has real impact. A 100-room hotel in one of your ridings that's short just nine employees stands to lose over $700,000 a year. They can't reinvest into their organization or recover the losses they experienced during COVID.

As a result of COVID shutdowns, Canada also lost major international events, fell behind in creating new hotel capacity, and dropped from fifth to 13th in our global competitiveness ranking. Top competitors like France, Australia and Spain are aggressively investing in the billions to capitalize on the global travel market, which is at an all-time high.

What can Canada do to address our reopening challenges and maximize our growth potential? Mr. Chair, we have three recommendations. The first is labour, the second is investment, and the third is a coordinated government approach.

On labour, we are doing everything possible to attract and reattract workers and repair the damage done through COVID layoffs when travel was shut down. Our members have increased pay, enhanced benefits and adopted new flexible ways of working, but these efforts won't be enough.

Our growth will need to come from immigration, so our number one ask of government is that our in-demand positions be prioritized for processing in both our temporary and permanent immigration streams, including consideration for seasonal peak periods. In addition, we should be better supporting new Canadians to find work in high-growth sectors like tourism and hospitality.

Our association ran a bridge program with the federal government doing exactly this for Syrian refugees before the pandemic. It was a significant success, according to the government's own report, and it could be resurrected with little effort and minimal funding to support the many Ukrainians who have arrived in Canada since the war. This program should be invested in immediately to support our critical labour shortage.

Our second recommendation is investment in tourism products and experiences. In this year's budget, we were delighted to see the investment of $108 million for local tourism projects and $50 million to attract high-value business events, but we can and must go further. The government has an opportunity to coinvest in new tourism attractions and experiences so that we can capitalize on the strong international interest in Canada. We need to keep marketing our Canadian brand to the world, and we need to ensure that we have enough experiences and hotel capacity to support this growth.

Finally, we are eagerly awaiting the announcement of the government's tourism growth strategy, where we assume rebuilding our workforce will be a central element, as it was not included in the federal budget. This strategy also has to include a coordinating body that would bring together multiple government departments to address our critical issues like labour.

This should be led by the Minister of Tourism and include IRCC, ESDC, International Trade, Finance and Treasury Board. This ask doesn't cost any money, but it is essential that we get the right representatives around the table with a mandate to help us solve our deepest COVID-related challenges.

Tourism is Canada's largest service export. We employ Canadians in every region and riding across this country. We proved through COVID-19 that we are resilient, and, given the opportunity, we can lead a remarkable recovery.

Members of the committee, the opportunity before us is historic, but the potential will not last forever. We need to act boldly and quickly to secure the next 10 years for Canadians and for our tourism industry.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Grynol.

Thank you to all the witnesses for your opening remarks.

We have approximately 90 minutes for members to ask questions. We'll start right away.

In our first round we have the Conservatives for up to six minutes. I have Mr. Baldinelli.

Welcome to our committee, Mr. Baldinelli.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Chair.

I'd like to thank all the witnesses for being with us today.

I'd like to begin with Ms. Grynol. Thank you, if I may, Susie, for all the work and advocacy that you've done, not only for the Hotel Association, but for the Tourism Industry Association and the Coalition of Hardest Hit Businesses.

I think you're being a little shy, too, in not recognizing the fact that you're representing over 8,000 facilities and 460,000 employees. In Niagara Falls alone, I have 16,000 hotel rooms and 40,000 people who have come to depend on tourism for their livelihood.

You mentioned some of the distressing signs. It's been three years that we've essentially lost our tourism years. It was two years, because of COVID-19. I put the entire blame last year on a useless ArriveCAN app that did nothing but keep people away from this destination.

Let's talk about the labour situation, because that is something that is impacting my community primarily. We have huge backlogs on the full-time stream, as well as issues with regard to temporary foreign workers.

I want you to explain a bit more about the issues. In Niagara Falls I had hoteliers who were not renting out floors of rooms because they had no people to clean those rooms.

Can you provide more of a description of what we're going through?

[Susie Grynol]

I think the statistic that should stun the committee is that 47% of Canadian hotels today, in our off-season, are pulling inventory out of the market. That's in our off-season, and that's because we can't service that demand. What a missed opportunity.

