COLUMN

Throwing away a natural advantage

Government should make tourism a national priority— it employs thousands of the least employable, often unskilled, workers

DIANE FRANCIS July 18 1994
COLUMN

Throwing away a natural advantage

Government should make tourism a national priority— it employs thousands of the least employable, often unskilled, workers

DIANE FRANCIS July 18 1994

Throwing away a natural advantage

COLUMN

Government should make tourism a national priority— it employs thousands of the least employable, often unskilled, workers

DIANE FRANCIS

A staggering 15 million tourists will come to Canada this year to see beautiful British Columbia, Niagara Falls, Toronto’s Blue Jays, Lucy Maud Montgomery’s P.E.I. homestead or charming Quebec City, to name just a few favorite sights. Fortunately for all of us, Canada is one of the world’s most popular vacation destinations. And this is for good reason. The country is blessed with gorgeous scenery, mountains, safe and sophisticated cities, friendly people, great restaurants and hotels, charm, efficient transportation and world-class entertainment and sporting events.

In fact, tourism is one of Canada’s principal competitive advantages. Unfortunately, there has been too little recognition by politicians of that reality. As they have done with so many of our economic advantages, politicians have sandbagged tourism over the years with their meddlesome and greedy policies, taxes and regulations. But enlightened governments understand that tourism should be a national priority. That is because it boosts an economy by employing thousands of the least employable, often unskilled, workers. At the same time, tourists bring in billions of dollars. And one out of every 10 Canadian workers depends on tourism for his or her livelihood.

But the news is not all good. According to a report prepared in May by the Hotel Association of Canada, this country has fallen from the sixth-most-popular global destination in 1980, measured in the number of visitors, to a 10th-place ranking last year— the largest drop of any country. Concludes the study: “Canadian hoteliers and our partners in the travel industry and government must reverse this deplorable record.”

While slipping in world ranking, Canada has enjoyed a recent uptick in the numbers of tourists and dollars generated, thanks in large measure to our devalued dollar. In 1993, Canada’s travel “deficit” shrank to

$7.7 billion from $8.2 billion from the previous year—still far too high, but an improvement. The number of visitors from Asia and Europe increased by nine per cent, including a record number from Germany (344,000, up 17.2 per cent) and France (362,000, up 16.7 per cent). Another 1.5 per cent more Americans came to Canada, for a total of 12 million, as well as a 5.1-per-cent increase in British visitors to 569,000, and 3.6 per cent more Japanese for a total of 409,000. (Offsetting this was the fact that 17.3 million Canadians left the country to visit the United States, while 3.3 million travelled to the rest of the world.) The increase in foreign visitors was mostly due to the devaluation of the Canadian dollar vis-àvis the U.S. dollar. But greedy Canadian governments still impose too many taxes on hotels, restaurants, gasoline stations, airports and airlines.

“The impact of duties, tariffs and taxes represents up to 50 per cent of gross accommodation revenue,” estimates the Hotel Association. “There must be a freeze. All levels of government must refrain from implementing taxes that inhibit travel for the reason that travel generates more gov-

ernment revenues indirectly [through job creation and sales taxes] than any directly imposed taxes.”

The feds impose the GST, income taxes, as well as costly licensing requirements and regulations. The provinces also impose income taxes, sales taxes, business taxes and other levies on employers to fund employee benefit programs. Municipalities add property taxes, business taxes and various other special taxes. In addition, government spending and deficits contribute “to higher interest rates and the lack of investment capital,” the hoteliers point out in their study.

Governments should roll back taxes in order to give the stakeholders in this business more money to cut prices, make profits and further promote themselves. Governments should also do their bit to enhance promotion, but should do it in concert with the tourist industry and should do it by co-ordinating and targeting their efforts to areas of new potential growth. Canada spent only $13.2 million for tourism promotion in 1993. By comparison, Japan’s government earmarked $408 million; Australia $147 million; Italy $130 million; France $90 million; Britain $73 million; and the United States $24 million.

In light of such expenditures, it is truly amazing that Canada attracts the numbers it does. And while I would be the last to counsel governments to spend more, I suspect government tourist bureaucracies spend too much on overhead and too little on promotion. Instead, governments should forgo taxes so the industry can better promote itself.

The Hotel Association is pushing for the creation of a Canadian Tourism Authority to market the country in a co-ordinated, efficient way. Right now, Canadian marketing efforts are shotgun and scattered through dozens of federal, provincial and municipal agencies. There are nearly two dozen separate government offices, paying huge rents, in New York City promoting travel to Canada.

‘Travel and tourism is the world’s single largest industry,” according to the hotel association brief. “It accounts for $3.4 trillion in gross output according to the World Tourism Organization. International travel will grow to $7.9 trillion in the next 10 years. Jobs are predicted to triple from 1990 levels of 204 million by the year 2005.”

Canada can get a bigger share of this growing pie—and must. Tourism and hospitality already are big business in Canada, producing $26 billion a year in revenues, more than is earned selling any of the following: wheat, natural gas, pulp and paper, metals and minerals. It already generates revenues of $76 million per day and yields $11 billion in annual taxes. Some 60,000 firms are involved in the industry, employing 1.2 million Canadians. Canada cannot afford to take tourism for granted any longer. And the way to capitalize on this wonderful competitive advantage is for governments to play a more enlightened role by playing less of a role.