Industry Committee on Nov. 29th, 2007

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

Is your organization considering measures under which, if there were a labour shortage, for example, older individuals who wanted to work could work part-time, or at certain times of the year only, and so on? Have you made any progress as regards new measures of this type to support these older workers?

[Diane Brisebois]

I must be honest—I cannot claim that that is the case. This is after all a newer phenomenon. We are in the process of studying the type of training being developed by retailers at the moment. This would apply not only to older workers, but also to young people. They have a new attitude about work and lifestyle.

That is why we are checking on the training model being used in Quebec. Retailers in Quebec and elsewhere in Canada are investing a great deal in this area, perhaps because of competition and the shortage of workers. There is a great deal of work to be done, but it is encouraging. We have already noticed in Quebec, in the area of everyday items, RONA, Le Château and Aldo are providing training for a much higher percentage of their workforce than five years ago.

[The Chair, Conservative, James Rajotte]

Merci, Madame Brunelle.

[Diane Brisebois]

I hope I answered your question.

[The Chair, Conservative, James Rajotte]

We'll go to Mr. Van Kesteren, please.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, Mr. Chair.

Thank you all for attending and for visiting us this morning. You bring us some fascinating statistics. I think we all know just how many are employed in the food industry, but these are much higher than I thought.

I have a number of questions. First of all, I carry with me a bill, and I think it understates and leads to my question on why taxes are so detrimental, I think, to the restaurant business.

My wife and I travelled to the States, and we stopped at a nice restaurant, we had a nice meal, and I was so impressed with their beer that I bought one of these two quarts of beer. The bill worked out to be $46.50 and the tax was $2.80. I just about had a heart attack. So I concur with what you say as far as taxes having a detrimental effect go.

Could you explain this, Mr. Reaman? Your chart about the GST is regressive. I don't quite understand about the harmonization. Can you elaborate on that?

[Ron Reaman]

I will allow Joyce to speak to that, because that's her bailiwick.

[Joyce Reynolds]

Okay, I will do so.

The slide you're referring to was developed by the Saskatchewan Tax Commission, which was looking at GST-PST harmonization. What they looked at was all of the products that are outside the current Saskatchewan sales tax base and what would happen if GST-PST was harmonized. As well as restaurant meals, you would find children's clothing, children's shoes, home heating bills, and all of these products would then be encompassed by the HST.

There's so much talk in the papers these days about harmonization and the benefits. What is not being pointed out to consumers is that their taxes would actually go up substantially--5% to 7%--depending on which of the five jurisdictions you're talking about. We're talking about a huge shift in taxation to consumers, and the ones who would be hurt the most are the lowest-income Canadians. More of their disposable income goes towards these products than does that of higher-income Canadians.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

We had a witness yesterday, and I agree with most of what he said, except he wasn't too convinced that lowering the GST had any impact.

Now, you don't share that view, obviously. Can you maybe talk about that quickly? Why is it so important to lower that GST?

[Joyce Reynolds]

The most important reason for us is that we see it as a flawed tax, an inequitable tax, an unfair tax, and any reduction in the tax reduces, to a certain degree, that inequity and that unfairness. But we see the damaging impact of taxes on consumers' willingness to spend, and disposable income has a great deal to do with expenditures in the food service sector. The higher the disposable income, the more likely that people will dine and spend in our restaurants.

So absolutely, we are 100% behind your reductions in the GST.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Mrs. Brisebois, could you elaborate on those boxes? Is there a reason in this country that we have to get them back to port in 30 days? What's the rationale behind the government's thinking?

[Diane Brisebois]

I'll let our vice-president talk about cabotage, because I must tell you I was shocked when I found out that our rules were so different from those in the U.S.

You may want Kim to talk about that.

[Kim Furlong, Director, Government Relations, Retail Council of Canada]

It's interesting. It appears that the rules were first put in place to maybe protect an industry or the movement of goods within the country, almost as internal trade. What we have found is that in the global economy, and as we're moving forward, Canada has never turned its attention into changing these rules.

Now, it's worth mentioning that the Senate transport committee has been looking at this and has heard the testimonies of associations such as the Railway Association of Canada and other infrastructure associations, and yet no report has been produced. So we thought it would be worth it to mention, again, that the way it functions in the U.S. is that you have this container coming in through one port, spending a year within the U.S. marketplace, moving freely from one destination to another, filled with goods, and then that same container can exit a different port. In Canada it comes into one port; it goes to the point of destiny. It can do one incidental movement, and then it has to return to its point of entry.

Now, what we're finding in retailers moving merchandise is that they are moving empty containers, and you can only imagine the costs of doing business and the lost opportunity for competitiveness to use that same container, to utilize it within the Canadian marketplace, given the fact, as Diane mentioned, that urban centres are further apart in Canada and the cost of transportation is already higher.

