Indigenous and Northern Affairs Committee on Nov. 17th, 2009

[Rob Clarke, Conservative, Desnethé—Missinippi—Churchill River, SK]

Thank you, Mr. Chair.

I have two questions, one for Jennifer and one for Ruth.

Ruth, how long has your organization been together? How long have you been operating?

[Chief Ruth Massie]

Since 2001.

[Rob Clarke, Conservative, Desnethé—Missinippi—Churchill River, SK]

How many people work for you now?

[Chief Ruth Massie]

There are three.

[Rob Clarke, Conservative, Desnethé—Missinippi—Churchill River, SK]

You operate on $200,000 annually--is that correct?

[Chief Ruth Massie]

Yes, and then we have some proposal-driven projects. We do the projects if they're funded, and we don't if we don't get funded.

[Rob Clarke, Conservative, Desnethé—Missinippi—Churchill River, SK]

What was the rationale for some of the other first nation communities, the other four, not to work with your organization?

[Chief Ruth Massie]

Some of them are a little bit more advanced in working directly with industry and they're feeling that they want to go directly into negotiation rather than learning. We make all our information available to them anyway, so they're a little bit farther advanced than the other communities.

[Rob Clarke, Conservative, Desnethé—Missinippi—Churchill River, SK]

Thanks.

Now, on the highway going into Alaska, how much funding is coming from the Americans to maintain this highway, or is there any money coming from the Americans?

[Jennifer Byram]

I don't know if there are any agreements with YTG to maintain it. The money comes to reconstruct it. I don't recall how much we've received lately, but it has been in the hundreds of millions of dollars.

[Rob Clarke, Conservative, Desnethé—Missinippi—Churchill River, SK]

What's the traffic volume?

[Jennifer Byram]

I don't know. After this point it's mostly American.

[The Chair, Conservative, Bruce Stanton]

Thank you very much, Mr. Clarke.

Ladies and gentlemen, thank you for coming this afternoon to help us with this important study. What you've given us here today will be very helpful for informing our recommendations and the report we will eventually table in Parliament.

Members, we're going to suspend so we can reset for our next panel. We'll resume here in about ten minutes.

Thank you.

[The Chair, Conservative, Bruce Stanton]

If I could get all the members to come back to the table, we'll get under way again.

May I start by welcoming our witnesses here today. And we welcome back Mr. Mills; he was here earlier today as well, but this time with a different hat on.

I'd like to welcome, first of all, Sandy Hachey and Mary Ann Ferguson from the Tourism Industry Association of the Yukon. Welcome.

Also, we have Mr. Marc Johnson, who is a member of the board of the Yukon Historical and Museums Association. Welcome, Mr. Johnson.

Mr. Mills is back with us now representing the organization Air North, which we heard a little bit about this morning and will hear a little bit more about in the course of our questioning.

For our witnesses who are just joining us, and you may have seen this earlier, we typically start with about a five-minute presentation. We're doing simultaneous interpretation, so I would ask you to speak at a pace that our interpreters will be able to translate properly. You don't have to feel yourselves rushed. Just take a normal pace and we'll give you a little bit of extra time if you go slightly over the five minutes. After the opening presentations we go to questions from members. Those are also five minutes in duration, which includes the question from the member as well as your response. We try to keep those as succinct as possible and that helps us learn a lot more in the space of a one-and-a-half-hour meeting.

Let's begin, then. We'll start with Sandy or Mary Ann. Which of you would like to begin?

Mary Ann Ferguson will start off from the Tourism Industry Association of the Yukon.

[Mary Ann Ferguson, Second Vice-Chair, Tourism Industry Association of the Yukon]

Thank you.

My name is Mary Ann Ferguson. I'm the second vice-chair of the Tourism Industry Association of the Yukon. As you said, Sandy Hachey is here with me. I want to thank you for inviting us to participate on this panel.

I will get right to it.

You've asked us to speak to the barriers and solutions that face northern economic development from a tourism perspective. There are a number of points we'd like to address.

Currently there is no real land use certainty. Without this, it is extremely difficult to attract investors and new operators to conduct their business in Yukon. There needs to be a balance with respect to land use planing and environmental and industrial concerns so that all industries have access to opportunities to grow and to protect land assets in the territory.

