INDU Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, May 31, 2000

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[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): I call the meeting to order. The order of the day is Bill C-5, An Act to establish the Canadian Tourism Commission.

We are very pleased to welcome some witnesses this afternoon. From the Elmhirst Resort, we have Mr. Peter Elmhirst, the president. We also have Mr. Duncan Ross, project manager, from the Tourism Industry Association of Canada. From the Land of the Loon Resort and Jacobson Bay Outfitters, we have Ms. Deborah Greening, the owner and operator.

I would propose that we have opening statements and then move to questions together.

I would propose that we begin with an opening statement from Mr. Elmhirst, unless you've identified a different order.

Mr. Peter Elmhirst (President, Elmhirst's Resort, and Executive Board Member, Tourism Industry Association of Canada): Thank you very much.

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As you have said, I'm Peter Elmhirst and I own and operate a year-round resort and a bush-flying operation on Rice Lake near Peterborough. I appreciate being asked to be here this afternoon to have the privilege to speak to you regarding a review of the act to establish the Canadian Tourism Commission.

As a member of the Tourism Industry Association of Canada's board of directors and as the owner-operator of Elmhirst's Resort at Keene, I've a vested interest in the operation and future of the Canadian Tourism Commission. Indeed, I have also had the privilege to serve as a member of the CTC's board of directors.

I'm here today primarily to represent the Tourism Industry Association of Canada. My current role with the association is as executive board member and chairman of the Rendez-vous Canada advisory committee.

Let me start by telling you about the Tourism Industry Association of Canada—TIAC. TIAC speaks on behalf of tourism businesses. We do not represent any one group or sector, especially not large business. TIAC speaks for the various sectors within the tourism industry, whether that be small, medium or large tourism businesses, destinations, attractions, transportation providers, or adventure-tour operators.

TIAC generally speaks on behalf of those businesses that do not have the opportunity to speak for themselves at a national level. These are the businesses, mostly small and medium-sized, that know an integral part of their success is directly related to the amount of legislative policy roadblocks that might impede their viability, sustainability, and profitability.

TIAC also manages Canada's premier travel trade marketplace, Rendez-vous Canada, which actually was held in Calgary earlier this month and will be held in Toronto next year. Each year, international buyers of tourism products are introduced to a different Canadian city. In Calgary in early May, TIAC brought together over 800 sellers of Canadian tourism products and over 360 foreign buyers over the course of 5 days. Overall it is estimated that $350 million in business was generated for Canada at that show.

To reiterate what Terry Francis, president of the CTC said yesterday, the tourism industry is a key economic sector in Canada. Tourism spending in Canada reached $51 billion in 1999. The tourism industry employed in excess of 500,000 people in 1999, proving clearly to be one of the leading growth industries within the Canadian business community.

However, we are also doing a great job for all levels of government. According to the Buchanan report on tourism, it is estimated that every $1 billion of tourism revenue generates $230 million for the federal government, $160 million for provincial governments, and $60 million for municipal governments, all in tax revenue.

TIAC's relationship with the CTC can be easily explained. Through its innovative marketing and sales machine, the Canadian Tourism Commission promotes Canada and its tourist destinations to both non-residents and Canadians. TIAC, on the other hand, ensures that the tourism industry is ready to receive the tourists by making sure that there are minimal amounts of legislative, regulatory, and administrative policies that may hinder the tourism industry's ability to function in a sustainable and profitable way.

The Canadian Tourism Commission is a true success story. As a result of its innovative marketing initiatives and world economic conditions, Canada's tourism deficit has dropped dramatically since 1994, from $4.1 billion to $2 billion today. TIAC is fully supportive of the Canadian Tourism Commission and its mandate, namely, the planning, directing and managing, and implementation of programs to generate and promote tourism within and to Canada.

While the objectives of the Canadian Tourism Commission are to market Canada as a desirable tourism destination to Canadians and the international community, which, by the way, has been an unqualified success, the major challenge is to support a cooperative relationship between the private sector and the various levels of government in Canada. This is why Bill C-5 is pivotal, not only for the future success of the Canadian Tourism Commission but for the entire tourism industry.

Although Bill C-5 is generally viewed as a machinery-of-government initiative, TIAC believes Bill C-5 is a very important step in the evolution of the organization.

The change of the Canadian Tourism Commission's legal status from a special operating agency to a crown corporation will enable the Canadian Tourism Commission to be more flexible and responsive in achieving its goal of partnering with the tourism industry and the federal government. As a crown corporation, the Canadian Tourism Commission will enjoy greater administrative, financial, and personnel independence. This is imperative in order for the Government of Canada and the private sector to realize the full potential of its partnerships and unique governance structure.

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Another aspect of Bill C-5 that is rarely mentioned is the importance of the ongoing partnership between the Canadian Tourism Commission and Industry Canada. TIAC is pleased that the CTC will continue to play an active role in identifying and working upon issues that impede the sustainability and profitability of the Canadian tourism industry.

Although TIAC is the national advocate on behalf of the tourism industry, it is important to mention that the CTC plays a significant role not only in the Canadian tourism industry but also throughout the international tourism industry in developing and supporting tourism policy initiatives.

The network of committees, subcommittees, product clubs, and best-practice programs established by the CTC allows grassroots participation and small business operators, such as Deborah and me, to become involved in the direction of our industry. We feel we have a voice with the CTC. The research and the accessibility to international markets allow us, as small operators, to focus our efforts on selling the product.

In closing, I would like to reiterate that the Canadian Tourism Commission is a success story, a fact that is unqualified. The Tourism Industry Association of Canada looks forward to continuing to work with the CTC in order to further grow and enhance Canada's tourism industry.

With that, I'll close. Thank you very much for your time. I'd be pleased to answer any questions I am able.

The Chair: Thank you very much, Mr. Elmhirst.

I'll turn to Ms. Deborah Greening from the Land of the Loon Resort and Jacobson Bay Outfitters.

