The Honourable Bill Morneau, P.C., Minister of Finance
House of Commons
January 12, 2016
Dear Mr. Morneau,
We would like to commend you on your open approach to Budget 2016. Soliciting the input of the community speaks to the open and inclusive philosophy of your government. At the Greater Niagara Chamber of Commerce, we represent over 1,500 businesses and organizations employing 45,000 people. We are the largest business organization in Niagara, and the third largest Chamber in Ontario. The Chamber Accreditation Council of Canada has recognized the Greater Niagara Chamber of Commerce with its highest level of distinction.
There are many budgetary issues facing Canadians, but we would like to focus on two topics that we feel are crucial to Canadian economic prosperity, that can be decisively affected by the 2016 budget, and in which investment will reap both immediate and long-term rewards. These are research and innovation, and investment in tourism.
We believe that innovation is the key to Canada’s economic future. The new and upcoming drivers of our economy will be the small-to-medium enterprises that can be flexible and innovative. Unfortunately, Canada is far from being a leader in innovation. The World Economic Forum ranks Canada as 22nd in capacity for innovation, 22nd in technological readiness, and 27th in company spending on R&D.
Our R&D spending as a percentage of gross domestic product has been declining for over a decade and now stands at 1.69%, well below the OECD average of 2.4%. Business spending on R&D is near the bottom of OECD countries. Ottawa’s R&D investment was actually less in 2015 than it was in 2010. Canada has become the only developed country on the planet with an intellectual property deficit. We spend $4.5-billion more buying foreign technology than we earn selling Canadian technology abroad. The conclusion is clear – we are behind, and falling further behind.
The situation is similar for tourism. In 2002, Canada was the eighth most visited country in the world. By 2013, we were seventeenth. This decline has been precipitated by high transportation costs, steadily reduced marketing efforts, and cumbersome visitor visa requirements. Travel and tourism contributes almost $85-billion to the national economy each year, accounts for 4.5% of national GDP, employs 600,000 Canadians, and generates $22.7-billion in tax revenue. It is extraordinary to neglect an industry so vital to our economy.
With the right policy changes, tourism could be worth a lot more. Travel costs for visitors to Canada, and for Canadians, are onerously large and growing, particularly for air travellers. Airport fees, airport improvement fees, government fees and taxes, duties, and GST are all passed on to the consumer in the form of higher ticket prices. The federal government charges Canadian airports massive rental fees, and has gathered almost $5-billion in this way since the system’s introduction. These airport fees alone account for 25% of the price difference between flights that land in the USA versus those that land in Canada, with navigational fees worth another 15%. The Conference Board of Canada found in 2012 that changes to Canadian policies on airports alone could bring over 2 million passengers back to Canadian airports every year.
Almost 90% of the world’s population needs a visa to visit Canada. Tourist visas cost $100 per person, or $185 if biometrics are required, and have long processing times. The Canadian visa system has acquired a reputation for slowness and poor customer service amongst foreign travellers. These are deterrents to visitors when they compare Canada, as a destination, with our competitors in the international tourist market. Visa inefficiency stymies the efforts of tourism marketing and has negative effects on our service-based economy and our international competitiveness, as it impacts the international convention trade and intercorporate transfers.
Our requests for the 2016 budget are these:
Firstly, we ask the government to invest $120 million in the Canadian Tourism Commission’s marketing budget, and to seek other opportunities to invest in promoting Canadian tourism.
Secondly, we ask that the government follow the recommendations of the 2012 Senate Committee report on the competitiveness of air travel by phasing out ground rents for airports, and transferring ownership of the land to airport authorities.
Thirdly, we ask the government to re-invest a significant portion of the $400-million it collects annually from tourist visa processing into lowering visa costs and wait times.
Lastly, we ask the government to invest heavily in supporting innovation and research, beginning by increasing Canada’s public R&D spending from 0.81% of GDP to 1.1%, which would make it the world leader in this category, but we also urge the government to do so carefully and in a way which does not “crowd out” private R&D investment.
We hope that you will find room to include these suggestions in the 2016 budget. The Greater Niagara Chamber of Commerce remains at your disposal and at that of your staff for any further questions on these matters. Once again, we wish to extend our thanks for the opportunity to be heard on this matter, and for your open approach to governance.
President & CEO
Greater Niagara Chamber of Commerce