Industry Committee on Nov. 7th, 2006

[The Chair, Conservative, James Rajotte]

Thank you very much, Minister.

We've had every member ask questions.

Thank you very much for being with us. Thank you to your officials as well.

If you have any further information you would like committee members to have--some of the questions asked today may have been of a specific nature--please feel free to provide it to me or the clerk. We will ensure that all the members get it.

Thank you very much for being with us here today.

We will suspend for about one minute. Then we will have the Canadian Space Agency and the Canadian Tourism Commission representatives come to the table.

[The Chair, Conservative, James Rajotte]

We'll call the meeting to order. I appreciate that we have a very short time. We have votes at 5:45. We will have to leave. We can maybe push it to 5:35 p.m., but not much beyond that.

We have with us today two representatives of the Canadian Space Agency. We have the acting president, Carole Lacombe. Welcome, Ms. Lacombe. We also have the vice-president, Virendra Jha.

We have, from the Canadian Tourism Commission, the vice-president of finance and chief financial officer, Karin Zabel. Welcome, Ms. Zabel.

I think we will have the Space Agency proceed first and then the Tourism Commission. As we have such a short time, we ask you to confine your opening remarks to three to five minutes. I think that would be appropriate to get to questions from members.

Will you start off, Ms. Lacombe, please?

[Carole Lacombe, Acting President, Canadian Space Agency]

Thank you, Mr. Chair.

I want to thank the committee for inviting us here today to talk about the Canada Space Program.

Forty years ago, Canada launched its first satellite and thus became the third country, after the former Soviet Union and the United States, to exploit space. Canada was the first nation to operate a national telecommunications system in orbit, and it has acquired international expertise in Earth observation.

Some will say that access to space was a matter of supremacy for the United States and Russia. For Canada, it was more a matter of necessity.

Canada's success in space is the result of visionary, targeted, and sustained efforts to address our country's unique needs. Those needs stem from our low population density, with people often located in remote communities; the immensity of our land mass; the desire to protect the longest coastline in the world; and the importance of our natural resources.

Since that time, the objectives of the Canadian space program have been to develop and use space, science, and technology for the benefit of Canadians. I will give you a few examples. Canadian satellite-linked communities are scattered across our vast land. Satellite images provide data for tracking oil spills and helping ships navigate through Canada's ice-filled waters. Space instruments provide data for monitoring our natural resources and detecting changes due to global warming. Images from space are used to assess disaster areas and manage response efforts, as, for example, was the case when the Red River flooded its banks, forcing the evacuation of over 28,000 Manitobans. In that case, satellite images helped monitor flood conditions, plan rescue operations, and determine the damage.

Delivering the Canadian space program has been challenging. The business of space exploration and development is hard stuff. It demands great minds and talent, the pooling of efforts and investments, and very innovative solutions to challenges.

In spite of its relatively modest size, the Canadian space program has flourished because of Canadian ingenuity, strong partnerships, and targeted investments.

Canada is recognized as a high-tech nation. Canada is an international partner of choice. Canada is a world leader in several niche technologies, and we use partnerships to leverage resources to maximize our investments.

The U.S. is Canada's most important partner. We have had a very successful 40-year collaboration.

Today, Canada's robotics expertise is helping NASA ensure the safety of space missions. This could be seen this summer in the case of the International Space Station. Our investment in the Canadarm has resulted in the exporting of four other robotic arms to NASA and in the development of new space robotics applications in mining and health.

Similarly, the 25-year partnership between Canada and the European Space Agency has enabled our researchers and businesses to take part in European space missions and guaranteed a rate of return on our investments of over 100 percent.

Today, the United States and Europe would like us to work with them again on the next wave of major space projects. We should all be proud of what we have accomplished.

In 1989, the Canadian Space Agency was created in order to oversee and coordinate Canada's space activities. At the time, the Canadian Space Agency focused its efforts mainly on the management of two major government projects: the mobile maintenance system intended for the International Space Agency and the RADARSAT Earth observation satellite. Since then, the Canadian Space Agency has evolved toward the management of a broader portfolio of projects and has acquired a vision for the coming decades.

Following a broad consultation process, the Canadian Space Agency has developed the Canadian Space Strategy, which is being used as a framework document for future space activities.

You have with you copies of “The Canadian Space Strategy”. This strategy has organized the Canadian Space Agency's activities into four strategic areas: earth observation, space science and exploration, satellite communication, and space awareness and learning. These strategic areas focus on benefits to Canadians and support key government priorities. We see space as a solution to policy challenges.

Earth observation satellites are already helping to address environmental challenges, ensure marine safety, detect suspect activities off our coasts, and protect our sovereignty, particularly in the north.

