Industry Committee on June 17th, 2008

[Randy Williams]

The first question was to Mr. Allan. I don't know if he'd like to answer that, or do you want me to go?

[The Chair, Conservative, James Rajotte]

Mr. Allan, do you want to start?

[Steve Allan]

Mr. Chair, as I understand it, the $400 million collective investment made by the federal government into various tourism-related things, including parks, I think goes to the previous question about there being a lot of government departments involved in and touching on tourism. The $400 million is taken across many departmental budgets, and again, that's one of the things that make tourism a complex issue in Canada.

It is our understanding that the secretary of state is intending to come forward with a national tourism growth strategy that would involve the multiple departments. As we understand it, that investment is currently being made, but we do have to harness it and bring all the departments together in order to develop an appropriate strategy.

I'm not quite sure what the private-public partnerships are. In the CTC we do work with all of the provincial marketing agencies. We work with tourism industry partners. And I did mention that last year we had $89.6 million in partnership, both dollars and in-kind support, for our marketing programs, so that's added to our current budget of $75 million.

[Randy Williams]

Obviously the report indicates a $400 million investment from the federal government in tourism-related activities, and we wouldn't argue that point. Obviously when you're investing money in our national parks and in various projects, including convention centres and infrastructure through the Building Canada fund and so on, those are certainly tourism related.

What we need to do is really get serious about strategic investments. Focusing on the level of money that's being invested is really diverting us from the real story here. As Jim said, we're not asking for handouts here. We're not asking for the government to give us money, such as you might get from other sectors. We're asking you to make investments that are strategic, whereas now you're making them in a more haphazard or à la carte fashion.

We'd like to see a strategy developed that's accepted by all departments of government, whereby funds are spent more strategically and there is a commitment to really understanding what a tourism investment is. Some of these expenditures, such as those supporting our parks, are obviously a benefit to tourism, but we're not preserving our parks exclusively for tourism. That's obviously something Canadians would expect for the public good, to conserve our natural heritage. It's obviously of benefit to local Canadians as well.

We have to be serious about looking at the amount of investment we're making in the strategic areas that tourism needs rather than throwing numbers out, which I think is the way you're going with this question. That's the more intelligent way of approaching this, rather than just saying, “We're already giving tourism $400 million, so go away.” That's not what we want to hear. We want to be a lot more strategic in our thinking.

[The Chair, Conservative, James Rajotte]

You have 20 seconds.

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

Mr. Facette, Air Canada announced today that 2,000 jobs would be cut and the number of its flights reduced.

In your opinion, is this solely due to the price of oil or is there something more complex within your industry that is causing these problems and which indicates that this is only the tip of the iceberg?

[Jim Facette]

Air Canada announced today that it is due to oil prices. However, according to the document in front of me, its representatives stated that they are forced to deal with federal and provincial fuel taxes and security and airport fees that are among the highest in the world. This means that there are other problems that are not only due to oil prices.

[The Chair, Conservative, James Rajotte]

Merci, madame Brunelle.

Mr. Stanton, please.

[Bruce Stanton, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

Welcome to our witnesses.

First of all, I want to say it's great to be talking about an industry that's near and dear to my heart. Today I'm here as a parliamentarian, looking at the big picture here in terms of how government can consider some of the issues that you've brought before us today.

One of the first things--and I'll direct this to TIAC, if I can--is that when you look at the preponderance of statistics in our industry, in particular we're citing growth levels in tourism of around 4.3% in 2007, and the fourth quarter was up 1.4%. We're seeing other indications from the industry that in fact would suggest this culture or this climate of crisis that you describe in your report isn't necessarily substantiated by the numbers we're seeing. We're seeing an industry that in fact is growing. Yes, there have been some changes, but even spending by Canadians is up 6.5% in 2007. I just looked at a Pannell Kerr Forster report for the accommodation industry, and they're seeing continued growth in things like average daily room rates and occupancy levels, even right out to 2010.

So when you look at that situation and compare it with this state of crisis that we're in--and I appreciate where you're coming from and have been on that page before--what can we do to work to improve the industry's position and not be so taken astride by Canada's rankings? Isn't it more important to look at the performance of our industry in terms of growth in profits, growth in expenditures, and actual tourism GDP? Shouldn't that be our first and foremost consideration in these issues?

[Randy Williams]

Obviously when you're looking at statistics and numbers, there are always going to be some numbers that you can fall back on and say there are some positive reflections there. But for each one of those, we certainly have some numbers that reflect a different point of view, like our travel deficit, like our growth compared to our competitors around the world.

