Industry Committee on May 17th, 2022

[The Chair, Liberal, Joël Lightbound]

Good afternoon.

Welcome to meeting number 24 of the House of Commons Standing Committee on Industry and Technology. Pursuant to Standing Order 108(2) and the motion adopted by the committee on Friday, April 8, 2022, the committee is meeting to study the competitiveness of small and medium-sized enterprises.

Today’s meeting is taking place in a hybrid format, pursuant to the House order of Thursday, November 25, 2021. Members are attending in person in the room and remotely using the Zoom application.

I would like to make a few comments for the benefit of the members attending in person as well as the witnesses. You are familiar with the public health rules in effect, so I would ask that you please follow them.

We have quite a substantial group of witnesses today. Thank you all for appearing before the committee. Some witnesses are appearing in person in the room and others are appearing via Zoom.

As an individual, we have Edward Iacobucci, professor and Toronto Stock Exchange chair in capital markets in the faculty of law at the University of Toronto. Also with us is Kevin Lee, chief executive officer of the Canadian Home Builders' Association; Anne Kothawala, president and chief executive officer of the Convenience Industry Council of Canada; Tony Bonen, acting executive director of the Labour Market Information Council; Eleonore Hamm, president of the Recreation Vehicle Dealers Association of Canada; and Patrick Perreault, chief executive officer of Table Métal Abitibi-Ouest. Good afternoon everyone and thank you for being here.

Without further ado, we will proceed with the opening remarks. Each organization will have five minutes.

Starting things off will be Mr. Iacobucci for five minutes.

[Edward Iacobucci, Professor and Toronto Stock Exchange Chair in Capital Markets, Faculty of Law, University of Toronto, As an Individual]

Thank you very much, Mr. Chair.

Thank you to the committee for inviting me to speak today.

I write and teach about competition law, and I want to take my time to share some views about the relationship between competition law and small and medium-sized enterprises.

Let me begin by just quickly reviewing why I think competition law is a valuable policy tool for Canada and then relate it to small and medium-sized enterprises in particular.

Competition is valuable to society because it compels firms to provide consumers with quality products at competitive prices. These are prices that roughly reflect their costs. This bring about economic benefits because it ensures that consumers who value the product more than it costs to produce are able to buy it. This creates gains from trade.

Competition law promotes competition that, in turn, encourages these social benefits, so competition law promotes competition in a variety of ways, and many of you will be familiar with them. I'll just quickly highlight three and focus on the third.

The first is that it deters price-fixing, where competitors substitute co-operation for competition and agree to set a certain price. It deters anticompetitive mergers. If two firms decide to merge rather than compete with one another, it is something that competition law authorities will scrutinize. Third, it prevents dominant firms from hurting competition by seeking to exclude competitors or limit competition.

It's the third that I want to talk about in its relationship with SMEs. Competition law accepts that vigorous competition on the merits may exclude some competitors. They just may not be able to keep up with the competition in the market. This is not just acceptable but kind of an inevitable by-product of healthy competition between firms.

How do we think about SMEs fitting within this framework? Acts by dominant firms that harm competition by improperly excluding SMEs and, indeed, other kinds of competitors, lie squarely within the domain of competition policy.

In a case called Nielsen, as an example, there was a dominant firm that signed up both its customers and its suppliers to a series of exclusive contracts. These exclusive contracts made it impossible for an entrant that wanted to come into the market to come into the market. It couldn't get the inputs, and it didn't have anybody to sell to, because the dominant firm had signed everybody up to exclusive contracts. The competition tribunal ultimately ordered Nielsen to stop relying on these exclusive contracts. This was a means to seek to promote competition within that market. The contracts essentially foreclosed competition by a smaller rival.

Protecting competition can indeed protect competitors, but, incidentally, the purpose is to protect competition, not competitors. Conventional competition law, then, would not seek to promote the welfare of SMEs or other competitors as a goal unto itself. Acts by firms that hurt SMEs but reflect vigorous competition on the merits are not and ought not to be within the domain of competition law.

If a dominant firm just happens to have a better product than a competitor, an SME or not, and as a consequence the SME or the other competitor struggles to compete, that is competition on the merits and is not a competition law issue. Competition law is intended to focus on protecting competition, not competitors. This focus on competition can help SMEs but is not the purpose of competition law.