I'd like to speak about air access. The plethora of taxes, fees, and charges that are in addition to the high cost of flying in Canada, particularly in the north, puts us at a direct disadvantage when compared to other destinations. A recent study completed by Deloitte indicates that consumers are 80% more likely to practice brand loyalty for everything from toothpaste to soap, except when purchasing airline tickets. Consumers purchasing air travel will look for the least expensive fare 80% of the time. They have no dedication to a specific carrier or destination. Again, this puts Canada, and Canada's north, at a direct disadvantage compared to competing destinations.

On infrastructure and access, particularly airports and highways, Yukon is again at a disadvantage when looking at direct flights to the destination and at the sheer distance when travelling by road. We have short-haul flights directly from Calgary, Edmonton, and Vancouver and one long-haul flight from Frankfurt directly to Whitehorse in the summer. Lower airport fees and improved airport status would allow us to attract more frequent long-haul, direct flights to Whitehorse, which would increase access to the destination and would stimulate growth in the industry. Improvements to highways would aid in setting aside preconceived notions with respect to road travel, which in turn could increase the frequency of travellers.

On a qualified workforce and immigration, with a population of less than 30,000 people, access to a qualified workforce is a challenge. Immigration laws make it increasingly difficult to hire qualified labour from outside the country. Small business competes locally with government at all levels--municipal, territorial, federal, and first nations--for qualified workers. Government jobs typically offer a higher wage, year-round employment, and some level of security. This makes it hard for our industry to compete, making it all the more necessary for our operators to look at bringing in qualified workers from outside.

Looking at debit and credit card fees, currently there is no regulation or cap with respect to fees that can be charged for using credit/debit card machines. It can be argued that if a business is to remain competitive, it must offer these services to consumers. These fees can be raised at any time, increasing the cost of doing business and decreasing profit margins for small operators in a business climate that already sees them operating at a higher cost by virtue of their location.

On INAC and access to capital seed funding, in other areas in Canada, a number of business development and entrepreneurship programs can be accessed through Industry Canada agencies such as Western Economic Diversification Canada and the Atlantic Canada Opportunities Agency. It has seemed that the only department northerners have had access to for similar types of programming has been INAC. The tourism industry is seen as a strategic industry in the territory, and we fought hard, with other supporters, for the development of our own Canadian Northern Economic Development Agency.

With the announcement of CanNor--again, part of INAC--we have yet to gain any knowledge with respect to how tourism fits into the big picture, what percentage of funding will be made available to tourism-based initiatives, and if seed capital will be included in funding programs, particularly for those with first nation partners.

We had some other issues for consideration as well.

First, there are the fuel prices. This, of course, impacts rubber tire traffic from the south. High fuel costs equal fewer road travellers.

There are also Mexican visa requirements. This was a market that Yukon was beginning to tap into, but the new visa requirements are challenging those efforts.

Lastly, there's the cellphone and Internet service. I don't know how many of you do not have Bell phones with you today--those services are generally good--but not all cell providers are supported here, only Bell. It's a hindrance for travellers who do not subscribe to a Bell service.

Thank you.

[The Chair, Conservative, Bruce Stanton]

Thank you, Ms. Ferguson.

Now we'll go on to Mr. Johnson for five minutes. Mr. Johnson.

[Marc Johnson, Member, Board of Directors, Yukon Historical and Museums Association]

Thank you.

I would like to agree with everything Mary Ann said. I have to point out that heritage and tourism work hand in hand. We like our customers in the museum, our patrons in the museum, and they're mostly tourists. Yes, I agree with everything she said, and perhaps I can add to that specifically from a heritage point of view.

First, I should say that my personal pursuit is fixing boats, old boats in particular. A couple of weeks ago I was working on one with my son, who is a mechanical engineer, or almost a mechanical engineer. We couldn't get it going. I finally diagnosed it as something the matter with the distributor, and from that, the points. He looked at me as though I was from outer space and asked what points are. I said, “You're a mechanical engineer.” He said to me, “Doesn't it have an electronic ignition?” Well, in 1932, no, it didn't. It came home to me that was an example of a skill I had simply because of my age that he didn't because of his age. And it applies here.