Ms. Deborah Greening (Owner-Operator, Land of the Loon Resort and Jacobson Bay Outfitters): Thank you.

I operate Land of the Loon Resort, a small nature-based, four-season resort in central Saskatchewan, on the edge of Prince Albert National Park. Along with my family, I've been in business there for 28 years.

I became involved in promoting tourism at the local level as president of the local chamber of commerce. I then helped to develop regional marketing organizations with the lakescapes destination region and then with the northern shores region, which now encompasses all of northern Saskatchewan.

In 1992 I became president of TISAK, the Tourism Industry Association of Saskatchewan, and worked toward a changing relationship with our provincial government and our industry.

In 1994 the provincial government and TISAK formed a partnership, and Tourism Saskatchewan was born. That's a marketing agency of government and industry, quite similar to what's happened between the federal government and the CTC.

I was elected to the board as vice-chair of Tourism Saskatchewan in December 1999. At the national level I became aware of the CTC during the initial implementation phase, as I was president of TISAK at the time of the initial discussions.

As a business, we have participated in CTC initiatives for the past three years, including the adventure tourism catalogue and the best practices and market-ready initiatives of the industry product development committee. We've participated in a number of familiarization tours the CTC has put together and organized that have brought German tour operators and journalists to our property.

I was appointed to the board of the CTC in October 1998, representing Saskatchewan and Manitoba, and I sit on the small and medium enterprises committee of the CTC, which is a standing committee of the board, and on the human resource transition committee.

That's the background of where I'm coming from and what has influenced my feelings about the CTC and the bill.

In 1989 I became involved in working jointly with Parks Canada to promote our area of Saskatchewan globally at Rendez-vous Canada. Through this and my work with the tourism industry of Saskatchewan, I had an opportunity to work with Tourism Canada, a government department. In so doing, we found it had a very narrow view of the product.

First, it didn't have a very thorough understanding of the broad product bases of Canada. In Saskatchewan particularly, it didn't see beyond our wheat fields and our grain elevators, so it wasn't doing a really great job of promoting our area of Canada.

We found it lacked flexibility in both budgeting and accepting industry input. We found there was no avenue for long-term thinking and planning. They tended to work in isolation, looking more at central Canada than the broad face of our country. We felt we weren't working with a partnership but pretty much being told what should happen within the industry's marketing. They weren't very approachable.

We found this led to fairly limited achievements, and there wasn't enough budget or money to really market Canada globally the way we needed to.

For federal government employees in the department it is extremely difficult to justify including every geographic region of the country. The most densely populated areas tended to get the attention, while some of the most significant products are in the rural and sparsely populated areas.

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What's happened with the CTC is that it has tended to deal with a lot of those issues that had a negative influence on the industry. As Peter has spoken to the statistics and the growth within the industry, I won't go into that. He has covered that off very well.

We now have broad industry representation on the board and on the committees, both geographically and sectorally. All aspects of the industry are involved, including small and medium enterprises, as well as the major players. Over 85,000 small businesses are involved in our industry. For the first time in our history, we actually have input as to the marketing of Canada throughout the world. The provincial governments all have good representation, as does the federal government.

Developing partnerships, which is critical to having enough resources to advertise globally, is what the CTC has done an admirable job of. We've more than doubled the advertising budget for Canada by forming those partnerships.

Industry, with marketing savvy and experience, is having input into marketing programs and initiatives, which is a valuable, valuable gift of intelligence regarding markets. It was not there previously. However, the government still retains policy decisions, business plan approvals, the hiring of the president, the appointment of the chair, and the appointment of the board members. So it's a true partnership in every aspect.

For the first time, we really do have the ability to make suggestions for improvements to the organization. The small and medium enterprises committee is an integral part of the CTC and is managing to influence how we do business.

I'll just go over some of my own experiences as a small operator and what the CTC has meant to our tiny little property in the centre of Saskatchewan.

For the first time we have tourism information and statistics readily available to us through the CTE program. Workshops that are extremely relevant to small business are being offered by the CTC. Their market-ready program is actually taking businesses that have never marketed globally before and preparing them for the marketplace, an opportunity that has long been needed within the industry. The Rendez-vous Canada familiarization program, which the CTC implemented for this last Rendez-vous, had 35 participants from small and medium businesses, who, for the first time, had an advance look at how to operate, in Rendez-vous Canada, in a global marketplace.

The increases to my personal business in foreign inquiries and guests has definitely increased since the formation of the CTC and our involvement in their initiatives. We also find that the staff are very approachable and are very willing to work with us, which is something we didn't feel previously.

Our involvement with the familiarization tours the CTC has implemented has actually meant that an article was written in Toursmagazine in Germany, featuring our property. It's the first time we've had journalistic coverage in a foreign country. We also are now included in the West Kanada Direkt catalogue, a major German tour company.

I very much believe in and support what the CTC is doing. As I've said, it's made a huge difference for my operation. From working with the small and medium enterprises committee, I see it's also helping small and medium enterprises throughout Canada.

The crown corporation status would be a major step in the right direction—the next step that needs to take place with the CTC. We need to have a better ability to partner with Industry Canada. Government departments are not designed to function well with private sector partnerships. Government department partnerships are sometimes viewed as being based upon reasons other than good business and practices, and positive outcomes are very necessary through those partnerships.

In terms of the administrative flexibility that would be gained by crown corporation status, a number of standard government policies and procedures are not suited to an industry-led partnership organization like the CTC. Accounting for partner contributions is difficult when the CTC must often commit the funds upfront.

In terms of the staffing and the ability to recruit good staff, hiring from a vast source of talent is key to our success. The marketing mandate of the CTC means the organization needs staff who have marketing and business expertise. The fact that it is selling an entire country in the global marketplace makes it even more essential that the staff have international marketing and business savvy. The restraints and limitations within which governments must function when hiring staff makes it extremely difficult to find and hire the best talent to do the most effective job.

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Long-term planning is key to our success as an industry. Government budget cycles don't work well with long-term planning. As a corporation, the industry would benefit by long-term planning and a more stable organization that has more assurance of longevity. Marketing requires continuity and a multi-year perspective.