Let me just close by saying that the idea that competition law has this focus on protecting competition and not competitors does not mean that the law writ large should not be looking out for the interests of SMEs in a variety of different ways. SMEs may have importance to the fabric of Canadian society that go beyond their relationship with competition. If that's true, which it could well be—and this committee, I'm sure, will hear lots about this today—then there are other legal instruments that I think are better suited to promoting the welfare of SMEs as a goal in and of itself.

Just to take an obvious example, if we want to promote the welfare of SMEs, we could look to tax law to promote that with a lower tax rate on small and medium-sized enterprises and on other kinds of firms.

Competition law is only one policy tool. I think if we try to change competition law to seek to protect SMEs, there would be the risk that we end up sacrificing consumers in the form of higher prices in order to promote this goal. There are other instruments that would be better suited to meeting the goal of promoting the the welfare of SMEs, if that is, indeed, an objective of the government.

I will close there. I'll be happy to take questions as they come as this session unfolds.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Professor.

We'll move to Mr. Lee for five minutes.

[Kevin Lee, Chief Executive Officer, Canadian Home Builders' Association]

Thank you very much.

On behalf of the Canadian Home Builders' Association, representing some 9,000 member companies in residential construction from coast to coast, thank you for the opportunity to speak with you today. Our membership includes home builders, renovators, developers, trade contractors, manufacturers, suppliers and various service providers, and all of these members are being challenged by labour and productivity issues.

I would like to start by first speaking about the top issue our association is always concerned about, and that is housing affordability. This is, of course, directly affected by labour and material shortages and resultant price increases, but the biggest driver of house prices in recent times has been the lack of housing supply. The basic economics of housing supply and demand imbalances have been the key driver of accelerating house prices in recent times.

Fortunately, Canada’s housing deficit of some two million homes is now widely accepted, and the federal government has now rightly identified that we need to build some 3.5 million homes over the next decade to catch up. To do so will require a doubling of our annual pace of housing starts. The big questions are how do we get there, and do we have the labour to do so?

I'll start by saying this. To get more supply online, labour is not our number one issue. Yes, labour is a challenge, but municipalities are actually at the nexus to unlock the ability to bring more housing supply online. They need to accelerate and streamline municipal processes, update municipal policies and zoning and combat Nimbyism. All of these municipal affairs are the top issues we need to address to get our housing starts up to where they need to be. We're hopeful that the new housing accelerator fund will help to start to address these issues.

Related to these bottlenecks is labour, not only for the construction industry but for municipalities as well. Our construction industry is facing the challenge of about 22% of our labour force retiring over the next decade. Municipal building officials are retiring at an even faster pace. As many as 50% of officials are set to retire in the next 10 years, so part of the solution to labour is also ensuring that municipalities can replace departing employees and increase staff to be able to do more.

Regarding workers who build more homes, we recommend a three-pronged approach.

Firstly, we must continue all efforts to promote to Canadians careers in skilled trades. This includes promoting them to young people, their parents, teachers and guidance counsellors. CHBA asks that the government continue all actions to promote careers in skilled trades, including financial supports to companies to support apprentices, like the new Canadian apprenticeship service. Our association is continually working to address the trades gap, and government supports of this nature are very beneficial.

Secondly, we need to update our immigration system for skilled workers and target permanent immigration solutions. Skilled labour allocations for immigration must be increased, and pathways for temporary workers to become permanent workers are needed. We know ESDC is looking at such solutions now, which is critical.

Thirdly, and in the direct portfolio of this committee, we need to focus on increasing productivity in our sector. We need more innovations that will enable us to build more houses more quickly and with fewer people. Site-built construction is extremely efficient and cost-effective, but we need to make it more productive, with better technologies that require less labour. We also need to increase the amount of factory-built systems we use, be they modular, panelized or other emerging technologies. This is something government investment can help accelerate, especially since it is capital-intensive.

Regarding regulatory requirements and bureaucracy, there is a huge burden on our industry, and there is no doubt that it needs to be streamlined to allow the housing construction process to move more quickly. This must be improved at the municipal level, but there are also elements at the federal level that can help. Many political drivers are now putting pressures on the national building code, causing accelerated change and risking causing unintended consequences if not properly vetted. There are also code change adoption challenges for industry, and almost every code change increases construction costs.