Our report really talks about the future of our industry. A lot of the numbers you reflect on there really are talking about historical.... We've had some growth, yes, of 2% or 3%, and I refer to that in our report. But when the world is growing at 4% to 6%, is 2% to 3% growth in Canada a level that we accept as a satisfactory result? I wouldn't think so. I think there's tonnes of potential, as Jim was saying. This industry has the potential to do more, and it has the potential to do more for every community in Canada. We're not talking about Windsor and the automobile industry or localized industry; we're talking about an industry that has benefit for all Canadians and all communities in Canada.

There are some dark clouds on the horizon. Our report doesn't speak to this summer, it doesn't speak to this summer and fall; it speaks to the next four to five years. And it had the hotels—

[Bruce Stanton, Conservative, Simcoe North, ON]

I don't mean to interrupt, but I have a limited amount of time here.

Basically what you've cited in your report is that you're looking for relief in terms of the airport rent situation. You're looking for some work on ADS, and we're talking about better animation and marketing of certain tourism products. Doesn't it take in a much broader picture here in terms of how we move forward?

Even if, hypothetically, those few things were considered and there were changes made to those, is that in itself going to predict that the tourism industry would, in turn, grow? We have to look at how Canada performs on its own merits. And yes, I know the travel deficit is there, and the rankings, but at the end of the day what's most important is that we have a climate here where tourism, like other business sectors, can prosper.

In fact, what I'm seeing is that your report is an indictment on what government's role has been in the past, but in fact, what we have is a contrary image in terms of where the industry is now. It has responded quite well. In fact, the only thing we know for sure is that in the future other geopolitical, social shocks are going to come our way. Isn't that our best way to strengthen our economy and business climate here so that we can attract more tourism investment and opportunity?

[The Chair, Conservative, James Rajotte]

You have about a minute, Mr. Williams.

[Randy Williams]

We have asked for seven strategic areas to be looked at and 53 different initiatives in our report. Some of them are government, some of them are private sector, and some will involve both public and private sector. It's an indictment not only on the way government has looked at tourism, but also on our own industry and the things that we have to do as a private sector.

But government is a stakeholder; it is a shareholder in tourism. You have an investment already. The park system, the museums, many of the historical sites, all of those are owned by Canadians. We're saying that in the future, in the next three to five years, if you don't invest in those properties, they will not be sustainable.

The tip of the iceberg is shown today with 2,000 people laid off at Air Canada, with Air Transat saying their profits are down--one of Canada's success stories--and with VIA Rail increasing their prices by 5%. We are already seeing the crisis point hitting. We're not talking about the past five years; we're talking about the go-forward, the next two to three years.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Stanton.

We'll go to Ms. Nash.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you.

Certainly you are outlining some major challenges we're facing in the tourism sector.

Mr. Williams, I can't remember if it was you who said this when you were before our committee in the service sector study, but we had a witness who described the situation in tourism right now as the perfect storm, in which we're facing the high dollar, high oil costs, and the downturn in the U.S. economy. I appreciate the point you're making today that these, in the past perhaps, masked some of the structural challenges that we're facing.

I think I read recently that Paris is still the number one tourism destination in the world. While I happen to think my home town of Toronto is a great place, it's not Paris. But Canada has amazing attractions that no other country has, and not only our natural attractions. I do believe Toronto, as the most diverse city in the world, has its own attractions that perhaps we need to be marketing better.

My question to you is, what kinds of attraction investments does Canada need to make? You said we should be maintaining parks anyway. There has been investment in some of the cultural attractions, at least where I come from. But what kinds of investments rise above the price differentials to make a destination really stand out in the world? What advice do you have for this committee to recommend to the government in terms of making those investments that really will help Canada market itself to the world?

[Randy Williams]

That's a difficult question to answer specifically, but obviously investments like we're seeing in northern Quebec now with Le Massif project are certainly helpful. Blue Mountain is a smaller scale of a Mont-Tremblant or a Whistler. Those kinds of investments certainly are helpful. There have been some investments in the arts and cultural community in the Toronto area that are helpful.

However, we need to really make an investment in our people and our infrastructure to make sure we are getting people into the country--our border infrastructure, our transportation infrastructure, and our people--and provide a climate where businesses can be profitable. Then they can invest in added value, so the experience visitors have when they come to this country is one that they talk about when they go home.

Right now we're servicing the customer. In most cases we're doing a pretty good job of that. But are we wowing them? Are we differentiating ourselves so that when they go back home they're talking about Canada as a must-see destination that is compelling enough to come here?