A sense of ownership is key to our success as well. As business is being asked to invest money in partnership marketing programs, we want assurance that our money is being well spent and that it's doing what it needs to do. As an industry, we need to know the investment is going to pay off, and we are more certain of that if we are involved in decisions. Crown corporation status would give us that assurance.

The tourism industry in the global market is big business, and as such, it can function only in a business environment. Government departments provide services and manage taxpayers' dollars. They are not in the business of selling product.

Thank you.

The Chair: Thank you very much, Ms. Greening.

I'm now going to turn to questions. Mr. Malhi.

Mr. Gurbax Singh Malhi (Bramalea—Gore—Malton—Springdale, Lib.): Thank you, Madam Chair.

Why is the act supporting the crown corporation, and what are your opinions on how the crown corporation can increase the revenue in the tourism industry?

Ms. Deborah Greening: In my view, dealing with these administrative issues of partnership relationships is somewhat crippling to the work we're doing in marketing. The crown corporation status would give us a much smarter and better way of doing business, and by doing such, we would definitely increase revenues and be able to market smartly, and therefore attract more business.

The Chair: Mr. Elmhirst, would you like to add, sir?

Mr. Peter Elmhirst: I think it was very capably answered.

My response would be additionally that a crown corporation operates in a more similar fashion to the private sector partners that have been so pivotal in driving up the investment of tourism marketing. We now have a situation taking place where the private sector is actually investing considerably more in the CTC than government itself is. Further investment will be facilitated by the closer working relationship of a crown corporation and the private sector.

Mr. Gurbax Singh Malhi: There is revenue to the federal government, the provincial government, and the municipal government from the tourism industry every year. What do you recommend to the federal government to improve or increase that revenue?

Mr. Peter Elmhirst: I don't understand the question, I'm sorry.

Mr. Gurbax Singh Malhi: We have revenue from the tourism industry. The federal, provincial, and municipal governments have revenue every year from the tourism industry. What do you recommend to increase the revenue to the federal government? Do you have any suggestions on an incentive they can take to increase the revenue?

Mr. Duncan Ross (Project Manager, Rendez-vous Canada, Tourism Industry Association of Canada): Well, Madam Chair, I really believe that by going to a crown corporation, the Canadian Tourism Commission would be able to attract innovative marketing partnerships, innovative marketers, to be able to create programs that are going to generate more visitors to Canada.

As Peter indicated, the tax contribution from the Buchanan report shows a direct correlation between the increase in visitation and the increase in tax revenues at all levels. It really does enable the Canadian Tourism Commission to be innovative and more effective in its approaches to marketing.

The Chair: Okay. Thank you very much, Mr. Malhi.

Mr. Brien.

[Translation]

Mr. Pierre Brien (Témiscamingue, BQ): I would like you to give me concrete examples of partnerships that will become possible. You keep telling us that partnerships are difficult when the commission is a government body, and that such partnerships will become much easier when the commission becomes a Crown corporation. I would like you to give me concrete examples to back up that statement.

Mr. Elmhirst, you were on the board of directors, and you may be able to cite some things that were not possible in the past and will be possible in the future. I would like to go beyond principles. I want concrete examples to convince me that what you state is true.

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[English]

Mr. Peter Elmhirst: Okay. My first response on that would be to do with the personnel who are available. The tourism industry is often viewed as a very simplistic industry—people simply travel, stay in hotels, and eat in restaurants, and there's little more to it. In fact it's a very complex industry and extremely competitive.

My understanding of a move to a crown corporation is that it would change the entire way in which the Canadian Tourism Commission would deal with its staff and its hiring. The most innovative marketers, whether they exist within the public or private sector, would be available to the Canadian Tourism Commission to be hired to give us a competitive edge.

Mr. Duncan Ross: I'd like to give an example. One of the main methods of marketing currently is e-commerce, websites. By moving into a special operating agency, there's more flexibility with the types of promotions that can be undertaken with corporate partners. There are opportunities to generate advertising revenues from banner ads on websites, linkages, and currently the traditional government website policy does not permit those partnerships to exist.

[Translation]

Mr. Pierre Brien: But do we need a Crown corporation to accomplish this? Could the government not amend its procedures? Do we need to create Crown corporations in all areas where we have dealings with the private sector? Your principles are just as valid in other fields. If we take your statements to heart, we can only conclude we must privatize all of Industry Canada.

[English]

Mr. Peter Elmhirst: It's a difficult question for me to answer. I have no ability to answer beyond this, but as a private businessman, there is much more natural logic for me to be a partner with and increase my contribution to a crown corporation that is more in control of industry and operating under standard business practices than to mail one more cheque to government, which in fact is what I'm doing when I'm working outside the crown corporation. It changes the whole mentality of the partnership.

[Translation]

Mr. Pierre Brien: Let me give you another view on this. As legislators, we send you taxpayers' dollars. Let us consider contracts you will award under a series of partnerships. The rules on calls for tender will no longer apply, and public funds will be allocated without being subject to criteria which may be somewhat more stringent when they are managed by a government organization. And if the organization fails to apply appropriate criteria, it is accountable. But when the new Crown corporation is established and enters into partnerships, you may not be obliged to apply the same rules to which the government is subject in awarding contracts. Yet there are taxpayers's dollars involved.

Would you not agree that, from our point of view, there might be some problems in connection with the proper management of taxpayers' dollars?

[English]

Mr. Peter Elmhirst: I'm answering too often here, but I would suggest to you that with a lot of private sector partners, all of them looking for return on investment, the scrutinization of the spending will be even greater than it is within government. These partnerships involve hundreds of small businesses and business people such as us. Return on investment is very, very important to me from my small investment. The finances should be more open to me under a crown corporation than they are within government, but I'm not sure of that.

The Chair: Ms. Greening, did you have anything to add?

