Industry Committee on May 10th, 2022

[The Chair, Liberal, Joël Lightbound]

The meeting is called to order.

Hello, everyone. Welcome to meeting No. 22 of the House of Commons Standing Committee on Industry and Technology.

First of all, I would like to apologize to the witnesses for the delay. There were a few votes in the House, which is why we are late. Thank you for your patience.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Friday, April 8, 2022, the committee is meeting to study Small and Medium-Sized Enterprises.

Today's meeting is in hybrid format, pursuant to the House Order of November 25, 2021. Members are attending in person in the room or remotely using the Zoom application. Those who are here in the room are familiar with the health rules.

Dear witnesses, we are delighted to welcome you to the committee.

Appearing as an individual are Mr. Ritesh Kotak, technology entrepreneur and strategist, and Ms. Yelena Larkin, associate professor of finance, York University.

We are also pleased to welcome Ms. Dana O'Born, vice-president, strategy and advocacy, who has returned, this time with the right equipment.

Thanks for being here, Madam O'Born.

From the Driving Change Automotive Group, we have Trevor Boquist, CEO; from the Thompson Okanagan Tourism Association, Mr. Michael J. Ballingall, vice-president; and from the Windsor-Essex Regional Chamber of Commerce, Rakesh Naidu, president and chief executive officer.

Thank you all for being here.

Without further ado, we're going to start with Ritesh Kotak for five minutes.

[Ritesh Kotak, Technology Entrepreneur and Strategist, As an Individual]

Good afternoon, Mr. Chair, and committee members. Thank you for inviting me to share my thoughts.

My name is Ritesh Kotak, and my work is focused on cybersecurity, privacy and digital transformation. I hold an MBA and recently completed my JD wherein I had the privilege to intern at the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic. In addition, I frequently contribute to media on tech and cybersecurity segments.

I would like to highlight a few areas that impact our country's ability to compete, especially with regard to small and medium-sized businesses, SMBs, and I will aim to provide the committee with recommendations on how to address these areas through policy and legislation.

The core of my recommendations involves the need to create a small business hub, which is a one-stop shop for entrepreneurs who seek support and access to government entities.

The pandemic has highlighted the need to leverage new digital tools. I'm sure that most of you have personal and/or professional social media accounts, but have you ever thought about what would you do if you lost access to those accounts? Imagine that you become a victim of a cyber-attack, your accounts get defaced with content that violates the platform's community standards, and now you're not only locked out of your Facebook account, but also Instagram and WhatsApp.

In December, I gave an interview to the CBC's Go Public segment on this very topic where SMBs were hacked, defaced and spent months trying to unsuccessfully recover their accounts. It took a request by the media to finally have these accounts recovered. Not only were they hacked, but business accounts were also defaced with sexually explicit material or terroristic imagery. The victims believe that they were phished. Essentially, they clicked on a fake link, and thereby provided their log-in credentials and then subsequently had their accounts compromised.

They went through the process with Facebook to recover their hacked account. The portal is not easy to navigate; there's no contact number or email address. Even if the account is recovered, it is still suspended because the hacked imagery violated the community standards even though it wasn't the user's fault.

Since conducting that interview, I have been inundated from coast to coast by small business owners who have been going through this nightmare for months and have been unsuccessful in recovering their accounts. As a result their businesses have suffered, not to mention the stress this has caused them.

When one of these victims complained in writing to the Office of the Privacy Commissioner, the latter's response was that since the account was hacked, they needed to contact their local police department. The police stated that there was nothing they could do and that the recovery of the account was between the user and the platform. The police's mandate is to find the hackers, not to restore the victim's account.

When the victim contacted Facebook Canada, they replied several weeks later saying that the user must contact Facebook HQ in the U.S. It has been months and no replies have come from Facebook HQ. There is no clear recourse or avenue for support.

I am sure there are many businesses in this exact situation. If we are going to be competitive, especially in the new digital economy, we need better mechanisms to help SMBs. Victims are revictimized by the process and are extremely vulnerable. Many turn to expensive online tools and consultants who charge thousands of dollars but are unsuccessful.