So we're turning the attention to that.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

We talk about training. What's happened in retail, I think, more than anything else is that we've become conscious of cost. Why are we not training people to sell? There used to be a time when we'd have salesmen in the retail industry. What's happened? Are you starting to do that?

[Diane Brisebois]

Yes, in fact, we have developed a certification program for sales associates and first-level store managers. In Quebec, they have developed a course that is now offered through most of the CEGEPs, the colleges, which provides a degree in retail management. Ryerson University has developed a retail diploma, and we're pleased to say that the University of Alberta has just opened a school of retailing.

The problem is that there were no institutions in the country that recognized retail as an important sector that needed to be promoted through education. We've found that in the last five years that has changed substantially. There's a lot of work that needs to be done at the sales associate level, but also with important head office jobs that we want to keep in Canada, like store management, IT, and supply chain.

So those are all the things we are addressing. It is much better, but a lot of work still needs to be done.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Van Kesteren.

We'll go now to Ms. Nash.

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

Thanks very much, Mr. Chair, and good morning to the witnesses.

I was thinking about both your sectors, that they're very diverse. You have everything from giant multinationals to very small family-owned businesses, so I appreciate that not all of the conditions apply to everyone. It's a very different reality for many of them.

I have two questions. The first is for you, Ms. Reynolds.

One of your slides looks at the decline in international visitors to Canada. Again, the local little mom-and-pop stores may not be as affected by this, but can you tell me, as an MP from Toronto where tourism is such a huge part of our economy, what impact this decline in tourism and other visits is having, and why do you believe this decline is taking place? Is the dollar the only factor, or are there other factors involved?

[Joyce Reynolds]

The dollar certainly is very significant, and the chart I have doesn't even reflect what's happened in the last quarter. Of course, we've seen a further increase in that deficit between Canadians travelling to the U.S. and Americans travelling to Canada.

So yes, the new passport requirements in the U.S. are having an impact. Obviously energy prices and the rise in the Canadian dollar are having an impact. What we've seen is that the percentage of our industry sales from international tourists has decreased by, I think, 31%—is that correct? It has decreased quite dramatically, so it's of huge concern to our sector, particularly in the border communities. We have a lot of restaurants in hotels, and it's obviously impacting them. It's of huge concern to us.

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

I would think it would be the border communities and also the major urban centres and major tourist locations. Can you tell me, do you think another factor could be the lack of marketing?

I'm thinking of Toronto. I'm a Toronto MP. It seems to me that there's a lack of investment in Toronto to make it the kind of tourist draw that it ought to be as our largest city. But that's a very local perspective.

[Joyce Reynolds]

I think if you went to any community across Canada, they would feel that their community also deserves to be marketed. I think there are efforts being made to market the communities and cities in the country—

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

They're failing, then.

[Joyce Reynolds]

It's very difficult, given the significant challenges and obstacles. I guess that's one of the reasons—and I want to emphasize this—that there's the concern about GST-PST harmonization. In Saskatchewan and B.C., you have no provincial sales tax on restaurant meals. So you're going to put another obstacle to bringing tourists to Canada. When tourists come to Canada and they have to pay an HST of 15%, whereas, as you pointed out earlier, in the U.S. you don't pay any tax, taxation becomes another part of it, as well as the dollar.

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

Madam Brisebois, turning to the comments you made earlier about training and turnover rates, I'd like to explore that a little more. Certainly people who work in the retail sector who are at the bottom end of the scale, if they don't like a particular workplace, can leave and go someplace else, because they're not giving up a lot.

I know with some of the small retailers in my community...I'll take a Home Hardware, for example, that's owner-operated. They do invest in a lot of training, and their pay scales are higher, and there are people who work there for decades. How can the federal government assist retailers to develop that kind of investment in their employees that adds value to the retail operators and reduces the turnover rate? I obviously know that wages and working conditions are part of it, but I also know there are other factors as well.

[Diane Brisebois]

Thank you very much. This is an important question.

I mentioned in my opening remarks the model that's being used in Quebec to recognize in-house training. If you look at the retail sector, a lot of the training, from entry level to the top, is very much in-house.

Home Hardware is a perfect example. It's a co-op; it's a franchise; it's owner-operated, as you said, and they spend an enormous amount of time and money. The issue here, though, the reason they've had fewer problems than maybe other retailers, is that 80% of their stores are located in more rural areas. There are a few urban stores, but most of them are rural, so the turnover tends to be much lower. The relationship exists. For urban stores, even if they're independent stores, the challenge is the cost of training. And that does impact on the amount of money you then have left to pay employees.

The good news is, if you look at the entire service sector, the retail wages have been going up faster. That's because of the competitiveness for labour. But there's no question, if we recognize that retail plays an important part, we need to look at ways to allow retailers to recoup some of the costs of in-house training. That would be big.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Ms. Nash.

Now to Mr. Simard, please.