Ms. Deborah Greening: I think it's a given that the industry itself is going to make sure the funds are spent responsibly and in a way that's going to get the biggest bang for the buck, which is the whole point of marketing the country. We, as responsible business people in Canada, would make sure that's what the crown corporation would do—more so than we have the ability to do now, I think, with an agency.

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[Translation]

The Chair: Mr. Brien, do you have any further questions?

Mr. Pierre Brien: Yes, I do. The Minister will have considerable powers when it comes to appointing directors to your board. And given the way those directors are appointed, they might not be as independent as we might wish. It may become difficult to ensure that political influence never comes into play. Don't you feel somewhat concerned about that?

[English]

Ms. Deborah Greening: It's my experience on the board that that's not the case, that there is a very good representation of the industry. And I think, again, the industry would police itself. If it feels the CTC is not representational of the industry as a whole, it's not going to spend its money with the corporation, and it will not make the corporation a viable entity. So I think the actual financial implications and involvement of the private sector are what will make sure there's good representation there.

Mr. Peter Elmhirst: The way in which the CTC operates is one where the board has general control of policy, but the CTC's investment in tourism marketing is very much driven by the committees, and the committees are made up of the investors. The people who are signing cheques and putting money into the programs are the ones who influence, the ones who identify emerging markets, the ones who identify where our investments should increase and decrease. Those decisions are not generally made at the board table. They are, in a very broad sense, made at the board table, but the actual marketing decisions are very much made by the investors at the committee level.

[Translation]

Mr. Pierre Brien: Ms. Greening and Mr. Elmhirst, what I understand from your statement is that you project the private sector will be more drawn into partnerships with a Crown corporation. So, we might expect the private sector to invest more in the next few years. If you come back before us in two or three years, we should see figures indicating that private investment in the commission's activities have significantly increased. Is that what you predict today? Or will you come back in three years defending your work as important and asking the government to invest more?

[English]

Ms. Deborah Greening: I'm sorry; I don't understand the question. I think what you're saying is if the crown corporation comes into being, in the long term industry will put more money in than they are now.

Mr. Pierre Brien: Based on your presentation.

Ms. Deborah Greening: I think that's exactly what will happen. I've been in this business a long time, and I've seen a lot of waste of money in trying to promote our industry. As a small operator who works fourteen to sixteen hours a day with my family, I resented the hell out of that waste of money.

For the first time, I see it making a difference. I see $65 million of Canadians' money attracting $88 million of industry money and partnering those dollars, and for the first time Canada is eleventh in the global picture of tourism. My little province, which nobody knows about, is finally having visitors come from all over the world. To me that's success, and that's what ensures the CTC as a crown corporation will be successful and will continue to attract more industry dollars.

[Translation]

Mr. Pierre Brien: I will have other questions later.

[English]

The Chair: Okay.

Mr. Lastewka.

Mr. Walt Lastewka (St. Catharines, Lib.): I just want to get some clarification, because yesterday we went through the budget and heard the percentages and amounts, and there seems to be some contradiction.

My understanding is when you add the federal, provincial, and territorial moneys together, it's $106 million, and when you add the private total, it's $54 million. That's what I was told yesterday. Is that accurate or inaccurate?

Mr. Peter Elmhirst: My response would be that generally speaking, the number I would hear—and I'm not central to the CTC—is federal investment compared to all other investment. I think what may be causing confusion is that you're lumping all government investment at different levels of government. That's not a number I would ever have heard, that I'm aware of.

The federal investment in the CTC, to the best of my knowledge, is $65 million a year. The $106 million must include provincial investment and municipal investment as well.

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Mr. Walt Lastewka: Well, yesterday I tried to separate what private business is doing versus governments, and that's exactly what I was told. The hard data given yesterday was $70 million, or $69.8 million, last year by the federal government, and $90 million, or $89.8 million, broken 60-40, 60% private and 40% with the provinces and territories.

So when I heard you say private is giving more money than the governments, it contradicted yesterday's data.

Mr. Peter Elmhirst: Unfortunately you have much more information than we do. You've had presentations from people a lot closer to the centre than we are and who are party to information we don't have.

However, the one point I would like to make is that many of the partnerships that are formed and that contribute to and participate in CTC programming are put together by the provinces of smaller private sector partners, and I would question how that money was being tabulated. If a group of resorts in central Ontario go together to buy into a CTC program in Europe and it goes through the Ontario Tourism Marketing Partnership to CTC, is that being counted as an Ontario investment or is it being counted as a private sector investment? See, it could very well come from the Ontario Tourism Marketing Partnership but be made up of private sector investment from within the province coming through the provincial agency.

Mr. Walt Lastewka: We'll have to get this redefined. This came directly from the Canadian Tourism Commission.

Mr. Peter Elmhirst: That's right, and I'm—

Mr. Walt Lastewka: I asked the question very clearly to separate private from government.

We'll let that one go. For clarification, maybe the clerk can help me on that.

The mandate of the CTC is very clear to me. It is basically marketing the world to come to Canada.

Mr. Peter Elmhirst: That's half of it.

Mr. Walt Lastewka: Okay. What's the other half?

Mr. Peter Elmhirst: Travel within Canada.

Mr. Walt Lastewka: But the CTC doesn't get involved with attractions or events to be built up in Canada or invested in Canada, correct?

Mr. Peter Elmhirst: I'm sorry, are you asking if it's part of the CTC's mandate to be involved in the development of the bricks and mortar of tourism?

Mr. Walt Lastewka: Right.

Mr. Peter Elmhirst: Indirectly only.

Mr. Walt Lastewka: Indirectly. Could you give me an example of that?

Mr. Peter Elmhirst: Well, by increasing the demand for products, you would increase the demand for the bricks and mortar.

Mr. Walt Lastewka: Okay, but not getting involved in the projects or bricks and mortar.

Mr. Peter Elmhirst: Exactly.

Mr. Walt Lastewka: They would feed back information, saying if you had so many more W, X, and Y events in this area, you could get more visitors, correct?