We need to ensure that affordability is enshrined as an objective of the national building code and all of the standards it references, so that all regulatory changes that are considered look at their impact on construction costs. While the system is continually looking to make codes more stringent, a look at outdated regulations that could be eased is also needed.

Regarding supply chain constraints, I’m sure you're well aware of the issues across all industries. Residential construction is no different. I’m happy to talk more about those affecting our industry in the Q and A, but I’d like to point out one emerging issue, which is that a questionable drywall duty is up for renewal again in western Canada and it stands to increase yet again the cost of drywall for western Canadian homebuyers and homeowners when they can least afford it. We need to get our international trade issues in order to ensure they don’t make matters worse.

Thank you for the opportunity to join you today. I look forward to answering any questions you may have.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Lee.

I will now move to Ms. Kothawala for five minutes.

[Anne Kothawala, President and Chief Executive Officer, Convenience Industry Council of Canada]

Thank you, Mr. Chair.

I'm Anne Kothawala. I'm the president and CEO of the Convenience Industry Council of Canada, also known as CICC, the chief advocate of Canada's convenience supply chain.

The study that you have undertaken to explore the challenges facing small and medium-sized enterprises is critical as we emerge from the COVID-19 pandemic. While the subject matter of your study directly impacts our stores, I would like to focus my comments on labour shortages, skyrocketing credit card swipe fees as well as regulatory changes that are needed to keep our businesses competitive post-COVID-19.

Convenience stores employ 212,000 Canadians and bring convenience to communities from coast to coast to coast. In many communities, we are the only store providing essentials to consumers, and while we were able to keep our doors open during COVID-19, we haven't been immune to the impacts of a pandemic.

Reduced foot traffic, coupled with increased overhead costs, has placed tremendous financial strain on our businesses. Right now our industry is facing a perfect storm of challenges—declining sales, labour shortages and changing consumer behaviour—which has forced locations to close across Canada. Concerningly, these closures are happening predominantly in rural and northern communities, the very places where these stores serve a critical role for Canadians looking to access essentials.

Our stores are struggling to find appropriately skilled retail clerks and other employees who constitute the convenience supply chain, including truck drivers for our distributors. The competition for workers has pitted the retail industries against one another.

Further complicating our labour shortage is the decrease in immigration during the pandemic. The convenience industry often offers newcomers to Canada their first work experience. For many new Canadians, convenience stores serve as an introduction to the community, and they serve as a stepping stone to owning and running their own business.

In addition to labour challenges, our stores are grappling with keeping prices competitive for customers at a time of high inflation. Keeping prices modest becomes more difficult as the cost of doing business continues to rise. A practical example of this added cost of business is Canada's high credit card fees, which continue to penalize small and medium-sized businesses.

The use of credit and debit cards has never been higher. Our members already experienced exorbitant interchange fees before COVID-19. Now, the move to touchless payments and increased credit card usage during the pandemic have resulted in even higher costs for our small businesses. After real estate and payroll, interchange fees are the third-highest cost of conducting business.

While other countries, including Australia and the EU, have capped their rates, Canadian small businesses continue to pay exceptionally high fees. Credit card fees range anywhere from 1.5% to 4% per transaction. This is in comparison to the EU and Australia, which have capped rates at 0.3% and 0.5% respectively.

In a recent survey, CICC asked our retailers about their awareness of the 2015 and 2020 voluntary commitments by credit card companies and whether they saw any changes. The response from our membership was unanimous—any costs savings that may have occurred have been eroded by the introduction of new fees introduced by banks and/or processors. Companies are simply just passing costs directly to the merchant through new fees.

Our small and medium-sized businesses really need action on this. It has been long promised but not delivered, and our stores would stand to save tens of thousands of dollars, on average, were fees to be reduced. With the cost of everything on the rise, this is an important action not just for businesses but also for consumers.

Speaking of rising prices, I'd be remiss not to mention the unlevel playing field our small and medium-sized business are on when it comes to the retailing of tobacco products in Canada. The unregulated sale of illegal tobacco continues to undermine the legal retailing of these products, which impacts our stores but also results in lost revenue to government, as taxes go uncollected on these products. Increased investment in enforcement and federal provincial coordination is required.