If I lose access to my bank account, I can go to the branch and verify my identity and recover access, but the same cannot be said for these platforms. We need mechanisms to protect consumers and to mandate these platforms to make it simpler for SMBs to recover their accounts to get back to business. Every day the page is offline is money that the business loses.

These experiences highlight the need, as I noted earlier, to create a small business hub. My parents are small business owners in the food manufacturing sector, and when the pandemic hit, they along with numerous businesses had to pivot their operations online. They didn't have deep pockets and access to IT departments. Many SMBs lack these resources and expertise compared with large commercial organizations. Put yourself in their shoes competing against major retailers online.

Major corporations have volume and can offer consumers free shipping. Your cost as an SMB is significantly higher. Major corporations have experts who assist in meeting complex regulatory requirements, such as compliance with product labelling. In comparison, if a small business were to seek compliance or advice, they would naturally contact the Canadian Food Inspection Agency for assistance, which often, even frequently, proves inadequate. The only options are to risk it or hire expensive consultants.

We need a fundamental shift from a reactive enforcement model to a proactive support model. We need a small business hub that would assist in addressing this.

I know my time is expiring, and I look forward to your questions about potential solutions to solve these issues and grow Canada's competitiveness.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Kotak.

We will now move to Professor Larkin, for five minutes.

[Dr. Yelena Larkin, Associate Professor of Finance, Schulich School of Business, York University, As an Individual]

Thank you so much.

I appreciate the invitation to attend this meeting and the opportunity to speak today in front of the committee members. My name is Dr. Yelena Larkin, and I am an associate professor of finance at the Schulich School of Business at York University. I study issues related to product market structure and industry concentrations through the lenses of academic research in corporate finance. This statement is an integration of my own research work on the topic of concentration, as well as academic work by my fellow finance and economic researchers.

Corporate finance research focuses primarily on publicly traded firms, which are obviously very different from SMEs in multiple aspects. However, I believe that the analysis of publicly traded firms, which are both industry leaders and the largest players in the overall economy, can be of interest to this committee, as it helps us better understand the overall economic environments within which SMEs operate these days.

My main focus is the declining nature of Canadian business dynamism as it is reflected in the universe of publicly traded Canadian firms. The number of firms listed on TSX that are not set as an investment vehicle, which excludes mutual funds, closed-end funds and so on, has dropped by around 30% since its peak in 2008, whereas the remaining firms have grown older and also bigger. Importantly, the growth size has been skewed so that large firms have grown at a much steeper rate. For example, the inflation-adjusted market cap of firms in the top quartile of size distribution has swelled from a quarter of a billion dollars in 2008 to almost one billion dollars in 2016.

The outbreak of pandemics has not reversed these trends. While the number of publicly traded firms on TSX has changed little, the average firm value grew by another 30% between 2019 and 2021. Other important trends that have been characterizing Canadian financial markets in the past two decades include low entry rate through IPOs—the process through which a private firm becomes publicly traded—and high level of exits though mergers and acquisitions.

Combined, these trends signal a structural change. Existing research based on international data demonstrates that concentrated stock markets are associated with less efficient capital allocation, sluggish innovation activity and slower overall economic growth. I have tested the validity of this argument within the Canadian economy and found consistent results. Canadian firms operating in industries with more concentrated market cap distribution end up being more profitable, but at the same time, they do not invest more in either tangible capital or R and D. Taken together, the increase in dominance of large firms is consistent with an increase in barriers to entry and potentially a decline in product market competition. This in turn hurts smaller firms, and SMEs in particular.

Going forward, I believe it is important to safeguard a consistent economic policy framework that would support the growth and development of SMEs along multiple channels. I also think it is necessary to ensure that various policies complement each other and not interfere with each other. As an example, on the one side, government's broad suite of funding measures has been supporting small businesses across Canada, especially during COVID-19. On the other side, however, the existing legal environment for mergers and acquisitions has been quite lenient towards anti-competitive mergers.