Mr. Duncan Ross: They could identify areas where there are marketing opportunities. Take for example the whole market for health and wellness tourism that has been identified as something many European and American visitors want to see. That information can be fed in through Industry Canada to be communicated to potential investors, and then programs that influence infrastructure development can be developed or that information can be utilized within that.

So the CTC really becomes the guardian of the image of Canada presenting externally, but it is also doing a lot of spadework to uncover a lot of opportunity for Canadian investors in very niche-specific market initiatives.

Mr. Walt Lastewka: Should the mandate be expanded from what you understand the mandate to be today?

Mr. Peter Elmhirst: I take that as a question of personal opinion, and my personal opinion—

Mr. Walt Lastewka: You're a director somewhere along the line—

Mr. Peter Elmhirst: Exactly, but I'm going to answer from a personal standpoint.

No, I don't think so. I think CTC's mandate should be to continue to market Canada.

Going back to your last question and another indirect influence on infrastructure development of bricks and mortar, CTC in its early days was very instrumental in having $500 million of BDC money earmarked for tourism development. It was purely an indirect contribution simply in influencing how moneys were earmarked within the Business Development Bank of Canada, but that is a huge benefit to the industry and a development of the bricks and mortar of the industry, but an indirect contribution.

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Mr. Duncan Ross: The CTC is also really very active in developing intellectual capital in the knowledge that it passes on to the Canadian private sector on how to market. Deborah mentioned programs for product clubs and introducing them into export readiness capabilities. Those go a long way to developing the Canadian tourism industry. And CTC indirectly is developing the infrastructure by developing people.

Ms. Deborah Greening: When you look at product development within the tourism industry, there are three components of it that are significant: infrastructure—or the bricks and mortar—education, and product development in what we call a soft format, which is putting together tour packages, looking at the market and deciding what's needed to be done to make it really saleable.

What the CTC has and what it does with the industry is market intelligence; it knows what the buyer out there is looking for. It uses the intelligence it has as a marketing organization to help properties like mine and Peter's make changes in the way we do business or in the products we offer so we can become viable in the marketplace. That can influence the decision of a business on how it's going to build or what it's going to build.

As far as the CTC having a direct involvement in building buildings is concerned, it doesn't do that, and I don't think it's a function that it should have.

Mr. Walt Lastewka: You talked about the area of market intelligence and feedback, which is what people like you need. You need a third party not to be biased, but to call it like it is, right, to be able to invest in future items?

Yesterday we talked a little about the Canadian label and the fact that you have the various provinces and territories and private enterprises involved in the CTC. Could you expand on the fact that you've had so many foreign buyers here?

I saw it somewhere where we've reduced the trade balances from $4 billion to $2 billion. What are the significant factors required to reduce that more? What is a priority for CTC, the new agency, when you get there, to reduce that even more? What is the thing that will enable us to do more? What is the priority from your standpoint? I know you might have a difference of opinion.

The reason I'm asking the question is that I'm from the Niagara area, so we've been debating this quite often.

Ms. Deborah Greening: I think there are two things. I think the one is our domestic travel, making Canada more attractive to Canadians so that they stay home, so they don't leave the country.

I think the other is just to be able to more effectively market Canada to other countries, which is what the CTC has been doing, but it needs to do it more effectively. It needs to be able to make deals quickly and efficiently. In its present structure that's tough to do. Just by the way government departments have to make even financial deals makes it hard for the CTC to react quickly and be able to get involved in things that will have more impact. I think the change will help that.

An example is that government departments, as you know, cannot accept revenue. The CTC cannot accept revenue. It's not a business. So when it goes to cut a deal with a supplier for the TV network or a magazine, it has to ask that magazine or that network to accept its partner's financial involvement directly from the partner.

The CTC can't come to Peter and me and a number of other businesses and say “We're going to go and do this campaign with CBS in the U.S. Are you in? Are you interested? We say “Yes, we'd love to put our money in. Here, take our money and go to CBS.” Because of the way the agency is, the CTC can't do that, right? So what happens is there are suppliers out there who aren't interested in doing business with the CTC because of the financial implications of having to deal with that bizarre arrangement, so this will improve how we can do business globally.

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Mr. Peter Elmhirst: I should like to add really briefly to that. In answer to your question, I think we need to increase our share of the pie. We need to market our icons, and Niagara is certainly one of them. The more closely tied to government you are, the more political the decisions made on how you market the country.

I happen to be in business in the Peterborough area, and there's no question that the better Toronto does, the better I do. That doesn't mean that RR 1, Keene, which is my address, has to be in every ad, but certainly we need to market our icons. Montreal and Quebec City are extremely exciting cities.

First, we need to market the real strength of the country and let it filter down to the rest of us, in part.

Secondly, we need to be price competitive. Canada's lost a lot of its price advantage in a lot of our markets. We have to be really careful about the way we deal with the industry from a tax standpoint, because it's a very price-sensitive industry.

The issues around customs, immigration, and so forth are really large. They're looming with the U.S. We need to keep quite an open border for tourists or it could hurt us.

Mr. Walt Lastewka: I've been to your resort many times when I was with GM in Oshawa. Congratulations.

Mr. Peter Elmhirst: All right. That's good. Thank you.

Mr. Walt Lastewka: Thank you, Madam Chair.

The Chair: Mr. Brien.

[Translation]

Mr. Pierre Brien: I would like to come back to part of the question I asked earlier, which I believe was not clearly understood. It is on your expectations of where funding for the commission will come from in the future. Do you expect the government to inject more money in the future, or do you believe that the increase in private investment will be enough to meet your needs?

[English]

Mr. Peter Elmhirst: A stable funding base is essential to long-range planning for marketing. Whatever expectation I may have of the federal government probably isn't going to have a lot to do with the final reality anyway.

However, I think the answer you're looking for is that for a long time the tourism industry—especially Deborah's and my end of the tourism industry—was one that said to government, “If you give us the money, we'll build it, and if you train the people, we'll hire them. If you do the marketing and the sales, we'll stand there and punch the cash register for you.” We totally depended on government as small tourism operators.