Last, the federal government can also support small and medium-sized businesses by adopting smart regulations that take into consideration the impacts that will be felt at the retail and store levels. Forthcoming regulations, for example, around energy drinks, as well as legacy commitments around front-of-pack labelling have a direct impact on our retailers. Involving Canada's convenience retailers in the development of these regulations, rather than consulting them after they've been developed, would help provide some predictability for our businesses.

In closing, Canada's small businesses are at a critical juncture. COVID-19 has shown that we need to create an environment that will help small businesses meet the needs of Canadians in a post-COVID environment. When local convenience stores are in peril, it has a ripple effect. It impacts tourism, hurts communities and reduces the number of tax dollars collected.

We're on the corners of Canadian communities. We need the federal government to be in ours.

I'm happy to take your questions. Thank you very much for the opportunity.

[The Chair, Liberal, Joël Lightbound]

Thank you, Ms. Kothawala.

We now go to Mr. Bonen for five minutes.

[Dr. Tony Bonen, Acting Executive Director, Labour Market Information Council]

Good afternoon.

I would like to thank the members of the committee for inviting me today.

It is a real honour to speak to you about the most pressing labour market challenges facing all of Canada, and the labour market information ecosystem.

I represent the Labour Market Information Council, or LMIC for short. LMIC is an independent organization that was formed on the initiative of the federal, provincial and territorial governments.

Specifically, we are supported by the labour ministries across Canada, as well as Statistics Canada. Our mission is to ensure Canadians have access to high-quality, relevant, labour market information to support their decision-making. At LMIC, we work in close collaboration with our federal, provincial and territorial counterparts to bring together a variety of players in the labour market information field. These include career development and employment service organizations, employer bodies such as sector councils, unions, researchers and organizations involved in training Canadians to succeed in the workforce.

I suspect that “labour market information” is probably not part of your daily vocabulary, as it is mine. Therefore, I'd like to explain what I mean by this. First and foremost, it is the data we use to track labour market developments and outcomes, but it is also the concepts, categories, taxonomies and ways we talk about labour markets. Why does it matter? Labour market information helps us tell the story of what's really happening in the world of work. It enables us to get beyond anecdotes and conjecture, into a quantitative, data-driven assessment of current reality and a more accurate picture of what to expect in the future.

Let me turn, now, to the top priority in labour market information issues today, and a big concern for small and medium-sized enterprises, although the data is a bit lacking for them. That is, of course, labour market tightness. There is little doubt that we're facing the tightest market in decades. The share of core-age adults working—those between 25 and 54—is the highest it's ever been. Unemployment is at the lowest it's ever been, essentially. As I'm sure you all know, job vacancies have skyrocketed as we've emerged from the pandemic. According to Statistics Canada, vacancies are roughly 80% higher now than they were prepandemic.

I have no doubt there are many businesses facing labour shortages. However, we avoid describing the current labour market conditions as generally and necessarily beset by labour shortages, and that's for two reasons.

First, there's no common definition of, or way to measure, labour shortages. For example, the latest data shows there's about one and a half unemployed people for every job vacancy. Of course, it would be unrealistic to say there's not a shortage, because we have more people looking for jobs than openings. That ratio of 1.5 unemployed people to job openings is currently the lowest it's ever been, and even lower in provinces like Quebec and British Columbia.

Second, and more importantly, there's a critical distinction to be made between labour shortages and skill shortages. At LMIC, we define “labour shortages” as a lack of applicants—a literal lack of bodies coming through the door. In past months, there have been many stories and anecdotes describing this very situation. A “skill shortage”, in contrast, is when there are applicants for a job opening, but the employer cannot find a candidate with the sufficient experience, skills, education and so on to fill that role.

We're a small organization. We have faced challenges, numerous times, trying to attract diverse talent over the past four years of our operation. As a labour market information challenge, the problem is that labour shortages and skill shortages appear the same in the data. It's a vacancy in the survey. It's a job posting in online job-posting data that we leverage and work with.