The existing Competition Act has been lacking clear guidelines as to what merger would be considered anti-competitive. The idea of examining the trade-off between efficiency gains and the competitive harm from the merger in order to determine whether a proposed merger should go through has also put consumers and small businesses at a disadvantage. I therefore welcome the recently proposed initiatives to amend and update the Competition Act in a way that better reflects today's unique challenges.

Additional strategies aimed at reducing barriers to entry and costs of business operation that are particularly acute for SMEs can further promote growth. Reducing regulatory costs that disproportionally hurt small businesses could be one such strategy. Another approach could focus on providing small businesses with better access to labour capital. Again, SMEs have borne the brunt of the COVID-related labour shortages.

Finally, I believe further academic research is needed to understand the drivers of the current trends in the Canadian economic environment and their implications for SMEs. Establishment of research programs that could bridge between academic researchers on one side and agencies with access to granular data on the other side could create valuable new advancements with direct policy implications for both SMEs and the Canadian economy in general.

Thank you very much for your attention. I'm looking forward to your comments.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Ms. Larkin.

I will now give the floor to Ms. O'Born for five minutes.

[Dana O'Born, Vice-President, Strategy and Advocacy, Council of Canadian Innovators]

Thank you so much for the initiation to be here today.

We had a technical difficulty early this week or late last week. I'm grateful for the opportunity to present today on the labour shortages and productivity of small and medium-sized enterprises across Canada.

My name is Dana O'Born. I am appearing on behalf of the Council of Canadian Innovators. We are a national business council that represents 150 of Canada's fastest growing companies. Our member companies are headquartered here in Canada and employ north of 52,000 employees across the country. They are market leaders in the sectors of health technology, clean technology, financial technologies, cybersecurity and more.

After two years of the pandemic, there has never been a greater need to support SMEs in their adaptation, growth and competition in the global economy. The priorities I'm going to speak to today address SMEs and their ability to access talent, capital, customers and marketplace frameworks—a few pieces that Yelena actually mentioned in her comments as well.

First, I’d like to brief you on the pressures facing domestic technology companies in Canada in their pursuit of attracting and retaining highly skilled talent.

A recent report from the ICTC estimated that by 2025, Canada’s digital economy will employ about 2.26 million Canadians. That’s 11% of all employment in the country, but it will require an additional 250,000 jobs to be created over the next three years.

CCI's members and Canada's scale-up companies are committed to creating many of the new jobs. However, they face a serious talent supply issue. Unfortunately, scale-up companies can't just maintain their workforce; they also need to grow rapidly and adding the best and brightest talent remains a constant priority.

A recent survey of CCI's members also found that most companies plan to increase their workforces by 20% this year alone. That’s an additional 10,000 workers added to our economy by this year’s end.

For years, the shortage of skilled talent has been a driving concern for CCI member companies, but the recent shift to remote work has only exacerbated the problem. Canada’s skilled workers are now part of a global labour market where geography is no longer as important. Our domestic innovators are finding themselves in fierce competition with global companies who can offer significantly higher wages for the same crop of skilled workers.

This is driving up wage inflation. Earlier this year, CCI surveyed our members on this topic specifically and found that wage expectations have increased by 20% to 25% over the past year alone. This is not sustainable. In response to this, CCI recently tabled and released a talent and skills strategy with 13 key recommendations to meet the talent needs of our country’s fastest growing companies. These recommendations speak to the need to increase generation, attraction and retention of skilled workers for Canadian firms.

Through our national membership, we have strong insight on how to address these challenges, including improvements to our immigration system and investments into upskilling and retraining programs across the country. I look forward to engaging with you a little bit more on some those ideas today.

In addition to skilled labour shortages, there are several challenges that scale-ups are facing while trying to sustain their growth. Canada’s outdated intellectual property regime and SR and ED framework must be improved to better support SMEs.

In the 21st century economy, intellectual property and other forms of intangible assets are the most critical sources of an economic advantage for firms and economies. Since 2020, we have continued to see a rise in the intangible assets base. Even as the pandemic winds down, the new wave of digitization, algorithms, patents, data and other intangible assets will only become more valuable.