I think that over the last decade we've seen a significant turnaround in that. We have seen the private sector more prepared to invest in the infrastructure, in the bricks and mortar. We're seeing some significant investment in tourism infrastructure in this country.

Whistler is a world icon now, and we have Mont Tremblant in Quebec. That same sort of development is now moving to Ontario, in the Blue Mountain region. We're seeing more investment in that way. We have now the Canadian Tourism Human Resource Council, with tourism education councils in each province. We see the tourism industry investing real time and real money in training its staff to attempt to reach the standard of service that we as Canadians can be proud of, welcoming guests from around the world. And we're seeing Canadians starting to invest more in the marketing effort.

Possibly it isn't as great as it might be. It's far easier to draw partners from the hotels in Niagara Falls. That city has, I believe, a budget of something in the order of the $15 million or $16 million range being drawn from the hotels. That's a much easier draw than that in Keene or in Prince Albert, Saskatchewan. There's no question of that. We're getting there, and I think it will continue to grow.

Also, the provincial investment has grown significantly, certainly in our province. Ontario is stepping up to the plate for the first time in several years with significant marketing dollars. If that money is spent in cooperation with CTC, then we all win.

I think we're not there yet, but I think we're going in the right direction. What will be necessary as a federal contribution in the future? I can't predict that, but I think the balance is changing.

Mr. Duncan Ross: Peter made the point about stable funding going forward as key to successful marketing. I'll cite an example. Due to a referendum, the State of Colorado terminated all funding for tourism marketing. The implications for the tourism industry of the State of Colorado were significant. In speaking to their director of tourism, they estimate that it was a loss of $3 billion in revenue.

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Just at the time Colorado did that, the Canadian Tourism Commission was getting rolling in developing innovative programs to develop the international ski business. In Banff alone, 55% of the destination's skiers are attracted from the United Kingdom. CTC has very strong support for the initiatives that the Canadian ski partners, Alberta, British Columbia, and Quebec....

So if you have the money as a base, your partners will invest and you will see growth. You will see growth in air access. Out of the U.K., charter flights into western Canada have been increasing—and it's not just for the skiing business. Now you have non-ski winter business. People are coming dogsledding. People are coming to do rail tours. It all really shows that a core base investment gives an industry the flexibility to grow and to generate more tax revenue.

[Translation]

The Chair: Mr. Brien.

Mr. Pierre Brien: As far as you know, is the tourism industry sound enough to grow as quickly, even with a stronger Canadian dollar?

[English]

Mr. Duncan Ross: As a marketer myself, I think the key is communicating, and communications and marketing initiatives really do cost. There are always going to be external variables like currency shifts that you have to be able to respond to, but having the Canadian Tourism Commission out there marketing brand Canada is key to minimizing the impacts of external fluctuations that are going to influence the industry.

[Translation]

Mr. Pierre Brien: In your current marketing—perhaps not in your official advertising, but in your actual dealings with clients—do you attract people by pointing out that the Canadian dollar is weak?

[English]

Mr. Peter Elmhirst: What the Canadian dollar is really doesn't matter very much to people. It's what the vacation costs. What's the Deutschmark conversion or what's the rand conversion? It really doesn't matter. It all boils down to what your vacation is going to cost you in your dollars, in dollars you understand. That tends to be the way you can most successfully market it—by simply putting it in real terms.

I want to go back to the question you asked a minute ago: can we continue to grow and be viable if our dollar increases in value? There's no question that's a huge challenge, but a successful CTC will really help us through that.

Deborah's family has been in this for many years, and so has mine. We've been in for 75 years. We can remember paying exchange on American money. We happen to have made a large investment in our property in the early eighties. We had a business that was heavily dependent on the border states. As the border states went into the economic doldrums, close to 20 years ago now, we were really hard pressed to sustain our business after having been in business for 60 years. What we did to sustain our business was go to Europe with it. We took our product to Europe. It started to sell in Europe, and we spread our base of business. We continue to do that now.

So the broader the tentacles of the tourism industry, the more likely we're going to be able to sustain it if our dollar does grow. If the U.S. market starts to dry up, then hopefully the business out of South America will be a little stronger or the incentive business out of Europe will have grown or the business out of Asia will have rebounded. The more bases you have to draw on, the more likely you are to be able to sustain downturns in any given market, and the CTC is getting us into a lot of markets that we would not be in without that cooperative initiative.

Mr. Duncan Ross: For instance, in the Asian markets, in Japan.... A small province like Prince Edward Island would not necessarily be able to afford marketing in Japan. There is a huge interest in Japan in a particular market segment, Anne of Green Gables.

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That has to be communicated. It's expensive to communicate it, but the CTC works with the Atlantic provinces to develop innovative campaigns with publishers in order to spread the word about that particular product, thereby bringing new dollars, new yen, into the country.

There really is a lot of critical mass developed as a result of the CTC.

The Chair: Do you have more to add, Ms. Greening?

Ms. Deborah Greening: Thank you.

I think the industry has a job to do in developing client loyalty. We have this wonderful opportunity right now because the Canadian dollar is bringing people in from the U.S. at a rate greater than before. We're getting a lot of new clients out of the U.S. who have never come here before. What that means is that we have these people we can influence with our product, people who we can help to develop a love for Canada.

If the dollar goes up again and we lose that bit of advantage we have now, if we do our job right we will have people who are going to come back regardless of what's happening economically to their budgets.

And it's happening. I have a client out of North Carolina who's with the Wrangler corporation. He came to my property in December for a dogsledding experience. The money didn't matter to him. He has now booked another two vacations in the next 18 months—in Saskatchewan, a province that until now he had never even heard of, let alone wanted to come to. He's sold. He thinks Canada is the greatest thing since sliced bread.

So if we can use this advantage we have right now and make people fall in love with us and what we have, that fluctuation is not going to have as adverse an effect as it could otherwise have.

The Chair: Thank you.