Despite these two challenges appearing the same in the data, the policy challenges and potential solutions are markedly different. Labour shortages require responses to entice more applicants. Maybe that's higher wages or better working conditions to increase the available pool of labour. Skill shortages need to be addressed primarily through training and education systems. That presents an implementation challenge, because scaling up programs or shifting the direction of training requires time to implement. By the time newly skilled workers are brought to market, there's a risk that labour market needs have shifted.

I think we are definitely facing both labour and skill shortages. I can explain why, with some key data points, in the question and answer period. I would simply like to say that, in preparation for this meeting, I tried to dig up some specifics on small and medium-sized enterprises, and on vacancy and job-posting data. We have a lack of information on that. We're working with our partners at Statistics Canada, right now, to see what we can dig up to share with the committee, because it's an important topic. We don't have specific data and insights on that now.

Finally, I want to close by cautioning members that, given current macroeconomic conditions and shifting policy stances by central banks around the world, the situation we're facing might change dramatically in the coming year or two. There's a big risk of a global slowdown in growth and potentially a recession, which could reverse the labour market tightness we are concerned with today. If we have learned anything from the past two years, it's just how rapidly labour markets can change, in terms of both plummeting and rebounding.

We therefore need to be thinking about long-term strategies to support evolving and dynamic systems of training, education and employment-matching services to meet the needs of employers in every province and territory.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Bonen.

We will now move to Ms. Hamm for five minutes.

[Eleonore Hamm, President, Recreation Vehicle Dealers Association of Canada]

Thank you, Mr. Chair.

Good afternoon, and thank you for having me here before the committee today representing the Recreation Vehicle Dealers Association of Canada, otherwise known as the RVDA.

The RVDA is a national volunteer federation of provincial and regional associations and their members, which have united to form a professional association for all businesses involved in the RV industry. In other words, we represent small and medium-sized businesses across the country. Our core objective is to bring together and represent retail businesses and provide support to promote the welfare of Canadian RV dealers and maximize the potential of the industry for the benefit of all Canadians.

RVing in Canada has a considerable impact on the economy. In 2019, the RV industry supported 67,200 jobs. The total spending was $6.2 billion, generating $4.8 billion in added value to our economy.

While COVID-19 has made the past few years challenging, we thank Parliament for taking swift action to support businesses and workers across the country. We are on the road to recovery, but it will take time to bounce back and thrive.

Three obstacles ahead of us are critical issues impacting our industry. The first—and we've heard it already—is the shortage of skilled workers. The second is the need for critical infrastructure in our national parks. The third is relieving border and supply chain issues.

The shortage of skilled workers remains a key concern for the RV industry. COVID-19 and its various waves hampered the ability for apprentices to access training programs. Currently, there are actually only two programs in Canada that offer RV service technician apprenticeship training leading to Red Seal certification. They are located in B.C. and Alberta.

Currently, out of over 1,200 full-time RV service technicians throughout Canada, only 424 have their Red Seal designation. The existing programs reach full enrolment every year and often hold waiting lists for several dozen prospective students. Training programs are offered in other provinces, but they're not accepted as full apprenticeship programs, meaning that they don't actually lead to Red Seal certification. As a result, few RV service technicians who actually work in the industry are able to be classified as apprentices or certified technicians. This means that many small and medium-sized businesses are challenged to find and attract RV service techs, and students have a hard time starting their careers in a trade that is in high demand.

We applaud the government for the focus on skills and training in the previous budgets. While the government has made good progress, we believe they can do two things to support skilled workers in the RV industry. First, we are looking for the government to create an apprenticeship travel grant that could be used by those required to travel in order to undertake an apprenticeship program. Second, the proposed new labour mobility grant of up to $4,000 a year to support temporary relocation within Canada by skilled tradespeople should be made available for those who are temporarily relocating to pursue their apprenticeship in Red Seal training.

The second obstacle facing the RV industry is the lack of infrastructure and tourism investments in our national parks. There are 119 federal campgrounds comprising over 10,800 campsites, but of these campsite 7,911, or approximately 80%, are not serviced. As the demand for campground services continues to rise, critical infrastructure needs, such as sizing requirements to accommodate larger RVs, access to the appropriate electrical outlets and waste disposal facilities remain unfunded.