To capture the maximum economic benefit from private sector R and D, it's essential that research and development be converted into commercial assets here in Canada. This means that changes to the SR and ED tax credit could potentially allow for costs associated with protecting, defending and prosecuting IP to be recognized as eligible expenses. This would send a powerful signal to businesses that generating IP through R and D is a fundamental component of the innovation process in Canada.

However, SR and ED will only deliver material, long-term value to Canada if the IP flowing from these investments continues to reside and be commercialized for the benefit of Canada. CCI has several recommendations to better support Canadian IP and the SMEs who develop it. I look forward to sharing some of them with you today.

To conclude, with smart changes to existing strategies and the development of new measures where required, we can ensure that Canadian SMEs become leaders in the digital economy. Without this strong base of homegrown, high-growth SMEs, we will not be able to generate the economic growth and public wealth necessary to pay for the public services that Canadians depend on.

Thank you and I look forward to your questions.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Madame O'Born.

We'll now move to Mr. Boquist for five minutes.

[Trevor Boquist, President and Chief Executive Officer, Driving Change Automotive Group]

Thank you.

I'm here today wearing two distinct but complementary hats: I am a local new car and truck dealer in Saskatchewan and I recently served as the national chair of the Canadian Automobile Dealers Association, or CADA, during the pandemic crisis. These dual roles have given me unique insight into the challenges facing dealers nationally and locally.

As a starting point, it is important to recognize that Canada is fortunate to have a network of over 3,500 franchised automobile dealers who sell and service new cars and trucks in virtually every community across Canada. Dealerships are not owned by factories. Each dealer invests “all in” in a locally run business that services their community. Our dealers literally keep Canada rolling, and it is important to note that governments across Canada recognized the essential service our members provide by keeping our operations open during the pandemic. Most members of this committee will know that our dealers represent a vital sector of the Canadian economy, but may not know that we proudly employ 150,000 Canadians in well-paying jobs that build communities.

Given the broad mandate of the committee’s study, I will focus my remarks on three issues.

First, regarding worldwide supply chain issues, the Canadian retail auto industry continues to be highly impacted. Given the highly integrated nature of the global supply chain and the microchip shortage, dealers and consumers in Canada are facing severe inventory shortages. It will take a long time for the auto supply chain to improve and it is important that the federal government is paying attention to factors that could stall this critical sector of consumer need. Vehicles have been delayed and auto parts shortages have impacted consumers across Canada. Now is not the time for new policy measures that hamper economic recovery in our small business sector.

Second, there has been recent attention paid to the issue of the consumer's right to repair. It appears some are trying to leverage consumer outrage over cellphones and washing machines into competition legislation for vehicles in Canada. From the ground, I can tell you this makes little sense as a practical matter. Cars and trucks in my province are being repaired and we never hear consumer complaints about the lack of access. In fact, vehicle consumers in Canada have been protected by a national voluntary agreement on right to repair since 2009. I would invite committee members to learn more about the Canadian Automotive Service Information Standard, or CASIS. The agreement ensures that manufacturers share service and repair information with the automotive aftermarket industry to maintain an open, fair and competitive repair industry for the benefit of all stakeholders and consumers.

Third, Canada has set bold targets for a future where electric and other zero-emission vehicles, otherwise known as ZEVs, have replaced internal combustion engine vehicles by 2035. The transition to 100% ZEV sales will be a massive societal transition that will require government leadership and programs, as well as a shift in societal barriers. Again, I can tell you from the ground that this vision of 100% electric by 2035 will be really tough to achieve.

On the positive side, the public should be encouraged by the impressive lineup of all-new ZEVs that will be introduced in the next couple of years. Leveraging the existing Canadian dealer network will be vital for the speedy adoption of ZEVs by Canadians. As with any new and unfamiliar technology, Canadian consumers will need to be educated about owning and operating ZEVs. Customers will also need the comfort of a reliable, Canada-wide network of qualified service technicians to service their new ZEVs in one of the world’s harshest winter climates. This includes performing valuable safety functions, such as recalls. Clearly, for Canada to achieve the target of all new light-duty car and passenger truck sales being zero-emission by 2035, more ambitious government action is required to enhance consumer incentives, invest in charging infrastructure, and create an electric vehicle battery supply chain.