Merci, Monsieur Brien.

Mr. Pickard.

Mr. Jerry Pickard (Chatham—Kent Essex, Lib.): Thank you, Madam Chairman.

Peter, I've been to your resort. It's a beautiful place.

I apologize, Deborah, that I haven't been to yours, but it would be worthwhile getting some of us out there to look at it too—internal promotion is extremely important.

I was interested in one of the comments. If someone has already asked the question, I apologize, and we'll go on. It had to do with the bottom paragraph on page 2. You suggest that you represent those small and medium-sized businesses that are incapable, really, of representing themselves on their own. You say that these businesses, mostly small and medium-sized, are an integral part of the operation, and you look at “legislative and policy roadblocks that may impede” the “viability, sustainability and profitability” of the industry.

I know you mentioned taxes. I heard that very clearly. What are the other roadblocks that you would say exist in Canada and impede your industry?

Mr. Peter Elmhirst: Right now?

Mr. Jerry Pickard: Yes.

Mr. Peter Elmhirst: When was the last time you had to take a flight?

Some hon. members: Oh, oh!

Mr. Peter Elmhirst: I mean, it's.... This could be serious.

Mr. Jerry Pickard: But let's lay out what problems your industry faces.

Mr. Peter Elmhirst: Air access and the problems that are taking place right now could hurt this industry for a period of time.

Before summer starts, I'm trying to get to Prince Rupert to go fishing—tomorrow. Honest to heavens, I should have given up. The chances of my getting to Prince Rupert and back without standing in an airport for 24 hours are almost nil. I understand that we're trying to combine two huge companies into one, but boy, the long-term impact on the tourism industry could be significant if this doesn't get put together pretty quickly.

Also, if you have an emerging product in the north of Canada, your ability to get customers to you is really pivotal to your success, and those are where the travel generators are. Obviously people don't travel to sit in an Air Canada seat or to sleep in a Holiday Inn bed. They come here to go to the floe edge in the Arctic or they come to go canoeing on Atlin Lake in central Saskatchewan.

In a country as large as Canada is, those air access issues, I think, are the next biggest threat to the success of our industry.

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Mr. Jerry Pickard: So that's taxation and air access. Are there other problems that you see as impeding the industry?

Mr. Peter Elmhirst: We're very nervous as an industry right now about what may happen with the border with the U.S. and immigration, the implications of free access, free crossing of the border. If we get involved in having much more stringent checking of identification and so forth on the U.S. border, it's going to grind it to a halt on busy weekends.

Mr. Jerry Pickard: So tourism flow is extremely important as well.

Mr. Peter Elmhirst: Oh, it's extremely important.

Mr. Jerry Pickard: Internationally?

Mr. Peter Elmhirst: You're saying we shouldn't—

Mr. Walt Lastewka: No, that's being fixed.

Mr. Peter Elmhirst: Good.

The Chair: It has been fixed. The United States actually passed an amendment through both the House of Representatives and the Senate for repealing section 110, which would require you to stop and register. They're going to take the information that you now collect and put it into a database so that no new information will have to be collected. They're just going to create a database from what is collected.

Mr. Jerry Pickard: Now you have some good news.

Mr. Peter Elmhirst: That's wonderful news.

I'd like to add one more thing on taxation. We don't think of taxation only from a collection standpoint. The very fact that the government of this country recognized tourism as an export industry and made it GST exempt is huge for this industry. People who are making their decisions now as to where they're going to travel this summer with their family..... Say a German is trying to decide whether he should be going to South Africa or the United States or Canada. The very fact that he can look at a price for his Canadian vacation that's free of GST is huge, and that is definitely an important thing, especially with the harmonized sales tax in parts of this country.

If that advantage were ever to be lost, it would be a huge impact on the industry. I wish to recognize the importance of that and thank the government for its continued support.

Mr. Jerry Pickard: Very good, Peter.

Mr. Duncan Ross: Another key area that the Tourism Industry Association is working on with the industry is the challenge of the national parks. TIAC really believes there has to be a balance of use with preservation and we're working with all the groups that are involved in that to identify best practices and to really come up with user-based solutions. So those are other areas.

I'm sure that Deborah, being very dependent on a national park, can agree with that.

Ms. Deborah Greening: I concur with Duncan. Not only access to national parks but also infrastructure maintenance within the parks system, both provincially and federally, is sadly lacking. With the budget cuts that both of those organizations have had in the last few years, we're seeing a need to do an increase in infrastructure. Speaking about transportation again, in Saskatchewan and Manitoba, roads and that type of infrastructure need a lot of work as well.

Mr. Jerry Pickard: I know there are many different levels of support for tourism. We have provincial groups, whose major aspect and major direction appears to be inter-Canadian tourism. They really focus on that, although they do advertise in Michigan and border states in the United States.

We have the CTC and we also have Attractions Canada. Do you feel we are doing an adequate job in these agencies? They're not one agency, but they're going in different directions.

Interestingly, I learned yesterday that CTC only spends 7% of its budget in Canadian promotion, tourism promotion of Canadians to Canadians. Most of their efforts and 93% of their budget are international. Obviously the answer is that the provincials pick up the Canadian-to-Canadian, and Attractions Canada may well do that as well.

Do you feel that the structure we have is working well, even though we have different levels of government and different responsibilities for each level of government?

Mr. Duncan Ross: I would say it's working effectively. Regarding your point about CTC committing 7% of its budget towards marketing within Canada, that's a direct result of an endorsement of the board of directors of CTC and the committees saying to put that money there. The Canadian Tourism Commission needs to invest more in marketing in the long-range markets because provinces and cities can't afford to do it, and in those markets visitors recognize the brand Canada.

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I always use the example of Germany. I ask people to name more than two or three states in Germany and people say “There are states in Germany?” Yes, there's Bavaria, Baden-Württemburg, and things like that. You understand what a German experience is. That's what the Canadian Tourism Commission is doing; they're trying to position brand Canada, but they're also trying to attract visitors who are going to yield high spending figures.