For instance, they have plenty of spoken word recordings in the archives, but nothing to play them on, no cassette players, no reel-to-reels, no cart machines, no eight-tracks, no turntables. They actually have these things, but they break down from time to time. What they don't have is analogue technicians in a digital world. These are skills that need to be taught today.

Other museums around the territory.... For instance, the Dawson City Firefighters Museum need somebody to fix or rather reassemble a steam engine fire pump. They need log buildings rebuilt. They need log constructors who are familiar with older methods. We have found recently that something called HPI funding--heritage properties initiative funding through Parks Canada--has done remarkably well in training people, sending them out for courses and what have you, in terms of creating the skills we need to maintain the material we have in the museums, to maintain the knowledge we must have that goes with some of our material in the museums. HPI runs out this year and we in the museum sectors need it and need it very much to be reinstated this year. HPI is but one fund available to the heritage group, and its demise is, to say the least, worrisome.

In a nutshell, the barrier to economic development in the heritage sector is funding or lack of it, and the solution is perhaps, simply put, more accessible funding. For instance, CHIP, the commercial heritage investment program, was a pilot program designed to increase heritage preservation, particularly in the private sector. I know of several projects that leveraged this program to create significant economic development--none of them were in the Yukon: hotels, restaurants, small businesses that refurbished old buildings to operate within those buildings. The payback was remarkable. They preserved their heritage as a byproduct, if you will, of creating economic development.

The fund is being discontinued. Whether it comes back as a direct federal investment in heritage or maybe in terms of tax incentives or some other incentive, the operative word is incentive. I think the federal heritage department has facts and figures on the success of that program in terms of economic development created as a direct result of heritage investment.

Heritage museums or private preservations create economic development, especially in the Yukon. Heritage is a backbone of tourism, or maybe it's the other way around. Without visitors the museums would wither, and without museums, the preservation of our heritage, the tourists would be less likely to come. We know of the Klondike as a brand. People use the word Klondike all over North America, if not the world, because they relate it to the Klondike right here and all the branding that goes with that word.

So barriers to tourism are also barriers to heritage, things like accessibility to the north. My compatriots have just gone through this.

Expensive infrastructure, gas prices, passport requirements—all these are barriers to the preservation and conservation initiatives. These issues are addressed through different federal departments, but they affect day-to-day lives as well as museum and heritage pursuits. It is simply more expensive to live and work in the north.

Museums are mostly non-profit societies who rely on federal funding. I find it a little awkward here, because almost our entire industry of heritage relies one way or another on federal funding, so cuts to funding hurt, specifically cuts to MAP funding, the museum acquisition fund. Cuts to any program hurt the museums, but these cuts also hurt tourism, and tourism is our number one industry.

As for solutions, I don't know. A national museums policy would help. We have aboriginal working groups; we have cultural centres; we have the museums that come under the YHMA, the Yukon Historical Museum Association; and we have private museums. All of them are running on proposal-driven initiatives. It would be very handy if there were some sort of program that would allow all these museums to operate independently and together at the same time.

I also sit on the working group of Heritage Canada, representing the Yukon. They are heavily involved in the creation of a national trust, something we don't have, something we've talked about, something that people would agree with. There was at one point $5 million in the federal budget put aside for the creation of the heritage trust, or a national trust of some sort. What happened to it, I don't know. Speaking as a member of that working group, they don't know either. It was there in the budget and disappeared. Certainly it would be helpful in a number of projects that would fit into the national trust category.

I would like to point out that all of this funding relates to job creation. There are a lot of people in the museum sector here in the Yukon who take training to work on heritage material. Sometimes they do this through Parks Canada, sometimes they do it through HPI. It is a very strong specialty concept to work on heritage material. You can't just build a log cabin. If it's a heritage log cabin, you need to do it the same way they did it a hundred years ago, and that takes special training. We have those people here, but we don't really have the work for them, because we don't have the money to employ them.

[The Chair, Conservative, Bruce Stanton]

We're quite well over our time now, Mr. Johnson. Do you want to take a minute to sum up?

