Thank you, Mr. Chair and honourable members of the committee.
With me today is our vice-president of public affairs, Christopher Jones.
First let me thank the committee for the opportunity to appear before you to share our views on the current state of Canada's tourism industry. As you may know, TIAC released a report on Canada's tourism competitiveness on June 2, and I believe you have been provided with a copy of this report. We state in that document that the issues facing the industry are urgent and profound, so we are deeply appreciative of the committee's willingness to convene this meeting and look into these issues without delay.
Globally, tourism is one of the most significant economic engines, with close to $800 billion being spent annually on worldwide personal travel. But while tourism receipts in the rest of the world are growing at roughly 4% to 6% annually, Canada's growth rate lags far behind, at about 2% to 3%. Moreover, Canada's travel deficit--the difference between the amount foreign visitors spend here versus what Canadians spend abroad--reached an historic high of more than negative $10 billion for 2007, with a further significant deterioration of that in the first quarter of 2008.
We're also seeing historic declines in inbound visitation from the United States. Traditionally, more than 80% of our visitors in a given year come from the United States, but last year the number of Americans visiting Canada reached its lowest point in the 35 years that these numbers have been kept. Other markets, such as Japan, are also stagnating, while growth elsewhere has been modest at best.
When external challenges such as 9/11 put a stranglehold on our border, when fear of a SARS pandemic disrupts global travel, when the strength of the Canadian dollar increases the price of our tourism products by 30% in two years, or when fuel prices rise to record highs, there is only so much government can do to mitigate these individual events.
Let me be clear about the issues we are facing. The low Canadian dollar and cheap fuel prices of the past hid many of the underlying structural challenges to our competitiveness as a world-class destination. A higher dollar, higher fuel prices, and a weakening U.S. economy expose the sector's weaknesses. It is my contention that the focus on and reaction to headline-grabbing but isolated events have diverted our attention from the fundamental issues we face as an industry.
Tourism is a $70 billion industry in Canada, and 1.6 million Canadians depend on tourism for their livelihood, but our industry has traditionally been neglected by governments. We have tended to regard tourism as a source of taxation dollars, burdening our businesses with structural costs and compliance measures that impede its price competitiveness. For example, the continuing insistence on charging airport rents, airport security fees, and excise tax on aviation fuel; and the abrupt cancellation of the visitor rebate program and its replacement by the onerous and burdensome foreign convention and tour incentive program are illustrative of the problem. In aviation alone, we estimate the federal government is imposing at least $800 million in punitive levies a year on that industry.
In our report we single out two fundamental areas of concern: accessing Canada, and product animation. Under the heading of access to Canada, we state that visitors need to be able to reach Canada with ease, cross our border efficiently, and then be able to travel within Canada as seamlessly as possible. They also need to be able to find options for travelling to and within Canada that are cost-effective and competitive with other destinations around the world. One example of competing on an uneven playing field is the lack of an agreement on approved destination status with China, the fastest-growing outbound travel market in the world.
In addition to improving access to Canada, we need to ensure that there are persuasive and compelling reasons to visit our country. A concerted effort on the part of both the private and public sectors is required to make sure that new products are introduced and the products we currently offer are world-class. Products must be enhanced continually to meet changing market trends and the standards of today's discerning travellers. We need to do more to animate federally owned assets, such as the national park system and museums, to make them engaging and worthy of repeat visits.
Other countries are recognizing the incredible potential for tourism to be an economic force in their country, and they are investing the time, energy, and funds into ensuring that they are attractive and inspiring destinations. We can no longer rest on the advantages of a lower dollar, low fuel prices, and a strong U.S. economy, concealing some of our deeper issues. Canada has a remarkable opportunity to capitalize on our positive image in the global marketplace by promoting itself as a clean and safe destination that is socially and geographically diverse. Unfortunately, we have thus far failed to recognize and seize the economic opportunities that are afforded to us by this essential sector, which is equivalent in size to fisheries, agriculture, and forestry combined.
I invite you to examine in more detail the seven policy areas we have identified in our report that merit urgent attention. The challenges the tourism sector in Canada faces are profound, but they are not insurmountable. However, if we are to ensure that we remain competitive as a destination, we need a concerted and united effort on the part of leaders in the public and private sectors to address these competitive challenges now, or it will be too late.
Thank you.