In closing, I'll say that Canada’s franchised car dealers look forward to playing a leading role in bringing in the next exciting chapter in Canada’s proud automotive history. Dealers will do what they have done for the last century, which is selling and servicing automobiles that provide Canadians with reliable and affordable private transportation. Canada is a vast northern country, and our success economically and as a society depends on a working automotive transportation network.

Thank you very much.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

We will now move to Mr. Ballingall for five minutes.

[Michael J. Ballingall, Senior Vice-President, Big White Ski Resort, Thompson Okanagan Tourism Association]

Good afternoon.

I would like to begin my presentation by respectfully acknowledging I am joining you from the traditional ancestral and unceded territory of the Syilx Okanagan people.

It is a pleasure to speak to the Canadian House of Commons Standing Committee on Industry and Technology today, May 10, 2022, my 62nd birthday.

I've been employed in the tourism and hospitality business since 1979. I've worked in restaurants, nightclubs, golf courses and ski resorts for my entire career. In November of 1985, I began my career at Big White Ski Resort after the resort was purchased by an Australian family. I was invited to visit their resort in Australia—Mount Hotham—where I began a career with a working visa as a ski instructor.

I met my wife in Australia. We moved back from Australia in 1995 with two kids and a boatload of furniture and I've been employed as the senior vice-president of Big White Ski Resort ever since. We currently experience over 660,000 skier visits and are the second most popular winter resort in British Columbia.

I volunteer on many tourism boards, including as adviser to the Canadian Ski Council, representing Canada's destination ski resorts. I'm a director of Tourism Kelowna, a director of the Tourism Industry of British Columbia, the president of the Tourism Big White Society and, last, the chairman of the Thompson Okanagan Tourism Association. In that role alone, we represent over 3,500 stakeholders from Osoyoos to Valemount. We are the geographical size of the country of Ireland.

As you are well aware, “Super, Natural British Columbia” has been heavily impacted by the COVID-19 pandemic. I would now like to share with you a number of points regarding labour shortages in the tourism industry and the supply chain challenges. I understand that my time is short, so let me begin.

Canada's tourism industry was amongst the business sectors hardest hit by COVID-19. Many people left their jobs during lockdowns, entering new fields and resulting in less Canadians to attract. Tourism was the first sector to be impacted and will be the last to recover. Prepandemic, the industry generated $105 billion in economic impact and employed over 1.8 million workers, as said by the Tourism Industry Association of Canada.

Today, the tourism industry simply needs your help. By way of example, let me illustrate.

The Crystal Cove Beach Resort in Tofino, British Columbia, is a great example of how the industry has been impacted. Tofino bucked the trend and became the Hawaii for all Canadians as world travel was heavily restricted. The trend continues into the summer of 2022. Major challenges in labour are their number one issue. Many businesses cannot operate at full capacity—some as low as 50%—as no staff are available to work in the hospitality chain, including at the front desk and in cleaning rooms. They have supply chain issues.

In the Town of Tofino, outdoor hot tubs are very popular. At this resort alone, they have 28 outdoor hot tubs that are highly sought after by the guests. It took up to 10 days to get parts during pre-COVID times; now it's up to six months. On a busy day, the town can expand from 2,000 to 10,000 people. Fresh stocks of groceries and other hospitality items are in great demand because of supply chain issues.

Let me give you an example about Whistler. You all know that this world-class destination and home of the 2010 Olympic Games is something that Canada is very proud of. A prime example on a greater scale is how the industry is in peril. Delays in immigration, even including recent changes, have not filled the labour pool, and they were short by up to 4,000 full-time equivalent jobs last winter. Today, I am told—and their studies will indicate—that Whistler will be short 5,000 to 6,000 employees this summer in a town of 14,000 permanent residents.