We see space as a driver of knowledge and innovation. Our scientific expertise is in demand worldwide.

I am concluding, Mr. Chairman.

We work with over 600 Canadian scientists in over 20 Canadian universities.

Finally, we see space as contributing to our economic prosperity. Today the Canadian space sector employs over 7,000 highly skilled people and generates $2.5 billion, about half of which is in exports.

Finally, we recognize that the best means of turning space science and technology into innovative products and services is through industry and science communities. Therefore, on average, 60% to 70% of our budget is contracted to partners in the industry and academia.

Merci beaucoup, Mr. Chairman.

[The Chair, Conservative, James Rajotte]

Thank you very much, Ms. Lacombe.

We'll go right away to Ms. Zabel, please.

[Karin Zabel, Vice-President and Chief Financial Officer, Finance, Canadian Tourism Commission]

Thank you very much.

Thank you for inviting the Canadian Tourism Commission to appear before you today. As a crown corporation of the Government of Canada, the Canadian Tourism Commission is specifically legislated to: sustain a vibrant and profitable Canadian tourism industry; market Canada as a desirable tourism destination; support a cooperative relationship between the private sector and the governments of Canada, its provinces, and territories with respect to Canadian tourism; and provide information about Canadian tourism to the private sector and to the governments of Canada, the provinces, and territories.

We do this in collaboration with industry and all levels of government. Through the CTC, the Government of Canada has been at the forefront of working nationally with the tourism sector to maintain its competitiveness and market Canada as a destination of choice for international travellers. Our ultimate goal, therefore, is to grow tourism export revenues. The commission focuses on attracting visitors from nine international countries where we generate the most revenue. These markets represent 64% of our international revenues and 91% of international visits. Tourism is an export industry. Marketing messages transmitted abroad to come and explore Canada helped bring $17.5 billion in foreign exchange into Canada last year.

The Canadian Tourism Commission drives new dollars into the Canadian economy, which is why Canada is investing in one of the most competitive and fastest growing industries in the world. Global consumers spend $623 billion U.S. a year on their trips to other countries. Within our own borders, Canada's tourism industry generates $62.7 billion in revenues. The taxpayer is well served. Thirty cents out of every tourist dollar goes directly to government. The federal government's share alone amounted to $9.3 billion last year. However, consumers have more destinations than ever to choose from.

Thirty-five years ago, Canada was second in the world's ranking of tourism destinations. As air travel became more affordable and more countries started getting into the tourism business, Canada and many others started to lose market share. We are now ranked in 12th place in terms of the international tourism revenue our country is bringing in. Despite this slide, Canada has shown some growth. Overseas travel, for example, was up 7% last year. Competition is fiercest for the American traveller. The U.S. continues to be our most important international market. It accounts for 57% of Canada's international tourism revenue. While U.S. plane arrivals into Canada are still doing better than what we've seen in the last couple of years, overnight automobile trips from the U.S. have seen the sharpest declines. As of July, overnight auto trips from the U.S. were down 7.3%, while plane arrivals from the U.S. were down 2.7% for the year.

Our research shows that U.S. awareness of Canada as a travel destination is weak. In America, the CTC and partners have about a 4% share of voice. Our collective investment in the U.S. market makes up just a fraction of what our competitors are spending. As a result, U.S. consumers are much more aware of destinations in Europe, Mexico, and the Caribbean. The uphill battle makes fostering tourism's growth all the more important.

The Canadian Tourism Commission's five-year strategy will reposition Canada and make it more relevant to the international consumer. Our objective is to see international tourism receipts climb by 10.9% to nearly $20 billion by 2011. To achieve that, we are targeting more high-yield customers from a wider range of lucrative markets. Our focus is on markets where we'll get the highest return on our investment.

The consistent application of a brand that builds powerful personal relationships between international consumers and Canada is the heart of our strategic approach. With our brand as the base, industry partnerships, cutting-edge research, and the world's most advanced e-marketing techniques, we will improve Canada's standings in the global tourism rankings by turning us into a “must see now” destination.

That concludes my opening remarks.

[The Chair, Conservative, James Rajotte]

Thank you very much, Ms. Zabel.

We will go right away to questions. If I could ask members perhaps to keep it to five minutes, that way we can get every party in.

Monsieur Lapierre.

[Jean Lapierre, Liberal, Outremont, QC]

Thank you, Mr. Chair.

First, I'm going to address the issue of tourism. We know that Chinese tourists are among the most likely to come to Canada, because of their number and their attraction to our country.

