Thank you, Mr. Chairman.
We appreciate the opportunity to participate in your study of the service sector. In the next 10 minutes, Ron Reaman and I will provide you with an overview of Canada's food service industry in terms of its size, scope, employment, and performance in recent years. We will also briefly outline the challenges that food service industry operators face and the policy help that the industry needs, focusing on three specific areas: labour shortage, food supply, and the GST.
The first slide shows that Canada's food service industry represents one of the largest sectors of the Canadian economy. With sales of $53 billion, it represents close to 4% of GDP. With almost 63,000 establishments across the country, the food service industry contributes to the economy of virtually every Canadian community.
More than two-thirds of Canadian restaurants, cafeterias, coffee shops, pubs, and caterers are locally owned and operated by independent entrepreneurs. They bring jobs and investment to communities from coast to coast. In fact, restaurants are often the community hub. They provide gathering spots for people, a social club for seniors, a boardroom for small business owners, and a meeting place for community groups. They're the go-to business for most charities. They raise money and donate food; they sponsor little league, fun runs, and summer camps. They believe in getting involved and giving back.
The next slide shows the economic impact of a new restaurant coming to a community, a full-service casual restaurant. I won't go through it, but I will leave it for you to read later.
In terms of employment, with over one million employees, the food service industry accounts for 6.3% of total employment in Canada. More people work in the food service industry than in agriculture, forestry, pulp and paper, banking, and oil and gas extraction combined. An additional 240,000 Canadians are indirectly employed by the food service industry as suppliers, distributors, and consultants. The food service industry provides first job experience for hundreds of thousands of youth, as well as a wide variety of career choices.
The next slide is on performance. Canada's food service industry has faced an unprecedented number of challenges in recent years: SARS, BSE, followed by skyrocketing energy prices, a rapid rise in the Canadian dollar, and a dramatic reduction in travel to Canada. As a result, real food service sales have increased just 3.6% since 2001, compared to real GDP growth of 14.5% during the same time period. There are 1,180 fewer food service operators today than in 2001. The number of international travellers to Canada has fallen 13.3% since 2000, and international tourist spending on food service has decreased 5.9%.
On profitability, food service is a competitive business that operates on razor-thin margins. According to the most recent data from Statistics Canada, rising food and labour costs reduced the pre-tax profit margin for the average operator to only 3.8% of operating revenue in 2005. The average business in Canada, in contrast, enjoyed a pre-tax profit of 8.8%.
Now I'll speak about the challenges, beginning with labour shortage.
The labour shortage is the greatest single issue facing food service operators. In Alberta, higher wages haven't translated into more employees. We're still facing fewer employees. A lack of people means lack of opportunities.
Over the next nine years, Canada's commercial food service industry will require an additional 181,000 workers. While the demand for food service employees will grow an average of 1.8% per year for the next nine years, the working-age population of 15- to 69-year-olds will grow by just 0.9%. Nearly 45% of food service employees are under the age of 25, reflecting the many part-time and entry-level jobs the industry provides.
Over the next four years, however, Canada's population of youth will remain flat, before dramatically declining over the following 11 years. By 2022, there will be 340,000 fewer young people in Canada than there are today. Our industry is confronted with a huge challenge.
How can industry help? It is essential that we modernize our immigration system, and in particular, the point system, so that it recognizes the diversities of Canada's labour market.
In terms of temporary foreign worker programs, we need to offer a bridge from temporary to permanent residency. We should recognize the Canadian job experience that temporary foreign workers acquire, and we should allow them to apply for permanent residency while they're in the country. We need to further streamline the process in the temporary foreign worker program and permit bulk applications. We wish to acknowledge significant progress in the last year in this regard. We would also like to see temporary foreign worker permits extended further. We need to expand the working holiday program to incorporate a larger cap and longer permit periods.
Other ways government can help is through policies that encourage rather than discourage work. Reduce the marginal tax rate for low-income Canadians. We were pleased to see the introduction of the working income tax benefit in the April budget. We'd like to see that expanded. We were also pleased to see the increase in the personal tax exemption. We would like to see it expanded as well, and increased over the next five years to $15,000.
We'd like to see seniors permitted to earn additional income without a drastic cutback in their guaranteed income supplement. Similarly, we recommend that the clawbacks of EI benefits be graduated.
I'll pass it over to you, Ron.