When we think about global travel demand, it's at an all-time high. If you just look at Google as a major indicator, you see travel to Canada is up 100% from 2019. People want to come to Canada, but they won't be able to find a hotel room, and they'll be dealing with all sorts of tourism businesses that will be closed over this time period.

Our competitors are eating our lunch. They are investing in the billions, and they have also resolved the labour challenges. I think there are some really good examples that we should look to, like the temporary foreign worker program, which in Canada today requires businesses to guarantee 30 hours a week for 18 months.

What happens in the off-season? Now you have a temporary foreign worker who requires 30 hours. You're in the off-season. Are you going to lay off Canadians to keep those temporary workers? We're not maximizing that program, but other countries have figured out how to do this. There is a temporary tourism visa that allows workers to come in, service the season, but then also re-enter in other seasons without having to go through another round of paperwork.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

You've probably heard this from several of your owners and operators. Even with the issue of bringing workers here, then there is no place to house them.

In Niagara Falls we already have one of the lowest rental and housing accommodation rates anywhere in this country. Where do these new workers live? There is a housing crisis as well that needs to be addressed. Quite frankly, this government's national housing strategy has failed. We're still looking for units so that we can even bring these individuals and the residents who live in our communities to work in these facilities.

As you said, we're leaving money on the table. How do we address that?

[Susie Grynol]

Housing is a major concern, for sure. I would look to the committee and its leadership, and across government to continue to work on that issue.

Our industry is getting creative about how we solve that, and building additional staff accommodations, but that gets really hard in downtown Toronto and Vancouver. There need to be more creative solutions there, for sure.

Going back a step, I think just getting the workers in Canada in the first place is a major consideration for our sector.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

One issue, too, that you touched upon, as we're trying to recover from those three lost years, is that lots of these facilities leveraged themselves quite tremendously. For three years they haven't had an opportunity to raise or generate the revenues needed to pay off those rents.

During the discussions on how this $108 million will be spent over three years, have you been able to work with government officials to tailor the criteria for these new programs that are going to be distributed through the seven regional development agencies, so that the issues—like those we had previously with HASCAP and so on—can be addressed in some of the funding criteria that are going to be established?

[Susie Grynol]

I think it's too soon for that still. Certainly we're engaged with government on the rollout there, but we're not sure how that money is going to roll out. It is for regional development. I think the issue you're referring to is on the debt side, which is still a major consideration for sure.

The fact that we are leaving money on the table every day and not generating revenue to cover the crippling debt our industry has had to incur over the COVID period is just heartbreaking. The suggestion that we have here doesn't actually cost the government anything. It's nonsensical that we've not updated our immigration laws to both temporarily and permanently support growth.

The greatest opportunity in front of us is a bridge program that could help new Canadians who have arrived into Canada. We've run a program like this before for Syrian refugees. It enhances their experience when they land. It supports the settlement agencies. It brings the employers to the table. If we were just a little more prescriptive about where people are going to land—and we believe they should be in high-growth sectors like ours—we could be doing a much better job of supporting those new Canadians, getting them into available jobs and closing that gap from arrival to gainfully employed.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

In communities like Niagara Falls.

[The Chair, Liberal, Peter Fonseca]

Now we go over to the Liberals and Mr. Baker for six minutes.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thanks very much, Chair, and thanks to all the witnesses for being here. I wish I had time to ask questions of all of you. I won't be able to do that. I hope you all understand that.

I'd like to start with the folks from the Canadian Bankers Association.

For context, I used to be a banker. That was my first job coming out of university. I used to be a management consultant. I consulted a lot in the payment space. I'm very familiar with this, so I come at this from that perspective.

Just to clarify, the issue you have is that the BIA would impose a change that would cause GST or HST to be charged on a service that networks charge to card issuers. Am I correct about that?

[Darren Hannah]

Yes. They are proposing to retroactively make a change to tax legislation to override a court case to effectively change the tax treatment of assessment fees. The card networks apply a charge to both issuers and acquirers.