There are those minor annoyances, such as that it's hard to get around, it's expensive when you get here, it's too much for liquor, it's too much to travel by air, and you take away my visitor rebate program. And it does matter. If the visitor rebate program didn't matter, then all those retailers out there who are saying you're getting GST-free sale on.... Tell those people they're wasting their money advertising a sale on which there's no GST. It does matter.

I want to give you one--

[Peggy Nash, NDP, Parkdale—High Park, ON]

Briefly, please, because I do want to get another question in.

[Randy Williams]

I'm sorry.

An American travelling to Canada for four days will spend $2,594--this is out of the Conference Board report commissioned by the CTC--and $1,800 in the United States. That's a difference of $740 more that they will spend in Canada. Of that, $560 comes from air costs, the difference in the U.S. versus Canada. So the same type of trip in the United States will cost $740 less than one in Canada. That's the kind of stuff we're talking about that artificially inflates our airline costs in Canada. It's hurting us.

Go ahead. I'm sorry.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thanks.

I want to say that I do appreciate the kind of tourism promotion for Canadians within Canada. I saw the VIA ads about VIA Rail being a more human way to travel. I think they're doing a good job in terms of promoting travel across Canada. But certainly air travel is a huge part of the tourism industry.

I appreciate the point you're making, Mr. Facette, about the airport fees. It does seem as though Canadian airports really get hit disproportionately with these fees. Again, coming from Toronto, I think we have a beautiful new airport there. It's a welcoming sight when you arrive at that airport. But I do appreciate the burden that places on companies.

I did want to raise the point about transportation infrastructure. Getting out of that airport is almost impossible. Do you have any recommendations on that?

[Jim Facette]

There's an expression in the aviation industry that if you've been to one airport, you've been to one airport. Each airport is different and unique.

A lot of the transportation links to the airport, be they public or private, are usually a function of the work that goes on between the airport and the municipality. Some talk about more public access through transit of some sort, be it light rail or what not.

We're going to see a unique situation coming up in Vancouver next year when they open the Canada Line. But the Vancouver airport is paying for the Canada Line on its property. It's paying $400 million for that. There is no other place that money is coming from--not from the municipality, not from anywhere else.

I think in general there's a cooperation that needs to happen between different levels of government to allow an airport to improve the transportation between the facility itself and other destinations. I would simply argue that getting out of Pearson Airport today, in 2008, is much quicker than it was 10 years ago.

[Peggy Nash, NDP, Parkdale—High Park, ON]

When I'm waiting 45 minutes for a cab, I don't know.

[The Chair, Conservative, James Rajotte]

We'll have to debate the travel times out of Pearson later. Thank you, Ms. Nash.

Mr. McKay, please.

[John McKay, Liberal, Scarborough—Guildwood, ON]

I think I'm on Ms. Nash's side on this one.

I want to direct this question to Mr. Williams or Mr. Allan--probably both of you, for that matter. I was having a breakfast last week with representatives of the Taiwanese economic and cultural office, and if my memory serves me correctly, they are anticipating welcoming 3,000 Chinese visitors a week into Taiwan. I could stand to be corrected on that number. These were countries that were at war not too long ago and still have missiles pointed at each other, yet there does seem to be a significant thaw in the relationship.

The American tourist is not coming back any time soon. The structural difficulties in the U.S. economy are going to preclude Americans from travelling for the foreseeable future, which means essentially that if Canadian tourism is to pick up it's going to have to be Asian tourism, and we are not in the game as far as the Chinese are concerned. When Mr. Emerson was a Liberal, he pretty well had this a done deal. It seems to be stalled now, and stalled in a major way.

I would be interested in your view as to what is going to move the approved destination agreement off the stall point that it currently is on and move it forward so that your industry can get the proper fruits of its labours.

[Randy Williams]

That's the $64,000 question. We're not on the front line of the negotiation. It's frustrating to us. Back in 1999 when the lineup started in order to get ADS status with China, Australia was the first country to get it and we were second or third in the queue. Now if we got ADS status we'd be 135th in the world to get it. It's frustrating for our industry. It's the fastest-growing outbound market in the world, and we're not there, as you indicate.

We're still growing at about 20% per year from China--and Michele may have some better numbers--so it's still growing for us, but that's the business travel and independent travel. ADS would give us leisure group travel and the ability to market into that huge potential.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Presumably you guys have thought about this a lot. What would it mean to you in terms of numbers of planes landing or numbers of tourists coming to Canada?