As RVing is a large component of tourism, both internationally and domestically, investment in camping and RV infrastructure will play a crucial role in the overall contributions of the tourism industry to future economic development and prosperity post-COVID-19. Upgrades in infrastructure are essential if we want to ensure the future of this industry and make it more accessible to all Canadians. We recommend that Parks Canada receive dedicated funding for investment in its campground infrastructure.

Supply chain issues are holding back small and medium-sized businesses across the country. Transportation bottlenecks and difficulty sourcing key inputs are leading to production slowdowns and delayed or cancelled sales. The overall effects of these supply chain disruptions and increased inflationary costs are estimated to be larger, broader and more persistent than initially anticipated and will continue to weigh on small and medium-sized businesses' ability to grow. The government needs to provide funding and financial support, and look for solutions to break up the bottleneck of supply issues. It must ensure that the border does not close again.

We would also recommend that the proposed $1.9 billion for the national trade corridors fund to make Canada's transportation infrastructure more efficient and effective should make resources available to private transportation and trucking companies, so that they can better adapt to new technologies and increase the flow of goods in and out of Canada.

Thank you very much for your time.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

We now go to Mr. Perreault for five minutes.

We can't hear you, Mr. Perreault. Is your microphone on mute?

I think your headset may be defective. We will try to figure out a solution, but if we can't, we will invite you back another time.

My apologies for the inconvenience, and thank you for making yourself available this afternoon.

We will now begin the first round of questions with Mrs. Gray.

You have six minutes, Mrs. Gray.

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

Thank you, Mr. Chair.

Thank you to all of the witnesses for being here today.

I'd like to start with Ms. Kothawala of the Convenience Industry Council.

You mentioned in your opening statement about merchant credit card fees. I was really shocked when you said that it's the third-highest cost of conducting business in your industry. You mentioned that there was an increase in credit card usage that took place over the pandemic, so the fees have increased a lot more for your members.

I want to ask you, on changing consumer behaviour and seeing direct delivery, for example, Uber Eats, not to single them out specifically, but with organizations like theirs and others, those are all credit cards that people would have to use in order to get those products. Of course, there would be the merchant fees plus the fees that those companies take, which would also cut into their margins.

Is this the new way of doing business? Is this impacting your members? Is this one of the ways that credit card interchange fees are impacting them?

[Anne Kothawala]

Yes. Thank you so much for the question.

You're absolutely right. That's why we are flagging it and are so concerned about it. We have seen that consumer behaviour has changed in a number of ways.

As we'll all recall, at the beginning of the pandemic, we didn't know if COVID could be transmitted by touching things, so people really steered away from using cash. We all know that consumers like their credit cards. They want to get points for travel. We understand that's important, but somebody ultimately has to pay for that. Our point is that it shouldn't be on the backs of merchants.

We've talked about this issue for a long time, and we really feel it is at a crisis point. We really need to see action, because the voluntary code is not sufficient to help out the small and medium-sized businesses.

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

That's great. Thank you.

We know that, in budget 2021, the government said they would reduce these fees. In this budget, in 2022, it again said that they were consulting, but we haven't seen any action.

Are you disappointed that there's no action on these fees yet that was promised last year?

[Anne Kothawala]

We're pleased to see that there is a commitment to continue to bring stakeholders together. We understand that this is a complex issue, and it requires a number of groups to come together to figure out the best solution.

Our industry has been working directly with finance officials to share the information that we're getting from our members. We do feel that there are solutions. We are looking forward to continuing to work with government to get this across the finish line, as it were.

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

Great. Thank you.

Another thing I've heard concerns on is regarding the GST or HST being added onto the credit card fees, causing another impact to small businesses and, of course, convenience store bottom lines as well.

Do you believe this is a fix that the federal government can tackle to help promote some relief faster on these fees?

[Anne Kothawala]

We have definitely called for that. Again, it's largely because of a number of products that we sell. Look at gas, for example. It's very highly taxed. Therefore, as an industry, as compared to another, maybe a grocery store retailer or a clothing store retailer, we pay a disproportionate level of tax. It absolutely does impact us in a greater way than it does other industries. If you look at some of our retailers in Atlantic Canada, for example, where the price of gas is regulated, credit card fees are really hurtful there.