The ski industry in Canada supports the overall policy of the Tourism Industry Association of Canada and Tourism HR Canada on improving the tourism labour force; however, the ski industry has specific challenges that must swiftly be addressed to solve this national problem. The ski sector relies heavily on foreign labour to support seasonal operation needs and the hard-to-fill positions of housekeeping, culinary, lift operations, rentals, boot-fitting and ski school. Those trained hospitality professionals then go on in the summer months to fill positions in the valley that the resorts are located on top of, including in golf courses, wineries, hotels, restaurants, bars, marinas, day camps and much more.

For years prior to and after the 2010 Olympics, visas were readily available for young people between the ages of 20 and 30, who could enter our country for multiple visits to work in the tourism and hospitality industries. We believe a return to these programs would have a profound beneficial impact on the tourism industry immediately and would, therefore, impact small businesses from coast to coast.

Historically, the two federal recruitment streams that have supported the hospitality sector have been the temporary foreign worker program and the international experience Canada working holiday. Ski employers report that the international experience Canada working holiday and the temporary foreign worker program have been the highest utilized channels to fill positions, with 40% of full-time instructors having started off in these programs and then moving to become permanent residents.

Industry recommendations are as follows.

Immediately exempt Canada’s tourism sector from having to fulfill the LMIA requirements until such time as revenue and employment levels match or exceed prepandemic, pre-COVID performance levels. It should be noted that ski areas are often placed within the LMIA zones that prevent the ski area from participating in current exemptions. For example, Banff is included, along with Grande Prairie, Alberta, which is 685 kilometres to the north. The enormous paperwork and requirements for employers result in the LMIA lapsing and having to start the process over again.

Ensure that there are dedicated representatives to support the needs of the hospitality, tourism and ski sectors, and expedite the processing of applications by ensuring that all applications advance through the review and approvals process in no greater than a three-week time frame. Resorts such as Whistler, Sun Peaks, SilverStar, Revelstoke, Kicking Horse, Fernie, Banff, Lake Louise, Tremblant, Mont-Sainte-Anne and Big White Ski Resort all have large HR departments that are very familiar with the process and can benefit the smaller operators through their assistance in finding and training hospitality workers. It is evident through the hiring clinics that these—

[The Chair, Liberal, Joël Lightbound]

Excuse me, Mr. Ballingall. I hesitated because it's your birthday. I didn't want to interrupt.

On behalf of the entire committee, we wish you a very happy birthday.

We're grateful to have you on this special day, but we're already two and a half minutes over time. I would ask you to conclude briefly. Otherwise, I'm sure you'll get the chance during the questions.

[Michael J. Ballingall]

There you go. Thank you very much.

Beginning with this year's ski season, we recommend the introduction of a two-year winter pilot project targeted at attracting ski instructors to the industry with a limited two-year visa. We are losing these professionals, who train Canadians, to our competitors in Austria, Japan and the U.S.A.

With that, I will conclude my statement.

[The Chair, Liberal, Joël Lightbound]

Thank you very much. I'm sure we'll get plenty of questions.

We'll now move to our last witness for today. Mr. Naidu, you have five minutes.

[Rakesh Naidu, President and Chief Executive Officer, Windsor-Essex Regional Chamber of Commerce]

Good afternoon, Mr. Chair and committee members.

Michael, a very happy birthday to you.

Committee members, thank you for the invitation to present to the committee.

I'm Rakesh Naidu, president and CEO of the Windsor-Essex Regional Chamber of Commerce. I'm presenting a Windsor-Essex perspective on the labour shortage and its impact on SMEs. My comments reflect what we are hearing from our industry associations and the frontline business community.

Windsor-Essex is located at the heart of the richest consumer market in the world, where more than half of the North American population lives within a day's drive. The 10th largest market in the U.S., metropolitan Detroit, is less than one mile away, just across the Detroit River. This unique geographical location makes Windsor-Essex an ideal location for trade.

It's no wonder that, of the more than 1,000 manufacturers in Windsor-Essex, 90% are exporters. Windsor-Essex has a significant auto cluster, including OEMs and many large tier 1 and tier 2 suppliers. There are more than 3,000 acres of greenhouses in Ontario. Approximately 80% of them are in Windsor-Essex, and 80% of what they produce is exported.