[Marc Johnson]

Sorry, I've gone too long, but I can get passionate about these things.

I would like to quote a letter to the Minister of Environment, James Prentice, from our own Minister of Tourism and Culture, Elaine Taylor. She was talking about pending cuts to the HPI program, and she says:

While much progress has been made in the areas of building a national heritage registration system, addressing the need for tax incentives, development of standards and guidelines to assist in heritage preservation and public awareness of heritage preservation efforts, there remains more to be done. To date, the aboriginal component of the HPI has not been implemented as planned. The full implementation of this component would complement work in support of First Nations capacity building and self-government responsibilities for heritage preservation on First Nations settlement lands. Further work is needed to engage youth and new Canadians and in the representation of rural and remote communities. Likewise, we need to build stronger links between the conservation of our cultural heritage and the environment—retaining, maintaining and re-using our heritage infrastructure which contributes to sustainable communities.

Thank you.

[The Chair, Conservative, Bruce Stanton]

Thank you, Mr. Johnston.

Now we'll go to Mr. Mills, representing Air North.

[Stephen Mills, President, Vuntut Development Corporation, Air North]

Thank you, Mr. Chairperson and all the honourable members. I appreciate the opportunity to be here this afternoon.

Just quickly, Air North is owned by the Vuntut Development Corporation—which has approximately 800 beneficiaries based in Old Crow, Yukon—Mr. Joe Sparling, who's the president, and also 600 other Yukoners who have bought shares through small business investment tax programs. We probably represent 1,500 to 2,000 Yukoners as shareholders in one way or another. I'm not going to argue with the presentation, but we do have people who choose to fly on Air North and there is some brand loyalty to Air North.

One of the things I'm going to talk about here is that our airline is going through a similar situation to that of some of the other northern airlines. Basically, there are six carriers in Canada that provide domestic service by jet. Three of those are based in the north: First Air, Canadian North, and Air North. There are three mainline carriers in Canada: WestJet, Air Canada, and Air Canada Jazz. I would kind of group Air Canada and Air Canada Jazz due to their arrangements for purchasing: basically, one simply buys the capacity of the other one.

I would also say that the situation in the Yukon is very different from that in the other territories and the current market conditions in the Northwest Territories and Nunavut. Maybe later we'll speak to that as part of the questions. One of the things that's really different is that we brought the low fares to the Yukon, not the other way around, which has happened in other jurisdictions. When we launched our jet service in 2002, we launched $195 one-way fares that are still available. That is from Whitehorse to either Vancouver, Edmonton, or Calgary. That was significant at that time—less than half of the average fares being charged by Air Canada. So when we entered the market, we brought a good alternative and it resulted in a very steep decrease in air rates in what I believe was a highly overcharged market. We have, since 2002, increased our market share to close to 50%.

We are also facing some pretty serious competitive challenges from our competitor, which is Air Canada. We have argued in the past that it is quite predatory in nature. It's something we struggle with. A good example is that, in about 2007, Air Canada managed its capacity as we did, and we saw load factors in the 80% range or higher, especially in the summer. Both carriers were doing quite well. Before 2007 and since then, Air Canada has gone back to a practice of flooding the market with capacity and last summer they flew four daily flights into Whitehorse from the south. What happened is that all our load factors have dropped by 10% to 15%. Some people argue that that's competition, but I also know that when you look at the amount of federal funding that has gone to Air Canada since about 2000 to help it survive, including current additional funding that, I think, was just given quite recently through loan funding to Air Canada, it is being provided funding that assists it in continuing to conduct predatory pricing and other practices on our airline.

We're not receiving that type of funding and we're not backstopped by the Government of Canada. I think it's something we really seriously have to continue to look at. We believe Air Canada is essential as a national carrier, as WestJet is. But we don't believe it should be able to attempt or continue to run the small airlines out of business and especially be backstopped to do that.

Here are a few things with regard to us. We have a small fleet. We're a small airline. We have three 737-200 aircraft. One is a cargo combi capacity. It can also fly onto gravel strips. For those who have been watching the torch relay, it was our first time flying our jet into Old Crow ever, the first time for a jet ever to go in there, and it carried the Olympic flame and the Olympic torch as part of the relay. It also carried that torch across Canada, and we are very proud to see not only our aircraft but to see “Yukon” on the tail of that aircraft and our flight crew taking it across the country.