Absolutely, we hope that there can be some movement on the tax component. Again, that is a really disproportionate impact on our industry.

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

Thank you.

Next I'd like to go to Ms. Hamm from the RV Dealers Association.

I know that RVs and camping are of course very integrated. One of the concerns I've heard has to do with CRA changes to private campgrounds in treating them as investment properties, not small businesses. I was wondering if you could expand on how this change is impacting the RV sector.

[Eleonore Hamm]

Yes, absolutely. Thank you so much for the question.

We work very closely with campground operators, obviously, because consumers purchase their RV, but they need some place to go and enjoy while touring Canada. What has happened is that there was a change in interpretation a few years ago, whereby campgrounds were being seen as investment businesses and not small businesses. CRA was looking at a number of campgrounds across Canada, reassessing them and saying that they were just investment properties. They didn't really look at the services being offered.

The issue with that becomes that these campgrounds could then potentially pay a tax rate of up to almost 50% as an investment business. You can appreciate that campground operators are generally open for only a small portion of the year—four or five months. They don't qualify to have five full-time employees because they're generally closed during the winter, so they don't qualify as a small business.

The concern from the campground operators is that this hasn't been amended in the tax code. They're always concerned that they're going to come back and be reassessed at a different tax rate.

We were talking earlier about investment in infrastructure in campgrounds. It's needed at all levels. Yes, we talk about Parks Canada, but for the private operators and the provincial parks, everybody needs to upgrade their systems. There's going to be that whole talk about EVs and where that is going and how does the industry address that. However, if they're so concerned about something like getting such a huge tax bill, we're finding that the campground operators are either not reinvesting, which is not good for the economy or, in some cases, actually closing their parks altogether.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Ms. Gray and Ms. Hamm.

We'll now move to Mr. Dong for six minutes.

[Han Dong, Liberal, Don Valley North, ON]

Thank you very much, Chair.

I want to thank all of the witnesses for coming today and for sharing their insights.

The first question I have is for Mr. Bonen.

You shared some insights about the difficulty and the accuracy of collecting data. I want to hear your view on undocumented workers. We know that they are a large group in our labour force in Canada. Do you have any insight on it or is there any way to quantify them?

It's a major challenge to the accuracy of our labour force here in Canada.

[Dr. Tony Bonen]

Thank you very much for the question.

It is very difficult to get accurate information on anybody who is undocumented or in a non-standard living or working situation. The other example that comes to mind is the agricultural sector, where there are many people working in non-traditional arrangements or, for example, who are temporary foreign workers and people living in communal residences. It's just that the way standard surveys are done—like the labour force survey—doesn't capture that. It doesn't go to those homes. When it comes to undocumented workers, I would think that one of the biggest challenges there is simply people not wanting to respond to surveys or not being in the locations where surveyors are going.

I haven't seen any particular data on that, certainly not from official sources recently. Years ago, I remember seeing some estimates on those numbers, but I would have to dig that up and see what that is. Generally speaking, official statistics will miss people in that situation.

[Han Dong, Liberal, Don Valley North, ON]

I can appreciate how difficult it is to put an exact figure on how many there are, but if there's any way for you to give us an informed estimate on how many are in our country, that would be very helpful.

If there were a pathway by IRCC to allow these undocumented workers who have been here for many years—obviously there is an intent to become a permanent resident—to obtain their PR, would you say that would be helpful in addressing the current labour shortage and would perhaps promote the mobility of skilled workers from industry to industry?

On top of that, obviously there is additional tax revenue. There is a benefit to them and to us, to the government. Would you agree with that?

[Dr. Tony Bonen]

It's hard to say, because we don't have clear information on where the undocumented workers are, how many there are or the skill sets they have. I will say that, if they were to go through a process with IRCC to become documented, we'd start having very good information on those people and would get a sense of who is missing as they go through that process.

Right now, there's just not enough information on that current set, but I think that across a large group of different, what we call, “under-represented” groups, that's one way we can be addressing labour shortages: by bringing in people who are maybe at the margins or outside of labour markets to support businesses and to meet their labour needs.

[Han Dong, Liberal, Don Valley North, ON]

Do you have any particular views on the labour market opinion assessment by IRCC as one of their processing requirements? Do you have any opinion on that process?