Industry Committee on May 30th, 2007

[Paule Brunelle, Bloc, Trois-Rivières, QC]

But the program applies to all vehicles sold.

[Guy Leclaire]

Yes, and the budget is apparently $160 million over two years.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

That is what it's costing us. Have the revenues been deducted? We're talking about a budget of $160 million. Does that mean $160 million will be levied on vehicles with a very high fuel consumption?

[Guy Leclaire]

It says in the budget that the program will be

broadly revenue neutral.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

So, we can expect people to continue to buy large vehicles.

[Guy Leclaire]

Perhaps.

[Paule Brunelle, Bloc, Trois-Rivières, QC]

We really don't know. You will have to assess the situation.

Thank you.

[The Chair, Conservative, James Rajotte]

We could have asked that question of Mr. McTeague, but unfortunately he's not a witness.

We'll go to Mr. Carrie now.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

I thought perhaps you could indulge me just for a minute. I know that Mr. Leclaire will be retiring soon, and I wanted to congratulate him publicly on his retirement and thank him very much for all the hard work he has done these last many years, not only for the auto sector but for all of Canada.

I'd like to thank you, Mr. Leclaire, for all you've done.

[Some hon. members]

Hear, hear!

[Guy Leclaire]

Thank you very much, Mr. Carrie.

[Colin Carrie, Conservative, Oshawa, ON]

It's a real pleasure to have you here today.

I was wondering, in your opinion, how the Canadian auto industry is doing here in Ontario relative to the rest of North America.

[Guy Leclaire]

Broadly speaking, the domestic auto industry is doing quite well. There are certainly some issues in terms of the Detroit-based assemblers and the problems they're facing in the market. But the investments in Canada continue at a quite significant level. All the assemblers here have invested heavily in new plants and equipment. Toyota is bringing in a brand-new plant on stream over the course of the next year.

So there have been some rough patches. There probably will continue to be some rough patches as the Detroit-based assemblers continue to adjust to market conditions in North America. But all in all, Canadian plants seem to be doing fairly well, and we project that they will continue to do so for some time.

[Colin Carrie, Conservative, Oshawa, ON]

I noticed in your opening statement you mentioned that in Canada we produced 2.5 million vehicles in 2006, and it appears that 1.6 million vehicles were actually purchased by Canadians. So it looks like there's about a 900,000 surplus as far as what we produce here. Would I be correct in stating that?

[Guy Leclaire]

Yes, and those are sort of average numbers. We produce an average of 2.5 million to 2.6 million vehicles a year, and generally produce 900,000 to 1 million more than we purchase. I think as you may have mentioned, Ontario is the largest automotive-producing jurisdiction in North America. So it does quite well, and it helps with the balance of payments.

[Colin Carrie, Conservative, Oshawa, ON]

Lately I've been listening to different people in the media calling for a global auto pact. Way back when Canada had an auto pact, and it was like a one for one.... What do you think would happen to our industry domestically if we went back to an auto-pact type of mentality?

[Guy Leclaire]

Our industry relies on trade. We produce a net surplus of about a million cars. The reality is that 90% of what we produce is actually exported. We need to have access, certainly to the U.S. market, and we do, through NAFTA. Without that, we would actually lose plants. We would be producing fewer vehicles. If we were only producing 1.5 million or so for the Canadian market, we would lose four or five assembly plants out of the twelve.

[Colin Carrie, Conservative, Oshawa, ON]

Madame Brunelle brought up a very good point about what the trend has been for Canadians. She mentioned that Canadians will still buy large cars. I have three kids, two dogs; grandma likes to come to the cottage. I need a bigger vehicle. That's the reality of it. I'm not going to fit into a little Pontiac Wave. It's not going to work for me.

What was the trend for Canadian consumers even before the ecoAUTO program? Have you seen a trend? Are we already starting to buy these smaller vehicles?

[Guy Leclaire]

Yes. Canadians, certainly relative to the U.S., tend to buy smaller, more fuel-efficient vehicles and fewer of the larger vehicles. Even there we might be buying SUVs, as you require to move your children and get to the cottage, but we tend to buy much smaller SUVs. All in all, we tend to buy the smaller, more fuel-efficient vehicles.

There's always room for improvement, which is where the eco rebate program will come in.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much.

If Madame Brunelle has a Honda Accord and she's thinking of a new one, as I said, the Oshawa plants are number one and number two for quality. The Impala is an excellent vehicle. It's very fuel efficient. That was selfish promotion there.

To shift over, recently we've heard a lot of issues about passports and how that's affecting our tourism rates. I was wondering what the effect of the increased need for passports for Canadians has been. I understand there's a wait-list of three million for passports in the States. Would you be able to comment on the passport issue, please?

[Michele McKenzie]

The passport issue, as far as the CTC is concerned, is the issue with respect to the new rules coming into place in the U.S. Most of our international visitors would be travelling with a passport anyway. From an impact point of view, we have seen declines in U.S. visitation since the new WHTI was announced. However, there are a number of factors at play in terms of the U.S. market right now. Passports are just one component of that.

We do know there has been confusion around whether people need a passport. From a marketing point of view, that confusion in itself has been a challenge for us.

Our efforts have been to try to help the American public, who might be interested in travelling to Canada, understand what the rules are. We've been doing that in a number of different ways: directly, in terms of our dealings with U.S. consumers, but also in terms of working with Canadian tourism operators. We put a tool kit on the Internet, which they can download, with messages they can send their customers so we have a clear consistent message from Canada as to what is required.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Carrie.

We'll go to Monsieur Godin, please.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Thank you, Mr. Chairman.

Welcome to you all.

As you can see, I'm replacing Brian, but I'm not Brian. Brian had some questions, but he had to leave for a few minutes. I will raise some of the questions he's interested in.

Going to the issue of passports, there's what we know today, but starting in January it's going to be another issue. How many people from the United States who come and visit us just go across the border with their car? Don't you think there will be a big effect?

For example, Montreal is close, not even an hour away, to the border with the United States. If you look at New Brunswick, for example, there's the border with Maine, and they're going across day after day and they have no passport.

We're dealing with the ones taking flights right now, and it's a mess. We've got people now waiting three months to get a passport. It's not easy. We don't have the offices across the country that we need to deal with the passport issue. Some places are worse. In northern Ontario, for example, in Sault Ste. Marie, if they want a passport they have to go to Toronto if they need one in an emergency. Just imagine that. Don't you think it's going to get worse?

[Michele McKenzie]

As I said earlier, the issue with respect to how WHTI has been implemented has created confusion. The research we have done in the U.S. would suggest that to the extent to which people are aware there's a passport law out there, they believe it's probably already in place. From an awareness point of view, there's confusion among the travelling public. We believe that confusion has been what has been depressing traveller numbers to date.

We believe that as accurate messages get out there the performance will continue to improve. In fact, based on studies that the Conference Board of Canada has done, we expect that turnaround to come in 2008.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Some municipality groups have hotel room levies. The question I want to ask is, where does that money go, how is it used, and does the CTC get any of these funds?