Ms. Deborah Greening: I'm on the board of Tourism Saskatchewan, so I see this from a provincial perspective as well. The provinces are doing a good job of marketing Canada within Canada. I think the initiatives that the CTC do domestically are doing a good job of coordinating the provincial efforts.

Attractions Canada is more in the business of creating awareness of festivals and attractions, not in the business of selling tourism. I think you're going to see the CTC and Attractions Canada maybe do some programs together and work together in the future.

Mr. Jerry Pickard: I see Attractions Canada as trying to bring people to an area and promote certain things that are happening. It may not be an individual resort or anything, but I see it as a promotion for tourism. Maybe I'm wrong.

Ms. Deborah Greening: I think you're right, but I call it awareness. There's a difference between creating awareness, educating people, letting them know what's there, and marketing and selling product. The two work together, but they're two separate jobs, two separate things we do.

I think you're also going to see with the CTC that some of the domestic programs.... The adventure catalogue that was put out in the U.S. last year, which my company takes part in, is now also going to be released to the Canadian market. So we're starting to see some use of joint effort within the different marketing areas of the CTC, which is to everybody's advantage.

The Chair: Mr. Elmhirst.

Mr. Peter Elmhirst: The answer to your first question about whether or not it's right, whether we got it right, depends on where you are in Canada. A lot of the municipal or regional areas really have it right: Noël Buckley and what he's doing in Niagara, Charles Lapointe in Montreal, Pierre Labrie in Quebec City. There are some extremely successful municipal organizations that are doing a tremendous job of marketing their area.

Where the void has been in many areas, specifically Ontario, as an example, is the link between the national CTC and the regionals. Ontario has toyed with a marketing partnership for years and has just put one into place.

I guess this gets to a part of the reason we're having this conversation in the first place. It's not an easy marriage. It's government money, and to politically withdraw from influencing the way it's being spent is not an easy decision to make.

Why should we be surprised that the bureaucrats who exist within the Ministry of Tourism don't welcome private sector participation with open arms? Often it becomes a management problem for the bureaucracy rather than an embracing of a new direction. The tourism industry itself has had trouble grasping the fact that this is something you actually invest in, not something you send for and have somebody write you a cheque.

Ontario has been rather slow to get its act together, but it is coming. For it to work well, it needs the three levels. If I have an emerging product, I can step on at the regional level and start marketing it regionally. Then when I get a little better, I can go to the provincial level and start getting into other provinces and the border states. When I'm ready for international marketing, I can make the next step to the CTC. But we aren't there yet.

I believe Saskatchewan is further ahead than Ontario. We are lagging a bit, but we finally have some significant financial commitment in Ontario and we're moving in that direction more quickly.

Mr. Jerry Pickard: You mentioned taxation, GST exemption, as a very positive government initiative. You mentioned the value of the dollar as a positive effect on the tourist industry. Are there other government initiatives that positively affect you? We like to have feedback from industry.

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Mr. Peter Elmhirst: It happened that I had to be in Toronto at a meeting at 9 on Monday morning. I would normally allow an hour and a half for the drive, but since it was a Monday morning, I allowed two and a half hours. I was still a half hour short. As I made that three-hour crawl from Peterborough to Toronto, I thought about my Memorial Day weekend guests who were on that same road with me. They didn't get to stop in Toronto. They had to go all the way to Fort Erie.

This industry is heavily dependent on the rubber tire. We've talk about air access and that sort of thing, but the vast majority of the tourists in this country arrive in their own automobiles and travel on our highways. The highway policy, fuel taxes, and so forth are large when it comes to areas of importance.

The Chair: Thank you, Mr. Pickard.

Mr. Lastewka, you have one more question.

Mr. Walt Lastewka: I was glad to hear the comments Mr. Elmhirst made, because some of us, including the chair, have said that it's about time we had better rail service from Quebec City to Windsor and, as an offshoot, to Niagara. People often ask, “Can I take a bus to Quebec City?” They'd like to go to Quebec City, but they don't realize that it's so far away. We hear all the time that people would like to come to Niagara and stay for a while but then get on some mode of quick transportation to go to Quebec City. The chair and I have been promoting that it's about time we did something like that, because then there could be many offshoots as a result of stopping along the way and going to Peterborough, north, and so forth. So what you just said was music to our ears.

The Chair: Mr. Elmhirst.

Mr. Peter Elmhirst: I'm not sure if I interpreted it correctly, but I take that to be the last question or comment before we end. If you are about to close off, I would like to thank the committee for your interest. I must say that I didn't expect this level of interest or discussion about the tourism industry or this level of commitment to it. I really appreciate the conversation here today. Thank you.

The Chair: Thank you.

Mr. Brien, you have the final question.

[Translation]

Mr. Pierre Brien: I have a short question on an issue raised earlier. You are all representatives of the tourism industry. What is the relationship between the tourism industry and Attractions Canada? I am a bit curious about it, because it is not a Crown corporation. The flexibility you seek by turning the Canadian Tourism Commission into a Crown corporation is not, I presume, to be found at Attractions Canada. So what is your relationship with Attractions Canada?

[English]

The Chair: Ms. Greening.

Ms. Deborah Greening: The only relationship I'm aware of is that Attractions Canada and the CTC staff are talking about doing some mutual marketing program in the future. I don't know the details. I just know that for the first time they are looking at working together on some project.

The Chair: Mr. Elmhirst.

Mr. Peter Elmhirst: I have no comments.

The Chair: On behalf of the committee, I want to thank the three of you for being here this afternoon. We appreciate your taking the time to join us. We know some of you had to come a far distance, and we do appreciate that.

We do hope that travel in Canada will get easier so that, as Mr. Lastewka and others have said today, tourism can be better promoted. I come from the most southern part of Canada, at the bottom of Ontario. A lot of people don't even realize that's the most southern part of Canada. We call it Canada's south coast. We still have a lot of work to do.

Thank you very much.

The meeting is adjourned.