Mr. Chair and members of the committee, thank you for this opportunity to participate in your important study on this subject.
Again, for the record, my name is David Goldstein. I'm the president and CEO of the Tourism Industry Association of Canada, representing the full cross-section of Canada's travel and tourism sector, with a focus on growing Canada's international competitiveness as a global destination.
Our sector generates annual revenues of $82 billion to the Canadian economy. We employ over 600,000 people in every riding in the country, including over 204,000 Canadians aged 25 and under, making our sector the largest employer of young Canadians.
Generating $17.4 billion last year in international currency exchange, travel continues to be Canada's largest service export sector. Not only are we a significant export sector in and of ourselves, but a recent report from Deloitte demonstrated that there's a direct correlation between travel and trade and that countries that experience more joint travel experience higher levels of trade and investment.
The travel and tourism industry in Canada is in no means in dire straits, but it is in need of a course correction to seize growth opportunities for today and ensure stability for the future. The good news is that receipts were up over 7% last year, outpacing the Canadian economy, but this masks a very disturbing overreliance on our Canadian domestic market. Currently, 80% of travel revenue is derived from Canadian travellers travelling within Canada, which is up from 65% just a decade ago. Furthermore, our overreliance on the domestic market is at risk, as brand U.S.A. and other countries' tourism marketing boards are significantly increasing their marketing investments to the Canadian traveller.
The good news is that the global opportunity is enormous. Travel and tourism is outpacing nearly every other sector of the global economy, but Canada is lagging behind. Last year, Canada's inbound visitor growth was only 1.7%, which is less than half the global average of 4%. Simply keeping pace with global growth of 4% would have added half a billion dollars to our economy and over $150 million in additional government revenues.
In order to get to the 4% international average, Canada needs a balanced strategy that focuses on higher-volume mature markets, primarily the U.S. and western Europe, and the high-growth emerging markets, including China, India, Mexico, and Brazil.
While over 80% of our export revenue and travellers still come from countries without visas, the fastest-growing markets are the ones that do require visas, making visitor visas akin to export permits. In fact, China alone has become the fourth largest inbound source market for Canada, with inbound visitation growing on average over 20% per year, reaching 288,000 visitors in 2012. Since signing the approved destination status agreement with China in 2010, Canada has seen almost 100,000 more visitors per year, which is a 48% increase. Treating these visitors as temporary residents just doesn't make sense.
While we agree that there needs to be a balance between economic activity and safety, we also agree that Canada needs to be mindful of its immigration system. Canada does not have the illegal immigration problem, in our view, that many western countries do. And the government has taken recent measures to expedite the refugee status system, which will thwart illegitimate claims.
In a recent white paper entitled “Gateway to Growth: Progress Report on Canadian Visitor Visa Process”, produced in conjunction with the Canadian Tourism Commission, we have outlined some of the key improvements that have taken place over the last three years, including the introduction of 10-year multi-entry visas and an increase in the number of visa application centres. However, demand in key emerging markets is outpacing capacity, and we are becoming increasingly uncompetitive on the world stage.
To that end, our paper makes several key recommendations to cut red tape and streamline our visitor visa system, and we hope the committee will consider these as part of the study.
Broad recommendation number one is the reduction of red tape. That includes waiving visa requirements for Mexico and Brazil, visa transferability from expired passports to new passports so we can maximize the use of 10-year multi-entry visas, and the introduction of paperless visas through an electronic travel authorization program.
Recommendation number two is to optimize existing security infrastructure, including the potential of a Canada-U.S. reciprocal visa program and a transit without visa program or pilot with Canada's major hub airports.
Recommendation number three is to reinvest in the visa process. TIAC was encouraged, in last year's federal budget, with the announcement of a two-year investment of $42 million to increase visa capacity. But this will barely keep up with demand, especially in markets like China. We recommend that a small percentage of the revenues earned by visas, upwards of $400 million per year, be reinvested in building visa capacity in the system.
In conclusion, Mr. Chair and members of the committee, it should be noted that in 2002 Canada ranked seventh in the world in inbound visitation. In 2012, we ranked 16th. We believe that breaking down the barriers and aggressively promoting the Canadian brand internationally will allow us to surpass the international average of 4% visitor growth and enable Canada to get back into the top 10 by 2017.
We appreciate the time to be with you, and we look forward to your questions this morning.