That is something we're quite proud of, but also the fact that we have worked on and now have jet service, and we are going to build that into our schedule, into smaller communities. It helps to reduce air fares in communities and it also improves the transportation infrastructure in these communities.

When we talk about barriers, one significant barrier to us continues to be the fact of gravel airstrips. There are no new aircraft, especially of the turboprop nature, that are being designed and built to land on gravel strips. We have four Hawker Siddeley 748s. We use those on the gravel strips. We also have, of course, our 737 equipped for gravel. But we're not able to actually upgrade to more fuel-efficient turboprops, because of current conditions of our runways. If we want to improve infrastructure to reduce costs, we should start to look at improving the infrastructure to allow for more fuel-efficient and more reasonable equipment.

There are a couple of other things that I will speak to.

One of the things we had in our jet service early on was interline arrangements with Air Canada. Those were cancelled due to a competitive decision by Air Canada to stop interlining with us. Of course, that prevents people from coming from Ottawa to here and interlining their bags and checking right through, and that's a competitive disadvantage. One of the things we talk about when the federal government is providing funding or backstopping the airline is that some assistance in re-securing these interline arrangements, as well as some assistance in trying to ensure that we simply have a level playing field within the Yukon for air travel, would go a long way.

Just showing how effective your committee is, I just got off the phone; I heard that Air Canada may be interested in re-establishing the interline arrangement. So I thank you for your assistance on that front.

[The Chair, Conservative, Bruce Stanton]

We're out of time, Mr. Mills. Was there any final point you wanted to make?

[Stephen Mills]

My final point is that northern gateway routes make a relatively small contribution to either one of the mainline carriers, but these routes represent a huge loss to a northern carrier. I would just like to end on that note.

Whitehorse is the hub of Air North, with almost 200 employees, with $10 million to $15 million of salaries that flow into the Yukon labour market, with spinoffs being a multiple of that. The economic benefit of having Air North operate its hub out of Whitehorse is significantly higher than what is provided by some of the other carriers and is very important to the economy of the Yukon.

Thank you.

[The Chair, Conservative, Bruce Stanton]

Thank you very much.

We'll begin the first round of questions with Mr. Russell for five minutes. Mr. Russell.

[Todd Russell, Liberal, Labrador, NL]

Thank you, Mr. Chair.

Good afternoon to each of you.

Thank you for those presentations. I tell you, they were pretty direct, and that's they way we like them, I think, for the most part. Some things I think are maybe a little bit beyond our control, such as gas prices, to some extent. Some would argue that we have more control than we do. But some of these things are very direct.

Now I want to get to a couple of points. In regard to the comments around CanNor made by Ms. Ferguson, I know CanNor is a new agency with a new mandate, but you were saying that you don't know where tourism is going to fit in that new agency. So I want to go back a little bit. The SINED program has of course been renewed and that $90 million is now going to come out of CanNor for direction and for spending, that type of thing. What was your experience with SINED, and how might that inform how CanNor is going to develop its policies and its funding rollout and that type of thing?

The other thing I'm interested in, from a tourism perspective, is Parks Canada. We haven't heard any mention of Parks Canada. I'm just wondering what their role is here, in Yukon. What type of driver are they for the tourism market? Are there things there that we can bring back from a totally federal perspective? I'm interested in that.

To Mr. Johnston, in Labrador we had a fantastic project. It was the reconstruction of an entire fishing village. It's called Battle Harbour, and it was the 18th and 19th century fishing capital at one time of Labrador. A lot of their funding came through ACOA, which was the regional development agency, very comparable now to CanNor. Maybe there are opportunities that will present themselves there. They went through an extensive training process in order to rebuild this community. You talked about skills that are no longer existing, and they just developed those skills, such as heritage carpentry, for instance, and those types of things. So it might be something to look at, that particular model. But I'd like you to comment on Parks Canada, on SINED. And certainly the suggestions made around not pulling funding for heritage investments and things of that nature are very well taken.

I don't know who would want to start.