From being the automotive capital of Canada, Windsor-Essex is fast evolving as the automobility capital of Canada. We recently attracted the investment of a $5-billion EV battery plant. Additionally, Stellantis confirmed an investment of $3.2 billion in retooling the Windsor and Brampton assembly operations. Stellantis also confirmed an investment to create 650 new R and D jobs at the research and development centre in Windsor-Essex. Amazon announced the opening of a fulfillment centre in the area, which will create 300 new jobs. These recent announcements equate to approximately 4,000 new jobs by the year 2024, not to mention the third shift coming back at the Windsor assembly operation, which will add a few more thousand jobs.

Year 2024 will be a major milestone year for the Windsor-Essex region, not just for the reasons mentioned. It will also be the year when the Gordie Howe International Bridge will get fully operational. The new international crossing will create further opportunities for business, specifically in the logistics and transportation sector.

While all the recent investments and upcoming opportunities give rise a great deal of optimism for the region of Windsor-Essex and I would say all of Canada, we are concerned that the labour shortage may not help us in tapping into the full potential of these announcements and the jobs that are likely to be created.

In a recent annual business confidence survey carried out by the chamber network in Ontario, 62% of businesses said that their sectors are facing a labour shortage. The situation in Windsor-Essex is very similar. This is further compounded by the aging population of the workforce and retiring employees who don't have a good succession plan.

We believe that immigration can provide much-needed relief to some of the challenges mentioned earlier. The Windsor-Essex Regional Chamber of Commerce has been leading an initiative to launch a municipal nominee program that will identify the needs of the community, specifically the employers in the region, and bring skilled and professional immigrants who will meet and match the needs of the employers. A proposal to do a pilot study was presented to the ministry of IRCC.

Another sector that has tremendous potential in the Windsor-Essex region is the logistics and transportation sector. The border crossing in Windsor-Essex is one of the busiest commercial crossings in North America. The importance of the border crossing was highlighted during the recent pandemic and the bridge blockade. The trucking industry moves approximately two thirds of the half a billion dollars worth of goods that cross the border on a daily basis. However, the industry is experiencing major challenges, and if these shortages are not addressed, this will lead to further supply chain disruptions, an increased cost of doing business and a rise in inflation.

The two major issues affecting the industry are driver shortage—currently we are approximately 50,000 truckers short in Canada—and the rising cost of doing business, specifically for SMEs. Small businesses typically pay more for hiring and training, for insurance and even for equipment.

To address this, the Windsor-Essex Regional Chamber of Commerce recently successfully tabled a resolution at the OCC AGM calling for immediate measures to be taken to address some of the challenges. The proposed recommendations include increasing immigration and bringing in internationally trained drivers, implementing and adjusting the driving requirements to allow new international truck drivers to fast-track their careers by considering their previous driving experience and providing financial support to smaller fleet companies to offset the high insurance costs, offer comparative wages and cover training and hiring costs.

In closing, inflation and labour shortages are impacting all sizes of businesses but especially SMEs. Supply chain disruption is adding to inflation, but it's also a result of labour shortages. We strongly believe that addressing labour shortages through prudent, long-term strategies such as the municipal nominee program. Attraction and, more importantly, retention of temporary foreign workers, international students, drivers and technicians and the development of sector-specific training and micro-credentials will result in much-needed support for the various sectors.

Thank you for the opportunity.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Naidu.

Colleagues, before we start the discussion, there are two things to note. We have a hard stop at 5:30 tonight, and Madam O'Born needs to leave at 5:00.

We'll start without further ado.

Madam Gray, the floor is yours.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair.

Thank you to all the witnesses for being here today.

My first questions are for Mr. Ballingall, and I'd like to say happy birthday, and thank you for joining us at the committee here today.

I know you represent many different organizations within the tourism industry, and tourism small businesses have seen very significant labour shortage issues in our region.

I wonder if you could touch on how much this has been impacting small and medium-sized businesses in the Thompson-Okanagan area.

