Thank you, Madam Chair. Thank you, members, for having me here today.
My name is Barbara Barrett. I'm the executive director of the Frontier Duty Free Association, representing land border duty-free stores across Canada.
Since the creation of the land border duty-free program in 1982, the federal government and small locally run family businesses have co-operated in building local border communities by driving export sales and repatriating Canadian dollars.
These small local retail businesses have made significant contributions to local employment, taxation and business growth. In addition, these independent stores have made strong contributions to the economies and social structures of some of the most remote rural communities in every province that shares a land border with the United States. Together, these independently owned duty-free stores have come to represent an important and integral part of the tourism industry by repatriating sales and acting as ambassadors to visitors to our country. The stores continue to promote unique Canadian-made products and ensure that visitors buy Canadian before leaving Canada.
Importantly, any items not bought at these stores are sales lost to the Canadian economy and tax system and are simply bought in U.S. stores a few hundred metres across the border.
From a federal government perspective, duty-free stores are an export industry success story, and the revenues generated through the small network of stores benefit the Canadian economy, create jobs and promote trade.
Prepandemic, land border duty-free stores repatriated over $1.5 billion in sales over 10 years, which would otherwise have been lost to U.S. duty-free stores and U.S. retailers. Total direct and indirect employment accounts for approximately 2,500 full-time employment Canadian jobs. These jobs represent approximately $35 million per year in federal, provincial and local taxes, and our operators have invested a total of more than $60 million in border communities.
Now let's talk about the pandemic.
The pandemic hit many sectors of the Canadian economy hard, but the closure of the Canadian-U.S. border for nearly two years literally shuttered Canada's land border duty-free sector. While many sectors of the tourism economy could run to domestic customers, or even to models like takeout or curbside pickup outdoors, our stores were forced into almost complete closure to keep Canadians safe from the raging COVID-19 cases in the United States.
Simply put, if Canadians and Americans could not cross the border, then our stores could not, by federal law, make sales. We were, without exaggeration, the hardest hit of the hardest hit.
I do want to point out that with the border closure starting in March 2020, we were enormously grateful for the rent and wage subsidy supports provided to our tourism businesses and others. With these, we were able to keep staff and are here to recover today. On behalf of my members, I wish to thank you for those supports.
I also want to be clear that as supports ended in spring 2022, the Canada-U.S. border was not truly open and in fact will not start to return to normal until the end of this week, on October 1.
This past summer, while the rest of Canada's economy was recovering, our border recovery stayed 45% to 50% down from prepandemic levels due to federal restrictions and the required use of the ArriveCAN app.
Hopes for a major end-of-season bounceback in sales during Labour Day weekend, like the other long weekends in the summer, were crushed for duty-free store operators, as surveys indicated an average of a 47% decrease in sales for Labour Day compared with the same period in 2019, all while federal supports have ended.
We would like to formally thank ministers for yesterday's exciting announcement to drop travel restrictions. Our federally regulated, independently owned small businesses have been devastated by the measures put in place at the border and have been left behind, despite doing their part to help keep Canadians safe. Therefore, as a matter of industry survival, we are asking for a short-term financial bridge to get our stores to the other side of winter in the form of a modest loan program.
We have proposed to Finance Canada a program that would earmark a total of $20 million in loan supports so that our export business can continue to represent Canada at the border and continue as an important, integral part of Canada's tourism fabric.
Please ask yourselves this question: What business can be almost completely shut down for 20 months, and then be down by 50% for several more months, and still survive without support?
I would be pleased to outline the nature of the support plan to members further and take any questions you might have about other policy areas, such as the reinstatement of the visitor rebate program, that can help our sector move from being the hardest hit to thriving and being competitive worldwide.
Thank you.