Could you tell me whether negotiations concerning the status of preferred destination, which had been started with China, have been successful? Are those negotiations ongoing? We've put a lot of hope in this project. It was one of the components of the Pacific Gateway Strategy. Where do the negotiations stand?

[Karin Zabel]

First of all, let me say that we are not the lead on ADS--approved destination status. It is the Department of Foreign Affairs and International Trade. However, having said that, it is our understanding that the negotiations have reached a standstill. I believe there are a variety of reasons for that, although I'm not prepared to speak to that given that it's not our portfolio.

I can say, though, that we have an office in Beijing. We have invested approximately $10 million in China, and that is a market that is growing. Even though we don't have ADS status, there is a significant interest in Canada by the Chinese, and we continue to work within that market to the degree that we can, even though we don't have ADS status.

[Jean Lapierre, Liberal, Outremont, QC]

Is your move to Vancouver now complete? Are you settled there and working there?

[Karin Zabel]

Yes. As you may know, we were mandated last year to move our head office from Ottawa to Vancouver. We did move at the beginning of December 2005, and we are completely established there now and have our head office up and running.

[Jean Lapierre, Liberal, Outremont, QC]

There's a kind of contradiction, because one of the arguments concerned the opening up to Asia, whereas the negotiations aren't advanced. I imagine there's less political will, because both sides seemed to be sticking to their positions, no? The purpose of your openness to the Pacific and the rest of that was to help us attract more tourists. I saw both as two fingers of one hand.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I think they're going to return to Taiwan.

[Jean Lapierre, Liberal, Outremont, QC]

Yes, that's it.

[Karin Zabel]

Again, I can't speak to government policy as to why we were relocated to Vancouver. Certainly we are closer to the Asian market, and we also are working with the Olympic organizing committee in Vancouver. But I can't say that the numbers from China are very good.

[Jean Lapierre, Liberal, Outremont, QC]

As for the Canadian Space Agency, you've been the acting president for 10 months now, Ms. Lacombe. So you've been without your president for 10 months. I know that's not your fault, but rather that of Mr. Carrie, that the new president hasn't been appointed. However, I imagine the entire organization must be starting to wonder what's going on.

Do you get the impression that the agency is still important for the government? Similarly, do you have funding? You mentioned your long-term projects. Do you have a commitment to long-term funding?

[Carole Lacombe]

As regards the first part of your question, concerning the presidency, the process to replace the former president is under way. The position has been advertised on government sites. Consequently, we hope the president will be appointed in the next few months.

As regards funding, as you know — I referred to this — the agency has been in the business for 40 years, and funding for the Canadian Space Program was provided through long-term space plans. So they were ad hoc projects provided with project funding. Since the government outlined its support for the space program for the future by providing the agency with a core budget in 1999, we now have annual funding, continuing funding in that regard. The strategy that I distributed and referred to in my introduction guides the space activities somewhat.

[Jean Lapierre, Liberal, Outremont, QC]

Thank you.

[The Chair, Conservative, James Rajotte]

Monsieur Crête.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Ms. Lacombe, I'll continue in the same vein.

The Auditor General commented broadly that the agency did not have the means to carry out its commitments. Has that situation been corrected? The Canadian Space Agency has made a lot of commitments through international programs, and Ms. Fraser said that the agency would not be able to meet its commitments because it didn't have any money. Has that been corrected?

[Carole Lacombe]

In view of those observations, the Auditor General, among other things, recommended that the agency establish a space strategy, and that's what we've done. On one of the most important recommendations, and following a broad consultation, we developed a strategy that enables us to maintain our decisions.

We then took into account the funding that we had over a 10- to 20-year horizon. As you know, space projects are implemented over many years.

We set our priorities based on the four areas of intervention that I mentioned in my remarks, and we informed the government about what we can and can't do with our funding.

We're currently pursuing priority projects for the government with our funding and in accordance with the four areas of intervention.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Is the funding adequate?

[Carole Lacombe]

As you know, investment in space can be costly. For the moment, having regard to our funding, we have established our priorities within each of the four areas of intervention. As regards Earth observation — the government supports us in this — one of our priorities is to ensure the operation of the RADARSAT program, which is the most important Earth observation program.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Is it possible for you to send us additional information on this subject? I have five minutes and I want to ask another question.

[Carole Lacombe]

That's fine; there's no problem with that.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

This summer, I went to the Canadian Tourism Commission, where I met Ms. McKenzie. I hope she's doing well.

I read the report that I have here and I'd like to know whether the board of directors or general management of the Canadian Tourism Commission has made submissions to have the $5 million that was taken away from it as a result of the reduction of moving costs allocated to operations.

Would you have liked that money to be allocated to the Canadian Tourism Commission? Did the board of directors or management take action to that end?