[Michael J. Ballingall]

The easiest way to explain that is to take, for example, our business. We would normally employ between 200 and 235 ski instructors pre-COVID and 50% of those would be on working holiday visas, whether they be from Australia, New Zealand or Europe.

We teach what is called a gap program, so we bring people from the Netherlands and the U.K. in to learn how to become ski instructors and then they're available for us to sell a ski lesson to school children, to families and to guests who visit our resort.

The pandemic cut all of that out. This year we had just over 60 instructors and we lost millions in revenue in the ski school alone. You now push that out into the restaurant industry. We had vice-presidents making beds this year. Normally we would employ over 200 housekeepers. The best we had was 44. That's at Big White.

If you go to Whistler, which is one of the biggest economic engines in the tourism industry in Canada, with millions of dollars a day in taxable revenue, they were short 4,000 employees. They're looking at being short 5,000 employees for this summer alone.

With 5.2% unemployment in Canada, these people are not readily available. What we're suggesting is to go back to the good times of 2010 when we invited people to come to work as part of the Olympic program. Those visa holders helped us support our tourism industry.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Great. Thank you.

Is that part of the international experience Canada permit as well, meaning that one sensible and easy fix by the federal government could be to extend these or to enhance these in order to help with the labour shortages?

[Michael J. Ballingall]

Yes, we would recommend that they extend these past two years. It's very seldom that you'll get a ski instructor who will return for his second year once they get a level 2 or a level 3 certification. They will sell their wares, for example, to the United States or Japan or to Austria.

We're suggesting that two years would be great if there were more visas readily available, but if you double that to four to six years, you would find that there would be a lot fewer problems.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you.

We've heard on the other side, from a competitive point of view, reports that the ArriveCAN app is causing delays or lengthening processing times at border checkpoints. We're hearing that Canada is getting a reputation for being difficult to travel to.

Do you think Canadian tourism is missing an opportunity to be as competitive as it could be as long as these different restrictions and processes are in place?

[Michael J. Ballingall]

Yes, I would agree with that statement.

Canada has literally the number one tourist brand in the world, Destination Canada. And Canadians alone are known for their hospitality—and don't forget, we live in a country that has clean air, fresh water, beautiful mountains, beautiful prairie scapes, the east coast of Newfoundland and Labrador and polar bears to the north. We have something that no other country in the world has.

The easier it is to the path to purchase.... People now are selling commissioned travel holidays. The people selling those holidays will sell the quickest way they can to get the commission, no matter where the customer is going. They want to earn the money. If they have to spend time on the telephone or on emails, suggesting how hard it is to enter Canada through the restrictions, through the apps, etc.... We have known from the last year or two years that this has definitely affected those numbers coming into Canada.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Do you think that should be a priority of the government right now, to look at removing some of those processes to give people assurance and confidence in coming to Canada? I ask because we know that with tourism, people don't necessarily book for tomorrow, but for months out.

[Michael J. Ballingall]

Yes, in the real-time newsscapes, look at the lineups that are happening at Pearson and Vancouver airports today. If the government officials were to meet with tourism professionals, airport professionals, we don't have all the answers but we have some of the answers. Certainly we would welcome the discussions, as we welcomed my participation to this committee today.

We have been in this business a long time. We know what a tourist will expect. We know what they will put up with, and we know what they won't put up with. Certainly the labour shortage is something that has to be fixed quickly or people are simply going to go somewhere else.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Mr. Ballingall, I just have time for one more quick question. This study does include red tape reduction, so I was wondering if you could touch on an easy fix the government could make right now to help reduce the regulatory burden on small business.

[Michael J. Ballingall]

Right now the Government of Canada welcomes agricultural workers from various countries to help our agricultural sector. Simply put those practices in place immediately. We could change this within a week. We could start welcoming young people who are willing to work in Canada, some who are trained and have been here before.

I, in real time, passed Quails' Gate vineyard today, which had nine temporary foreign workers in the vineyard who were doing an excellent job. There are thousands of them in the Okanagan Valley. We need thousands of hospitality workers now. That visa would work very well for us.